Sony Group Corporation (6758) Earnings Call Transcript & Summary

The time has come to begin FY 2023 financial results announcement of Sony Group Corporation. I am Okada from Corporate Communications. I'll be serving as master of ceremonies today. Let me introduce the people on the stage. First, Hiroki Totoki, President, COO and CFO; Naomi Matsuoka, Senior Vice President, Executive Officer in charge of Corporate Planning and Control, lead of Group DE and high promotion and support for finance and entertainment area; Hayakawa Sadahiko, Senior Vice President, Executive Officer in charge of Finance and IR. These three will be explaining the results of FY '23 and forecast for FY '24 and fifth midrange plan. After that, we are going to have Q&A. A total of 80 minutes is allocated. Now Mr. Totoki, the floor is yours.

Today, I will explain this content. Matsuoka and Hayakawa will talk about our results for FY '23 and our result forecast for FY '24. And I will talk about the fifth midrange plan, which started this fiscal year. Hayakawa-san, please go ahead.

Thank you. FY '23 consolidated sales were JPY 13,020.8 billion, a new record high. Consolidated operating income was JPY 1,208.8 billion. Net income was JPY 970.6 billion, and consolidated adjusted EBITDA was JPY 1,880 billion. Furthermore, the JPY 229.4 billion in consolidated operating income for the previous quarter was the highest ever for a fourth quarter. Due to the partial spinoff of our Financial Services business, which is scheduled for October 2025 from this earnings announcement, we are also showing other figures without the Financial Services segment. On a consolidated basis, excluding the Financial Services segment, sales were JPY 11,265 billion. Operating income was JPY 1,335.3 billion, and operating cash flow was JPY 1,177.8 billion. The performance by segment for FY '23 is shown on this slide. Next, I will explain our consolidated results forecast for the full FY '24. Our full year forecast is sales of JPY 12,310 billion, operating income of JPY 1,275 billion and net income of JPY 925 billion. On a consolidated basis, excluding the Financial Services segment, sales are expected to be JPY 11,400 billion and operating income is expected to increase 9% year-on-year to JPY 1,130 billion. The forecast for consolidated operating cash flow, excluding the Financial Services segment, is JPY 1,400 billion, a significant increase of 19% year-on-year. The full year forecast by segment is shown here. Now I will move on an explanation of the overview of each business. First is G&NS segment. FY '23 sales increased a significant 17% year-on-year to JPY 4,267.7 billion, mainly due to increased third-party software sales and the impact of foreign exchange rates. Operating income increased JPY 40.2 billion year-on-year to JPY 290.2 billion, mainly due to the increased sales. Operating income for the previous quarter was JPY 106 billion, a new record high for the fourth quarter in this segment. The FY '24 forecast for sales is JPY 4,200 billion and operating income is JPY 310 billion. We expect acquisition-related expenses, including expenses related to the acquisition of Bungie, Inc for this fiscal year to be approximately JPY 52 billion, a decrease of JPY 17 billion year-on-year. PlayStation 5 sales in the previous quarter totaled 4.5 million units, and in the full FY '23, 20.8 million units. As of the end of March, cumulative unit sales of PS5 reached 59.2 million units, approaching the 60 million cumulative units sold of the PlayStation 4, which had undergoing price cuts of a total of USD 100 in the same period since its release. We expect PS5 sales for this fiscal year to be approximately 18 million units. In terms of software, the live service game, Helldivers 2 released in February, has been a hit that far exceeded expectations with cumulative sales for both PS5 and PC in 12 weeks since its release to the beginning of May, reached 12 million copies, surpassing the record set by God of War Ragnarök in the same period after its release in 2022. The game has become our biggest PC-ship title to date, and as a multi-platform title, it also contributed significantly to sales and profit last quarter. Following this success, we are looking forward to the release of live service games such as the expansion content, Destiny 2: The Final Shape, which is expected to be released by Bungie on June 4 and Concord, which is scheduled to be released this year by Firewalk Studios, which we acquired in 2023. Thanks primarily to the growing iteration of PS5 as well as the success of Helldivers 2 and third-party free-to-play titles, the number of monthly active users across PS in March remained high at 180 million accounts, up 9% year-on-year. Total play time on PS in the month of March increased 15% year-on-year. And for the entire fourth quarter of the FY '23, it reached the second highest level in history, second only to the fourth quarter of FY '20, which benefited from significant stay-at-home demand due to the pandemic. Looking at the console cycle, we think that the PlayStation business model has changed significantly since the launch of the PS4. The business model up to and including the PlayStation 3 was focused on increasing the number of software units sold in relation to newly sold hardware for each console generation. After