The FINANCIAL — Sony Corporation on May 23 held a Corporate Strategy Meeting during which President and CEO, Kazuo Hirai, provided an update on the progress of the current mid-range plan, the final year of which is the fiscal year ending March 31, 2018 (“FY2017”).
He also explained how Sony plans to achieve its mid-range financial targets and continue to be a company that generates a sustainably high level of profit and creates new value beyond FY2017.
1. Progress of Mid-range Plan (FY2015 – FY2017)
10% or more ROE and 500 billion yen or more operating income are the financial targets for the Sony Group for FY2017, which is the final year of Sony’s second mid-range plan (for the fiscal year ended March 31, 2016 (“FY2015”) through FY2017). Although 500 billion yen in consolidated operating income is a high level of profit that has not been achieved for twenty years, Sony believes that it has built a foundation which will enable it to achieve this mid-range financial target through the fundamental transformation it has already implemented.
After achieving the mid-range targets, Sony aims to generate sustainably high profit and continue to be a company that continuously generates new value.
One of the primary reasons for the improvement in financial results up to and including the fiscal year ended March 31, 2017 (“FY2016”) was the revitalization of the consumer electronics business, starting with the television business. By operating the business with a strategy of “emphasizing differentiation, not volume,” Sony was able to revitalize the business to the point where it is expected to contribute stable profit.
In order to achieve the financial targets for FY2017 and to generate sustainably high profit for the next fiscal year and beyond, Sony believes that it not only needs consumer electronics to generate stable profit, but it also needs profits in the Game & Network Services segment to increase, the image sensor for mobile use business to recover and the Music and Financial Services segments to continue to contribute high profits, according to Sony.
In the Pictures segment, the profit forecast for FY2017 is significantly below the original target set in the mid-range plan, but Pictures remains an important business for Sony. Inside the Pictures business, the level of urgency with which measures are being implemented to improve the profitability of the Motion Pictures business has increased. Due to the nature of the business model for Motion Pictures, it takes time for results to improve, but Sony is aiming to transform this business into one that generates a high level of profit.
2. Looking Towards FY2018 and Beyond
FY2017 is the final year of the current mid-range plan and is the year during which Sony will establish the next mid-range plan.
There is no change to Sony’s mission to “be a company that inspires and fulfills your curiosity” and its vision to “use our unlimited passion for technology, content and services to deliver groundbreaking new excitement and entertainment, as only Sony can.”
Having diverse businesses in the Electronics, Entertainment and Financial Services sectors, and managing those diverse business domains with a common set of values under the SONY brand is the fundamental strength of Sony.
In order to achieve sustainable growth over the mid- to- long term, Sony believes it must 1) remain the “last one inch” that delivers a sense of “wow” to customers through its direct relationships with consumers (“Kando @ The Last One Inch”), 2) expand recurring revenue business models which grow stable profit by maintaining a relationship with each customer and 3) be a diverse company that pursues new businesses.
In order to continue to generate a high level of profit over the mid- to- long term, the Sony Group as a whole, and each business unit within it, will work to pursue new businesses. The company will work together as One Sony to create a sustainably high level of profit and continue to be a company that provides new value to society.
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