Leaded by WeWork, SoftBank predicts higher-than-expected annual net loss

by bold-lichterman

Japanese tech investment giant SoftBank Group said Thursday it expects an even larger-than-expected net loss in its 2019/20 fiscal year, due to WeWork’s increased negative impact on its accounts. SoftBank Group now forecasts a net loss of 900 billion yen (nearly 7.8 billion euros) on its financial year ended March 31, while it had forecast in mid-April a loss of 750 billion yen.

In question, the upward revision of non-operational losses related to assets held outside its investment fund Vision Fund, in particular WeWork, the American giant of shared offices, in great difficulty since last year. These non-operational losses are expected to total 1,000 billion yen, against a previous forecast of 800 billion yen, according to a statement from SoftBank Group.

New asset disposal plan

However, the group did not change Thursday its forecast of operational loss (1350 billion yen) or that of its turnover (6 150 billion yen, down 36% over one year). It is supposed to release its final annual results on May 18. In particular, SoftBank Group had to fly to the aid of WeWork last fall in the face of the financial collapse of the American company, whose IPO project had exploded in full flight due to growing doubts among investors about its economic model and its governance at the time.

However, the shareholders of SoftBank Group were indifferent on Thursday to this umpteenth bad news: the title appreciated by 3.21% to 4,758 yen around 01:10 GMT, on a Nikkei index very well oriented (+ 2.61%). To pass the pill on to its shareholders, SoftBank Group announced in March a huge asset disposal plan of 4.5 trillion yen over 12 months, combined with a huge buyback plan for its own shares (for 2.5 trillion yen) in order to cancel them and thus increase the value of its stock on the stock market.