Now it's time to start Sony Group Incorporated (sic) [ Sony Group Corporation ] consolidated announcement. My name is [ Okada ] from PR, and I'll be facilitator for this meeting. I'd like to first ask Mr. Totoki, Executive Deputy President and Chief Financial Officer, Senior Vice President, who'll be giving the presentation about our projections for the rest of the year and the result of first quarter of 2022. We are planning to finish this in about -- and with that, Totoki-san, we will...

Thank you very much. I would -- now, I'll start with discussing business environment around our company. The forecast announced in May was based on growth outlook of the global economy as of January as well as major risks at the time of forecasting such as direct impact from the situation in Ukraine and the impact of COVID-19 in China. Business environment had changed significantly since then, and there are concerns about more slowdown of global economy primarily due to rapid inflation as well as responding monetary policy by different countries. We are working to assess the impact from those environmental changes and will take prompt actions to address them as a top priority in managing our business. And the forecast we disclosed today incorporates those impact to a reasonable degree based on current circumstances. ET&S and I&SS are highly sensitive to changes in macro environment, but we are also paying close attention to all other segments, including G&NS, Music, Picture and Financial Services, and we are taking a step to mitigate risks in managing our business. Now I will explain the following topics. FY '22 Q1 consolidated sales increased 2% year-on-year to JPY 2,311.5 billion, and consolidated operating income increased JPY 26.9 billion to JPY 307 billion, both of which were a record high for the first quarter. Income before tax increased JPY 8.2 billion year-on-year to JPY 291.4 billion, and net income attributable to Sony Corporation -- Sony Group Corporation shareholders increased JPY 6.4 billion to JPY 218.2 billion. Consolidated operating cash flow excluding the Financial Services saw an outflow of JPY 167.4 billion primarily driven by increase in working capital and the impact from currency adjustment due to a weaker Japanese yen. The slide show results by segment of FY '22 Q1. Now I will explain FY '22 consolidated results forecast. Consolidated sales are expected to be JPY 1,500 billion (sic) [ JPY 11,500 billion ], JPY 100 billion lower (sic) [ higher ] than the previous forecast. And operating income business is expected to be JPY 1,110 billion, JPY 50 billion lower than the forecast. Q1 operating profit was higher than the forecast, but in order to cover uncertainties in business environment from a second quarter and onward, we decided to maintain full year operating income forecast as announced in May for the 5 segment except G&NS, where we have revised our view for general gaming market. Consolidated operating cash flow excluding Financial Services is expected at JPY 820 billion, JPY 230 billion lower than the previous forecast to reflect actual result in Q1. The assumed foreign currency rates have been updated to approximately JPY 130 to the U.S. dollars and approximately JPY 130 (sic) [ JPY 138 ] to euro. This slide show our forecast by segment for FY '22. I'll now explain the situation in each of our business segments. First one is G&NS segment. FY '22 Q1 sales decreased 2% year-on-year to JPY 604.1 billion primarily due to a decrease in software sales, including add-on content, partially offset by favorable impact from foreign exchange rates. Operating income decreased significantly by JPY 30.5 billion year-on-year to JPY 52.8 billion primarily driven by decrease in software sales and increase in gaming software development costs. Despite an upside of bigger sales due to currency, FY '22 sales are expected to decrease by JPY 40 billion from previous forecast to JPY 3,620 billion primarily due to revised forecast of software sales for the year, reflecting the result of Q1. Because of the factors such as decrease in software sales and negative impact of foreign exchange rates, together with the earlier-than-expected closure of Bungie acquisition resulted in JPY 13 billion additional for transaction for the year, FY '22 operating income is expected to decrease by JPY 50 billion from our previous forecast at JPY 255 billion. PlayStation users' total gameplay time declined 15% year-on-year in quarter 1. Gameplay time in June improved 3% compared with May and was down only 10% versus June 2021. But this is a much lower engagement level than we anticipated in our previous forecast. We believe the main reason for this is that the growth of the overall game market has recently decelerated as opportunities have increased -- have -- opportunities have increased for users to get out of home as COVID-19 infections have subsided in key markets. With this in mind, we intend to take action to increase user engagement in the second half of the fiscal year, during which major titles, including first-party software, are scheduled to be released primarily by increasing the supply of PlayStation 5 hardware and promoting the new PlayStation Plus services. For now, we have made no change to our 18 million unit sales forecast for PS5 hardware in FY '22. But since we are seeing a recovery from the impact of the lockdown in Shanghai and a significant improvement in the component supply, we are working to bring forward more supply in the end (sic) [ year-end ] holiday selling season. Sony Interactive Entertainment completed its acquisition of Bungie on July 15 of this year, and the collaboration between the 2 companies have begun. In addition, the acquisition of Haven Entertainment Studios announced in March was completed in June 27. In addition to the content development capability enhancement at our existing studios, we are working to strengthen our first-party software by creating new IP and accelerating the rollout of the live game services and multi-platform titles through synergies with the studios we've acquired. Next is the Music segment. Q1 sales increased a significant 21% year-on-year to JPY 308.1 billion primarily due to the ForEx rate impact and the streaming revenue increase. Operating income increased JPY 5.6 billion year-on-year to JPY 61.0 billion primarily due to the positive impact from exchange rate. The contribution to operating income from digital media (sic) [ Visual Media ] and Platform accounted for slightly more than 10% of the segment operating income for the quarter. FY '22 sales are expected to increase JPY 40 billion from our previous focus to JPY 1,220 billion (sic) [ JPY 1,280 billion ] mainly due to the ForEx impact. The operating income forecast is unchanged from our previous forecast. Q1 streaming revenue continued to grow with revenue -- Recorded Music growing 27% and Music Publishing growing 42% year-on-year; 8% and 20%, respectively, on a U.S. dollar basis. We are monitoring the impact of the global economic slowdown on streaming services. But we have not changed our view that the global music market, including both Recorded Music and Music Publishing, will grow steadily over the next several years at a growth rate in the high single digit. In Recorded Music, we are producing many hits such as Harry Styles' album, Harry's House, which has become a huge hit worldwide. As a result, we averaged 47 songs in Spotify's weekly global top 100 songs for the