Fiscal Year 2010 Full Year Earnings Presentation · 2018-08-10 · Fiscal Year 2010 Full Year Earnings Presentation May 17th, 2010 SEGA SAMMY HOLDINGS INC. [Disclaimer] The contents
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[Disclaimer]The contents of this material and comments made during the questions and answers etc of this briefing session are the judgment and projections of the Company’s management based on currently available information.
These contents involve risk and uncertainty and the actual results may differ materially from these contents/comments.
・Decreased sales year-on-year, but returned to profitability・Strong overall domestic sales of game software, but sluggish sales of new titles overseas・Postponement of release of some titles to the following period・Streamlining of development by limiting the number of domestic titles
Consumer
・Decreased sales year-on-year due to reduction of number of facilities・Reduction of losses due to review of facility portfolio and reduction of operating expenses・SEGA domestic same-store sales performed at a lower level year-on-year・Closure or sale of 66 domestic facilities and 8 overseas facilities
Amusement Facilities
・Decreased sales but increased profitability compared to the previous period・Solid distribution of earnings due to utilization of revenue sharing model・Strong sales of CVT kits for mainstay titles
Amusement Machines
・Decreased sales year-on-year, but increased profitability・Gross margin ratio increased due to such factors as increase in pachinko board sales ratio, decrease in parts procurement costs, withdrawal from peripheral business, and review of pricing strategy・Write downs and such were implemented for scarcely used liquid crystal components and other parts・Sammy acquired Sammy Rental Services
Pachislot Pachinko
・Net sales: 384.6 billion yen, Operating income: 36.7 billion yen (31.0 billion yen), Net income: 20.2 billion yen (14.5 billion yen)
*Numbers shown in parentheses are reference values based on previous accounting policy (unaudited)・Decreased sales year-on-year, but increased profitability・Posted total extraordinary losses of 11.9 billion yen, which included an impairment loss and loss on revaluation of investments in securities
Operating Income – Primary Factors behind Fluctuations (Major Causes)
・Increased pachislot unit sales・Decreased parts procurement costs・Increased pachinko board ratio・Reduction of operating expenses due to withdrawal from peripheral business・Review of pricing strategy
¥4.3 billionLoss on revaluation of investment in securities
¥3.4 billionLoss accompanying cancellation of development of game content
¥30.2 billionTotal extraordinary losses
¥4.4 billionLoss on voluntary retirement of related expenses
¥6.4 billionImpairment loss
FY 2009 Full Year Results
¥2.3 billionOther
¥0.6 billionLoss on disposal of shares in affiliated company
¥0.4 billionLoss on disposal of fixed assets
¥1.6 billionLoss on liquidation of subsidiary
¥0.8 billionLoss on facility closures
¥11.9 billionTotal extraordinary losses
¥2.4 billionLoss on revaluation of investment in securities
¥3.8 billionImpairment loss
FY 2010 Full Year Results
■This period: 11.9 billion yen in extraordinary losses (Previous period: 30.2 billion yen in extraordinary losses)⇒ Significant reduction of extraordinary losses from the previous period
◆R&D costs and content production expenses decreased year-on-year, primarily in the Consumer Business and Amusement Machines Business, as well as cost deferrals in the Consumer Business in accordance with the postponement of introduction of some titles◆Cap-ex and depreciation expenses decreased significantly year-on-year, mainly due to a decrease in the number of amusement facilities
◆Current assets: 11.9 billion yen increase due to such factors as purchase ofnegotiable securities of deposits◆Fixed assets: 12.7 billion yen decrease due to such factors as impairment oftangible fixed assets ⇒Total assets: -0.7 billion yen decrease to 423.1 billion
yen ◆Equity ratio: +3.4 points to 55.8%
Summary of FY Results (JPY billion)
+26.8pt295.0% 321.8%
DifferenceEnd of previous fiscal year
End of thisfiscal year
+3.4pt52.4% 55.8%
+14.2242.5 256.7
-0.7423.9 423.1Total assets
Net assets
Equity ratio
Current ratio
(JPY billion)
(JPY billion)
Account End of previous fiscal year End of this fiscal year Change Account End of previous fiscal year End of this fiscal year ChangeCash and Cash Equivalents 106.4 101.3 -5.1 Accounts Payable 51.2 37.3 -13.9Accounts Receivable 80.4 67.0 -13.4 Corporate Bond 3.2 20.6 17.3Securities 26.7 73.4 46.6 Short Term Borrowings 5.4 3.4 -1.9Inventories 41.5 36.7 -4.7 Other 37.1 31.3 -5.7Other 31.4 20.2 -11.2
