索尼 (SONY) 2016 Q4 法說會逐字稿

Ladies and gentlemen, at least -- at this time, we'd like to begin this session, the earnings announcement and earnings announcement for fiscal '16.

I'd like to thank you very much for being with us despite your busy schedules.

I'd like to introduce our presenters: first of all, Kenichiro Yoshida, Executive Deputy President and CFO; and Corporate Executive in-charge of Corporate Planning & Control and Accounting, Kazuhiko Takeda.

We have Senior General Manager and Corporate Communications and CSR, Atsuko Murakami (sic) [Shiro Kambe]; corporate deputy -- Finance and Corporate Development, Atsuko Murakami.

And Mr. Yoshida will make the presentation, to be followed by question-and-answers.

And altogether, we plan to spend 45 minutes.

Thank you.

My name is Kenichiro Yoshida, CFO.

Good afternoon to you.

And I'll be spending about 20 minutes discussing these 2 topics.

Consolidated sales in fiscal '16 decreased 6% year-on-year to JPY 7,603,300,000,000.

Consolidated operating income declined 2% from the previous year to JPY 288.7 billion.

And income before income taxes decreased 17% to JPY 251.6 billion.

Net income attributable to Sony's stockholders decreased 50% to JPY 73.3 billion mainly due to the fact that goodwill impairment charge recorded in the Pictures segment during the year could not be deducted for tax purposes.

And this chart shows the consolidated results for the fourth quarter of fiscal '16.

As previously announced, we recorded a JPY 37.2 billion gain on the sale of certain shares Sony held of M3 during the quarter.

This chart shows the results of each segment for the fiscal year.

This chart shows the results by segment for the fourth quarter.

And this is the first time in the 19 years -- in 19 years, since the fiscal year ended March 31, 1998, that we recorded an operating profit for the total of the 6 Electronics segments in the fourth quarter.

One issue for the management was this fact that we consistently recorded a loss in Electronics in the fourth quarter, so I am pleased to see that we have made some progress in this area.

Next is the consolidated results forecast for fiscal '17.

And as is shown here, we expect consolidated sales to increase 5% year-on-year to JPY 8 trillion.

And operating income will be 7% (sic) [73%] up to JPY 500 billion.

We expect net income to be JPY 255 billion, which is about 3.5x the level of the previous year.

And we believe that we can achieve the targets we set in February 2015 for our current midrange plan, namely 10% or higher ROE and JPY 500 billion or more in operating income.

The assumptions for foreign exchange rate is JPY 105 to the U.S. dollar and JPY 110 for the euro.

The amount of dividends for fiscal '17 is undecided at this time.

And we plan to determine the amount of the interim dividend at the time of the first quarter earnings announcement.

We're changing the composition of some of our segments in fiscal '17.

In the Components segment, we plan to transfer the batteries business, and the part of that business that will be transferred accounts for about 60% of the sales of the segment.

And since we are aiming to complete the transfer of the business in July, we will eliminate the Components segment, starting in fiscal '17.

And the remaining businesses, including storage media business, will be moved to All Other segment.

And the fiscal year results forecast for each segment are shown on this slide.

We are basically using the figures budgeted by respective segments, but I would like to make some caveats at this point.

As is shown in the upper right, we used JPY 110 to the U.S. dollar and JPY 150 (sic) [JPY 115] to the euro when formulating the forecast for each business segment.

Now there is an -- some JPY 40 billion negative impact on operating income because of the difference in currency rates used compared to JPY 105 to the dollar and JPY 110 to the euro which we used in the calculation of the consolidated forecast.

And this impact is included in the Corporate and eliminations line.

And fiscal year '17 is the final year of our current midrange plan.

As our President, Mr. Hirai, has mentioned previously, we believe it is very important -- it is a very important milestone for Sony to achieve these current midrange targets.

In April, we split the image product and the solution segment into a separate subsidiary, completing a plan to convert our business units into distinct subsidiaries.

We believe that creating separate subsidiaries will increase the organizational independence of our various businesses.

Because each independent business sets reasonably high targets in an effort to achieve our midrange targets, we have incorporated a contingency budget of about JPY 40 billion into the Corporate and elimination line, in addition to the JPY 40 billion foreign exchange impact I mentioned earlier.

And I will now explain the current situation of each segment.

First, I will talk about the Mobile Communications segment.

