Softbank Group Corp yesterday said net profit rocketed to US$11.1 billion in the fiscal third quarter, as stock rallies and asset sales helped it solidify its recovery.
Net profit for October-to-
December hit ￥1,171.9 billion, more than 21 times higher than the ￥55 billion reported a year earlier, the conglomerate said.
Photo: Bloomberg
Despite the results, it said it would not provide “forecasts of consolidated results of operations as they are difficult to project due to numerous uncertainties affecting earnings.”
However, the economic crisis that has accompanied the COVID-19 pandemic has worked largely in Softbank’s favor, with rallies in tech stocks it owns and rising valuations for firms in its portfolio suited to the era, including food delivery.
Softbank reported a nearly US$9 billion net loss in the previous full fiscal year, but has quickly returned to the black.
Founder Masayoshi Son, who has transformed the telecoms company into an investment and tech behemoth, has battled critics of his commitment to sometimes-troubled start-ups, and brushed aside doubts over a massive asset sale program.
Softbank has stakes in some of Silicon Valley’s hottest start-ups through its US$100 billion Vision Fund.
Moreover, Son has consistently backed the firm’s worth, insisting its stock has been undervalued and its fundamentals remain strong, despite wobbles, including over office-sharing start-up WeWork.
Government stimulus designed to combat the economic effects of the pandemic have helped bolster stock markets, to Softbank’s benefit, Tokai Tokyo Research Institute analyst Masahiko Ishino said.
The firm and its Softbank Vision Fund “took full advantage of monetary easing,” he told reporters before the results were released.
The value of the fund’s stake in US food delivery app DoorDash rose massively following its initial public offering in December.
Softbank has invested heavily in ride-hailing platforms worldwide in recent years, from California-based Uber Technologies Inc to Didi Chuxing (滴滴出行) in China, Singapore’s Grab and India’s Ola.
Last month, Softbank announced the sale of US$2 billion of stocks in Uber following a surge in the US ride-hailing giant’s value, though it still remains the firm’s main shareholder.
The results come after Softbank launched an aggressive plan to sell up assets to finance a stock buyback and reduce its debt, which has so far raised about ￥5.6 trillion.
In December it sold an 80 percent stake in robotics firm Boston Dynamics Inc to Hyundai Motor Co in a deal that values the US company at US$1.1 billion.
And in September, it announced an agreement to sell British chip designer Arm Ltd to US firm Nvidia Corp for up to US$40 billion, potentially creating a new giant in the industry.
If approved, the deal would be one of the largest acquisitions in the world this year and propel Nvidia to the forefront of the semiconductor sector.
However, the sale faces challenges — including securing approval from regulators in Britain, Europe, the US and China.
Paired with the recent recovery in tech stocks, Softbank’s asset-sale strategy appears to be paying off, but analysts said the company might need more risk-management and to keep reviewing its portfolio.
“The impact of monetary easing is likely to be weaker” if another global equity rout strikes the market, Ishino said.
“Softbank Group needs to consider such scenarios by rebuilding its corporate structure, and we will pay attention to how it will transform itself in preparation for the future,” he said.
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