The SoftBank Group’s logo in Tokyo, on May 12, 2021. (Philip Fong/AFP via Getty Images)
Net Loss of $2.2 Billion From China Investment
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SoftBank Group Corp on May 12 released its performance for the 2021 fiscal year ending March 31, reporting a net loss of 1.7 trillion yen ($15.1 billion), the biggest loss in any fiscal year since its establishment in 1981. Its Vision Fund posted a net loss of 251.6 billion yen ($2.2 billion) in the Chinese market.
In contrast, Vision Fund’s investment income in the U.S. market was 1.77 trillion yen ($15.7 billion) over the same period, and the total income in Asia, Europe, and Latin America excluding China was 1.52 trillion yen ($13.5 billion).
Altogether, Vision Fund and other fund investments lost a combined 3.7 trillion yen ($32.9 billion). One of the biggest losses came from Chinese ride-hailing giant Didi Global Inc.
As of March 31, SoftBank Group’s net asset value was 18.5 trillion yen ($164.3 billion), and the loss in the first quarter of 2022 was 0.8 trillion yen (47.1 billion).
The company has been trimming its stake in Chinese e-commerce giant Alibaba, from 59 percent on Sept. 30, 2020, to the current 22 percent.
The plummet in Alibaba’s stock price is one of the main reasons for the reduction, which fell from HK$275.6 (US$35.8) on Sept. 30, 2020, to HK$80.0 (US$10.4) on May 12.
There have been big swings in SoftBank Group’s earnings curve over the past three fiscal years. There was a dramatic net loss of a trillion yen ($8.9 billion) in fiscal 2019 and a dramatic net gain of 5 trillion yen ($44.4 billion) in fiscal 2020. Then, the net loss for the financial year 2021 was 1.7 times that of the 2019 financial year.
In a November 2021 article, Chinese media Broker China called SoftBank Group the biggest “victim” of the heavy blow on Chinese internet giants, when Vision Fund and other funds lost about 1.16 trillion yen ($10.3 billion) in a quarter.
SoftBank Group’s newly released Consolidated Financial Reports mentioned the losses caused by Didi, citing the impact of tightened regulatory policies on the market, as well as the huge fines imposed on Alibaba by Chinese regulators in the name of antitrust.
Both Alibaba and Didi encountered harsh disciplinary measures by the Chinese authorities in 2021. Alibaba was fined 18.228 billion yuan ($2.7 billion) by the State Administration for Market Regulation in April 2021, while Didi was forced to delist from the New York Stock Exchange. Moreover, Didi’s app was removed from mobile stores, and new user registration is completely suspended.
When announcing the fiscal 2021 results, Masayoshi Son, founder and chairman of SoftBank Group, stated that the company has to enter a “defensive” state.
“With the current market conditions, no one knows what will happen tomorrow, so we have to prepare for the worst,” he said in an interview, according to a video posted on the SoftBank Group’s official website.