索尼 (SONY) 2016 Q2 法說會逐字稿

At this time, I would like to start this session to announce the consolidated results for the second quarter for fiscal 2016. My name is Hill and I will be your MC today.

And I would like to introduce our speakers, Executive Deputy President and CFO; Representative Corporate Executive Officer, Kenichiro Yoshida. We have Kazuhiko Takeda, Corporate Executive and Corporate -- responsible for Corporate Planning and Control and Accounting. Then we have Miss Atsuko Murakami, Corporate Executive in Finance and Corporate Development. Mr. Yoshida will make the presentation first and that will be followed by questions and answers. Altogether, we shall spend 45 minutes.

Mr. Yoshida, will you please start?

Thank you. I am Mr. Kenichiro Yoshida, CFO of Sony. First, I would like to say a few words about the wrongful conduct that occurred at Sony LSI Design Incorporated, which we announced on Friday of last week. As we said in the announcement, we have discovered that certain former executives and employees of a Sony affiliate company illegally paid out Company money and misappropriated part of the money for themselves. At this point in time, we estimate that JPY900 million in damages were incurred by LSI due to this wrongful conduct, which was repeated over a period of some four and half years. Sony is considering lodging criminal charges and pursuing civil liability claims against those individuals responsible for this conduct.

It is immensely regrettable that this has occurred and I would like to profoundly apologize to all the parties concerned. We are working to further enhance our internal control and supervisory systems so as to prevent recurrence of incidents of this kind.

Now, to explain two topics in the next 15 minutes. As we announced yesterday, we signed a definitive agreement with Murata Manufacturing Company related to the transfer of our battery business. Due to the recording of loss related to this transfer of the business, we have downwardly revised our consolidated results forecast for the fiscal year. In the second quarter ended September 30, 2016, we recorded JPY32.8 billion operating loss and JPY4.5 billion of income tax expense related to this transfer of business. And at this point in time, we expect that these amounts will constitute essentially all of the losses that we will incur as a result of this transaction.

And primarily due to the incorporation of these losses, we have revised our forecast for consolidated operating income downward by JPY30 billion and our forecast for net income attributable to Sony's shareholders downwards by JPY20 billion.

And now I will present the second-quarter results. Consolidated sales for the second quarter decreased 11% year on year to JPY1,688.9 trillion. Consolidated operating income declined by 48% year on year to JPY45.7 billion.

We estimate that the negative impact from the April earthquakes in Kumamoto on the operating income for the second quarter, which ended on September 30, 2016, was about JPY13.7 billion, including opportunity losses.

Net income attributable to Sony's shareholders decreased by 86% year on year, down to JPY4.8 billion.

And this next chart shows the consolidate results for the first half, accumulatively, over the year. And this chart shows the result for each segment. The operating results of the semiconductor segment and the component segment, including the batteries business, significantly deteriorated year on year. On the other hand, the pictures and mobile communication segments, which recorded losses in the previous -- the same quarter of the previous year, had a significant improvement in operating results.

And this chart shows the results for the first half for the fiscal 2016 by segment.

Next is the consolidated results or results forecast for the current fiscal year. As I mentioned before, sales remain unchanged from the forecast we made in July. Operating income was downwardly revised by JPY30 billion to JPY270 billion, but there were improvements in other income so that the net income attributable to Sony's stockholders was downwardly revised by JPY20 billion, down to JPY60 billion. Foreign exchange rate assumptions for the period are JPY101 for the US dollar and JPY113 to the euro.

As is shown here, the negative impact of the Kumamoto earthquakes on the annual operating income is expected to decrease to about JPY53.5 billion from JPY80 billion that we announced earlier in July due to the faster rehabilitation of our Kumamoto factory.

And here, you see the current fiscal year forecast by segment. We downwardly revised the operating income forecast in the component segment, including batteries business and picture segment, compared with the July forecast. On the other hand, we upwardly revised the income forecast for the imaging products and solutions, semiconductors and home entertainment and sound segments.

Now I will explain the current situation in each segment. First, mobile communications segment. This fiscal year, we're reducing mid-range smartphone model unit sales and downsizing the scale of the business in unprofitable regions. Sales for the quarter decreased 40% year on year due to these initiatives and underperformance of sales in Europe, where we have a large number of unit sales.

The primary reason for the sales underperformance was that our product lineup launched this spring did not meet the needs of the market.

