Sega Sammy Holdings: Actual Results for the Year Ended March 2013

Sega Sammy Holdings’ fiscal year 2013 performance review and 2014 outlook detail the company’s financial trajectory across its diverse entertainment portfolio. The fiscal year ending March 2013 was characterized by a decline in overall sales and income, primarily driven by reduced unit sales in the Pachislot and Pachinko Machines Business due to unfavorable market conditions and revised sales schedules. Despite these headwinds, net income rose due to tax benefits from the liquidation of U.S. subsidiaries and extraordinary gains from pension fund adjustments. The Consumer Business saw a decrease in total sales but successfully narrowed its operating loss through structural reforms in Western markets and the strong performance of digital titles like Phantasy Star Online 2 and the Kingdom Conquest series.

The company’s strategic focus for the fiscal year ending March 2014 centers on a return to growth through increased unit sales in the Pachislot and Pachinko sectors and a projected return to profitability in the Consumer Business. Management anticipates that the digital gaming segment, bolstered by the operational shift toward service-based models and the success of titles like Puyopuyo!! Quest, will serve as a primary earnings driver. Additionally, the company is expanding its footprint in the resort and casino industry, with ongoing developments in Incheon and Busan aimed at leveraging its entertainment expertise.

Operational expenses, including R&D, depreciation, and advertising, are expected to rise in 2014 to support these growth initiatives and the launch of new mainstay titles. While the Amusement Machine Sales Business expects a recovery following a development-cycle-induced lull, the Amusement Center Operations Business anticipates a slight income decline despite projected sales growth, largely due to the reversal of previous accounting policy benefits. These projections reflect a broader corporate strategy of diversifying revenue streams while navigating the cyclical nature of the Japanese gaming market.