quarter, a significant increase from the average 36 songs we recorded last fiscal year. In addition to strengthening our ability to continue to generate hits, we are working to expand and diversify our profitability foundation by enhancing artist services through The Orchard and AWAL, expanding our business in emerging markets and collaborating with business partners in new areas such as social and gaming. Next is the Pictures segment. FY '22 Q1 sales increased a significant 67% year-on-year to JPY 341.4 billion primarily due to the foreign exchange rate impact, an increase in the delivery in Television Productions and a revenue increase from films released in the previous fiscal year in Motion Pictures. Operating income increased a significant JPY 25.3 billion year-on-year to JPY 50.7 billion due to increase in the overall sales of the segment. FY '22 sales are expected to increase JPY 50 billion compared to our previous forecast to JPY 1,380 billion primarily due to foreign exchange rate. The forecast for operating income is unchanged from the previous forecast. Theatrical revenue in the U.S. appears to be -- to recover -- to be recovering with box office revenue in some weeks exceeding 2019 levels, thanks not only to the large-scale films aimed at young audiences but also hits in the family genre, where it was believed COVID-19 would make it difficult to attract audience. We are looking forward to the movie Bullet Train, starring Brad Pitt, to be released in August in the U.S. Demand for premium content continued to be strong due to increased competition between -- amongst the video distribution services. As an independent major studio that provides product to a variety of partners, we see this as an opportunity. In addition to Media Networks, the service integration between Crunchyroll and animation distribution business Funimation is proceeding smoothly, and the number of paying subscribers and business financial performance are growing at a pace that exceeds our expectation. Next is the Entertainment, Technology & Services segment. FY '22 Q1 sales decreased 4% year-on-year to JPY 552.3 billion mainly due to a decrease in television unit sales resulting from the impact of lockdown in Shanghai and worsening market conditions, partially offset the favorable ForEx impact. Operating income decreased JPY 18.2 billion year-on-year to JPY 53.6 billion mainly due to the impact of the decrease in television sales. FY '22 sales are expected to increase JPY 50 billion from our previous forecast to JPY 2,450 billion mainly due to the ForEx impact, partially offset by our incorporating the risk of market deceleration into our forecast for the second half of the fiscal year. The operating income forecast is unchanged from our previous forecast. Due to a faster-than-expected improvement in the utilization of our manufacturing facility following the Shanghai lockdown and a faster-than-expected improvement in supply constraints for components centered on semiconductors mainly for digital cameras, Q1 operating income significantly exceeded our previous forecast. On the other hand, new risks such as global economic slowdown, especially in Europe, and the adverse effects of the strong dollar on our financial results have recently become apparent. We plan to apply the upside to profit we enjoyed in Q1 to these risks and implement additional measures such as improvements in product mix and cost controls in anticipation of even more risks. The inventory level at the end of June is a little high even when we exclude the increase in valuation of the inventory due to the yen depreciation and the strategic stockpile of parts that we are concerned about procuring. And we plan to adjust that level in preparation for the expected softening of demand in the product market going forward. Moreover, we are steadily promoting the transfer of production across multiple facilities, decentralizing the production of key components and digitalizing and further optimizing our operations. We will continue to strive to maintain and improve our profitability by responding swiftly to market changes. Next is the Imaging & Sensing Solutions segment. Sales for the quarter increased 9% year-on-year to JPY 237.8 billion mainly due to the ForEx impact. Operating income decreased JPY 8.8 billion year-on-year to JPY 21.7 billion mainly due to an increase in R&D and depreciation expenses despite the positive ForEx impact. FY '22 sales are expected to decrease JPY 30 billion from the previous forecast to JPY 1,440 billion. The operating income forecast is unchanged from our previous forecast. Our forecast this time assumes that we cannot expect a recovery in the Chinese smartphone market this fiscal year after considering the trends seen in the Chinese market during Q1, and we have incorporated deceleration of the middle and low-end finished product market as well as lower sales of the mobile imaging sensors -- image sensors to reflect this deceleration. On the other hand, in response to growing needs for video recording, the introduction of smartphone manufacturers of our larger die-size, high-resolution image sensors in their high-end lineup is steadily progressing. We believe that this trend towards higher-resolution quality and improved functionality of cameras has become even more apparent. From the second quarter onward, we anticipate that the larger die-size sensor adoption of -- by customers will accelerate further and drive sales growth for mobile image sensors. In addition, due to an easing supply and demand equilibrium for logic semiconductors, it has become possible to gradually increase the production of high value-add image sensors, the production of which was previously restricted due to supply constraints. Therefore, we expect that the product mix will gradually improve from the latter half of the fiscal year. Moreover, when it comes to automotive image sensors in (sic) [ and ] our AITRIOS and other solution businesses that are expected to grow significantly over the mid to long term, we will continue to proactively invest in the development of technology and expansion of business themselves. Last is the Financial Services segment. FY '22 Q1 Financial Services revenue decreased a significant 28% to JPY 297.8 billion mainly due to a decrease in net gains on investment in the separate accounts at Sony Life Insurance Limited (sic) [ Sony Life Insurance Co., Ltd ]. Operating income decreased -- increased a significant JPY 57.3 billion year-on-year to JPY 81.3 billion mainly due to the recording of a gain on the sales of real estate completed in April and the absence of a loss recorded in the same quarter of the previous fiscal year from the unauthorized withdrawal of funds both at Sony Life. As Sony Life previously announced, the judicial procedures to recover the funds from the unauthorized withdrawal were completed in July. The FY '22 Financial Services revenue and operating income forecasts are unchanged from our previous forecasts. With the large-scale and rapid changes in the business environment this fiscal year, the risks and issues that need to be addressed are wide-ranging and diverse. In each business, we aim to thoroughly grasp the situation accurately and respond promptly to changes in the business environment. And we plan to continue to operate the business with highest level of caution. At the same time, we will steadily continue our efforts to achieve long-term growth. This concludes my remarks.