Operating results improved JPY24.3 billion year on year to JPY3.7 billion in operating income due to the improvement in the profitability of the business, mainly resulting from cost reductions.

We have downwardly revised our sales forecast for the fiscal year by JPY60 billion due to a downward revision of our annual smartphone unit sales forecast by 2 million units to 17 million units, mainly resulting from the underperformance in Europe that I mentioned earlier.

Our operating income forecast for this fiscal year remains unchanged, mainly because the impact of lower sales is expected to be offset by our ability to ship our flagship model in line with expectations, fixed cost reductions and a positive impact from exchange rates. Although we recorded operating profit in the first half, the business is subject to significant risks, such as market environment volatility and recent underperformance in Europe. Thus, we are conservatively forecasting our performance in the second half. We aim to achieve operating profit for the full year.

Next, the game and network service segment. Sales and operating income for the current quarter decreased year on year and JPY19 billion of operating income was recorded. The year-on-year decrease in sales was mainly due to the appreciation of the yen. During the current quarter, our hardware was changing due to the launch of a new model of PS4 in September. The year-on-year decrease in operating income was mainly due to the price cut of the new PS4 model.

The negative impact on operating income of the price cut was partially offset by continued cost reductions, but operating income for the segment decreased due to the residual impact of decreased PS3 software sales. However, the strong momentum of the business continues, as is shown in the 31% year-on-year increase in network revenues.

The sale of PSVR which was launched in October are on track. Furthermore, this month, we plan to launch the PS4 Pro, a high-value-added model.

Our operating income forecast for this fiscal year remains unchanged.

Next, the imaging products and solutions segment. Sales for the quarter decreased 25% year on year. Although the impact of the decrease in sales was partially offset by an improvement in product mix, cost reduction and other factors, operating income decreased JPY8.2 billion year on year to JPY14.9 billion, mainly due to the negative impact of the stronger yen. The negative impact on operating income from the Kumamoto earthquakes is estimated to happen about JPY3 billion for the quarter.

We have upwardly revised our operating income forecast by JPY12 billion to JPY34 billion from the July forecast. The revision was mainly due to an increase in the supply of image sensors due to a quicker-than-expected recovery from the earthquakes. We are working to maximize profitability by allocating the additional image sensors to high-value-added products.

Next, the home entertainment and sound segment. Although sales decreased 19% year on year, operating income increased JPY1.8 billion to JPY17.6 billion. Despite the decrease in sales from the negative impact of the stronger yen, we were able to continue to achieve an increase in operating income due to a shift to higher-value-added products and cost reductions.

Fiscal year operating income has been revised upwards by JPY6 billion compared with the July forecast to JPY47 billion, mainly due to the strong performance of the television business in the first half of the fiscal year.

Next, the semiconductor segment. Sales for the quarter decreased 5% year on year and an operating loss of JPY4.2 billion was recorded, a deterioration of JPY38.2 billion year on year. The significant decrease in operating income was mainly due to a JPY19.7 billion negative impact from the stronger yen and JPY9.4 billion of inventory write-downs on certain image sensor models.

The write-down was on inventory of certain models we decided to stockpile last fiscal year and about JPY20 billion remains after write-down, but we think we can liquidate that inventory going forward.

We are forecasting a loss of JPY53 billion, a reduction in loss of JPY11 billion compared with the July forecast, mainly due to strong demand from Chinese manufacturers and a smaller negative impact from the Kumamoto earthquakes than had been anticipated.

Now I would like to briefly explain my view of the operating environment in the semiconductor business. First, in regards to image sensors for mobile use, which is our core business, some of the products that we had expect to shift slipped into the third quarter, but demand recently has been quite strong, including from Chinese manufacturers. Price on a dollar basis is stable.

On the whole, orders going into the next year are strong. In addition, we expect the proportion of dual-lens cameras to increase above the level expected at the beginning of the year. However, since the market for smartphone sensors changes very quickly, we continue to monitor the market trends very carefully.

In the first half of the fiscal year, image sensors for applications other than smartphones, like AV and surveillance cameras, were significantly impacted by the earthquakes. Going forward, we are working to improve our profitability by focusing on the high-value-added part of the market. Growth continues to be strong in the surveillance and drone segment.

As for automotive, Denso Corporation announced the other day that it would use our automotive sensor. But we think that it will take time for the market to expand meaningfully.

