It is now time for us to start Sony Corporation's fiscal year 2020 first quarter earnings briefing session. I will be acting as the emcee. My name is Kato from Corporate Communications Department. This briefing is held for the media, analysts, and institutional investors who we have notified in advance. The audio and presentation materials can be viewed on our website. Today, first of all, from the Executive Deputy President and CFO, Hiroki Totoki, we will give an explanation on consolidated financial results for FY 2020 Q1 and the forecast for FY 2020, and then have a question and answer session. It should last approximately 70 minutes. Totoki-san, please. Today, I would like to begin by addressing the operating environment surrounding Sony. The spread of the new COVID-19, an increase in geopolitical risks such as the tension between the United States and China, and the frequent occurrence of natural disasters in recent years are just a few of the things that are fundamentally changing society and economy, as well as people's values and lifestyles, in a variety of ways. These changes will not be limited to short-term, and they are difficult to predict. There's a saying that, "It's not the strongest of the species that survives, nor the most intelligent, but rather the one most adaptable to change." Sony intends to adapt flexibly to the changes in the environment and increase the focus with which we manage each of our businesses. The fiscal year ending March 31st, 2021, or fiscal year 2020, is an important year in which we expect to both recover from the impact of the spread of COVID-19 and formulate a strategy to address the business environment in the aftermath of the spread of the virus. We intend to improve the resilience of the Sony Group by leveraging our advantage, which is the diversity of our personnel and businesses, adapt to changes, and convert the crisis into an opportunity. Now, I will explain the following. Fiscal 2020 first quarter consolidated sales increased 2% compared to the same quarter of the previous fiscal year to JPY 1,968.9 billion. Consolidated operating income slightly decreased to JPY 228.4 billion from the same quarter of the previous year, which was a record high. Income before income taxes increased JPY 88.9 billion to JPY 319.9 billion, partially due to an improvement in the unrealized gains on securities investments in other income and expenses. Net income attributable to Sony Group Corporation stockholders for the first quarter increased JPY 81.1 billion to JPY 233.3 billion. Excluding extraordinary items, operating income would have increased JPY 2.2 billion from last year to JPY 225.2 billion. This slide shows the results by segment for the fiscal 2020, for the first quarter. At the previous earnings announcement we held in May, we were unable to reasonably predict the impact of the spread of COVID-19, our consolidated results forecast for fiscal 2020 was undetermined. Today, we are disclosing the consolidated results forecast for fiscal 2020. Consolidated sales are expected to be flat year-on-year at JPY 8 trillion, 300 billion, and operating income is expected to increase JPY 225.5 billion to JPY 620 billion. Income before income taxes is expected to be JPY 685 billion, and net income attributable to Sony's stockholders is expected to be JPY 510 billion. Our forecast for operating cash flow, excluding the Financial Services segment, is JPY 550 billion. Our current forecast for three-year cumulative operating cash flow, excluding the Financial Services, is approximately JPY 2.1 trillion. We plan to issue JPY 25 per share as an interim dividend this fiscal year, compared to JPY 20 per share in the previous fiscal year. We have yet to determine how much the annual dividend amount will be this year, but our policy is to increase dividends in a steady manner over the long term. The fiscal 2020 forecast for each of our segments are shown on this slide. I will explain the details when I talk about each segment after this, but I'd first like to explain the operating loss in corporate and elimination. In the previous fiscal year, we recorded JPY 31.5 billion in extraordinary gains, while this fiscal year, we expect to increase expenses for mid to long-term growth initiatives and societal contributions, such as investments across the Sony Group to explore and develop new businesses, including artificial intelligence and robotics, as well as contributions to the global relief fund for COVID-19. The fiscal 2020 forecast includes an expectation that we will incur JPY 25 billion in restructuring costs across the Sony Group. In addition to continuing our efforts to reducing costs, we are taking action to adapt quickly to changes in the operating environment brought on by the spread of COVID-19. I will now explain the situation in each of our business segments. First is the G&NS segment. The first quarter fiscal 2020 sales increased 32% year-on-year to JPY 606.1 billion, and operating income increased JPY 50.2 billion to JPY 124 billion. Sales for the fiscal year are expected to increase 26% compared to fiscal 19 to JPY 2,500 billion, mainly due to a significant increase in game software and hardware sales. Operating income is expected to be JPY 240 billion, flat compared with fiscal 19, because the benefit of