Q1 results: As tech rally cools, SoftBank posts 39% lower profit

Japanese group to cut China investments until tech sector scrutiny clarifies

Japan’s SoftBank Group Corp on Tuesday reported a 39 per cent fall in first-quarter net profit, even as Vision Fund returns were boosted by listings during the period.
 
April-June profit was 762 billion yen ($6.9 billion). That compared with profit of 1.3 trillion yen in the same period a year earlier.
 
The Vision Fund unit posted on Tuesday a first-quarter profit of 236 billion yen ($2.14 billion) as gains from listing portfolio companies were offset by falling shares in firms like e-retailer Coupang Inc. SoftBank has offloaded shares of US tech giants like Facebook, Microsoft, Alphab­et and Netflix, according to its latest financial report released on Tuesday, CNBC reported.
 
The Japanese group posted record annual profit in May with executives pointing to further upside from Vision Fund investments like Chinese ride-hailing firm Didi Global and “Uber for trucks” startup Full Truck Alliance.
 
Those companies listed in New York during the quarter but Chinese regulatory action has subsequently hammered valuations, underscoring SoftBank's China risk even as the group seeks to reduce its dependence on its largest asset, Chinese e-commerce giant Alibaba Group Holding.

The turmoil is clouding the outlook for the group, whose shares have slipped a third from two-decade highs in March amid a record 2.5 trillion yen buyback which has since been completed.  “Until the situation is clearer we want to wait and see,” said SoftBank Chief Executive Masayoshi Son. “In a year or two I believe new rules will create a new situation.” While the crackdown has affected returns expectations, "Our broader thesis in China is unchanged: It's still a large, growing and compelling economic opportunity," said Navneet Govil, the chief financial officer of Vision Fund.
 
Son also said he would begin to make personal investments alongside Vision Fund, a controversial step that could lead to conflicts of interest as his company backs technology startups.