SoftBank Group Corp books JPY1.26tn net profit in first quarter despite fall in sales

11 Aug 2020

SoftBank Group Corp today (11 August) reported a net profit of JPY1.256 trillion (USD11.86 billion) in the April-June 2020 quarter, up 11.9% from JPY1.122 trillion in the corresponding period a year ago, thanks in large part to the merger and sale of its stake in US mobile carrier Sprint, marking a return to profitability following its biggest ever loss in the previous quarter. However, SoftBank did not report operating profit for the quarter, saying it was ‘not useful in appropriately presenting the consolidated financial results of a strategic investment holding company’ and that going forward it will report ‘gain (loss) on investments’ in order ‘to show investment performance in the consolidated financial results’.

With the group’s founder and chairman Masayoshi Son reverting to a more defensive strategy in response to the uncertainty brought on by the COVID-19 pandemic, SoftBank saw its net sales broadly stable at JPY1.450 trillion – compared to JPY1.480 trillion year-on-year – although income before tax plunged 50.9% to JPY833.047 billion. Nevertheless, Son’s group reported that a better performance from its USD100 billion Vision Fund, which posted an investment gain of JPY296 billion, had helped reverse Group losses, while as part of its revised business focus SoftBank is progressing with the plans it announced back in March to divest USD41 billion of assets during the current financial year. By June this year Son confirmed that it had already completed about 80% of its target by selling off stakes in T-Mobile US and domestic division SoftBank Corp, using some of the proceeds to buy back its own stock. Indeed, by 3 August it had sold or monetised JPY4.3 trillion of assets through the sale of T-Mobile shares, borrowing using T-Mobile shares, pre-paid forward contracts using Alibaba shares, and the partial sale of Softbank Corp shares.

Concerning its assets programme, the Group noted: ‘Given the current concern for a second or third wave of the novel coronavirus (COVID-19), SBG believes that it needs to further enhance its cash reserves. SBG is investing the funds raised until such cash reserves are used for the planned share repurchases and debt reductions, together with other surplus funds, in high-quality, highly liquid marketable securities and other instruments, in addition to holding the funds in cash and deposits, while being firmly committed to its existing financial policies on LTV (loan-to-value, the ratio of liabilities to holding assets) and cash on hand.’

Japan, SoftBank Group Corp