the increase in sales and an increase in profit from PlayStation Plus are expected to be offset primarily by the increase in costs related to introduction of PlayStation 5. Hardware, software, and network services all benefited in the current quarter from the positive impact of stay-at-home demand resulting from the spread of the virus. In the software space, the first-party title, "The Last of Us Part II" was a huge hit, and non-first-party titles, including free-to-play titles, contributed significantly. "Ghost of Tsushima," which we released on July 17th, sold through 2.4 million units in the first three days since launch, making it the fastest-selling in-house first-party new gaming software IP for the PlayStation 4. In the network services area, PS Plus subscribers have reached about 45 million as of the end of June. At a time when communication network environment was under pressure, the PlayStation Network did not falter or experience any other issues, and is continuing to deliver high-quality entertainment experiences. We aim to continue to enhance and expand user engagement as we approach the launch of PS5 in the 2020 holiday season. Next is the music segment. Fiscal 2020 quarter one sales decreased 12% year-over-year to JPY 177.1 billion, and operating income decreased JPY 3.4 billion to JPY 34.9 billion. For full year, sales are expected to decrease 7% compared to fiscal 2019 to JPY 790 billion, and operating income is expected to decrease JPY 12.3 billion to JPY 130 billion. In a recorded music space, revenue in most categories, including from package media and advertising-supported streaming services, is being negatively impacted by the spread of COVID-19. Overall streaming revenue only grew 6% year-over-year on a US dollar basis during the quarter. Audio streaming revenue, of which paid streaming accounts for a large portion, grew 17%. In the music publishing space, revenue from all areas except for streaming, such as music licensing from movies and television, is being significantly negatively impacted by the spread of COVID-19. In the visual media platform space, revenue is being significantly impacted due to a variety of factors, such as decrease in physical media production and the postponement and cancellation of live events, primarily in Japan. On the other hand, we are beginning to have success in initiatives expected to contribute to the financial performance going forward, such as the launch of Stagecrowd, a paid live video distribution service that serves as a one-stop shop for ticket sales, merchandise sales, and stage construction. A strong sales of the mobile game app, "Disney Twisted-Wonderland." Next is pictures. Our fiscal 2020 quarter one sales decreased 6% year-on-year to JPY 175.1 billion, primarily due to a decrease in box office revenue in motion pictures and a decrease in advertising revenue in media networks, but partially offset by an increase in license revenue in television productions. Operating income increased JPY 24.4 billion year-on-year to JPY 24.7 billion due to a significant decrease in marketing expenses in motion pictures. Primarily due to decrease in theatrical releases resulting from the spread of COVID-19, we expect fiscal 2020 sales to decrease 25% compared to fiscal 2019 to JPY 760 billion. We expect operating income to be JPY 41 billion, a decrease of JPY 27.2 billion compared to last year, which benefited from the contribution of hit titles. Although we have resumed filming in some countries, the severe environment in motion pictures and television productions is continuing. If we can restart production, we think we can recover our position in the television production area relatively quickly, because demand for content from digital distribution services is extremely high, and we think we can leverage our advantage as a major independent studio. As for theatrical, theaters are either closed or admittance is limited, and we expect the release calendar to be very crowded when they do reopen. Since motion pictures generate profit over multiple years, starting with theatrical releases, the impact on our financial results of not being able to release them is expected to last two-three years. On the other hand, digital sales of products we have released theatrically in the past are strong. For Sony, the importance of theatrical releases is not expected to change going forward, but in order to maximize the long-term value of our product, we will select the optimal distribution channel for our product based on the nature, scale, and timing of the product. Next is the EP&S segment. For this quarter, the sales decreased 31% year-on-year to JPY 331.8 billion, primarily due to a decrease in unit sales of digital cameras and TVs. Operating income decreased a significant JPY 34.2 billion year-over-year, and a JPY 9.1 billion operating loss was recorded due to the impact of the decrease in sales despite the reduction in operating costs across the entire segment. For full year, sales are expected to decrease 6% to JPY 1,870 billion, and operating income is expected to decrease JPY 27.3 billion compared to fiscal 2019 to JPY 60 billion. Mobile communications recorded JPY 11 billion in operating income during the quarter, and we expect it to generate a profit in the full fiscal year. The EP&S segment