So that was the presentation from Mr. Totoki. It will be followed by this. So we will have a media Q&A from 16:20 and a Q&A for investor and analysts from 16:45. We are scheduled to be covering about 20 minutes for questions. [Operator Instructions] Now we'll be starting the Q&A session for media people, so please wait a few more seconds. Thank you.

Thank you for waiting. And we now like to start the Q&A session with the media representatives. And to respond to your questions, we have Mr. Hiroki Totoki, Executive Deputy President and CFO; and also Ms. Naomi Matsuoka, Senior Vice President in charge of Corporate Planning and Control, Support for Financial (sic) [ Finance ] Business and Entertainment Area; and also Mr. Hayakawa, Senior VP in charge of Finance and IR. And we will start the Q&A session. [Operator Instructions] We have Mr. [ Tetsumi ] of Nikkei BP.

This is [ Tetsumi ] from Nikkei newspaper. Can you hear me?

Yes, we hear you.

I would like to understand the gaming business situation. If we look at the materials, the software sales was at about 25% decrease, and this is also the reason why you have reduced the forecast for the year. And maybe the reopening of the markets is the reason. And the growth of the gaming world, maybe, as the -- for the industry as a whole, it's slowing down. So in the midterm, do you think it has already peaked out? So that is my first question. My second question, this is more about the future. When it comes to gaming and semiconductors recently, mainly in the Western markets, there's inflation. And there's also -- there's concerns about recessions. So what is related to your company is the consumer's lifestyle. When it comes to gaming, PS5 and software, there might be impact to the demand. And for the semiconductors, the image sensors. Including the high-end consumers, maybe there's an impact in the market. So I'd like to understand if there's any impacts that you're feeling. And how -- what is the level of the risks that you're feeling for the future? Can you explain those situations to me?