During fiscal '16, sales decreased 33% year-on-year primarily due to a larger-than-expected decrease in unit sales of smartphones, mainly in Europe; and a significant reduction in the size of the business in unprofitable regions.

Operating results improved JPY 71.6 billion year-on-year to operating income of JPY 10.2 billion largely due to operating cost reductions, including the benefit of lower costs resulting from restructuring initiatives implemented since the second half of the fiscal year ended March 31, 2015, despite the negative impact of a decrease in unit sales.

Here you can see the operating results improvement over the past 3 fiscal years.

For fiscal '17, we expect to increase our annual smartphone unit sales by 1.9 million year-on-year, mainly in the Middle East and Europe, to 16.5 million units.

Sales revenue is expected to increase 8% year-on-year to JPY 820 billion.

We believe the operating environment for the smartphone business will become even severer compared to the previous fiscal year due to the headwind of foreign exchange rates and an increase in the price of key components such as memory.

However, we are aiming to record operating income for the segment overall for the fiscal '17 as well.

Next I will talk about the Game & Network Services segment.

Both sales and operating income increased year-on-year, and operating income was JPY 135.6 billion.

Network sales increased 35% year-on-year and continued to lead the growth of the segment.

PS VR and PS4 Pro, which went on sale last fall, both continue to sell well, which demonstrates the achievements we made when launching new products in fiscal '16.

In fiscal '17, we expect to increase both sales and operating income of the segment.

And the forecast for operating income is expected to be JPY 170 billion, primarily due to an increase in the network sales.

3.5 years have passed since the launch of PS4.

And we expect annual unit sales in fiscal '17 to decrease year-on-year to 18 million units, but some major software titles are scheduled to be launched, and we believe we are in the harvest phase of the platform.

Next I will explain the Imaging Products & Solutions segment.

In fiscal '16, sales decreased by 15%, and operating income decreased JPY 22.1 billion year-on-year to JPY 47.3 billion.

Although the negative impact from the Kumamoto earthquakes that occurred in April last year was offset by an improvement in product mix and cost reductions, operating income still decreased significantly year-on-year due to the large negative impact of the stronger yen.

In fiscal '17, we expect to increase both sales and operating income primarily due to an improvement in product mix.

JPY 60 billion of operating income is expected.

Of this operating income, approximately JPY 2.6 billion is expected to be recorded from insurance recoveries for opportunity loss from the Kumamoto earthquakes.

As I mentioned at the beginning of my remarks, Sony Imaging Products & Solutions Inc.

began operating as a separate subsidiary on April 1 this year.

Next is the Home Entertainment & Sound segment.

In fiscal '16, although sales decreased 10% year-on-year, partially due to the impact of foreign exchange rates, operating income increased JPY 7.9 billion to JPY 58.5 billion primarily due to an improvement in product mix.

The television business which is included in this segment had a significant improvement in profitability and an increase in the stability of this -- its earnings, unlike the past.

In fiscal '17, we expect to record JPY 58 billion of operating income, especially flat year-on-year even though the volatility of the business environment continues to be high, including from such things as panel prices and foreign exchange rates, especially in the emerging market currencies.

Next I will talk about the Semiconductors segment.

In FY '16, sales increased 5%.

And operating results deteriorated JPY 22.3 billion year-on-year to an operating loss of JPY 7.8 billion.

Factors contributing to the deterioration were a JPY 43.7 billion negative impact of the appreciation of the yen; and approximately JPY 28 billion of net negative impact of the Kumamoto earthquakes, after taking into account positive insurance recoveries.

On the other hand, there were positive factors, including a year-on-year increase in unit sales of image sensors for mobile products and a decrease in impairment charges against long-lived assets in the camera module business.

In the end, there was a significant deterioration of operating results year-on-year.

In FY '17, we expect a significant increase in sales and a significant improvement in operating results.

The sales forecast is JPY 880 billion, and the operating income forecast is JPY 120 billion.

The JPY 120 billion operating income includes a JPY 27 billion gain on the sale of a Chinese factory in the camera module business, which was announced at the beginning of this month.

In addition, we expect to record approximately JPY 6.7 billion of insurance recoveries from the Kumamoto earthquakes.

Therefore, excluding these factors, the underlying operating income of the segment is estimated to be approximately JPY 86.3 billion.

In FY '17, we expect to record JPY 130 billion in additions to long-lived assets of the segment, of which JPY 110 billion is expected to be for image sensors, reflecting the strong demand for image sensors.