was the segment which was impacted by the spread of COVID-19 earlier and more significantly than any other segment. The supply chain has almost fully recovered, and although progress varies depending on the product category and region, customer demand is beginning to recover as well. We are preparing for potential second and third waves of COVID-19 by transforming the structure of our business into a more resilient one through an overhaul of our operations and further streamlining, as well as the enhancement of our e-commerce distribution channels. This segment, which will inherit the Sony Corporation trade name on April 1st, 2021, is further accelerating its efforts to unify the management of the business under its umbrella and is promoting the evolution of the business by deploying products and services that enable reality real-time and remote activity through our audio, video, and communications technologies. Next is I&SS, Imaging & Sensing Solutions. Fiscal 2020 quarter one sales decreased 11% year-on-year to JPY 206.2 billion, and operating income decreased JPY 24.1 billion to JPY 25.4 billion. Fiscal 2020 sales are expected to decrease 7% to JPY 1 trillion, and operating income is expected to decrease JPY 105.6 billion to JPY 130 billion. I will explain the state of our sensor business. Fiscal 2020 sales of image sensors for mobile products are expected to decrease compared to Fiscal 2019, primarily due to a decrease in end user product sales by one of our major customers, a deceleration of the smartphone market, and a shift to mid-range and moderately priced models in that market resulting from the impact of the spread of COVID-19, and significant reduction in component and finished goods inventory by Chinese customers. Profitability is expected to be impacted by a decrease in gross margins and an increase in depreciation and manufacturing-related costs associated with production equipment we purchased in the previous fiscal year when we expected growth, as well as higher research and development costs. We do not expect to grow sales of mobile sensing products compared to fiscal 2019 because adoption by smartphone makers has been slow, and sales of flagship models which already use our products have decreased due to the shift in market conditions. Sales of image sensors to AV have also decreased due to the contraction of the sensor market for digital cameras resulting from the impact of the spread of COVID-19. We expect the market to contract in one year as much as we had previously expected it would contract over the next approximately three years. In order to respond quickly to the changes in the environment, especially for image sensors for mobile products, we will modify our strategy, mainly in the areas of investment, research and development, and customer base. We have already significantly reduced investment in capacity to supply demand in the fiscal year ending March 31st, 2022, because we can supply that demand by stockpiling strategic inventory through utilization of our excess production capacity this fiscal year. The forecast for cumulative capital expenditures for the three fiscal years begun April 1st, 2018, which we explained in the past, has been reduced JPY 50 billion from approximately JPY 700 billion to approximately JPY 650 billion. We are carefully reviewing the timing of planned capital expenditures in fiscal 2021 and beyond. We will review the projects and priorities for research and development spending as well to ensure that they fit with the recent trends in the smartphone market and changes in our major customers' needs. However, in order to maintain and increase our future technological competitive advantage, we will not drastically reduce the number of projects or the budget. We intend to more proactively expand and diversify our customer base, which we're cautious to do previously due to production capacity constraints. Over the mid to long term, we will work to expand the applications for image sensors and the market overall by introducing edge sensing products that use sensors equipped with AI processing functionality, and we will steadfastly work to grow this business. We plan to complete within approximately one year an enhancement of our business model to adapt to the recent changes in the environment, and we expect to return the business to the path of profit growth from the second half of fiscal 2021. Last is the Financial Services segment. Fiscal 2020 quarter one Financial Services revenue increased 33% year-on-year to JPY 446.8 billion, primarily due to a significant increase in net gains on variable insurance investments in the separate account at Sony Life. Operating income increased JPY 1.1 billion year-on-year to JPY 47.2 billion. Financial Services revenue in fiscal 2020 is expected to increase 7% compared to fiscal 2019 to JPY 1,400 billion, and operating income is expected to increase JPY 12.4 billion to JPY 142 billion. On July 13th, we completed our public tender offer for the shares of Sony Financial Holdings, SFH, not held by Sony. The shares of SFH will be delisted on August 31st, and SFH will become a wholly owned subsidiary of Sony on September 2nd. The financial services business managed by SFH has a stable, high level of profit and is a core business of Sony that plays