TOKYO, Aug 9 (Reuters) – Japan’s Sony (6758.T) logged a hefty drop in first-quarter profit, hurt in part by a weaker performance from its movie division but the entertainment giant remained hopeful about prospects for a record year for its PlayStation 5 console.
Operating profit slid 31% to 253 billion yen ($1.8 billion) in April-June, in line with estimates and also pulled down by lacklustre results from its financial business which had benefited from a property sale in the same period a year earlier.
Profit at its movie division plunged by two-thirds due to lower sales for television content as well as higher marketing costs after the company released more films in theatres.
Sony trimmed its annual sales forecast for the unit by 3% citing the impact of strikes by Hollywood writers and actors, which have affected production of scripted television shows and films.
Once a consumer electronics giant, the conglomerate has transformed itself to focus more on entertainment, developing movies, music and games.
Sony has said it expects to sell 25 million PlayStation 5 consoles this financial year, in what would be a record for a PlayStation device, following the easing of supply chain snarls.
Sales have so far been weaker than expected but the company said promotions starting in July are helping sales momentum.
[1/2]An employee of the consumer electronics retailer chain Bic Camera works at the promotion display of the Sony PlayStation 5 game console and its gaming software, ahead of the game console’s official launch, in Tokyo, Japan November 10, 2020. REUTERS/Issei Kato/File Photo
“We believe that there is ample possibility for us to catch up,” Sony President Hiroki Totoki told reporters.
Cumulative sales of the console have topped 40 million but the company lacks high-profile upcoming first-party titles.
Nintendo last week reported it has sold 18.5 million units of “The Legend of Zelda: Tears of the Kingdom” since its release in May, helping drive sales of its aging Switch console.
Sony is also a leading maker of image sensors, which are used in cameras.
The conglomerate had expected a gradual recovery in the smartphone market from the second half of the current financial year but now thinks it will not happen until 2024 at the earliest.
Sony maintained its forecast of a 10% decline in operating profit for the full year.
In May, Sony said it is examining a partial spin-off of its financial unit, which includes life insurance and banking, as it looks to invest further in its entertainment businesses.
($1 = 143.1300 yen)
Reporting by Sam Nussey; Editing by Edwina Gibbs
Our Standards: The Thomson Reuters Trust Principles.
TOKYO, April 25 (Reuters) – Japanese startup ispace inc (9348.T) is preparing to land its Hakuto-R Mission 1 (M1) spacecraft on the moon early on Wednesday, in what would be the world’s first lunar landing by a private company if it succeeds.
The M1 lander is set to touch down around 1:40 a.m. Japan time (1640 GMT Tuesday) after taking off from Cape Canaveral, Florida, on a SpaceX rocket in December.
Success would mark a welcome reversal from the recent setbacks Japan has faced in space technology, where it has big ambitions of building a domestic industry, including a goal of sending Japanese astronauts to the moon by the late 2020s.
In one of the biggest blows, Japan Aerospace Exploration Agency (JAXA) last month lost its new medium-lift H3 rocket to forced manual destruction after it reached space. That was less than five months since JAXA’s solid-fuel Epsilon rocket failed after launch in October.
The 2.3-metre-tall (7.55 ft) M1 will begin an hour-long landing phase from its current position, in the moon’s orbit some 100 km (62 miles) above the surface moving at nearly 6,000 km/hour (3,700 mph), Chief Technology Officer Ryo Ujiie told a media briefing on Monday.
Ujiie likened the task of slowing down the lander to the correct speed against the moon’s gravitational pull to “stepping on the brakes on a running bicycle at the edge of a ski jumping hill.”
Only the United States, the former Soviet Union and China have soft-landed a spacecraft on the moon, with attempts in recent years by India and a private Israeli company ending in failure.
After reaching the landing site at the edge of Mare Frigoris, in the moon’s northern hemisphere, the M1 is to deploy a two-wheeled, baseball-sized rover developed by JAXA, Japanese toymaker Tomy Co (7867.T) and Sony Group (6758.T), as well as the United Arab Emirates’ four-wheeled “Rashid” Rover.
