SoftBank(SFTBY) - 2020 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The consolidated results showed a significant impact on EBIT and net income, primarily due to the performance of the SoftBank Vision Fund segment, which experienced a large decrease [9][10] - The net sales remained relatively stable, but the overall EBITDA was dragged down by the Vision Fund's performance [9][10] - The equity value of holdings decreased by ¥500 billion, and net debt increased by ¥800 billion, leading to a total decrease in shareholder value of ¥1.4 trillion since December 2019 [22][23] Business Line Data and Key Metrics Changes - The domestic telecom business reported a 4% increase in revenue and an 11% increase in operating income, marking the highest performance ever [17] - The SoftBank Vision Fund had cumulative investments of ¥8.8 trillion, with a valuation loss of approximately ¥100 billion [11][12] - Eight companies from the Vision Fund went public, generating a gross gain of about ¥150 billion [15][16] Market Data and Key Metrics Changes - The global impact of COVID-19 led to a 90% decrease in travel and a 50% decline in automotive shipments, significantly affecting various sectors [6][37] - The stock prices of major holdings like Alibaba initially dropped but began to recover, indicating a potential return to normal business performance [16] Company Strategy and Development Direction - The company plans to monetize ¥4.5 trillion in assets, with ¥2.5 trillion allocated for share buybacks, indicating a focus on strengthening financial stability [27][71] - The merger between Sprint and T-Mobile is expected to create significant synergies, enhancing the value of SoftBank's equity stake [18][81] - The company is committed to supporting unicorns and new technologies that can thrive post-COVID-19, emphasizing a shift towards online services and digital solutions [41][90] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unprecedented crisis caused by COVID-19, comparing it to the Great Depression and emphasizing the need for cautious management [5][26] - There is an expectation that some unicorns will successfully navigate the challenges posed by the pandemic, with a belief in the long-term growth potential of the remaining investees [42][98] - The management remains optimistic about achieving a blended IRR of 20% in the long term, despite current challenges [104][112] Other Important Information - The company has implemented measures to ensure a loan-to-value ratio below 25% as part of its financial discipline [29] - There is uncertainty regarding dividends for fiscal 2020, with management indicating that the amount may be adjusted based on financial needs [30][32] - The company has been actively involved in social contributions by supplying medical equipment at cost during the pandemic [33][35] Q&A Session Summary Question: How does the company view new investments for Vision Fund in the current fiscal year? - Management indicated that new investments for Vision Fund 1 are no longer being pursued, but they will continue to invest using their own funds for Vision Fund 2 [50][51] Question: Is the Vision Fund considered a failure due to its negative performance? - Management stated that while there have been losses, the overall performance relative to market declines has not been as severe, suggesting a nuanced view on the fund's success [59][60] Question: What measures are in place to manage potential valuation losses in the Vision Fund? - Management emphasized a conservative approach to evaluating potential losses, utilizing third-party assessments and maintaining a cautious investment strategy [92][94] Question: How does the company plan to compete in the current investment landscape? - Management highlighted the importance of recycling proceeds from successful public companies to fund new investments, while also focusing on maintaining a strong market position [70][72] Question: What is the outlook for the company's governance and board structure? - Management confirmed plans to increase the number of independent directors to enhance governance and ensure robust decision-making processes [106][109]