a role in our long-term growth strategy. By eliminating the listed subsidiary relationship between SFH and Sony, we intend to increase the speed of decision-making, enhance management optionality, and further improve the value of the business. In addition, by capturing the minority interest in realizing tax benefits, we expect to increase Sony's consolidated net income by approximately JPY 40 billion-JPY 50 billion per year going forward. That is expected to contribute to increasing earnings per share, EPS, and return on equity, ROE. In order to deepen understanding of our financial services business, we are considering what key performance metrics to disclose. Now I will briefly discuss the minority investments we made in Bilibili and Epic Games this fiscal year. At a time when digitization of the entertainment industry is accelerating, we plan to leverage these investments to expand the customer touchpoints for our diverse array of content, as well as create new digital content and ways of enjoying that content that go beyond our business segments in partnership with these companies. Going forward, we intend to proactively pursue strategic investment opportunities to explore future growth. Next, I will explain our enhanced segment disclosure. Historically, Sony has proactively enhanced disclosure of information about our businesses. From this fiscal year, we have decided to disclose on a quarterly basis the information shown here in the G&NS and Music segments, which are of particular interest to the capital markets. At the same time, we have terminated disclosure of certain items in the EP&S segment. For more details, please see our supplemental information. Today, we announced the establishment of a facility to repurchase up to JPY 100 billion in shares of Sony during this fiscal year. Like in the past, we view share repurchases as a strategic investment and will decide to execute them based upon a comprehensive assessment of a variety of factors, including the availability of other investment opportunities, our financial condition, and price at which our shares are trading. We aim to maintain strict financial discipline and a healthy balance sheet going forward as we optimize our capital efficiency with a focus on EPS and ROE. We also plan to maintain sufficient liquidity at a time when the recent operating environment is uncertain, and we think it is important not to miss any growth opportunities. In conclusion, I will show our capital allocation. This concludes my remarks. That was Totoki, Executive Deputy President and CFO. From about 4:25, we will be conducting Q&A. The first 20 minutes will be dedicated to questions from the media, and the following 20 minutes will be questions from the sell-side analysts. Those who have registered in advance to ask questions from the media and the sell-side analysts, please connect to the designated phone number in advance. Those of you who have not registered in advance, you will be able to listen to the Q&A via webcast. Kindly wait a little while longer before we resume. We will commence the questions from the media shortly. Kindly wait a little while longer. Thank you for your patience. We will now start the Q&A session with the media. The respondents are Executive Deputy President and CFO, Hiroki Totoki, Senior Vice President in charge of Corporate Planning and Control, Finance and IR, Naomi Matsuoka, VP, Senior General Manager, Corporate Communications Department, Mami Imada. Those of you who have a question, first of all, after the asterisk, press 1 on your phone. When it is your turn, we will call out your name. Please state your media and name before you ask a question. Kindly limit yourself to 2 questions per person. To prevent audio feedback when asking a question, please turn the volume of devices around you off. In the case audio is interrupted due to poor connections, due to time considerations, we will have to move on to the next question. If you wish to cancel your question, after the asterisk, please press two. Now, we will start the Q&A session. Those of you who have a question, please press asterisk and then the number one. I'd like to take the first question. Inomata-san from NHK. Inomata-san, would you ask your question? Thank you. Inomata is my name. Am I coming through? Yes, we can hear you. Thank you. Two questions. Firstly, the full year forecast that you're announcing this time, the slow recovery will start from the coronavirus situation in the second half. Is that your assumption? Can you tell us more about this? The second question is, you're preparing for the launch of PlayStation 5, but will you be in time for launch? Have you been affected by the situation? Thank you for the question. Firstly, concerning the full year forecast, the impact of the coronavirus, assumptions, what are they? Was the question. The earnings announcement we made in May, we used a general assumption for the whole company and did some simulation exercise. This time, all the business segments have come up with their own figures and assumptions. Because business is all different and the geographic areas are different, the nature of business different, so this time, we don't have a unified assumption for the group. They are probably the most likely scenario that can be contemplated at this