Next, I would like to discuss the issues facing management. This fiscal year there are several factors that are negatively impacting the results, such as approximately JPY30 billion in impact from the earthquakes net of the insurance] recoveries, approximately JPY30 billion in expenses related to the exit from high-functionality camera modules and the inventory write-downs on certain models that I have mentioned earlier.

However, the biggest challenge that will continue into the next fiscal year is how to respond to the appreciation of the yen, which is expected to have an approximately JPY63 billion negative impact on operating income this fiscal year compared to the previous fiscal year. What we can do on the sales front is to increase the proportion of high-unit-price custom products for smartphones and increase sales of relatively higher-margin sensors for AV and surveillance applications.

Now, in the meantime, what we can do on the cost front is internalize the manufacturing of a portion of the logic process and cut other costs across the entire Company, including R&D expenses. These are challenges management needs to overcome to improve the profitability of Sony Semiconductor Solutions, which began its operation as a separate subsidiary in April this year.

Next, I would like to discuss the component segment. Sales for the quarter decreased 24% year on year due to the impact of the stronger yen and a decrease in sales of battery business. A JPY32.8 billion operating loss related to the transfer of the battery business was recorded, as I mentioned earlier. As a result, JPY36.6 billion operating loss was recorded for the segment.

The fiscal year forecast for the operating result has been revised downward by JPY36 billion to an operating loss of JPY48 billion due to the loss related to the transfer of the battery business and the downward revision in the forecasted sales.

We plan to complete the transfer of the battery business in the beginning of April 2017. We aim to transfer the business smoothly through a cross cooperation between both companies.

Next is the pictures segment. Sales for quarter increased 5% year on year, mainly due to an increase in theatrical revenues of motion picture titles. Operating income of JPY3.2 billion was recorded, compared with a JPY22.5 billion loss in the same quarter of the previous fiscal year due to the impact of the increase in sales.

The fiscal year forecast for operating income has been revised downward by JPY9 billion to JPY29 billion. This was primarily due to lower-than-expected theatrical revenue and there was an expected media networks' revenue compared to the level of the July forecast.

The turnaround of motion pictures, the most challenging of the three business categories in the pictures segment, is progressing, but it takes time for the benefit to be realized. And therefore, we believe that there is a possibility that we may not meet the operating income target we gave for the next fiscal year at the IR Day in June. While continuing to strengthen outside of the United States and augmenting IP, we plan to work with a new CFO of Sony Pictures Entertainment, who joined in July, to further enhance its financial discipline.

Next is the music segment. Sales and operating income increased year on year and JPY16.5 billion of operating income was recorded. The performance of Fate/Grand Order, a mobile game application, and of recorded music continued to be strong. There is no change to our sales and operating income forecast for the fiscal year.

Lastly, I would explain the financial services segment. Revenues increased, but operating income decreased year on year and JPY33.6 billion of operating income was recorded. Revenue increased due to the improvement of the investment performance in the separate account of Sony Life, primarily reflecting a rise in the Japanese stock market in the current quarter compared to a decline in the same quarter of the previous fiscal year.

However, the impact of the improved investment performance has a limited positive impact on operating income because the improvement in investment performance is attributable to policyholders.

Operating income decreased year on year, primarily due to the absence of large foreign gains on foreign-currency-denominated customer deposits at Sony Bank since foreign exchange rates were essentially unchanged from the beginning to the end of the currency quarter, while foreign exchange gains were recorded in the same quarter of the previous fiscal year resulting from the appreciation of the yen.

There is no change to the forecast for the fiscal year.

In conclusion, I would like to show the results forecast for each of our business segments. This concludes my explanation. Thank you.

At this point, I would like to open the floor to your questions. Our staff will be bringing a microphone to you, so please state your name and affiliation before asking your questions. And please limit your questions to two each. Now I'd like to invite you to ask questions. Please raise your hand if you have questions.

Thank you. Ayada, Daiwa Securities. About semiconductors and the game business, one question each on those segments. First of all, about semiconductor business. Looking to actual results for the second quarter in image sensors, revenue is up by JPY40 billion compared to the first quarter. And the one-time factors for both first and second quarters, inventory write-downs and the impact of earthquakes, but [PL] has improved only by JPY6 billion or so. So even with the impact from the foreign currency, the profit impact seems small. The unit price has been flat you said, but the -- perhaps the profitability was that in terms of the mix of the programs or are there any other special reasons for this not-so-great improvement in profitability?