We plan to increase our image sensor production capacity from the current 88,000 wafers per month up to approximately 100,000 wafers per month by the end of March of 2018 on a 300-millimeter wafer basis.

And this will be primarily in the Kumamoto (sic) [Oita] plant.

Now I would like to use this graph to share with you the breakdown within the Semiconductors segment, as I did at the last earnings announcement.

The way we break down the results has changed slightly.

We now have image sensors, camera modules and others.

This chart shows the quarterly results of the last 2 years.

And this chart shows the fiscal year results of the last 2 years as well as the forecast for FY '17.

As to image sensors, profitability decreased significantly in FY '16, but we are forecasting a significant improvement in profitability for FY '17 due to an increase in unit sales resulting from a greater adoption of dual-lens cameras and the growth in sales to Chinese manufacturers, as well as the absence of the impact of Kumamoto earthquakes.

Next I will discuss about the Components segment.

In FY '16, sales decreased 13%, and a JPY 60.4 billion operating loss was recorded.

The operating loss included JPY 42.3 billion of loss related to the planned transfer of the battery business.

As of October 2016, we said that a loss of approximately JPY 33 billion was expected to be incurred related to the transfer, but the loss amount increased due to adjustments, including the impact of foreign exchange rates, made to the book value of the assets subject to transfer.

We are continuing to prepare for the transfer of the battery business to Murata Manufacturing Co., Ltd., which is expected to be completed in the beginning of July.

As I mentioned at the beginning of my remarks, the remaining business, such as storage media, would be included in All Other from FY '17.

Next I will talk about the Pictures segment.

Sales decreased 4% in FY '16 due to the impact of foreign exchange rates.

On a U.S. dollar basis, sales increased 5%.

An operating loss of JPY 80.5 billion was recorded mainly due to the recording of a JPY 112.1 billion impairment charge against goodwill in the third quarter.

In FY '17, we expect significantly higher sales due to an expected increase in sales of Media Networks and Television Productions.

Operating results are expected to improve significantly primarily due to the absence of the impairment incurred in the previous fiscal year, and operating income of JPY 39 billion is expected to be recorded.

If we exclude the impact of the impairment charge incurred in FY '16, operating income is expected to increase JPY 7.4 billion year-on-year.

As was previously announced, we are currently searching for a successor to Michael Lynton, who is leaving Sony Pictures after having led that business for 13 years since 2004.

We plan to announce the successor as soon as we make a decision.

Next I will talk about the Music segment.

In FY '16, sales increased, but operating income decreased year-on-year and JPY 75.8 billion in operating income was recorded.

The decrease in operating income was mainly due to the absence of an JPY 18.1 billion remeasurement gain resulting from the consolidation of Orchard Media, which was recorded in the previous fiscal year.

This fiscal year, the performance of Fate/Grand Order, a mobile gaming application, was very strong and a significant contributor to the operating results of the segment.

As for FY '17, sales are expected to decrease slightly, and operating income is expected to be essentially flat year-on-year at JPY 75 billion.

Next is the Financial Services segment.

In FY '16, Financial Services revenue and operating income increased year-on-year, and JPY 166.4 billion operating income was recorded.

The year-on-year increase in operating income was mainly due to the decreases in amortization of deferred insurance acquisition costs and the provision of policy reserves, primarily driven by the increase in interest rates and the improvement in the stock market at Sony Life.

We expect to increase financial service revenue and operating income in FY '17, and we expect to record JPY 170 billion in operating income as a result of the expansion of insurance amount in-force.

In conclusion, I will show the results forecast for each of our business segments.

Please note that, in order to enhance our disclosure, we have included an analysis of cash flows for Sony excluding the Financial Services segment on Pages 20 to 21 of the handout.

Cash flow is an important metric for management.

I hope that you have a look at this.

We also recently announced that we plan to hold a corporate strategy meeting and an IR Day on May 23.

This concludes my remarks.

Thank you.

We will now proceed to "questions and answers" session.

And staff will be bringing a microphone to you.

Please identify yourself with your name and affiliation before you ask your questions.

And please limit your questions to 2 each.

So please raise your hand if you have questions.

Ono, Morgan Stanley.

Two points, please.

First of all, about game and networks.

This is forecast for this fiscal year.

Sales increase by JPY 250 billion (sic) [JPY 240 billion].