time. Your second question about PS5 preparations, is there any impact on the production? As things stand now, toward the holiday season, production is proceeding smoothly. Regard to development of the game software, the first-party studio, as well as third parties, to their business. Again, as things stand now, there are no major issues or problems that are apparent at this point in time. Thank you. Thank you. I'd like to move on to the next question. From Nikkei, Shimizu-san, please. I am Shimizu from Nikkei. I have two questions regarding image sensors. There is a trade friction between U.S. and China, there is a restriction on Huawei. You said that the sensor forecast is going to come down in terms of sales. What is the impact of this bilateral relationship? Secondly, as your future policy for Huawei, the risk for Huawei, I think it's going to remain, but are you going to make any changes to your partners? Do you have any policies regarding your partnerships in the supply chain? Thank you for your question. For image sensor, for the full year, what is the reason for the decrease in sales? The second question is related to the supply chain. First of all, for a specific company, I refrain from making any comments. I do hope that you would accept and understand. Having said that, currently, the business environment surrounding us is deteriorating because of COVID-19, especially the high-end smartphone market is contracting, and that is shifting towards the mid- and low-end zones. That's a volume zone now. I think that is a change that is taking place currently. Also secondly, the friction between the U.S. and China, there is an impact from that. From the risk perspective, our customer base needs to be expanded and diversified, and we will continue to focus on the customer base aspect. Thank you. Going on to the next question, please. From Toyo Keizai, Takahashi-san. Takahashi-san, can you ask your question? Thank you. I am Takahashi from Toyo Keizai. First question about Game & Network Services. One quarter profit is JPY 124 billion, which I think is quite high. What about the contributing factors? Can you give me some details? Sales JPY 600 billion in 2019 Q3, end of the year. I think there are those factors, the holiday season. Compared to Q3, to what extent? The profit is much bigger and maybe it has to do with advertising. What is the change, is what I want to know. That's the first question. If you have two questions, can you ask the second one too? Yes. Second question, about sensors. High-end smartphones, there's a shift to low and mid-range smartphones, and that has impacted profit, you said. If it's this year, 5G smartphones are going to increase. I'm wondering if high-end is going to be weaker, just the general feel. Can you explain what's happening in a little more detail? That's my second question. Those are my two questions. Thank you for those questions. Games in the first quarter, high profit. The factors behind that is I think what you are asking. Compared to the third quarter, you said, well, comparison with the third quarter is quite difficult. Compared to the year-over-year, if I may explain year-over-year, then we can say that due to COVID-19, there is the stay-at-home demand. For fourth quarter, new titles had an impact, so add-on and other software sales were contributing. The first-party and third-party titles were both doing well. First-party, The Last of Us Part II, as I said before, it's a big hit. That's with regards to games. About sensors, changes in the market, and how are the changes occurring? For one thing, all over the world, there is a poorer sense in the market, deterioration of the market, that is impacting the sensor sales. Also the higher priced products, well, you could say shifting to the more moderate priced models overall. For our image sensors, especially the high-end image sensors that we sell, the high-end models are decreasing in sales. That's impacting our business. That's all. Thank you. Next question. Nagumo-san from Nikkei Asian Review. Nagumo-san, please. Thank you. About image sensors, the first question is, you talked about the sales decline in the high-end models. In the image sensing industry, what would you say are the long-term changes? What are the short-term changes? Can you talk to us about the difference? The second question, also about I&SS, you'll be selective about R&D topics. Can you be more concrete and specific about that? Thank you for the questions. The long-term versus short-term changes, you requested what are our views. Currently, whatever we see now, we don't consider to be long-term trend. At a certain time, the impact of the coronavirus will somehow be absorbed so that the smartphone market as a whole is not declining all that much. The transition or the shift that we're seeing currently is only temporary, we believe. Although they are temporary for this year and for the next year, more mid to low-end products will sell, that's for sure. Therefore, image sensors, most often for that level of product, would have to be our production. We have to make that switch. For that, there will be a change. Because there's a change in product mix, we have to make an adjustment in our strategy and modify our production strategy. As far as the large trend is concerned, the