SoftBank Group Corp Q3 operating profits plummet 99% on Vison Fund losses

12 Feb 2020

Japan’s SoftBank Group Corp reported that its operating income for the fiscal third quarter ending 31 December 2019 plunged 99% year-on-year, significantly below analyst estimates in a Reuters poll, impacted by losses at the group’s USD100 billion Vision Fund. The Fund reportedly booked an operating loss of JPY225 billion (USD2.05 billion) in the period under review, compared to a profit of JPY176 billion in the year-ago quarter. In its report, SoftBank said the Vision Fund had invested USD74.6 billion in 88 companies by the end of December, and that those investments were worth USD79.8 billion by the year-end.

In a stock exchange filing, SoftBank said consolidated operating profit in October-December 2019 stood at JPY2.6 billion, compared to JPY438 billion in the corresponding period a year ago, which compared with the JPY345 billion average of three analyst estimates compiled by Refinitiv.

Nine-month net revenues were down 1.1% y-o-y at JPY7.090 trillion, as pre-tax income fell 25.7% to JPY1.345 trillion and net income attributable to shareholders plunged 69% to JPY476.587 billion from JPY1.538 trillion previously. The relatively poor set of results come as SoftBank founder and CEO Masayoshi Son strives to attract outside capital for a successor to the Vision Fund – which has Saudi Arabia and Abu Dhabi as its anchor investors.

More positively, shares in SoftBank Group Corp soared last night after a US federal judge approved a merger between its US wireless unit Sprint Corp and T-Mobile US. SoftBank shares jumped 11.9% to become Japan’s second biggest company by market value in the wake of the decision, which allows SoftBank Group Corp to offload the troubled US asset at a time when it is facing some investor scepticism over its investment decisions.

Earlier this week SoftBank’s domestic arm SoftBank Corp reported that operating income for its third quarter ended 31 December 2019 climbed 15.1% y-o-y to JPY243.163 billion from JPY211.286 billion, underpinned by a strong performance from its mobile business. Third quarter revenue increased by 3.5% to JPY1.245 trillion, fuelled by a 4.3% rise in mobile service revenue to JPY426.425 billion on the back of rising smartphone adoption and a drop in monthly discounts. Meanwhile, EBITDA rose to JPY418.966 billion from JPY346.623 billion and net income (attributable to shareholders) edged up 0.5% to JPY109.213 billion, impacted by higher corporate tax related to the intergroup transfer of Z Holdings shares as part of an agreement to merge the subsidiary and Line.

Japan, SoftBank Corp, SoftBank Group Corp