Operating income also will be up by about JPY 35 billion, so compared to the previous years, the improvement in margin-and-profit ratio is -- seems to be lower, but is this because network business is the biggest profit contributor?

And also, regarding Network Services, is it still in the investment phase fiscal '17 and so this is not yet a normal sort of a business situation?

And second point has to do with the Semiconductors business.

You explained this earlier, onetime gains, onetime profits were there.

Excluding them, it's JPY 86.3 billion this year, it's going to be.

And sales -- divided this by sales, then OP margin is calculated at 30 -- less than 10%.

So consider this level -- the level of profits, are we to understand this is a sustainable level?

Or will there still be more of development investments so that there's room for the rise in the profit margin going forward?

Thank you.

Your first question, so about Game & Network Services, profit growth is less than the sales growth.

And why is that?

And also there is a question about investment.

I will be making some comments, but Murakami-san will also be -- make comments as well.

And second question was about Semiconductors, by the way.

So on your first point, the Network business growth, we have the gross figures so the margin tends to appear lower.

And special circumstances you mentioned, well, the network business is a profit driver now, and that's how we see it, but some of the services, such as PlayStation Vue, they're still in the investment phase.

Murakami-san, any additional comments?

Yes.

This year, the target is JPY 170 billion.

As we achieve this, this will be record profit in the game business, the highest ever.

So JPY 170 billion is a reasonable, acceptable level, but Network Services, the growth, it will be slowing down, we expect.

Because this year, network business, in fiscal '16, the growth was at 35% -- or 50% growth, actually, [on] top of this calculation, but we expect this growth to slow down.

And also, the Forex will be a headwind.

It will be working against this business.

And as Mr. Yoshida said, the accounting method applicable to the Network business, in other words, the Game business, once you buy the games, they're recorded as a sales revenue.

So if you took sales and operating income, it's not always that both of these numbers grow proportionately together.

On Semiconductors, the OP margin of slightly less than 10%, how we stand on that level.

In the last few years, there has been high volatility associated with this business, given that, raising the margin further.

Well, now that semiconductor business is an independent subsidiary, it will be an urgent objective for this company.

I mean this is the company that has to pursue and go after even higher margins.

And that's why the management of this new company SSS is implementing all kinds of initiatives and actions to be able to achieve that.

Thank you.

Next question?

Yes, I see a person sitting in front of the first one who asked questions.

My name is Ezawa, from Citigroup Securities.

2 questions.

Both of them are related to JPY 500 billion of operating income according to guidance.

One, actual earnings and this fiscal year's guidance, there are one-off factors, but excluding the one-off factors, for Sony operating income is not increasing rapidly, according to your guidance.

So your recognition as the management is that in the actual operating income, from which level to which level are you anticipating?

If you could give me numbers and figures, I would appreciate it very much.

Second, JPY 500 billion is a target that you have been upholding.

And the equity market has an expectation, and it has discounted that into the market.

And the investors, many investors are expecting something beyond JPY 500 billion target.

Maybe it doesn't have to be numbers, but what kind of things, the initiatives beyond JPY 500 billion?

I am sure you have been saying this at the IR meeting, but at this moment, JPY 500 billion is not a goal but a starting point.

If you could just substantiate this, I would appreciate it very much.

First question, operating income excluding onetime factor.

I will ask Takeda-san to answer this.

As you rightly pointed out, in fiscal '16, a one-off factor, but it had major items of about JPY 180 billion worth.

Therefore, operating income of JPY 290 billion, plus JPY 180 billion, that's JPY 470 billion.

That is closer to JPY 500 billion.

For each segment, the high standard has to be upheld for operating income.

It's not just a simple sum of all targets.

We feel that we have to look at the foreign exchange rate and also the business environment.

JPY 500 billion still is the target we uphold for this fiscal year.

Now JPY 500 billion includes the sales of the camera modules.

This is a one-off.

So the real basis, you have to exclude this in order to come up with the real basis.

Do you agree?

Yes.

Now second, what lies beyond JPY 500 billion?

In the strategy -- Corporate Strategy Meeting in the 23rd -- on the 23rd of May, there will be such meeting.

By 2020, for the third MRP, next year's Corporate Strategy Meeting at the earnings release will be the forum for the announcement.

The keyword going forward, as Mr. Hirai said, recurring is the keyword, discipline of the management.

In addition to ROE, cash flow have to be looked on.