a transition period during the PS4 generation, the PS5 model has shifted to one where playtime on the platform has increased due to expansion of the user community beyond console generations. Due to this change in business model, during the PS4 generation, we were able to significantly grow profits in this segment, thanks to rapid digitalization and the expansion of network services. In the PS5 generation, which has capitalized on the established PS4 user base, the trend is hard to see due to the impact of stay-at-home demand and acquisition-related expenses. But since the launch of the PS5, we have continued to achieve a high level of a more stable profit growth. As we enter the second half of the console cycle, we expect the number of new PS5 units sold to gradually decline. However, by steadily maintaining and expanding the consistently increasing number of active users and user engagement while also strengthening control over business costs, we believe that we will be able to steadily increase sales and profits from the PS platform going forward. In addition to the stable earnings base on the PS platform, we are aiming to grow sales of first-party software, which we have been actively strengthening in recent years. And by doing so, we plan to achieve a new record high in profits in this segment during the fifth midrange plan. Next is Music segment. FY '23 sales increased a significant 17% year-on-year to JPY 1,690 billion, mainly due to increased streaming sales and the impact of foreign exchange rates. Operating income increased JPY 38.6 billion from the previous fiscal year to JPY 301.7 billion, mainly due to increased sales, setting a new record for this segment for the fourth consecutive year and being the highest among our 6 business segments as was the case last fiscal year. The FY '23 profit contribution from visual media and platform accounted for approximately 10% of the segment's operating income. The FY '24 forecast for sales is JPY 1,690 billion and operating income is JPY 315 billion. Streaming revenue in the previous quarter continued to grow on a U.S. dollar basis with both Recorded Music and Music Publishing, each increasing 11% year-on-year. In terms of Recorded Music, an average of 31 songs were ranked in the top 100 on Spotify's weekly global song rankings for the whole of FY '23. Moreover, Beyoncé's new album, Cowboy Carter, released on March 29, has become a hit, ranking #1 in the U.S. album chart immediately upon its release. Streaming revenue in Music Publishing has grown significantly with a CAGR of 38% over the 4 years since FY '20, thanks to an expansion of opportunity to monetize our music catalog, which have been available for a certain period of time. We have been strengthening our music catalog since making EMI Music Publishing a wholly owned subsidiary in 2018, and the number of songs we managed at the end of March was approximately 6.24 million, an increase of 1.7x over the past 10 years. We also maintained the top global market share in Music Publishing. The value of music catalogs as IP assets is expanding significantly, and we intend to further expand the monetization opportunities of these IP assets, primarily by maximizing synergies between the entertainment businesses. Next is the Pictures segment. Although there was a decrease in the number of television program deliveries, FY '23 sales increased 9% year-on-year to JPY 1,493.1 billion due to an increase in the number of theatrical releases and the impact of foreign exchange rates. Operating income was JPY 117.7 billion, essentially flat year-on-year. This was primarily due to an increase in marketing costs resulting from the increased number of releases, offset by the impact of the increase in sales. Our FY '24 forecast for the sales is JPY 1,480 billion and operating income is JPY 120 billion. The negative impact on the profitability of the Hollywood strikes in FY '23 is estimated to have been approximately JPY 118 billion caused by changes in the film release schedules and delaying the delivery of the television programs. We believe the negative impact of the strikes and on profitability will peak in FY '24, and we have incorporated approximately JPY 34 billion as the impact into the full year forecast. Regarding Crunchyroll, we are expecting it to contribute even more to the operating income of the entire segment due to the sales growth, primarily from an increase in the global plan subscribers and overseas distribution of anime products as well as reduced amortization expenses associated with the acquisition. In Motion Pictures, we have plans to release major titles in FY '24, such as the sequel to the popular Bad Boys franchise, Bad Boys: Ride or Die as well as new titles from the Sony Pictures Universe of Marvel characters, Venom: The Last Dance and Kraven the Hunter. Next, the ET&S segment. FY '23 sales were JPY 2,453.7 billion, essentially flat year-on-year. This was mainly due to a decrease in the unit sales of televisions, offset by an impact from the foreign exchange rates. Operating income increased JPY 7.9 billion year-on-year to JPY 187.4 billion, mainly due to the favorable impact of foreign exchange rates and the benefit of the cost reductions despite the impact of lower sales in televisions. Our FY '24 forecast for sales is JPY 2,370 billion and