And also, I think the current production is 73k per month. The second half, do you have any numbers to the increase in your capacity?

And also, the second question concerns PlayStation 4 in game business. In the second quarter the volume is slightly negative year on year, the unit volume. And your plan is to increase the sales in the second half, but in the second quarter it didn't grow as much. Is it the result of the launch of the new console or is it because of lack of large titles that -- because there'll be significant titles to be launched in the third quarter, so one doesn't have to be concerned about their performance in the third quarter?

Thank you. I will answer your first question and Takeda will speak if there's additional comments. And also, on your second question, Murakami will respond.

So first of all, about the semiconductors business, the profit improvement seems to be small, rather. Also, I think the production also touched upon production capacity.

First of all, about semiconductor business, yes, there's impact of the ForEx market, but this period, we tried to increase sales to the Chinese customers. And in (inaudible) more than custom products, but the general products were sold more.

And also, the impact of the fluctuation of the inventory, I don't have specific numbers, but the inventory peaked in the first half. And our plan is to reduce the inventory afterwards. So the end of the year, the inventory should decline, with a peak having been reached in the third quarter. So there are phases where inventory is built up and there are phases where inventory is reduced and the profitability structure is different depending on these phases.

And on the production capacity, it's a difficult point to answer. But for now, we're actually increasing production because we're receiving good orders and there has been a slight increase in the production. But as to the future what will be our production, well, it's difficult to see what will be the market trend in demand, so we'll take a very cautious attitude. Toward the end of the year, it's likely that we will increase our production.

Regarding your first question, Mr. Takeda speaking, the impact of the ForEx and also fixed costs tends to increase when inventory is being reduced. And indeed, in the second quarter, for certain of the models, JPY9.4 billion of write-down was taken for some of the models' inventories.

On your question about the game business, the growth of the hardware, on September 15 a new PS4 was launched for sale, was launched. And also PS4 Pro will become available in November and therefore the old PS4 model, people didn't buy, waiting for the arrival of the new models. And on September 15, yes, we did launch the new PS4 and the sales are proceeding as we'd expected. So this new PS4, and also PS4 Pro, between the two of them the annual sales would be included in our forecast of JPY20 million and we are not changing this annual volume JPY20 million.

Thank you. Next question. Yes, please.

My name is Nishimura from Credit Suisse Securities. Thank you for inviting. There are two questions. One, for the next fiscal year, the MRP how do you view the mid-range plan. You made a revision on the battery business side because of the transfer of the business battery and expenses associated with it for the next fiscal year more than JPY500 billion or more. Have you changed or have you not changed? The exchange rate is fluctuating and earlier, film -- motion pictures seems to have some difficulties, so are there any variations among the segments.

The second question about games, PlayStation VR is on track you said. The new entertainment, supply new entertainment is important and so much expectation is given to PS4 or PSVR. After you launched this what's your take on the market reception of PSVR? In view of various players can potentially collaborate, this is a new business inclusive of the collaboration of the new business, if you can share the progress being made or any speed at which you are making this progress I would appreciate it very much.

Thank you for your question. The first point is about our take on the next fiscal year's performance by segment, any variations across the segments. Your second question is PSVR games and its prospects. Allow me to answer each, and Takeda and Murakami may supplement my comment later.

First, JPY500 billion or more, we haven't changed that stance. As I said today for motion pictures on the IR day that's the range we announced and there is a risk of deviating from that range, that's why I dare mention this today.

PSVR, the total unit volume I haven't mentioned but we get a very good feeling about this. From the computer graphics to other things such as live actions and if you can expand this there is a potential for the expansion of the applications. And there is a corporate-wide effort being made toward this goal.

Takeda San, any additional comments for JPY500 billion goal?

This fiscal year, because of the earthquakes and the impairment of camera modules and transfer of battery business, so it's one-time expenses that were recorded this fiscal year. But for the next fiscal year, the JPY500 billion target, there is no change about that.

For semiconductor business, we are trying to turn that around. For game and networks and music we are going to grow them steadily. For mobile, we try to achieve the black figures and make it to a more stable growth business. IP&S and HE&S stable resource and stable source of revenue for us. And we are trying to secure stable profit out of these two segments. Thank you.

For PSVR as you know on October 13 we launched this product North America, Europe, Japan, Asia. For every region, very good sales and some of the stores find it low inventory level. The customers gave us very favorable reputations. We haven't disclosed any numbers and figures. Since the launch, the number of units sold is on track. The second half's plan, production plan has been revised upward slightly.