smartphones going larger and using multiple lenses, that will continue. The performance for the cameras required for smartphones for video and the camera photos, and the demand for the higher quality will continue. Therefore, we believe the demand should come back sometime in the future. Next question will be the last because we are running out of time. Nishida-san, a freelance journalist, please. Thank you. I am Nishida. I can hear you. Thank you. Two questions. Regarding image sensor, once again, this year or since last year, there are increasing number of lenses, and that is favorable for Sony, as you have been stating. You said that high-end models are coming down. The trend for multiple lenses, is it slowing down temporarily? When you're moving towards the mid and low end, still multiple lenses. Could you talk about that? Second question, regarding EP&S business or segment, you are in the recovery phase already, as you said. Especially, which is the genre in the market and the geographical area that is having difficulties? Also, which are the product areas and the geographical areas that are doing favorably? Thank you. Regarding the first question, multiple lenses is a positive for us. Well, high-end and mid and low-end markets, what is the trend in terms of multiple lenses? In the mid and low-end markets, there is no change in the trend for increased number of lenses. There are multiple image sensors used in the mid and low-end models as well, that trend has not changed that much. For EP&S, and also larger size, the trend has not changed. For EP&S, the areas that is having difficulties. Well, okay, let me talk about the area where there is a recovery already being observed. First of all, U.S., Europe, and Japan. Well, Japan is doing very well. Those areas, it is in a recovery phase. Also in Asia and Latin America, there is a slow recovery. Emerging market is having a little bit of a struggle. By product, TV, because of the stay-at-home demand, I think, there is a very good appetite for demand for TVs. The digital imaging is where there is a difficulty or challenge. In May, we had a forecast at that time. Compared to that, the recovery itself is much faster. We have hopes for the future. That is all. Thank you. Our time is now up, therefore, we would like to close the session for media. Those of you who are connected to the phone number to ask questions, after the asterisk, please press two. Now we will have to change the respondents, therefore, we will start the analyst session at 4:50. Kindly wait a little while [Break]. We will start the analyst question session soon. Kindly wait a little while longer. Thank you for your patience. We will now start the questions from the sell-side analysts. I will be acting as the MC. I am Hayakawa, in charge of IR. The respondents are Executive Deputy President and CFO, Hiroki Totoki. Senior Vice President in charge of Corporate Planning and Control, Finance & IR, Naomi Matsuoka. Senior Vice President, Senior General Manager, Global Accounting Division, Hirotoshi Korenaga. Those of you who have a question, first push asterisk and then the number one on your phones. And when it is your turn, we will call your name. Therefore, please state your name and affiliation before you ask your question. Kindly limit your questions to two questions per person. And to prevent audio feedback when asking your question, kindly turn the volume of the devices around you off. In the event that due to poor connections, the audio is disrupted, we will have to go on to the next question. If you wish to cancel your request for a question, please push asterisk and then the number two. Now we will start the Q&A session. Those of you with a question, please press one after asterisk. Ayada-san from JP Morgan, please. Thank you. Ayada is my name, JP Morgan. Two questions, please. Firstly, concerning games. In the first quarter, the third-party software and also micro transactions, they did very well. For what reasons? Also talk about the momentum. For instance, June PlayStation sales and also Fortnite events, these sort of one-time events, were they the factors that pushed the results up or were they also significant stay-at-home impact as well? Your sales were up. Maybe difficult to break them down, but again, do you think that these results in the first quarter will continue with impact in the second quarter and onward? Secondly, about, again, image sensors. Mr. Totoki earlier was talking about toward the second half of next year, would like to put the business back to the path for profit growth. To the extent that you can, what would be the assumption they require for you to be able to return to the path for growth? For instance, to be more profitable, except that the market will return with the strength of 5G and also high-end smartphone demand, do you think will return and come back in the second half next year? Are they the requisite conditions or increasing the share and also reviewing the cost structure, are they factors enough for you to be a bit more profitable in the next year? In other words, by making yourselves leaner, do you think you'll be able to return to profitability, better profitability? Thank you for the questions. The first point concerning the first question is about the impact, in the game