operating income is JPY 190 billion. In FY '23, the digital cameras and interchangeable lenses generated increased sales in operating income, thanks to enhanced product appeal, and televisions and mobile communication reduced costs, enabling the entire segment to achieve a level of operating income that exceeded FY '22 results and our projection at the beginning of FY '23. Moreover, full year operating cash flow was JPY 322.8 billion, the largest amount our 5-year business segment, excluding the Financial Services segment due to improved profitability and significant inventory reductions mainly in television. The market for interchangeable lens and mirror-less cameras, which is the main source of our sales and profit for this segment, showed a strong growth in the previous quarter, mainly in China and Japan and has continued to remain strong since April. We expect this market growth to gradually decelerate from the second half of this year -- this fiscal year onward, but we believe this will remain stable going forward. Next, the I&SS segment. FY '23 sales increased a significant 14% year-on-year to JPY 1,602.7 billion, mainly due to increased sales of the image sensors for mobile products and the impact of foreign exchange rates. Despite the impact of increased sales, operating income decreased JPY 18.7 billion year-on-year to JPY 193.5 billion, mainly due to an increase in expense, including depreciation and amortization expenses. Our FY '24 forecast for sales is JPY 1,840 billion and operating income is JPY 270 billion, which would be a record high for this segment. In the current smartphone product market, while unit sales in the previous quarter in China slightly exceeded the same period of the previous year, stagnation continues in the U.S. and in other parts of Asia, and we believe the global recovery will be very slow. In this market environment, our mobile sensor business is expected to continue to grow due to larger die size sensors and higher added value and an expanded market share, and we plan to achieve year-on-year sales growth in the FY '24 of 10% or more for the third year in a row. In addition to the trend of increasing the die size of the wide-angle camera sensors, smartphone manufacturers are working to increase the size and improve the image quality and the performance of the actual wide angle and in telephoto camera sensors, and we believe this will be the growth driver for the mobile sensor market over the next few years. To accommodate these trends towards larger die sizes and higher added value, we are focusing our sensor development on improving pixel performance and in characteristics. We are developing high-performance sensors while focusing on the number of manufacturing processes and productivity as well as improving production yields through pixel design. These efforts expected to contribute to future investment and efficiency and cost improvements. In addition, with regards to improving the yield of mobile sensor, which had been a top priority since the previous fiscal year, we have been making a progress at the pace that slightly exceeds our plan. As a result, we expect to be able to reduce the impact on profitability for this fiscal year to approximately JPY 18 billion, almost half of the previous fiscal year. Last is the Financial Services segment. The Financial Service revenue for FY '23 was JPY 1,770 billion, almost double year-on-year, mainly due to the impact of market fluctuation in Sony Life Inc. Operating income decreased a significant JPY 144.5 billion year-on-year to JPY 173.6 billion. This was primarily due to a decrease in the net gains related to market fluctuations for variable insurance and other products of the Sony Life as well as recording of the gains on the stable sales of the [ SB OST ] at the Sony Life and the recovery of funds related to unauthorized withdrawal in the previous fiscal year. These negative factors were primarily offset by the recording of the gain mainly from the transfer of the portion of the shares of the Sony Payment Services Inc. The FY '24 forecast for the Financial Services revenues were JPY 910 billion, and operating income is JPY 145 billion, a decrease of JPY 28.6 billion from the previous fiscal year, which included the recording of the gain from the transfer I previously mentioned. Please note that this forecast does not take into account the impact of the market fluctuation in the Sony Life. Now I would like to explain the fluctuations in operating income that have been particularly notable since the adoption of IFRS 17. This is the trend of the breakdown of Sony Life's quarterly operating income while insurance services results, which are the base profit for the business, have generally remained stable. Investment gains and losses have fluctuated greatly due to the changes in the market conditions. The majority of the investment gains and losses consist of unrealized valuation gains and losses. We are considering the measures to curve these fluctuations in gains and losses, including the transfer of the previously controlled insurance contracts to the external parties through reinsurance transactions. This concludes our explanation of our financial results for FY '23 and the results forecast for FY '24. Next, Totoki will explain our midrange plan. Totoki-san, please go ahead.