Total Current Liabilities 97.1 92.8 -4.3Total Current Assets 286.7 298.7 11.9 Corporate Bond 52.8 41.5 -11.3Tangible Fixed Assets 65.1 59.0 -6.0 Long Term Dept 6.7 6.1 -0.5Intangible Fixed Assets 13.2 13.3 0.1 Other 24.6 25.8 1.2Investment Securities 27.7 28.6 0.8Others 31.1 23.4 -7.6 Total Long-term Liabilities 84.2 73.5 -10.6
◆Decrease in unit sales year-on-year◆Improvement of board sales ratio◆Reduction of parts procurement costs centered on liquid crystal displays
Pachinko
◆Review of pachislot and pachinko pricing strategies◆Write downs and such were implemented for scarcely used liquid crystal components and other parts◆Reduced operating expenses through withdrawal from peripheral business◆ Sammy acquired Sammy Rental Services ◆Made GINZA Corporation a full subsidiary, positioning the company as a strategic brand which will play a role in the development of multiple brands
◆Postponed release of some mainstay titles, but increase in unit sales year-on-year◆Strong sales for this period’s mainstay title “Pachislot Psalms of Planets Eureka SeveN”◆Strong sales of multiple titles with innovative game features
◆Decreased sales compared to the previous period, during which major titles were released, but increased profitability◆Solid distribution of earnings due to utilization of revenue sharing model◆Strong sales of CVT kits for mainstay titles, such as “SEGA Network Mah-jong MJ4 Evolution”◆Cost reductions due to such factors as introduction of a common reusable chassis and new circuit board, as well as a review of parts procurement costs◆Reduction of R&D costs and content production expenses
⇒ Previous period: 11.4 billion yen⇒ This period: 7.8 billion yen + amount capitalized: 1.6 billion yen
◆Decreased sales year-on-year due to reduction of the number of facilities◆Reduced operating loss due to review of facility portfolio and reduction of operating expenses◆SEGA domestic same-store sales comparisons: Whole period: 91.7% (Jan: 96.6%, Feb: 89.4%, Mar: 92.6%)◆Promotion of closures of domestic facilities that have low potential and profitability
(Closures: 66 facilities, Openings: 4 facilities) ⇒ Number of facilities as of end of 4Q: 260 facilities
◆TOY: Strong overseas sales centered on “BAKUGAN,” but weak domestic sales due to stagnant consumption◆Mobile phone and PC content: Strong sales due to introduction of major titles and pay-per-use system◆Animation: Number of animation productions decreased, but revenue from sales was strong, buoyed by “BAKUGAN” overseas and others
Netw
ork / O
ther
◆Decreased sales year-on-year, but returned to profitability◆Strong domestic sales, but sluggish sales of new titles overseas◆Postponement of release of some titles to the following period◆Streamlining of development by limiting the number of domestic titles (Previous period: 36 titles ⇒ This period: 17 titles)◆Reduction of R&D costs and content production expenses
⇒ Previous period: 32.8 billion yen⇒ This period: 19.6 billion yen + amount capitalized: 3.9 billion yen
・Streamlining of development by limitingnumber of overseas titles・Decrease in use of operating expenses from closure of overseas development subsidiary and reorganization of North American and European organizations・Decrease in R&D costs and content production expenses・Improved profitability of listed subsidiary
Operating Income – Primary Factors behind Fluctuations (Major Causes)
◆Unit sales projected to increase year-on-year by 50,000 units to 410,000 units (Expected new unit sales in overall market: 2,850,000 units)
◆Projected introduction of 12 titles during the year, including large-scale titles◆Projected introduction of new chassis ⇒ Board sales ratio: 30.4% projected for whole period◆Cost reductions through reuse◆Titles to be sold in 1Q:
Sammy “Dejihane CR SOUTEN-NO-KEN”, “Pachinko CR Club Moon”, TAIYO ELEC “CR Cinderella Boy 2”
Pachinko
◆Unit sales projected to increase year-on-year by 47,000 units to 210,000 units (Expected new unit sales in overall market: 750,000 units)
◆Projected introduction of 13 titles during the year, including multiple mainstay titles◆Cost reductions through reuse◆Mainstay titles to be introduced from 1Q:
◆Increased sales but decreased profits year-on-year◆Continued contribution to profits from revenue sharing titles
⇒ Planned introduction of this period’s mainstay title “HATSUNE MIKU Project DIVA Arcade”◆Planned launch of this period’s mainstay title “SENGOKU TAISEN”
*The kids card game business, which had been included in the amusement facilities segment, was transferred to the amusement machine segment starting from the plan for fiscal year ending March 31, 2011.