Thank you very much for the question. I think you asked me two questions, regarding gaming network services, what's the situation now. And also in the Western markets mainly, there's this concern of a recession, the gaming network services and what is the impact on I&SS as well. So I would like to answer both questions. Regarding the gaming market, like you said, the software sales has gone down 25%. There were two factors to this. One is the reopening, apparently. And secondly, I showed you earlier the PlayStation users' gaming time. I talked about the trend. If you look at that, I think it's apparent. And also, compared to the previous fiscal year, the major titles' sales has decreased. The number of titles have gone down. So I believe those are the two major reasons. The engagement itself for some time for the downwards trend in June, that stopped. And for July, we saw a slight recovery. That's my understanding. So we need to carefully observe the situation around this. Therefore, the changes in the trend is something that we need to incorporate into our future expectations. And for the mid to long-term growth and trends, for now we don't have any serious concerns and for the game network services and I&SS impact from the economic situation point of view. For PS5 demand, the supply has not been sufficient. So for this, the demand has not gone down. And first of all, we need to really meet the demand. I think that is the important thing to do. And also, regarding the image sensors, especially for smartphones and for the high-end smartphones, we would have to see what the sales situation is going to be. In China, the demand is going down. And I don't think in this term, we will be able to see a recovery, and I said that in my presentation. So the mid to low-end products, demand slowdown is actually significant. So for the high-end products from a global perspective, the demand for our image sensors as of now has not gone down. And for now, the demand is quite robust. However, obviously, this depends on the economic trends. But especially in the second half, we would have to look at the global smartphone demand very closely. That's all.

Now I would like to take you to the next question. [ Sasaki-san ] from [ Toyoke ] side, please. Hello, [ Sasaki-san? ]

Hello? Can you hear me?

Yes, we hear you.

Okay. Very good. I'm [ Sasaki ] from [ Toyoke ] side. I have two questions. First question is again about gaming. Now in first quarter, software sales has decreased, as I understood. And -- but like you said, externality was main driver. But is there any other reasons -- whether from competitors or maybe internally, is there any reasons that dragged down the sales performance of software -- gaming software? The other thing is the progress that you've made, particularly for semiconductors. In the midterm perspective, you have there some concerns about that. And for Pictures, there are certain drivers that can influence on that. Semiconductors also, do you expect some -- like a turnaround and upsides coming in the midterm perspective in semiconductor?

Thank you for your question. First question was on gaming. Is there any other factors that drove down -- slowed down of sales performance in gaming software except externality? That was your first. Second question was -- your question was about first quarter progress we made in light with the full year performance, particularly on the [indiscernible] or on semiconductor business, as I understood. First question, the factors outside of externality, it goes back to my earlier presentation. Last year, we had big titles, big content being launched. In this financial year, particularly in the first quarter, there's nothing similar. In terms of the magnitude of the size of the content, we are kind of -- we had not as many big titles like before. Now progress for Q1 for I&SS, first quarter -- actual in the first quarter was performing better than our expectation. Because our sales and profit plans were focusing more growth coming from second quarter and afterwards because of customers' trend, the product life cycles of customers. These are the inputs that we took. In that sense, the progress that we made for this first quarter in this financial, I&SS business actually performed quite well in the first quarter.

Let's move to the next question. [ Nakasuji-san ] from TV Tokyo.

Okay. And once again, my name is [ Nakasuji ] of TV Tokyo. Most recently, the depreciation of yen was taking place. All of a sudden today, yen went up. And how -- what's your view on this rapid changes up and down? And also, what's your prospect for this exchange rate?

And too, most recently, exchange -- ForEx market is changing rapidly. And our response to that is since we also do have some management measures, Hayakawa-san will respond.

The impact of exchange rate at the start of the fiscal year for the consolidated operating income other than the Financial Services, gaming and ET&S and I&SS, in these three segments, our sensitivity, the JPY 1 down is JPY 1 billion. And for euro, that's JPY 7 billion difference. As Totoki-san has pointed out, it's moving practically up and down. But the -- to mitigate the risks, we want to make sure we get enough margins. And also, the impact of the ForEx rate is very different depending on the segment. I want to make sure that here we have a robust cost structure. So that's how we try to respond in our operation. That's it.

Let us move on to the next question. [ Abe-san ] from Nikkan Kogyo newspaper.

