Capcom Summary of Consolidated Financial Results for the 3rd Quarter: Fiscal Year Ending March 31, 2008

Key insights

6 takeaways

01
Capcom reported a 4.8% increase in net sales to 51,655 million yen for the third quarter of the fiscal year ending March 31, 2008, though net income declined 17.8% to 3,574 million yen.See it on page 1
02
The Home Video Games division drove growth with a 23.3% increase in net sales to 30,852 million yen and a 38.2% rise in operating income to 6,039 million yen, fueled by Resident Evil and Monster Hunter Freedom 2.See it on page 2
03
Arcade Operations and Arcade Games Sales segments underperformed, with the latter recording an operating loss of 692 million yen due to a lack of flagship software.See it on page 3
04
Operating income fell 8.2% to 6,101 million yen, impacted by increased operational expenses, a challenging Japanese macroeconomic environment, and updated accounting standards for depreciation and retirement gratuities.See it on page 4
05
Despite mixed quarterly results, the company maintained its full-year forecast of 81,600 million yen in net sales and 6,200 million yen in net income.See it on page 7
06
The company’s financial position remains stable with a shareholders' equity ratio of 56.8% and total assets of 90,081 million yen.See it on page 1

Summary

Capcom’s consolidated financial results for the third quarter of the fiscal year ending March 31, 2008, reflect a period of moderate revenue growth tempered by declining profitability. Net sales reached 51,655 million yen, representing a 4.8% increase compared to the same period in the previous year. However, operating income fell by 8.2% to 6,101 million yen, and net income declined by 17.8% to 3,574 million yen. These results were influenced by a challenging macroeconomic environment in Japan, characterized by fluctuating stock prices and currency appreciation, alongside increased operational expenses.

The company’s performance varied significantly across its business segments. The Home Video Games division served as a primary growth driver, with net sales rising 23.3% to 30,852 million yen and operating income increasing 38.2% to 6,039 million yen, bolstered by strong international sales of Resident Evil titles and the continued popularity of Monster Hunter Freedom 2. Conversely, the Arcade Operations and Arcade Games Sales segments struggled; the former faced declining customer spending and high costs associated with new store openings, while the latter suffered from a lack of flagship software, resulting in an operating loss of 692 million yen.

The financial position remained stable, with total assets at 90,081 million yen and a shareholders' equity ratio of 56.8%. Cash and cash equivalents decreased to 31,087 million yen, impacted by capital expenditures and dividend payments. The company applied updated accounting standards regarding depreciation and retirement gratuities for directors, which contributed to a reduction in reported operating and ordinary income. Despite the mixed quarterly performance, the company maintained its full-year forecast, projecting net sales of 81,600 million yen and net income of 6,200 million yen for the fiscal year ending March 31, 2008.