• Next is the Imaging Products & Solutions segment.
• FY18 sales increased 2% year-on-year to 670.5 billion yen, primarily due to an increase in sales of high value-added products including mirrorless single-lens cameras and interchangeable lenses.
• Operating income increased 9.1 billion yen year-on-year to 84.0 billion yen.
• This increase was primarily due to the increase in sales of high value-added products and a reduction in operating costs.
•In October of last year, I explained our plan to invest approximately 600 billion yen in the three years through FY20, and to increase our image sensor production capacity to about 130,000 wafers per month on a 300 mm wafer basis.
• As of today, there is no major change to this investment plan, but we will pay close attention to trends in demand and make decisions regarding the execution of the investment in stages.
• Already, as we look out to the fiscal year ending March 31, 2022 and beyond, we expect demand for smartphones to continue to increase due to the trend toward larger sensors and multi-lens cameras.
• We are currently considering whether to construct a new building to meet this increased demand and, if we decide in FY19 to construct a new building, capital expenditures through FY20 might increase by approximately 100 billion yen.
• Demand for image sensors is expected to increase at a relatively slower pace from the fiscal year ending March 31, 2023, and we expect the amount of our capital expenditures to decrease.
• As we consider investments going forward, we are continuing to prioritize capital efficiency and are working to increase ROIC.
• We will provide more details on this point at the IR Day next month.
• In conclusion, I would like to explain the current status of our consolidated operating cash flow excluding the Financial Services segment and our capital allocation policy.
• At this point in time, we expect three-year cumulative operating cash flow to exceed 2 trillion 200 billion yen (our target was for 2 trillion yen).
• As for the use of the cash that is generated, we plan to continue to prioritize growth investments that contribute to increased corporate value.
• More specifically, we plan to spend approximately 1 trillion 100 billion yen on capital expenditures primarily for image sensors and, if we decide to construct the new building in the Semiconductors segment that I mentioned earlier, this amount might increase to 1 trillion 200 billion yen.
• Strengthening our content IP and supplementing technology not found in the Sony Group will continue to be the focus of our strategic investments.
• In this way, we will prioritize investments in growth, but stock repurchases might also be an option depending on the status of our free cash flow and the stock price.
• We plan to continue to increase the amount of our dividends in a steady manner over the long-term.
• Last year we mentioned strengthening our balance sheet as one of the goals of our capital allocation strategy but, due to our improved financial results, we now think that we have recovered to the point where we have sufficient financial strength.
• Going forward, we will aim to increase our corporate value through growth investments while maintaining our healthy balance sheet.
Imaging Products & Solutions (Before segment realignment)
Results for the fiscal year ended March 31, 2019
Sales increased 14.6 billion yen (2%) year-on-year (a 3% increase on a constant currency basis) to 670.5 billion yen. This increase was mainly due to an improvement in the product mix reflecting a shift to high value-added models such as mirrorless single-lens cameras and the interchangeable lens lineup, partially offset by a decrease in compact digital camera unit sales reflecting a contraction of the market.
Operating income increased 9.1 billion yen year-on-year to 84.0 billion yen. This increase was mainly due to the above-mentioned improvement in product mix as well as reductions in operating costs. During the current fiscal year, there was a 3.2 billion yen negative impact from foreign exchange rate fluctuations.
Semiconductors
Results for the fiscal year ended March 31, 2019
Sales increased 29.3 billion yen (3%) year-on-year (a 3% increase on a constant currency basis) to 879.3 billion yen. This increase was primarily due to a significant increase in sales of image sensors for mobile products, partially offset by a significant decrease in sales of camera modules. Operating income decreased 20.1 billion yen year-on-year to 143.9 billion yen. This decrease was primarily due to an increase in research and development expenses and in depreciation and amortization expenses, as well as the absence of the above-mentioned 28.3 billion yen gain resulting from the sale of the entire equity interest in a manufacturing subsidiary in the camera module business, an 8.6 billion yen gain resulting from the sale of manufacturing equipment and 6.7 billion yen in insurance recoveries related to the Kumamoto Earthquakes, each recorded in the previous fiscal year. These negative factors were partially offset by the impact of the above-mentioned increase in sales. During the current fiscal year, there was a 0.5 billion yen negative impact from foreign exchange rate fluctuations.
Forecast for the fiscal year ending March 31, 2020
Sales are expected to increase significantly primarily due to a significant increase in sales of image sensors for mobile products mainly resulting from a significant increase in unit sales and an improvement in product mix, partially offset by the impact of foreign exchange rates. Operating income is expected to be essentially flat year-on-year primarily due to an increase in depreciation and amortization expenses as well as research and development expenses, and the negative impact of foreign exchange rates, substantially offset by the impact of the above-mentioned increase in sales.
via Sony