My name is [ Abe ] from Nikkan Kogyo Newspaper. Can you hear me?

Yes, we hear you.

I have one question regarding the operating income. You have revised it downwards for the year. Why is that? So game and network service is the main reason why you have done that. Out of that, in this area, what is the biggest factor for this revision? Is it the reduced sale in software titles?

Thank you very much for the question. As you have said, for the full year, the downward revision of -- downward revision is because of the G&NS. At the beginning, we made a forecast for software sales. Especially for the first quarter, we were quite confident. But we believe there was this gap in the results. We thought that the reopening would much -- would be much more stronger. But that -- based on the results for the Q2 onwards sales, we have updated the information, and we have made the best estimation for now. That's all.

We'll take it to the next question. [ Judikar-san ] from Bloomberg, you're next.

Yes. I'm [ Judikar ] from Bloomberg. I can -- I hope you can hear me.

Yes, I can hear you.

Okay. Now a question -- two questions about gaming business. Software sales have been -- was decreased. You explained about it a few times. But hardware, the PS5 hardware, shipment was not catching with the demand. Do you think that's the reason for lower software demand? The other thing is about consumer products. Whether the cameras and other, products are getting hit from raw material cost increase, supply chain. And there are currencies. There are a lot of headwinds that are coming. Do you think PS5 also needs to increase its price point? Do you think it needs to be considered?

Well, thank you very much for the questions, both of which were about game and network services with regard to your question. So software sales. The -- is -- the PS5, the hardware itself, was not being supplied enough for distribution. Is that the reason? Now hardware supply, we're not meeting expectation of customer. We're not shipping enough volume to cover the demand. We acknowledge that as the fact. We want to address that and improve as soon as possible. As I hate to repeat myself, there were two big constraints that we are imposed with. One is parts and components availability. The other one is supply chain. The logistical parts and components availability saw for a lot of improvements. Sure, we are very hopeful that this is quite optimistic about that. For supply chain disruption, we actually got quite a hit from first quarter. In the first quarter, hardware volume for sales were quite smaller than what we expected at the beginning of the year. So supply chain disruption is something that we hope to get or completely be addressed. In any case, we would like to take our product a day -- earlier is better. We want to deliver as much as soon as possible. 8 million meant the -- as a target has not been changed, but we are trying to produce them as soon as possible in ready for our holiday season this year. Second question was about a potential price increase for PlayStation 5. At this point in time, there is nothing I can tell you, share you anything specific about prices. So please take it as my answer to your question.

Okay. We have limited time, so we'll make the next person the last person to ask question. [Operator Instructions] Hearing none, I would like to conclude the Q&A session with the media representatives. And the Q&A session for investors and analysts, we will start at 4:41. [Break]

We will be starting the Q&A session for investors and analysts. There will be a few more seconds. [Break]

Thank you very much for your patience. And now we'd like to start the Q&A session for investors and analysts. My name is [ Shinchi ]. I belong to the Financial Department/ IR Group. And on behalf of the Sony holdings group, we have these people responding to your questions. [Operator Instructions]. Now we'd like to start the Q&A session. [Operator Instructions] The first, Mr. Ono-san of Morgan Stanley [ MEFT ], please.

Yes. I am Ono from Morgan Stanley, I have two question. One is about games. The other question is about I&SS. So first question on gaming is now, PS5 shipment has been -- well, the components parts situation has improved, as you said. But it's -- the supply, it's been slow more so than launch. And the third-party software has been postponed by third-party content creators. But do you think -- and Totoki-san, you earlier talked about how -- you said the volume expectation was maybe too optimistic at the beginning. But do you think software has got the impact because of the supply shortage? Or what about user engagement, too, with the PS? There were a lot of excited users who wants to play with PS5. They got, for the lack of better word, get frustrated and maybe had, if you like, shifted its behavior. So can you talk about your perspective of how consumers are behaving based on that -- for those fact? The other thing is about I&SS, especially for the mobile customers. How do you see the risks and the inventory availability for that? You said mid to low end for Chinese market versus the inventory. Like you said there was a concern for the inventory, but you are confident about high end. But I think you talked about a lot of inventories, which are commodity items. So can you talk about risk associated with those -- that situation?

