Earnings Results Briefing for the 1st Quarter: Fiscal Year Ending March 31, 2027

The first-quarter earnings results for the fiscal year ending March 31, 2027, reflect a period of structural transition characterized by increased net sales but a decline in operating profit. Consolidated net sales reached 68.25 billion JPY, a 5.3% year-on-year increase, while operating profit fell by 45.5% to 1.26 billion JPY. The significant drop in profit attributable to owners of the parent, which totaled a loss of 4.54 billion JPY, was primarily driven by an extraordinary loss associated with a special early retirement program. Despite this, the company maintained its full-year earnings forecasts for operating and ordinary profit, citing stable performance across most business segments.

The Publication and IP Creation segment served as a primary growth driver, with net sales rising 10.2% to 37.97 billion JPY. This segment benefited from structural reforms, including optimized print runs and improved return rates, which decreased from 33.7% to 29.7% year-on-year. Conversely, the Gaming segment experienced a 37.4% decline in net sales and a 58.8% drop in operating profit, largely due to the absence of major title launches comparable to the previous year’s performance. The Animation and Film segment saw a 26.1% increase in net sales, though it recorded an operating loss as the company continues to invest in long-term production capacity and studio consolidation.

Management remains focused on executing its mid-term strategy, which emphasizes increasing the in-house animation production rate to 50% by fiscal year 2031 and maximizing IP value through transmedia development. While rising production costs and industry-wide labor shortages present ongoing challenges, the company is implementing initiatives such as the Studio One Base project to streamline operations and enhance profitability. The current fiscal outlook remains consistent with initial projections, as the company anticipates that ongoing cost-reduction measures and strategic investments in high-potential titles will stabilize performance throughout the remainder of the year.