PS4, existing users of PS4 especially core gamers there are so many of them, we would like to expand the client base not only games but we would like to expand it to other areas. So there is a corporate-wide effort on this. How this will turn out, well, together with the developers we would like to increase the sale of VR, but we are too early now to say anything definite at this moment. Thank you.

We are going to take the next question.

Thank you very much for your presentation. I am from Goldman Sachs; my name is Sugiyama. My question is about the pictures and the games. First about the motion pictures. Ghostbusters that was released recently and Inferno, one is classic and the other is fairly more recent franchise picture. Seen from outside the box office revenue is not as high as had been expected. Now you made a statement about the motion pictures earlier. How much of that is due to those two motion picture titles? And also, I think you said you are going to focus on franchises. And, of course, would there be any further revision to your plan by looking at the recent results?

Now about the games you said that focus remains unchanged, but the launch of titles the date might be changed. I think you're referring to Gran Turismo, so I do expect a fairly major negative impact. But you mean you continue to do well on the network side, so the upside of the network I think is significant to offset the other negative factors. Do I understand the picture correctly? Thank you.

Thank you very much for your question. Let me first discuss the motion pictures Ghostbusters and Inferno. You shared your observation. And, of course, I would like to ask Mr. Takeda to supplement. How much of an impact has those two motion pictures had on our forecast? The Ghostbusters did not reach the point that we had expected to reach. But in any case, we will not change our policy to focus on franchise.

The [Tom Rothman] [our CO] is focusing on the augmentation of IP and I think his direction is right, so his policy or direction will be maintained and respected. Since he became the top of the motion pictures he has sent green light signals to some, and we have had expectations on the results that will be delivered next year and thereafter.

The games, the change of the launch date, for certain software titles or title. I shall refrain from not mentioning the monetary impact since we are excluding from our forecast because it will not be launched during this year. In the meantime, PS4 software network have demonstrated power and good momentum. There is a continued momentum in those areas. That is why our forecast remains unchanged.

I'd like to invite another question.

Thank you. Ezawa, Citigroup Securities, two questions please. Your revisions that you've made on your business plans there are several primary causes, reasons and one-time reasons there are some -- excluding those one-time factors what is the actual revision on your performance? Can you give us some thought on that?

According to my understanding, the impact of the earthquakes has been reduced now, so that improved the profit by JPY20 billion or so. And also, if the inventory write-down is also affecting that and also the battery business transfer combining all of these, I think the pluses -- the minuses cancel each other. But you've reduced the forecast to JPY270 billion. How much is really to the deterioration in fundamentals? Can you tell us that?

Another question is about your target to reach JPY500 billion next year. Are there any hurdles, because if you are revising the number as downward there has to be these hurdles? But you are still saying that the JPY500 billion will be achievable. So what are the additional new initiatives that you will be taking to make sure that the original target is still achievable?

The second point is about the regions and the forecast, excluding the one-time factors what is the actual situation the impact on the profitability. And also, the hurdles to achieve the JPY500 billion next year may be now higher, so what are the new initiatives to still being able to achieve that target?

Mr. [Guda] will explain about the first question.

But the challenges the opportunities that are included in others and the corporate eliminations perhaps that should be explained. As we explained this at the previous meeting, we have the JPY45 billion the opportunity challenge included in the other, all other corporate eliminations. But thereafter there has been a smaller impact that we've calculated from the earthquake, so the challenges partially have indeed been achieved.

Therefore, for now the opportunities that we are calculating now is JPY20 billion. Excluding that -- so including those opportunities we'll reach JPY300 billion except that because of the business transfer batteries there is JPY30 billion to be subtracted from that, so that our forecast is now for JPY270 billion.

Regarding your second point do we see higher hurdles before we can achieve JPY500 billion? We don't know. But as we've been saying for some time now, JPY500 billion the profit we only achieved that level of profit 20 years ago back in 1997, only once have we achieved that level. So, yes, the target is a challenging target.

The key point I'd like to say here is that we have to eliminate all the businesses, which are money-losing businesses, so eliminating any loss-making businesses is the key thing that we must do. And there are no supplementary remarks from my colleagues.

Anyone else? Yes, please.