business, the first quarter, first party and third party. There's a significant impact of the stay-at-home demand, particularly we had a good result in April. After May, it's been more normalized, but still, compared to last year, on the same period last year basis, user activity has been very high. In the first quarter, we're lucky to have a strong first-party titles and third-party free-to-play titles. Because there is events held and they were very active as well. I think those were the factors. Breaking this down will be rather difficult, but I hope you will understand. About the image sensors. Second half of next year will be the time for profit growth. Yes, that will be our pursuit. Beyond the second half next year, in terms of that time frame, currently, especially there's a slowdown in the high-end smartphones. Taking that long-term view, I think this trend will slow down. Another point is, currently, at this point in time, mainly with the Chinese customers, they have a large inventory, and inventory adjustment will happen. It is one aspect that has been affecting our results this year. I'd like to move on to the next question. Nishimura-san from Credit Suisse, please. Thank you. I have two questions regarding image sensors. For image sensor, the production capacity and the capacity factor, and also the projection for the 2nd quarter, please give them. For this fiscal year, the operating income was decreased. What was the impact of the capacity factor of the production facility? 2nd question. In image sensing, mobile sensing, you were not able to grow as much as you expected. I think year-on-year, you are expecting a decrease in sales. Is it just a delay or is it the user's design is demanding you to review or revisit your plans? Could you tell me about that? Thank you. First of all, regarding image sensor, the capacity and the capacity factor and the 2nd quarter. The capacity for this quarter, for fiscal 2020, at the end of first quarter, and that's 133K per month at the master price. At the end of the second quarter, 135K per month. We will gradually increase the capacity. That's our plan. The number of wafers to be input. The first quarter's, the actual figure is the average three months is 136K for mobile and also for digital camera. There were some adjustments made for production. For the projection for second quarter, for that, the simple average for three months is 112K. For mobile and digital camera, I think there's going to be more production adjustment. Well, for sensing segment, the sales is expected to come down. What is the magnitude of the impact? Well, last year, actual was a little over JPY 230 billion, and it just slumped to JPY 130 billion. Generally, it's like one third of that is the reduction in sensors or sensing products. That's one third. Big point about that is that as of last year, we thought that the growth can be expected, so we made the capital investment, and also we have increased our R&D expenditures, and that has been the impact. That is all. Next question from Morgan Stanley, Ono-san. Thank you. First question is about games, and second question is about pictures. Games. Naturally, there's the PS5, and I don't think you'll give us any details, but from before, when you give guidance on games about the PS5 price is not announced, then you give some guidance. There are a number of scenarios, the highest probability, one that most likely would be looked at. This fiscal year, in your plan, towards best estimation in coming up with a range and for price or for volume quantities, what kind of range do you have in your plans to the extent that you can give us a hint? I would appreciate that. Second question about pictures. Theatrical release, there will be impacts over the next 2-3 years, as you mentioned. What I want to ask you, these are negative factors, on the other hand, for example, the digital% will go up or there will be upside maybe on the TV side. In this segment, the risk-reward in terms of profit level in the next two- three years with the downside risk of theaters, what kind of changes do you see? For example, strategically, you could raise the weight of digital. The risk-reward upside may not change that much, or it will. If you could give me your comments on these points. Thank you for those questions. First of all, games. This fiscal year, the key points of our plan, I think that's what you're asking, and to the extent that I can talk about it, I will. That is, first quarter, very strong results. Second quarter onwards, stay-at-home demand will settle down to an extent. That's how we view it. Also, PS5 introduction, marketing expenses, certain expenses will be incurred. That will be an assumption. With regards to the volume and price, right now, I cannot talk about that. You have upside and risk, both sides. At this point in time, we feel that this balance is good, and we show a plan based on that. As for pictures, I think what you're asking is, while the theaters are shut down and you have that impact, then there's possibilities of digital shifting. OTT players do have strong demand for content. Putting that into consideration, what is the view is, I think, what you are asking, and that will be explained by Matsuoka-san. As you say, right now, there is the impact of coronavirus, so that in