Now I'd like to talk about our midrange plan. First, let me give a brief overview of our fourth midrange plan. Under the theme of our fourth midrange plan, Sony's evolution, we have been working to evolve our corporate architecture and the business portfolio to drive growth for the entire group. In April 2021, we transitioned from a large headquarters housing support functions for our Electronics business to Sony Group Corporation being a scale-down group headquarters. By doing so, we established a structure to promote the growth of the group in an equidistant relationship with each business. Regarding our business portfolio, we are making concrete preparations for a partial spin-off of the Financial Services business in October 2025 with the aim of achieving further growth in both the Financial Services business and our other businesses. Additionally, by concentrating capital allocation on the growth areas of the 3 entertainment businesses and the I&SS business, we were able to significantly increase the combined sales of these 4 business segments, creating a more growth-oriented business portfolio. Thanks to these efforts, the KPI, we set as a growth indicator for the fourth midrange plan period, 3-year cumulative consolidated adjusted EBITDA was JPY 5.1 trillion, 19% higher than our initial target and 42% higher than the amount generated during the third midrange plan period. In addition, our ability to generate profits is steadily improving. The average annual growth rate of consolidated operating income, excluding the Financial Service segment was 9.0% from FY 2020 to FY 2023. Now I'd like to talk about our fifth midrange plan. We are presenting the plan, excluding the Financial Services segment and Endo, the head of that business, will provide an explanation of the midrange plan of the Finance Services segment at the business segment meeting scheduled for May 31. The themes of the fifth midrange plan are Beyond the Boundaries and maximum synergies across the group. With the intention of continuing to implement the proactive initiatives, we have been implementing to further realize synergies and achieve more growth for the entire group. During this midrange plan, no changes are planned to our strategy of working to increase corporate value through continuous growth. While further strengthening our efforts to realize group synergies, we plan to focus on implementing measures to achieve mid- to long-term growth in our 3 entertainment and image sensor businesses. At the same time, we expect the business environment to remain uncertain and volatile during the period of this midrange plan and beyond. In order to further increase our resilience to such environmental changes, we aim to work to strengthen our earnings base through the ongoing evolution of our business portfolio and to improve investment efficiency and business profitability. Consequently, for a period of this midrange plan, we have placed greater emphasis on profit-based growth KPIs and we have set up KPIs for the entire group, the growth rate of consolidated operating income and operating income margin. Specifically, we aim to increase consolidated operating income during this midrange plan, primarily in G&NS and I&SS and achieve an average annual growth rate of 10% or more and a 3-year cumulative consolidated operating income margin of 10% or more. In addition, we have positioned as an important indicator, the sales growth of the game software and network services businesses in G&NS, the Music, the Pictures and the image sensor businesses. We also plan to regularly report progress on the consolidated operating cash flow, which is the source of capital allocation. I will now discuss the main focus measures for each business under the fifth midrange plan. Further details will be provided by each business leader at the business segment meeting on May 30 and 31. In the G&NS segment, under the theme of console and beyond, we aim to drive profit growth of the Sony Group by expanding this [ cable ] installed base of PlayStation consoles, providing richer gaming experiences and growing our business through the two-pronged approach of expanding into PCs and enhancing the first-party software titles originating from our in-house studios into which we have invested. In the Music segment, we continue to aim to grow faster than the market by strengthening our efforts in emerging markets, increasing monetization opportunities for our music catalog and incorporating adjacent businesses such as merchandising. We also plan to accelerate the global expansion of Japanese anime and artists. In the Pictures segment, which serves as a core of collaboration between the 3 entertainment businesses, we aim to maximize the value of the IP assets held by the Sony Group. Furthermore, we aim to achieve profitable growth with Crunchyroll, a DTC service that deeply engages with anime fans and anime creators as a growth driver. In the ET&S segment, we plan to continue to control risks in businesses facing severe environments, such as televisions, while steadily growing our highly profitable and technologically differentiated imaging and sound businesses and accelerating expansion into the growth access businesses. Through this, we aim to continue to shift the business portfolio of the entire segment and generate cash that supports the Sony Group. In the I&SS segment, we intend to maintain our high growth rate, primarily in mobile sensors and focus especially on increasing profitability, improving investment efficiency and reinforcing development and manufacturing during the period of the fifth MRP. We also plan to proceed with the launch of new growth businesses that will follow from mobile sensors such as automotive sensors, while maintaining financial discipline in the long-term perspective. Next, I'd like to explain capital allocation during the term of the fifth midrange plan. Three-year cumulative consolidated operating cash flow, the main source of allocation is expected to be JPY 4.5 trillion, significantly exceeding the results of the fourth midrange plan due to profit growth during the fifth midrange plan as well as the recovery of working capital that increased during the previous midrange plan. With regard to capital expenditures, we expect to spend JPY 1.7 trillion, a decrease of JPY 0.2 trillion from the previous MRP, taking into account that investment for image sensors is expected to decrease from the previous MRP period. With regard to strategic investments, we plan to allocate JPY 1.8 trillion to business growth investments and flexible share repurchases. We will continue to work toward mid to long-term growth of our business through such means as acquisition of IP and M&A, but we intend to emphasize investment efficiency and be more selective in the strategic arena. The biggest change from the capital allocation strategy under the previous midrange plan is that we plan to allocate any increase in free cash flow during the period of this midrange plan primarily to shareholder returns. With regard to shareholder returns, we plan to place emphasis on the total payout ratio, which we expect to gradually increase throughout the period of the fifth midrange plan aiming for approximately 40% in FY 2026, the final fiscal year of the plan. To this end, we set aside JPY 250 billion for share buybacks for this fiscal year, the first year of the MRP, which exceeds the amount we acquired in the previous fiscal year. Regarding dividends, our policy is to continue to increase dividends steadily while accelerating the pace of dividend increases. In addition, with the aim of further expanding the investor base that holds our shares, at the Board of Directors meeting held today, it was decided to implement a stock split with a record date of September 30, 2024, and an effective date of October 1, 2024. These are the main points of our fifth midrange plan. At the corporate strategy meeting scheduled for May 23, CEO, Yoshida, and I will explain the direction of our group's businesses over the longer term. That's all for the explanation.