In any case, in the previous meeting, I think it was 1997, there was the record profit.

And then from the next year onwards, for 4 consecutive years, there had been the decline in the profit.

So the keyword that Hirai said, recurring is so important from this perspective as well.

We will go to this side.

My name is Nakane, from Mizuho Securities.

I have 2 questions.

First is on FX sensitivity for the entire company and by segment.

What is your outlook or forecast?

And the second question is rather vague.

I think you have completed this exercise of splitting and having all the subsidiaries becoming independent, but there were pros and cons about this exercise.

There is a possibility of that it would have the silos again.

And which area will you put so much focused?

Because I don't think you have the total optimization yet.

So what is your regional strategy?

And how do you minimize this potential risk of making silos again?

Thank you.

On the FX sensitivity, Ms. Murakami would respond.

For the entirety, if there is a move of JPY 1, there is a plus of JPY 3.5 billion.

And for the euro, stronger yen and weaker yen will translate into JPY 5.5 billion.

Emerging market weakening is to the negative.

The [$1] weakening of the dollar would mean JPY 1 billion of change.

Is dollar and euro [Mobile] dollar?

Your assumption is stronger yen.

Mobile is plus 2.5; euro, minus 1.5.

Network service is 3.5 billion for dollars and minus 3.5 for the euro.

IP&S, minus 500 million for dollar; and for the euro is the same.

[HS] is plus 3 billion for the dollar and minus 1 billion for the euro.

Under -- it's minus 4.5 billion for the dollar; and for euros, some negative impact.

About the fear or the possibility of creating silos as a result of the split-out of the segments and making subsidiaries and also the original strategy: I think what you say is valid.

There is such a potential risk, but it's not a question of whether they are subsidiaries or they have split out but whether -- I think the key is whether the management is engaged in good communication.

Mr. Hirai is at the core of the management team.

And within the top management team, there is a good communication.

But we always have to challenge and ask ourselves, "What are the some of the things that the subsidiaries can work collectively to generate some benefits?

Maybe procurement is one idea, so horizontal collaboration.

Or that working benefit is always being pushed for.

And [Tamagawa] and Takagi are looking at the strategies, but what will be the strategy of a certain region, for instance, India?

It's not just in AV, but we will also look at the entertainment.

And the country strategy is something that we must really look at very seriously and firm up that plan.

And this is something that we will have to address in the coming future.

Ayada, Daiwa Securities.

Semiconductors and the game businesses managed.

And as far as semiconductor is concerned, you talked about CapEx, capacity increase, but rate of utilization and also unit price, I'd like to ask questions about rate of utilization in January, March period.

The previous meeting -- I think you were producing 80k, 80,000, units.

That was your plan, but was that an actual result.

And also, in the first half, what's the level of your production?

And also -- that's the question about the rate of operation, but unit price, your top of your plan assumed that the dollar price will decline by 10%, but actually it didn't happen.

The price did not come down, I don't think.

So this year, what's your assumptions about the unit price development for the year?

Or saying differently, the proportion of the customized sensors, what will be the profitability of your customized sensors?

That's my question on Semiconductors, but for the game business, you've talked about PS Vue, that it's still in the investment phase.

And since you started this business, the competitive landscape has changed considerably.

I believe YouTube TV, for instance, has appeared most recently, so compared to the previous conditions, the level of expectations in this business might have changed.

Do you still believe that there is a winning chance for this business?

Again because you say this is still investment stage, when will be the target time line that this business will start to contribute to the profitability?

So first question, on Semiconductors.

Your second point was about the game business, particularly PS Vue.

So the first point, about the unit price and rate of utilization and also the unit price development for this year, Takeda-san?

First of all, rate of utilization of our facilities.

In the master, unit number is what we indicated previously.

And in the fourth quarter, it was 80k, 80,000 units, but actually we had 84k.

We produced 84k of masters.

And in the first quarter this year, the production has increased.

So in terms of master production, it's -- we had a full production mode.

And about the unit price, unit price situation, the level we had at fiscal '16, end of fiscal '16, was kept in the first quarter.

And the second quarter and beyond, the proportion of customized products will rise.

Therefore, the unit price is in -- on the upward trend.

Your second point, well, basically we have MRP -- PS Vue is looked at as a part of our midrange plan longer term.

So we would like to see growth in user basis, but basically the gaming sets will be the core customers that we would like to capture more, greater use by the users and for instance by offering OTT services, the OTT, the multichannel service.