The M1 is also carrying an experimental solid-state battery made by NGK Spark Plug Co (5334.T), among other objects to gauge how they perform on the moon.
In its second mission scheduled in 2024, the M1 will bring ispace’s own rover, while from 2025, it is set to work with U.S. space lab Draper to bring NASA payloads to the moon, targeting building a permanently staffed lunar colony by 2040.
Shares of the Tokyo-based lunar transportation startup had a blistering market debut on the Tokyo Stock Exchange this month as investors bet its lunar development and transportation business will fit in with Japan’s national policy of defence and space development.
Reporting by Kantaro Komiya; Editing by Chang-Ran Kim and Stephen Coates
Our Standards: The Thomson Reuters Trust Principles.
HONG KONG, Jan 6 (Reuters) – China’s deeply troubled property sector is set to see home sales fall for the second straight year in 2023, but the pace of declines will ease thanks to state support measures and the lifting of the government’s strict anti-COVID policies.
Property sales are expected to slip by a median of 8% this year, a Reuters survey of eight economists and analysts showed, compared to a slump of around 25% in 2022, as economic activity, household income and consumer confidence are seen rebounding in the second half.
Economists and analysts believe policymakers will roll out more support measures to stimulate home demand this year, as part of Beijing’s overall goal to bolster the $17-trillion economy after a sharp COVID-induced downturn in 2022.
Those policies could include further lowering of mortgage borrowing rates and down-payment requirements, as well as relaxing home purchase restrictions in top-tier Chinese cities, they added.
Hopes of a pickup in the economy later this year have been fuelled by China’s dismantling in December of its stringent zero-COVID policy, which likely dragged GDP growth down to just 3% last year, one of its worst years in almost half a century.
But the reversal has triggered a wave of COVID infections, which are expected to cause further economic disruptions and strain households for at least a few more months.
MORTGAGE REVOLT
China’s property sector, which accounts for a quarter of the economy, was badly hit last year as cash-squeezed developers were unable to finish apartment construction, prompting a mortgage boycott by some buyers. Citywide lockdowns to control the pandemic and layoffs also weighed heavily on buyer sentiment.
Property investment in November fell the fastest since the statistics bureau began compiling data in 2000, down 19.9% on year.
“For 2023, we expect a sequential rebound in both sales and property new starts, as property policies continue to ease, and re-opening after COVID leads to a rebound in economic activity and household income,” said UBS chief China economist Tao Wang.
“Although property sales and starts will likely be slightly weaker than in 2022, property will be much less of a drag on the economy than in 2022.”
There are some early signs of a turnaround.
New-home sales rose more than 20% over the three-day New Year holiday from a year-ago due to promotions, support policies and the gradual release of pent-up demand after high COVID-19 cases, the China Index Academy said this week.
The academy said major cities such as Beijing and Shanghai saw a rise in sales compared with last year’s New Year holiday, but sentiment remained at low levels in most small cities.
HOUSING DEMAND
Shares in embattled Chinese property developers have gained 86% since the trough in October, buoyed by a string of property easing measures and the COVID policy u-turn.
An index tracking high-yield dollar bonds of Chinese developers (.IBXXAX13) has more than doubled from its Nov. 3 low, but is still 30% lower than the beginning of this year, and 58% lower than its peak in May, 2021 after a series of defaults.
“I think the market has been ruthlessly efficient in repricing the positive policy noises that have come through,” said Tim Gibson, co-head of global property equities at Janus Henderson Investors.
“In terms of what the market needs to see, I think that really goes back to the point on the demand side.”
Gavekal Dragonomics expects a rise of 5%-10% in property sales this year, while Citi has forecast a 21% drop, citing time needed for job and home price expectations to recover, as well as a drop in new supply.
Sheldon Chan, a Hong Kong-based portfolio manager of T. Rowe, said there’s chance that the property recovery “may be slower than that the market seems to be pricing or potentially pricing”.
“We may be close to see some bottoming out in housing demand …but I don’t think we’re quite there yet,” he said.