Thank you for the introduction. My name is Miyamoto from Mitsubishi UFJ Morgan Stanley. VRs volume to me looks small. Was it intentional that for the first year you set the volume at a low level or is there any bottleneck that you have for the production increase?

And the shipment for this year if it is set at one for next fiscal year how much more do you think you have the potential to grow in terms of production? It's in a qualitative way if you could answer my question I would appreciate it.

Thank you. PSVR, the volume seems to be low you said. Is it intentional or not? And then our forecast for next fiscal year. Well, PSVR, originally we focused on core gamers, as Murakami said earlier, our target was core gamer to start with. So rather than pursuing the scale or the volume we wanted to provide service to the core gamers first. It's not that we decrease or we intentionally lower the target it's just that our main target clientele is the core gamers.

For the production bottleneck, I do not know any of such. For the next fiscal year, we are in the midst of creating the business plan for the next fiscal year, so allow me to refrain from answering that.

Thank you. I can take the next question.

Ono from Morgan Stanley. I have two questions. First on the mobile, European performance was poor. That resulted in downward revision of the unit sales forecast. But if you apply the foreign exchange simply and excluded that impact, it still suggests that there are some other downside risks.

You talked about Europe but can you talk about the market or sales trends of other regions, give us an update. Now JPY17 million was this you're trying to maintain profitability. I think this will be subject to arguments from the market. So given that can you also update us on what you intend to do?

On the second point, just for the sake of confirmation, semiconductor JPY9.4 billion of write-downs in the semiconductor and yet you still have JPY20 billion of inventory. After the write-down, you believe that the risk for the remaining inventory is limited or you are able to reduce the risk for the remaining inventory.

Thank you for your question. Now your question was on the mobile and about the write-down of the semiconductor inventory. Takeda would also -- would supplement me, but let me in the meantime say -- talk about the unit volume or unit level of the mobile.

JPY17 million was an intended number. Whilst we have not completed the discussion about the medium-term plan but we believe that next fiscal year and thereafter we would be aiming for a higher level for the stability of the earnings or profit. Medium-term plan.

Your question about the regional mobile performance, Japan is the major market. Europe our product lineup was not well received as we had hoped in the market, but Asia and other regions the numbers that we have achieved is not far from what we have assumed. For India, Brazil those markets where we were not making money or there were losses, we have managed to reduce our presence, therefore, there has not been any negative factor from those markets. About the semiconductor inventory, I think there is very limited risk after the write-down of the inventories.

This next one will have to be the last question.

Katsura is my name, SMBC Nikko Securities. About ForEx and also the performance next year, I have two questions. First of all foreign currency situation if I heard you right the impact is negative JPY63 billion. And how much was felt in the second quarter I'd like to ask? And also, has there been any change in terms of ForEx sensitivities because I understand there are some other companies, which experienced such a change in sensitivity terms.

And also about the second year -- next year, this year the battery business and also inventory write-downs and the impact of the earthquake these are one-time impacts, all together it was JPY70 billion or so. Next year one hopes that there would not be such one-time impacts. But if there are any what should we be prepared for? [The mix] has been taken care of I think so there will be no surprises next year, but still if there are any risks of one-time nature.

Murakami will talk about the impact of the ForEx market. But are we contemplating any one-time negative impacts for the next year? As of now, we are not aware of anything. So incorporating all that, we are still expecting or to pursue JPY500 billion.

The ForEx impact particularly regarding the semiconductors, when we talk to JPY63 billion negative year-on-year that was really to semiconductor business [SSS]. And for this year -- sorry for the second quarter the negative impact I said is JPY19.7 billion.

But about sensitivity, there is no change, but with the semiconductors when the dollar is JPY1 stronger, then the impact is JPY3.5 billion. If the yen gets stronger against the dollar by JPY1 the impact is JPY35 billion. Against the euro, there is no significant impact. But for the full entire company what's the sensitivity on ForEx? Well, when the yen gets JPY1 stronger, that's JPY3.5 billion against the euro; when the euro is weaker by JPY1, it's negative JPY5 billion.

But emerging currencies, when emerging currencies go lower, in other words when the yen is stronger against emerging currencies that's a slight negative on us. And also for entertainment and films and the music business when the dollar is stronger by JPY1, it's a negative JPY1.6 billion. So sensitivity in numbers remain unchanged.

Thank you. With that, we will conclude our earnings session. Thank you very much for your visit today.

Statements in English on this transcript were spoken by an interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.