Well, thank you for the question, -- two question. First question is on games; second question on I&SS. Now first question. The supply of PS5 is the slower supply to demand. Is that the reason why users decided to stay away, therefore slowed down the sales of software and -- as a hypothesis. And, well, how do I see it? Well, this is a very difficult question. But for us, the supply of hardware will for sure increase user engagement for sure. Because yes, actually, that's been proven from the data that we are paying attention to. So somebody who are playing with PS5 tends to have very high engagement, which is a very positive sign by itself. But from that perspective, PlayStation 5, if the supply -- more people use the hardware, then positive impact -- well, may expect the positive impact to come quickly. So in that sense, in the second half, the volume of PS5 are going to significantly increase. So after the second half, we have our own title. Third-party contents are also being planned for their launches. So after the second quarter, after -- there's a momentum which we can build on to escalate that engagement. So your question about inventories, let's say -- about this question, initially for image sensor for mobile -- so we are looking at production capacity and the demand forecast, and we are going to be acquiring like strategic inventories. And the inventory is going to be having a higher availability than last year. More recently, in the first quarter, the shipment has slowed down a bit. Inventory right now is trending higher than our expectation, but this is within a reasonable range, looking at the growth projection of -- on our forecast. How do I see moving forward especially? So we are expecting to see -- starting to expand more sales in second quarter. So inventory level is going to lower down. It's going to be coming to the normal level. But for the strategic inventories, we are going to have -- deliberately have additional excessive inventory in 2024, 2023. So for the time being, we expect the inventory level to -- for that -- particular for strategic inventory components, to stay the same. Now I talked about many of the components are commodity parts. Generally speaking, I will stay with that statement. But when the demands change, I think you might be concerned that if the demand slowed down, too much of the inventory may turn around as a risk. But are going to be adjusting the capacity for FY '23. We will be able to flexibly not -- be able to control that based on the reaction from the marketplace.

Let us move on to the next question. Hirakawa-san from BofA Securities, please.

This is Hirakawa from BofA Securities. I have two questions. First question. Regarding operating income plan, you have made a downward revision. The cash flow -- operating cash flow plan, the downward revision is a negative JPY 230 billion? So that's my first question. Secondly, for I&SS. In your explanation, you talked about smartphones mainly. On the other hand, when it comes to the operating income plan, due to ForEx impact, JPY 7 billion. So for 3 quarters or so, it's more -- the JPY 30 billion is the impact of ForEx. So the industrial equipment and security cameras, image sensors are things that were not included in your explanation. So those are having a significant position. So I would like to understand that situation. And from a housekeeping perspective, if you can give me any operating capacity factor information, that would be helpful.

Thank you for the question. Regarding the first question, the downward revision of the operating income and also the cash flow situation, the working capital and the tax, those are the factors. But Hayakawa will be explaining the details.

Thank you very much for the question. As was explained in the speech, and the performance was also explained, the operating cash flow is a negative. This is also impacting the expectations. The working capital has gone down. And due to the depreciation of the yen, from a cash flow statement perspective, there was an adjustment made due to ForEx. So that is significant. And also, regarding the operating income, it has gone down by JPY 50 billion. And the operating cash flow is JPY 230 billion, and the gap between the two -- regarding the JPY 230 billion negative -- regarding the JPY 50 billion, this is the G&NS downward revision of profits. And also for the working capital increase, for this, I&SS and also the increase in inventory for ET&S is significant. And regarding I&SS, as Totoki explained, after 2Q second quarter and ours, the sales is going to be significant especially in the fourth quarter. So the account receivables will increase and inventory will also increase as well. But for this, the operating cash flow will come back from the next fiscal year. So that is why the operating capital is involved. For the ForEx calculation, this is quite significant for this fiscal year. The yen has depreciated, and so that is quite significant. And also, as of May -- compared to May, the cash tax payment has gone up. And for Pictures and Television Productions, it has also gone up. And also lastly, regarding the adjustments for the ForEx, the operating cash flow portion has gone to the negative side. If you look at the cash flow statement, I think it's clear. But for the so-called balance sheet, for the foreign currencies, it's also being included in the calculation, and we see an offset. For the first quarter results, you see that there's an offset. So from a capital allocation perspective, the operating cash flow looks like a negative. But from a balance sheet perspective, it has come back So I think for the ForEx adjustment, I think that could be said. Thank you.

Thank you very much. And as for I&SS, the impact of -- positive impact of ForEx is offset by the profit in the industrial applications and the security cameras. And as I said, that the macroeconomic slowdown risk which I mentioned earlier is a concern that the large customers of ours in this area is in China. And so we are -- we anticipate the risk of a possible slowdown for industrial usage. But this may be somewhat of a conservative response we may have. And in terms of a sensors capacity and the actual input, and in the supplement material, there is some information we hope you'll refer to. At the end of this quarter, 142 -- 114,000 slices per month. And also, in terms of input, 124,000 slices per month.

Okay, let us move to Ayada-san of JPMorgan Securities.