The presentation was given by Totoki, Matsuoka and Hayakawa. After this, from 4:35 Q&A with media and from 5:00, Q&A with investors and analysts will take place. We're allocating about 20 minutes for Q&A each. Those of you who have registered to ask questions in advance, please connect the telephone to the designated number in advance. And as for the way of asking questions and points to be noted, please look at the invitation letter that we have sent to you in advance. Would you kindly wait until the Q&A session begins?

Thank you for waiting. We will now begin entertaining questions from the members of the media. As was the case of the presentation, the people -- 3 people listed on the slide will be responding to your questions. Now we will begin the Q&A session. I would like to ask you to limit your questions to 2. If you have any questions, please press the star key followed by 1. The first question will be by [ Umek ] from Toyo Keizai .

[ Umenaki ] from Toyo Keizai. Can you hear me?

Yes, we can.

I have 2 questions, if I may. Earlier, you talked about strengthening the shareholder returns, including that, enhancing enterprise view, I'd like to hear the view of Totoki-san. Enterprise value will be regarded as cash flow generation and discounted value in the future. As compared to the previous midrange plan, we'll be reducing investment and increasing returns to shareholders compared to the previous midrange plan. How are you going to enhance enterprise value, if there's any change or differences in the thinking? Please explain. Secondly, [ Carmen Group ] acquisition according to the media report, I'm sure that there's a limit as to what you can share with us, but is it true that you are making proposals and strengthening your entertainment business in the midrange plan, is there any consistency? Can you please comment on that, please?