FY 2011 Projections
Resultsthrough 2Q
Full YearResults
Projectionsthrough 2Q
YoY Change Full YearProjections
YoY Change
17.9 45.1 19.0 +6.1% 53.0 +17.5%
Domestic 14.8 38.9 16.3 +10.1% 43.3 +11.3%
Overseas 3.1 6.2 2.7 -12.9% 9.7 +56.5%
-0.7 7.0 0.1 - 5.5 -21.4%
Operating Income Margin - 15.5% 0.5% - 10.4% -5.1pt
◆Sales projected to decrease year-on-year in light of severe market conditions◆Domestic same-store sales comparison: Whole period: 95.8% (projected)◆Domestic facilities: Projected opening of 5 facilities and closure of 17 facilities
⇒ Number of facilities as of the end of the period: 248 facilities*The kids card game business, which had been included in the amusement facilities segment, was transferred to the amusement machine segment starting from the fiscal year ending March 31, 2011.
◆Decreased sales but increased profits year-on-year◆Projected unit sales of 16,960,000 units◆Streamlining of development by limiting the number of overseas titles (Last period: 49 titles ⇒ This period: 38 titles)◆Projected launch of this period’s mainstay titles, including “IRON MAN 2,” “VANQUISH” and “HATSUNE MIKU -Project DIVA- 2nd”◆Reduction of R&D costs and content production expenses ⇒ Projected for this period: 18.1 billion yen (Last period: 19.6 billion yen)
Entertainm
ent Softw
are
◆Toy: Strengthen Group efforts centered on “Bakugan LLP” and expand sales of “Zhu Zhu Pets” in the domestic market ◆Mobile phone and PC content: Mobile phone and PC content: Strengthen profitability through introduction of mainstay titles and expansion of “pay-per-use” service ◆Animation: Focus on further expansion of “BAKUGAN,” launch brand management of “Posties” and its license marketing
◆Year-on-year, net sales decreased by 2.8% to 10.76 billion yen, and operating income increased by 16.1% to 2.6 billion yen.◆Continued strong sales of AM Business, the company’s core business, centered on “777Town.net” (for PCs).◆Performance is trending upward due to plan to switch business models (introduction of pay-per-use) for the highly profitable “Sammy 777 Town” service (for mobile phones).◆Began full-fledged introduction of pay-per-use service for the high-priority business “Yosoo.net Mobile” whose membership topped 1.6 million.◆Withdrawal from the Solutions business (sale of all shares in Media-Trust Co., Ltd.).
Results in FY 2010
◆Year-on-year, net sales is projected to increase by 20.8% to 13 billion yen, and operating income is projected to increase by 19.2% to 3.1 billion yen.◆Aim for further growth through introduction of mainstay titles and expansion of “pay-per-use”service in the in the core AM Business (PCs and mobile phones).◆To analyze new service centered on “Yosoo.net Mobile” for make them profitable.
◆Year-on-year, net sales decreased by 9.6% to 17.13 billion yen, and an operating loss of 395 million yen was recorded.◆Domestic sales declined year-on-year, due to the overall slump in consumption and the lack of hit products.◆Continued strong overseas sales of the “BAKUGAN” character toy for boys.◆Liquidation of 3 unprofitable subsidiaries:TAIYO, RemArt, SEGA TOYS PLUS◆Transition to new management structure.