My name is Ayada from JPMorgan. I have two questions, general questions, both of which. And the first question is about operation, the cost approach about the operation. So because the demand has quite shifted, right, there was like a -- in your announcement, there were a lot of evidences that demand have shifted. And Totoki-san, you mentioned about very quick, agile response. But after first quarter being closed, is there anything that you want to change versus not change? In terms of operation, can you -- do you mind highlighting changes and not changing operations? And speaking about changing operation, in the first quarter, you saw quite worse -- the cash flows got worse than before the -- so TV, the consumer products. Like would you want to manage the inventory level? And the sensors, there is a downward adjustment, and the production capacity, that was -- if they're not being made, the inventory level is going to quite go up at the end of the period. So again, based on those things, what are the things that you would change versus not change in terms of your operation? Second question is about your -- it's about the full year plans. You have -- yes, I understand midterm adjustment. But just having said that, there are some uncertainties right now. What are the uncertainties, like potential risks. For example, [indiscernible] game or the high-end products revenue or sales projections are not changing. Do you see any risks for those businesses at all? Yes. If -- and the unknown risks become materialized, do you have any buffer to be able to cushion that surprises? Is that also part of the numbers that's included in the full year?

Well, thank you for your question. First question was changes or shifts on demand in a quite substantial one. And your question was what are we going to change and what are we not going to change. Second question was about potential risks for rest of the year. So I will take these two questions. So first, what are we changing or not changing? In that respect, what we are not changing is a building block for mid-to long-term strategic growth. The investment, therefore. Amount of investment may adjust, but what we are committed to do will not change. We will not change our stance and commit for our investment for the future. What we are changing for this financial year is mostly on how we are using expenses and the control of inventories, I would say. Speaking first on expenses. For example, entertainment in overseas businesses. Entertainment industries are now becoming very conservative for recruitment. And so when there were headcount, who are open positions, we will try the -- not the traditional approach, but they will have taken more traditional, conservative approach than traditions. And marketing and sales expenses are also looked at, at not spending them. So operational teams are making sure that they are trying to make improvements with risks in their mind. Now for inventory control, so on all segments, a huge attention is being given to inventories. Well, gaming network is -- first of all, look, inventory is not a problem because supply is not being able to catch up demand. But for ET&S and therefore I&SS, all the segments -- well, the inventory went up. There are three reasons for why the inventory went up. One is currency change, weaker Japanese yen. Therefore, it, on the surface level, looks like bigger inventories because of the value change in currency. And we had a quite a long month of supply shortages. We have to make sure that we have access to material. And also the -- in terms of inventory control, the bigger influence is -- actually comes from parts and components. So normalizing parts and components is something that we are focusing on right now. Inventory for I&SS goes back to my earlier comment actually. In FY '23, we have a plans to capacity expansion. But the question is what timing in which we are going to turning that switch on. That would be a one control mechanism that we will use, right? And this next one is related to the second question. Is there any risk with the high-end smartphones? So high-end smartphone, if there is going to be risk and become reality for the high-end smartphone. And so we have these scenarios. If our scenario -- the reality becomes slower than our scenario. If that's the -- if that happens, the timing of the capacity expansion will be adjusted or postponed slightly later. That will be the way to control it. The other one, risk about holiday seasons, our gaming business. Well, the economy being slowed down, therefore, is having an impact on the gaming business sales performance. I don't think that will be our risk, not from the economic slowdown. And the reopen is probably the bigger reason. So after second quarter, the -- when the big content title comes out, we'll be able to test and see how this is going to perform, and that will be a good indicator for us to assess the holiday season. Thank you.

Let us move on to the next question, from Mizuho Securities, Nakane-san, please.

Yes. I have two questions. First of all, for Music and Pictures. Second, those 2 areas, the quarter progress -- performance was better than expected from Pictures and Music. I would like to understand the situation. And up to the second quarter compared to the budget, is it higher or lower? What is the range? And for now, it looks healthy, and there are some continuing factors. So I'd like to understand the situation. And regarding Bungie, you said that the acquisition has been completed and the cost changed from JPY 44 billion to JPY 57 billion. I would like to understand the situation regarding that from next year onwards. And I'd like to understand the business situation and the timing of the consolidation. Can you give us an update, please?