terms of production and releases, there is an impact in pictures. Naturally, TV programs, well, there is a good demand continuing. We are an independent studio, and therefore, when responding to that kind of good demand, then the large movies, their release is being delayed, and we believe we can catch up through the TV side. Then we will look at COVID spread situation, and in order to maximize value, see what should be the release and what should be the sales, what would be best. Strategically, by responding strategically, we would be able to respond to downside risk to an extent, and we want to maximize value and profit by doing so. Let's proceed to the next question. Nakane-san from Mizuho Securities. Thank you. Nakane speaking. Can you hear me? Yes. All right. Two questions about sensors. Firstly, the second half operations. Totoki-san said the operation will be lower in the 2nd quarter, but you'll be increasing strategic inventory. As that happens, June inventory was 2,000 tons. What will be the inventory in the 2nd quarter? Can you give us some assumptions? Secondly, related to Ayada-san's question earlier, you would like to return to profitability the second half of next year. Totoki-san said the high-end model slowdown will stop, and also inventory adjustment by Chinese customers also be over by then. Demand will be more brighter by that time next year. Is your assumption that the capacity will not increase, or the capacity will increase going forward next year? Also about the cost. I think the cost will increase in depreciation. What are the measures for you to increase the profitability of the cost? Two questions received. About the sensors, the second half operations. Inventory till the end of the year and the operation status at the end of the year. Speaking about inventory situation firstly, in the first quarter, 2,900 strong was the level of inventory we had. End of the year, I think there will be a slight increase on top of this. That's assumption. The level of operations, little bit less than 90% is the level of operation that we are assuming now. That's related to what I said earlier about increase in inventory. The profitability return in the second half, what are the assumptions? Well, is the assumption to see increase in capacity? Yes. A slight increase is within assumptions, but the timing of increasing of the capacity I mentioned that in a speech, we have to observe the demand situation going forward to adjust at which timing we should increase, at which timing we should operate capacity. Basically, I think that our capacity will increase. Thank you. We have a time constraint, the next question will be the last one. Katsura-san from SMBC Nikko Securities. Thank you. Katsura speaking. Two questions. First one, in EP&S segment, I'm sure the details will be given in the briefing separately, in the presentation material, you had the unit sales volume in the forecast. I think the impact of COVID-19 is coming down. If you look back at first quarter, compared to your expectations, how was it in reality and also going forward? I think you have JPY 25 billion for budget. Do you have any other comments that you can add to that? Also, slide 24 regarding capital allocation, you gave us an update, it's JPY 1.4 trillion or more of a strategic investment. How much have you executed so far, and what is the remaining amount? If you could share the breakdown of that, the strategic investment. Thank you. Thank you for the question. Your first question, in EP&S segment, first quarter, I try to summarize that quarter. Well, there were some initial simulation that we have done in May. It's difficult to be accurate in making comparison, but it was much less predictable in May. Based on that simulation in May, actual performance of first quarter was much better, especially for TV, because of the demand for stay-at-home. The recovery pace was much better than we expected. Basically, the online sales was increasing and also once the stores were opened, the merchandise would be sold. For the first quarter, it was actually difficult to sell. We were short of inventory. It was actually very good. For digital allocation, most recently, there is a good recovery. I think if you compare to Lehman Brothers situation, or compare to that time at least, the situation is very different and I think the recovery is much faster. That is my impression. However, regarding restructuring, we want to strengthen our financial status. Regardless of how we are going to prioritize our ups and downs, I think we want to be resilient in what we do. Also regarding the capital allocation that you were asking about, so more than JPY 1.4 trillion. The ones we have executed is EMI, wholly owned subsidiary, and also SFH becoming wholly owned subsidiary. That was JPY 400 billion. In this interim period, we have already repurchased JPY 300 billion of our own shares, share buyback. This year, JPY 300 billion is what we're expecting. It depends on what opportunities we're able to capture. We are flexible about exactly what we do. Today we have made an announcement about this repurchase operation that will be maximum of JPY 100 billion. Thank you. It is now time to close this briefing session on earnings for the first quarter of fiscal 2020. Thank you for your participation.