Q3 results 2020

Machine sales growth fails to offset IR decline for Universal

2 minutes read
Japanese gaming content developer and integrated resort operator Universal Entertainment saw revenue for the nine months to 30 September fall 17.5% year-on-year, as growth in its gaming machine business failed to offset decline from its Philippines integrated resort.

Revenue for the three quarters of the year to date came to JPY77.14bn (£555.3m/€620.3m/$732.4m), of which Universal’s amusement machines business – comprising sales of pachinko and pachislot machines – contributed JPY55.55bn, up 31.0% from the prior year. 

In the third quarter alone, however, the division’s contribution came to JPY6.70bn, a significant year-on-year drop.

This was mitigated by a strong first half performance, in which sales more than doubled to JPY48.85bn, thanks to the roll-out of new pachislot devices during the first six months of 2020. 

The third quarter decline, Universal explained, was down to the novel coronavirus (Covid-19) pandemic, which had made pachinko hall operators cautious about replacing existing machines with new models. 

The integrated resorts division, comprising the Okada Manila property in the Philippines, saw sales fall 58.6% to JPY20.56bn. This followed the shutdown of the property from March, which did not reopen until mid-September. 

Universal noted that while it was permitted to reopen, it remains limited to 30% capacity.

Other revenue, including its gaming and social casino titles, fell 19.0% to JPY930m. Its “Anata no Otto!? Hades” title proved “an immediate hit”, while its Slots Street social casino app rolled out Golden Hibiscus, its second slot developed in partnership with Sega, following a Mahjong game released in 2019. 

Turning to costs, operating expenses for the year to date declined to JPY33.14bn, leaving a gross profit of JPY44.01bn, down 9.1%. Selling, general and administrative expenses also declined, allowing Universal to increase its net profit for the nine month period from JPY1.39bn in the prior year to JPY7.80bn. 

After non-operating income of JPY1.32bn, plus non-operating expenses of JPY9.52bn, Universal posted a JPY394m operating loss for the period, significantly reduced from the JPY6.46bn loss in 2019. 

If depreciation and amortisation were factored back in, earnings before interest, tax, depreciation and amortisation (EBITDA) for the period came to JPY20.81bn, down 2.8%. 

While the operating loss was significantly reduced, the business then recorded an extraordinary non-recurring loss of JPY6.81bn, related to its Philippines property’s shut-down. 

This led to a marginal increase in pre-tax loss, to JPY7.20bn, though a JPY382m tax deferral helped reduce this figure slightly, for a total net loss of JPY6.81bn, up 18.8% year-on-year. 

Image: Tomas Cermak via Freeimages.com

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