Thank you very much for your questions. First, as to the thinking about enterprise value, compared to the fourth midrange plan, I talked about the capital allocation earlier. CapEx will be slightly less this time. Also, we -- including the return of working capital during the fifth midrange plan period, as compared to the previous 3 years, basically, there'll be a better cash flow position. So we will be utilizing that for return to the shareholders, that is the basic thinking. Enterprise value has to be enhanced in a sustainable manner. Fourth midrange plan period, we have been making investment in advance for the growth of the future. We have been sowing seeds for the growth in the future. In the fifth midrange plan, we'll be harvesting from the seeds that we have sown in the previous midrange plan so that we can enhance the enterprise value in the future. That is the basic thinking behind coming up with the midrange plan. And secondly, related to reported, and we have not made any announcement at all. So specific deal, I would like to refrain from making any comment about a specific deal. But on the other hand, lots of information are there. And at this point, our strategy including the thinking on the capital allocation, I would like to comprehensively explain to you our thinking. Game and Music and Pictures. With IP, we are going to generate synergy, which is a unique strength of Sony Group, and this is the core of our growth strategy. Sony Pictures is the hub of generating synergy, and as an entity, this has an important position. Therefore, in this area, if there is any good opportunity then appropriate value and return on the investment can be expected. On that assumption, we consider possibilities, which is only too natural. However, in the fourth midrange plan, the capital allocation results in the past 3 years -- 3-year strategic investments, excluding the share buyback, was JPY 1.3 trillion, of which 3 quarters were allocated to 3 entertainment segments. Music is the largest followed by Game and Pictures about the same amount. And the purpose of investment, IP acquisition is the largest in proportion. Roughly speaking, the next 3 years, the basic policy will be continued. That's what we have in mind. At the risk of being repetitive, the strategic investment for the fifth midrange plan, including flexible share buyback is JPY 1.8 trillion. Within this amount, 3 years period for -- without focusing upon any particular segment, we'll be making strategic investment and flexible share buyback, that is our basic thinking. So I do hope that you can understand our basic stance. That concludes my explanation.

[ Umetu-san from Nikkei ].

Can you hear me?

Yes, we can hear you.

And I do have 2 questions. The first one is as follows, and SIE, the restructuring reduction, and how much impact on the impact on FY '23 or '24? And then also, as per today's announcement, you made an announcement about some people changes and does that include all the restructuring activities? And then also, JPY 1.2 trillion of strategic investment you mentioned, can you give us a breakdown by segment?

Thank you very much for your questions. First, the SIE, the structural reform, and I think there's a question on that. In FY '23, and we have the double-digit hundreds of millions of the structural reform expenses are recorded. And then also, that will continue into FY '24. So for the most part, I think we'll need the same level of cost and expenses. And in FY '25, there will be improvement. So for overall, in terms of cost improvement in FY '25 onwards, and we expect the cost improvement effects to materialize. And then as for the people changes, it's not really related and -- just announced, it's not directly related to the structural reform. And another -- the other question is about the strategic investment broken down by segment. And at this point in time, we have a general idea, but we do not have the granular breakdown by segment. And I think we need to make a decision at the opportune timing. But just looking back on the 3 years that have ended, and looking at the breakdown, like I said, JPY 1.3 trillion over the 3 years and then a 3/4 is given to the 3 entertainment segments. And among 3 entertainment segments, the Music is the largest followed by Game and Pictures. So that will help you sort of visualize the strategic investment coming in the next 3 years. That's all.

We'd like to take the next question from [ Asahi Newspaper, Tanaka-san, ] please.

I'm Tanaka from Asahi Newspaper. Can you hear me?

Yes. Please go ahead.

The first question is about the foreign exchange rate. The ForEx impact for the entire group, in total, for the sales and the income, what was the upward impact, the positive impact? And the weakening of the yen is accelerating. So how are you viewing this current trend, Mr. Totoki? And the second question is about the image sensor, it's performing well, and I'd like to ask you the reason, the smartphone market itself is shrinking, and especially FY 2023, the sales units are quite low, but the image sensor by Sony was doing well. So what was the reason for that?

Thank you for your questions. First, on the ForEx impact, the details will be explained by Hayakawa. But regarding the weakening of the yen, my view is the following. When it comes to the ForEx, there is no control over that. So we will have to adapt to the situation. But if there is a rapid change that is going to be unfavorable in managing business, that is my view. Hayakawa-san, please.

Regarding the ForEx in the previous years performance, the impact by that FY 2023, the performance by segment, the material is showing the ForEx impact. So please take a look at that. Basically, last fiscal year, versus dollar, the weakening of the yen was seen. And also the dollar was weaker versus the euro. So on a consolidated basis, in income, JPY 140 billion, positive impact from ForEx came to us. That's all from my side. Thank you.

Next on the I&SS business related question. As you said rightly regarding the FY 2023, the smartphone market itself was not very -- not quite strong. And in FY '24 and beyond, we believe that it will be recovering slowly. Our sensor business is performing well because the -- not because of the sales units of smartphones, but it's because of the main camera and large-sized die of such cameras. Regarding the wide-angle cameras, it has become larger in size. But at the same time, the wide -- ultra-wide angle as well as the telephonic cameras, they will become larger in size. And as a result, our sensor demand will become stronger. That's all.

Bloomberg, [ Furukawa-san ], please.

Furukawa from Bloomberg. Can you hear me?