SoftBank Group Corp. posted a record net loss Monday of ¥961.58 billion for the fiscal year that ended this March, its first red ink in 15 years, due to the poor performance of its tech startup investments amid the pandemic.
The figure is a sharp drop from the net profit of ¥1.41 trillion the conglomerate logged in fiscal 2018. It also booked an operating loss of ¥1.36 trillion for fiscal 2019, compared with a ¥2.07 trillion profit the year before, on sales of ¥6.19 trillion, up 1.5 percent.
The operating loss was the largest ever for a Japanese company other than financial firms, according to Nomura Holdings Inc.
SoftBank Group, which has become an investment giant, did not provide its earnings forecast for the current business year through March 2021, citing the uncertainty of the business environment.
The group said its Vision Fund lost ¥1.9 trillion ($17.7 billion) last fiscal year after writing down the value of investments, including WeWork and Uber Technologies Inc.
SoftBank founder Masayoshi Son’s $100 billion Vision Fund went from the group’s main contributor to profit a year ago to its biggest drag on earnings. Uber’s disappointing public debut last May was followed by the implosion of WeWork in September and its subsequent rescue by SoftBank. Now Son is struggling with the impact of the coronavirus on the portfolio of startups weighted heavily toward the sharing economy.
SoftBank also recorded losses from its own investments, including WeWork and satellite operator OneWeb, which filed for bankruptcy in March.
Under SoftBank control, WeWork has been offering some tenants discounts to minimize cancellations following government-mandated coronavirus quarantines, which have forced nonessential employees globally to work from home.
Before the earnings were released, the company said Monday that it doubled the amount it plans to spend buying back shares and announced changes to its board, including the resignation of long-time director Jack Ma.
The company plans to repurchase as much as ¥500 billion ($4.7 billion) worth of its own stock by March 2021, it said in a statement. That’s on top of an equally sized re-purchase it had announced in mid-March.
The Tokyo-based company also announced several changes to its board, including the departure of Ma, the co-founder of Alibaba Group Holding Ltd. Three new directors have been nominated, including Chief Financial Officer Yoshimitsu Goto.
Ma’s departure is a historic moment since he and Son have sat on each other’s boards for years. Alibaba is regarded as Son’s most successful investment.
“The buyback announcement is a surprise, given the slew of low expectations and bad news,” said Justin Tang, head of Asian research at United First Partners.
The company said on Friday that it had bought ¥250.6 billion of its own stock since March 13, about half of the ¥500 billion budget for the original re-purchase plan.
The buyback announced in mid-March initially failed to lift SoftBank’s stock amid concerns the conglomerate’s portfolio of startups is particularly vulnerable to the economic shock from the coronavirus pandemic. When the shares plunged more than 30 percent in the week that followed, Son took an unprecedented step to unveil a second repurchase of as much as ¥2 trillion. The latest announcement is part of that broader plan.
“Son is also sending a message that he is serious about funding that ¥2 trillion buyback he announced in March,” Tang said.
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