Thank you very much for the question. Regarding the situation regarding Music and Pictures. Regarding Music, in the first quarter, it was -- it did very well. And Spider-Man and other titles made a major contribution. For the entertainment area, the profit contribution was very high from that perspective, and dramas have been produced for TV. There were many deliveries made. So this quarter, it performed very well. And for -- are we seeing a decrease in -- from this point onwards? Are we going to Spider-Man-Verse -- major titles. The Spider-Verse has been postponed to the next term. We have already made that decision. So that would have a negative impact. So that's why it's flat. Regarding Music, it's in line. The streaming market is doing very well. It's growing. And our share and margin are both also performing very well. And regarding games, so we'll have to look at the situation next year onwards. But regarding the cost for the acquisition, the expense for the FY '23 compared to this year, it will be an increase of about 20% -- by 20%. And also, the Bungie business having an impact on the whole both in terms of revenue and profit, I think it will be minimal.

We're running out of time, so we will limit only one question from -- per person. And so now, Katsura-san from SMBC Nikko Shoken.

So since I can only ask one question, this is related with the previous question, but there is some -- this is a general question. Now compared with year-on-year on the last -- the budget 1Q -- Q1 and full year, there are certain things that you have incorporated versus not incorporated. There were a lot of in and outs, so I'd like to kind of clearly understand them. First of all, Q1. So Shanghai locked down, about JPY 30 billion, right? ET&S is actually doing quite well. Picture's ahead of the plan. And games, no. I&SS is also -- have a slight change. And so there are a lot of changes for upsides. And the Financial services also looks like that. So -- but out of that, the actual like currency, so positive, negative. Also, there were a lot of in and outs, positive and negatives for currency. Can you just summarize like -- so how -- currency actual impact compared with last year? For the full year, so this is again gaming. Gaming is the only one you have made adjustment. But I&SS also have performed slower a bit. But there are -- if there are any other positives in other businesses, could you -- do you mind making some comments about that?

Okay. So year-on-year and versus last year, there were a lot of things that we have incorporated, not incorporated. And so currency versus last year, let me pick that up as the first discussion point, at the beginning of the year, this financial year, in terms of currency, when we started this planning process, the currency -- ForEx impact were -- we actually incorporate certain changes that could happen. So in Q1, about JPY 30 billion in positive. Positive, so I'm talking about impact for the bottom line. And that's, in the overall -- at high level, that's about the impact that we gained from currency change. The other thing -- so there are changes on the upside and downside. It's kind of complicated to describe. The reason why I say that is what we announced at the beginning of financial year, right -- back then, lockdown in Shanghai was very clearly there. We could see that coming. And geopolitical impacts, we have actually incorporated those -- the geopolitical developments. But global economic slowdown, including China, is something that we didn't really anticipate, incorporate. And that's an environment change that we only saw afterwards. And we have updated them based on those new developments. And what's being incorporated? What's not being operated? It's quite messy, if -- you feel like, well, partly because there was a positive from currency. But how much risks are we going to be incorporating? I guess that's what you're asking. But nature risks are very different from business to business, and the demand -- and how demand is going to go up or down. And economic slowdown, the depth of and the length of economic slowdown, right? That is the very important factor in determining that, which is very difficult to predict. What we can do is get as clear as possible in terms of intelligence that we can gather right now. So positive impact from currency are not completely being reflected for risks. But as a matter of fact, in first quarter -- this is just first quarter. We have 3 more quarters to go. So in -- since that's -- yes, that's the only thing that I can say at least at high level.

Next person is the last question, is Nishimura-san with Crédit Suisse.

And regarding gaming, and there has been the ForEx and also external factors. But is there a specific positive factor? For example, R&D and platform expansion? And also, there's -- I understand there's a launch for [indiscernible] game. And if you could update us with those positive impact developments.

And from second quarter onward, positive factors you asked. PS5 hardware -- PlayStation 5 hardware production is now experiencing much less restrictions from component suppliers. That's, I believe, is one big factor. And we want to produce as many units as possible. In terms of production capacity, we have enough and -- because Shanghai lockdown is already been resolved. And as I mentioned over year that the logistics lead time is -- has not recovered to the level pre-COVID-19. So it will take a little bit longer. So even considering that, we want to produce more units as soon as possible. And in terms of a third-party and first-party from second quarter onward, as I mentioned earlier, major hit titles are expected, and that is going to be a positive factor, obviously. In terms of a platform expansion/extension, new PS5 has, on the positive side, that the -- as of the end of June, we were able to roll out, as was planned. And so customers are moving to the new platform. But how much of this is going to impact? And we -- too early to say because we just rolled it out in end of June. We need to collect more data to say anything conclusive. But I don't think -- I think we had a very good start. That's it.

Okay. Now we have reached the scheduled ending time for Sony Group earnings announcement for Q1 FY '22. And thank you very much for your participation. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]