Projections in
FY 2011
◆Year-on-year, net sales is projected to decrease by 29.9% to 12 billion yen (decreased due to the change in the transaction from “BAKUGAN”), and operating income is projected to increase by 795 million yen to 400 million yen.◆Reintroduction of “BAKUGAN” domestically ⇒ Strengthen Group efforts centered on “Bakugan LLP”. New animation series being broadcast.◆Expanded sales in domestic market of “Zhu Zhu Pets (※)” for which exclusive selling rights in Japan were obtained in the previous period.◆Full-fledged release of web-linked “Jewelpet” toy, which was jointly developed with Sanrio. New animation series being broadcast.
※Awarded the 2010 Toy of the Year in the U.S.
“Jewelpet”(C)’08, ’09 SANRIO/SEGA TOYSWe’ve・TVO・Jewelpet Production Committee
◆Year-on-year, net sales increased by 69.2% to 24.19 billion yen, and operating income increased by 842.5% to 3.77 billion yen.◆Improve profit margin (Operating Income Margin increased 12.8 points year-on-year to 15.6%)⇒Reduce losses for scrapped parts through optimization of order quantities, cost reduction, increase of unit price due to introduction of new chassis and other factors ◆Pachinko unit sales: 72, 295 units
Major titles: “CR Kidou Shinsengumi Moeyo Ken 2”, “CR BLOOD+”, “CR Shin Honnoujinohen ~Yumemaboroshi no Gotoku~”◆Pachislot unit sales: 11,528 units, Major titles: “Pachislot BLOOD+”
Results in FY 2010
◆Year-on-year, net sales is projected to increase by 41% to 34.1 billion yen, and operating income is projected to increase by 2.4% to 38.6 billion yen.◆Projected sale of 6 titles and 90,000 units for pachinko and 4 titles and 35,000 units for pachislot machines.◆Nationwide promotion development, and increase in unit sales of pachinko and pachislot machine units and number of pachinko and pachislot halls that introduced those units through enhancement of relationship with sales agents.◆Development of mainstay pachislot machine, and promotion of sharing and common configuration of parts through business tie-up with Sammy.◆Establishment of production structure responding to short-term delivery, mass production and high quality.
◆Year-on-year, net sales decreased by 6.2% to 13.29 billion yen, and operating income increased by 10.3% to 320 million yen.◆Animation: Revenue from production decreased year-on-year due to advancement of planning choice that prioritizes productions with potential for profits and limits the number of productions, but revenue from sales increased, buoyed by overseas sales of “BAKUGAN” and the “Detective Conan” animated film, and sales of licenses for pachinko pachislot machines. Overall, operating income increased.◆Year-on-year, net sales for the Amusement Business declined, but operating income increased due to cost reductions. A net loss resulted from the recording of extraordinary losses due to impairment and store closures in order to further strengthen profitability into the future.
Results in FY 2010
◆Year-on-year, net sales is projected to increase by 3.7% to 13.78 billion yen, and operating income is projected to increase by 6.3% to 340 million yen. ◆Animation: Strove to increase revenues through formation of a value chain for animation production work for game machines that extends from planning and development to production and sales in an aim to expand profitability with “Bakugan LLP,” which was established through a joint investment of five Sega Sammy Group companies, as a member. Concerning new business, the Company has completed an agreement with Japan Post for joint ownership of the copyrights of Japan Post’s “Posties” image characters, and has begun brand management of the image characters as well as licensing sales to build a foundation that expands future profit-making opportunities.◆Amusement Facility: Aim to elevate the operations and investment effects of each facility in order to further strengthen profitability into the future, and promote the development of new facilities with priority placed on profitability and facility opening costs.
14 titles 17 titles 22 titles 4 titles 9 titles 16 titles 19 titles 1 title 5 titles 8 titles 12 titles607,106 units 523,422 units 380,688 units 15,048 units 55,102 units 108,500 units 123,286 units 5,111 units 57,038 units 79,243 units 162,932 units
8 titles 14 titles 9 titles 3 titles 6 titles 8 titles 12 titles 2 titles 8 titles 10 titles 13 titles288,895 units 132,981 units 108,184 units 19,704 units 154,950 units 237,288 units 391,831 units 53,748 units 167,715 units 329,850 units 360,171 units
The contents in this material and comments made during the questions andanswers etc. of this briefing session are the judgment and projections of theCompany’s management based on the currently available information.These contents involve risk and uncertainty, and the actual results may differmaterially from these contents/comments.
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