Investment giant Softbank Group on Wednesday reported an annual net profit of $45.8 billion, the best ever for a Japanese company, reaping the rewards of tech share rallies to recover from last year’s record loss.
The telecoms-firm-turned-investment-behemoth has poured money into some of Silicon Valley’s biggest names and hottest new ventures from AI to biotech through its $100-billion Vision Fund.
“The technology sector, where the company focuses its investment strategies, has been positively impacted by the accelerated adoption of digital services to address the pandemic,” SoftBank said in a statement.
“However, there is no guarantee that the current positive impact will be sustained in light of uncertainties associated with the pandemic.”
Net profit for 2020-21 was 4.99 trillion yen ($45.8 billion), exceeding its own target and putting it in the ranks of the world’s most profitable companies.
In 2019-20, SoftBank reported a net loss of 961.6 billion yen — its worst ever — as the start of the pandemic compounded woes caused by its investment in troubled office-sharing start-up WeWork.
But it quickly returned to profit as the impact of Covid-19 lockdowns worked largely in its favour.
South Korean e-commerce giant Coupang, backed by SoftBank, in March raised more than $4 billion in its initial public offering (IPO) as people flocked to shop online during lockdowns.
The value of the Vision Fund’s stake in US food delivery app DoorDash also rose massively following its IPO in December.
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Soaring tech shares on Wall Street led to consolidated gains of 7.53 trillion yen on its investments, particularly Vision Fund shares, the conglomerate said.
CEO Masayoshi Son, Japan’s richest person according to Forbes, in February hailed the Vision Fund as a “goose that produces golden eggs”.
Having transformed SoftBank into an investment giant, Son has battled critics of his commitment to sometimes-troubled start-ups, and brushed aside doubts over a massive asset sale programme.
Masahiko Ishino, an analyst at Tokai Tokyo Research Institute, said SoftBank should make hay while the sun shines.
“I don’t know if ‘it’s time to harvest’ is the correct phrase — but it’s true that now is a good time to see results after the company’s investments three or four years ago,” he told AFP ahead of the earnings report.
“A big factor behind (SoftBank’s strong results) is the soaring US and global markets. It’s a powerful driver, as many of the companies SoftBank has invested in are listed in the United States,” he explained.
With the aggregate market value on Wall Street snowballing since the 2008-9 financial crisis, “the opportunity to obtain returns on investment has grown”, Ishino said.
SoftBank has invested heavily in ride-hailing platforms worldwide in recent years, from California-based Uber to Didi Chuxing in China, Singapore’s Grab and India’s Ola.
In January, SoftBank announced the sale of $2 billion worth of stocks in Uber following a surge in the US ride-hailing giant’s value, though it still remains the firm’s main shareholder.
Last month the Japanese group said it will buy a 40 percent stake in Norwegian robotics company AutoStore, which develops warehouse automation technology, in a deal worth $2.8 billion.
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