Financial

Fiscal Year Ending March 2019: 1st Half Financial Results

1 January 201826 pages2,439 words

Summary

Koei Tecmo Holdings reported record-breaking financial results for the first half of the fiscal year ending March 2019, characterized by significant growth in profitability and the expansion of its global intellectual property (IP) portfolio. Net sales reached 17.4 billion yen, a 16.7% increase year-over-year, while operating profit surged by 64.3% to 4.68 billion yen. This performance was driven by high-margin royalty income from licensed titles and the continued success of the smartphone game sector, resulting in an improved operating profit ratio of 26.9%. The strategic focus centers on three primary pillars: creating global AAA titles with sales targets of 5 million copies, developing smartphone titles capable of generating 1 billion yen in monthly revenue, and collaborating with leading overseas IPs. Key product milestones during this period included the continued success of Nioh, which surpassed 2 million copies, and the strong performance of licensed mobile titles like Shin-Sangoku-shi and Dynasty Warriors: Unleashed, both of which achieved high rankings on the App Store and Google Play in Japan. Geographically, Japan remains the largest market, accounting for approximately 66% of sales, though the Asia region saw the most dramatic growth with a 46.1% increase in revenue. While unit sales for packaged software saw a slight decline of 6.6% to 2.39 million units, the company offset this through digital growth and licensing. Looking forward, the mid-term management plan aims for 51 billion yen in sales and 21 billion yen in ordinary profit by fiscal year 2020, supported by upcoming major releases such as Dead or Alive 6 and Nioh 2, alongside a full-scale entry into the Chinese market and the completion of a new office in Minato Mirai.

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Fiscal Year Ending March 2018: 1st Half Financial Results

Koei Tecmo Holdings reported record-breaking financial performance for the first half of the fiscal year ending March 2018, achieving all-time highs in ordinary profit and net income. Despite a 10% year-over-year decrease in sales to 14.9 billion yen, ordinary profit rose 40.6% to 6.9 billion yen, and net income increased 33% to 5.0 billion yen. These results significantly exceeded initial management forecasts, driven by high-margin IP licensing and a strong performance in the entertainment segment, which remains the primary revenue driver. The geographic scope of the results reveals a strategic shift toward international markets. While domestic sales in Japan declined by 19.1%, overseas revenue grew by 15.6%, with the Asian market showing the most significant growth at 45.9%. Unit sales data further illustrates this trend, as overseas software sales rose to 69.3% of the total volume, nearly doubling in North America and Europe compared to the previous year. Key titles contributing to this success included Nioh, which surpassed 2 million units, and Fire Emblem Warriors. Looking ahead, the company maintains an optimistic full-year outlook, projecting sales of 42 billion yen and an operating profit of 11.5 billion yen. The strategy for the second half of the fiscal year focuses on multi-platform releases for the Nintendo Switch, PlayStation 4, and Steam, alongside the expansion of smartphone gaming through the new "midas" brand. Additionally, the company is diversifying its portfolio through location-based entertainment, such as the "VR Sense" cabinet, and strategic alliances with AI technology firms like HEROZ, Inc. to enhance future development capabilities.

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