The latest China Beige Book private economic survey was more blunt: “But forget a return to days of old: it will take considerable policy support in 2023 just to pull property out of the gutter.”
DOLLAR BOND MARKET
Despite hopes of a modest improvement in home demand this year, the sector’s recovery is expected to be a long and bumpy one, still weighed down by excesses of the past.
Many developers are expected to struggle to significantly ease their stifling funding squeeze, weighing on their ability to purchase new land and repay offshore creditors.
For many private developers, being absent from the land market last year also means they may have fewer projects for sale in 2023, in turn constraining their cash flow.
Moreover, 2023 will see a high offshore debt maturity wall totalling $141 billion, compared to $120.7 billion in 2022, data by Refinitiv show. The figure represents the amount at issue and does not reflect redemptions and defaults.
Providing good quality and unpledged asset collateral is the biggest challenge for developers in both raising domestic bonds and obtaining offshore bank loans, in which proceeds can be used for offshore repayments, three developers told Reuters, speaking on condition of anonymity because the issue is sensitive to regulators.
As a result, Cosmo Zhang, credit analyst at Vontobel Asset Management, said the sector would see more debt restructuring.
“There are still a few names we think, even if they haven’t defaulted yet, they probably still need to restructure their capital structure in the coming years, to be sustainable. Their capital structure is not sustainable.”
Editing by Sumeet Chatterjee and Kim Coghill
Our Standards: The Thomson Reuters Trust Principles.
WASHINGTON, Dec 6 (Reuters) – Many automakers and the South Korean government are urging the Biden administration to tap a commercial electric vehicle tax credit to boost consumer EV access, a plan that could help ease concerns over a climate bill approved in Congress.
The $430 billion U.S. Inflation Reduction Act (IRA) passed in August ended $7,500 consumer tax credits for electric vehicles assembled outside North America, sparking anger from South Korea, the European Union, Japan and others.
Some automakers say a lesser noticed IRA provision for “commercial clean vehicles” could be used to boost EV manufacturers and address foreign concerns.
Rivian Automotive (RIVN.O), Hyundai Motor (005380.KS) and Kia Corp (000270.KS) among others want the administration to let consumer vehicle leasing qualify for the commercial EV tax credit that could reduce monthly lease payments.
The South Korean government in comments made public Tuesday urged Treasury “interpret ‘commercial clean vehicles’ broadly” to include rental cars, leased vehicles and vehicles purchased for use in Uber (UBER.N) or Lyft (LYFT.O) rideshare fleets.
South Korea also asked Treasury not to impose any budget restrictions on commercial vehicle tax credits through 2025.
Hyundai and Kia want Treasury to allow people leasing EVs to be able to qualify for up to a $4,000 tax credit for used EVs if they buy vehicles when leases expire.
The IRA consumer EV tax credit imposes significant battery minerals and component sourcing restrictions, sets income and price caps for qualifying vehicles and seeks to phaseout Chinese battery minerals or components.
The commercial credit does not have the same sourcing or pricing restrictions but has an “incremental cost” eligibility test that might prove complex. Some automakers want Treasury to make it easier to ensure most commercial light-duty vehicles qualify for $7,500 tax credits.
President Joe Biden said last week “there are tweaks that we can make that can fundamentally make it easier for European countries to participate.”
Some automakers oppose using the commercial credit for consumer sales.
Toyota Motor Corp (7203.T) said “the lack of criteria to qualify for (commercial credits) could undermine the IRA’s goals to expand domestic production of EV batteries and maintain America’s energy independence.”
Tesla (TSLA.O)said commercial credits “should apply exclusively for commercial end-users” and the consumer tax credit “should apply exclusively for individual end-users.”
General Motors (GM.N) Chief Executive Mary Barra told Reuters on the sidelines of an event Monday that addressing foreign concerns about the credit is “more complicated than just one thing to solve it” and added “sticking to the intent of the bill” drafted by Congress “is important.”
Reporting by David Shepardson; Editing by Lincoln Feast.
Our Standards: The Thomson Reuters Trust Principles.