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Sega Sammy ups full-year projections after Q3 growth

| By Marese O'Hagan
Japanese Pachinko company Sega Sammy reported sales of JPY236.75bn (1.50bn/1.79bn/$2.04bn) for the nine-month period ended 31 December 2021, as the business recovered from the novel coronavirus (Covid-19) pandemic.

This is a 12.6% rise from the corresponding period in Sega Sammy’s 2020-21 financial year.

Its entertainment content business, including iconic video games business Sega, was the main source of sales revenue, bringing in JPY178.34bn, aided by revenue from the holiday season.

Sega Sammy picked out home downloads as a key driver behind the 6.0% year-on-year growth, especially with people buying content at home during Covid-19 lockdowns.

The sale of physical games units, on the other hand, were down 32.7% year-on-year, including Shin Megami Tensei V, Football Manager 2022 and Super Monkey Ball Banana Mania among the most popular.

The sale of pachislot and pachinko machines, meanwhile, made up JPY52.06bn in revenue, up 38.4% from the previous corresponding period.

Sales of its Pachislot Anemone Psalms of Eureka Seven Hi-Evolution machine hit 48,000 units, up 300% year-on-year. With the addition of sales from the P Hokuto No Ken Toushin machine, total machine sales for the nine months amounted to 64,000 units, an 8.4% improvement on the prior year.

Resort operations generated a further JPY6.81bn in revenue, a rise of 37.3%. Sega Sammy’s Phoenix Seagaia Resort in Miyazaki, Japan – which doesn’t offer gambling – saw a 111.4% increase in visitors compared to Q3 2020. Its Paradise City property in South Korea, meanwhile, saw a 47.8% decline in the purchase of chips by customers.

Cost of sales totalled JPY137.32bn, up 8.1%. This left an overall gross profit of JPY99.43bn, up 19.4%.

Selling, general and administrative expenses fell by 4.1% to JPY66.76bn, lowering the operating income to JPY32.66bn. However this still represented a 141.5% improvement on the previous year’s total.

Non-operating income was JPY3.66bn, which was almost cancelled out by non-operating expenses of JPY2.93bn. After factoring in other income of JPY2.75bn, and other losses at JPY555.0m, the total pre-tax income came to JPY35.5bn, a rise of JPY26.71bn year-on-year.

In Sega Sammy’s H1 results the company reported a return to profit, while its pachislot and pachinko machine division struggled.

Last month Sega Sammy announced that Sega was to exit the Japanese amusement arcade business after 50 years.

It will sell the remaining 14.9% of its Sega Entertainment division to Genda, which bought 85.1% of Sega Entertainment’s shares in 2020. The sale will see all Sega-branded arcades in Japan re-branded to GiGO, with Sega Entertainment named Genda GiGO Entertainment.

As a result of its performance over the first three quarters of its fiscal year, Sega Sammy has now raised its full-year projections.

For the year ended 31 March 2022, it expects total sales to reach JPY315.00bn, suggesting revenue will rise 13.4% from its 2020-21 financial year. This will be driven by stronger than expected sales of entertainment products, and increased demand for pachinko and pachislot machines.

This will offset a “sluggish” performance from the resorts division, with the operator warning that Covid-19 is still affecting customer demand and visitation.

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