We have to improve the recognition level of such multichannel services that we are offering them.

When they will start to contribute to the profitability, I mentioned that earlier but also the ad business to be run on PS Vue or the more efficiency to be added to operations and cost optimization by making these efforts that can maximize the profitability of business.

Comparison against the competitors, it's difficult for us to comment on competitive situation, but in terms of popular channels and multichannels and simultaneous streaming, some of the services that are not found to be presented by the competitors; and ease of use, for instance, is high quality of service which is all appreciated by the existing users.

So we will try to maximize these advantages that we find to increase the number of the users going forward.

Yes.

The next one, yes?

My name is Kasta, from SMBC Nikko Securities -- my name is Katsura.

I have questions about semiconductor and games as well.

Semiconductors, your concept on Slide 12, the CapEx is slightly exceeding the amortization compared to 2 years ago.

Discipline is exercised.

Now the assumption for this, what is your assumption on this semiconductor?

Why have you decided on this amount of investment?

For example, dual-lens cameras proportions, so -- or large customers' proportions.

Could you just give me some comments on your assumptions?

When you say 100k, what is the proportion of external sources?

What is your view on the risk management?

Second, about games, according to the slide, network sales is the driver.

At the same time, PS4's unit -- sales unit is expected to decline.

So were there are other hardwares as well?

So from outside, it's difficult to know, but hardware sales, is it going to increase or decrease?

What's your assumption?

What I want to ask you is that, from next fiscal year onwards, when you have the -- when you think of the performance, I'm sure on our IR Day details will be given, but say, profit, according to the normal cycle, this will be the peak.

So going forward for the next 3 years, do you have any ideas to give us inspirations for predictions?

Semiconductors and games.

For the second question, Murakami will answer, about the games.

For semiconductor, as you said, compared to 2 years ago, discipline is exercised more effectively, as you said.

The background of why we came to this number for investment is that, in order to survive in this business, we have to manage risks, but on the same time, the stable supply has to be provided.

As you know, requests for capacity and the requests for volume has been on the increase from last year.

Volatility is quite high when we see ups and then next we'll see downs.

So you -- we accumulate a track record, so far, so we have some ability to predict.

But the major trend, as you rightly said, is that the dual lens impact is so big.

And from the high functionality, another is the video functions -- demand for video function, we are good at it.

So we feel that demand is on the increase.

That's our assumption at this moment.

On the other hand, risks have to be minimized.

So we need to work with the foundry partner, balancing risks and stable supply.

On this, we make decisions and came to the CapEx numbers for the -- this fiscal year.

And 100k capacity was determined in that manner.

Second question, about the game.

This year, FY '16, is to 20 million; and then FY '17, 80 million.

That's the plan.

PS4, this is the fourth year since launch.

The peak of the past platforms came 3 or 4 years after the launch.

So PS4 should not be an exception, in our view, but installed base -- or the sales units, sorry, sales units.

If we reach 80 million this year, the accumulation -- accumulated number will be 78 million.

So we need to capitalize and leverage on this base for software sales.

We need to promote software business and network businesses so that we can expand the profit.

For hardware, the peak, according to the normal cycle, hardware peaks will be the same year -- the next year in profit.

And software peak will come, according to the conventional cycle, so we don't feel that there will be a major diversion from this trend.

For software, this is the season for harvest, and we would like to promote the steady business going forward.

When the network service grew, that means that the -- this is different from the past business practice.

And in the console cycles wave in the past, if you look at it, well, we cannot eliminate volatility, but after the peak, the volatility of the performance should be minimized to stabilize the profit foundation or base.

That's important.

We have very little time left.

I'm afraid I can only accommodate one question.

Lady in this middle block.

Nishimura, from Crédit Suisse.

Risk buffer of JPY 40 billion, the thought behind us?

In each segment of the business, they have set up a very challenging target.

Now of course, as we have just begun this fiscal year, what are some of the segments that are doing well or the other segments where they are feeling the hurdle to be a little too high?

In terms of the risk buffer, for FY '17, Mr. Hirai is encouraging each [Hirai] to achieve their targets, the stretch targets.

And each segment is working very hard to realize these high goals.

I don't -- I would like to refrain from identifying particular areas of risk.

Well, thank you.

With this, we would like to close this briefing.

We thank you for your kind attendance.