Sega Sammy Holdings Summary of 3rd Quarter Results for FY Ending March 2013

Key insights

7 takeaways

01
Sega Sammy Holdings saw a sharp financial decline in the first three quarters of FY2013, with net sales dropping 33.6% to 207.0 billion yen and operating income falling 89.1% to 7.0 billion yen.See it on page 1
02
The primary cause of the earnings downturn was the postponement of key pachislot and pachinko title releases, leading to a significant reduction in full-year forecasts.See it on page 2
03
Pachislot and pachinko unit sales suffered substantial declines, reaching approximately 130,000 and 89,000 units respectively.See it on page 2
04
The consumer business segment achieved a turnaround, moving from a 5.5 billion yen operating loss in the previous year to an operating profit of 500 million yen, driven by packaged software like 'Ryu ga Gotoku 5' and digital titles.See it on page 3
05
Digital growth was highlighted by 'Phantasy Star Online 2', which reached 1.7 million registered users by the end of 2012.See it on page 3
06
The company expanded its international footprint and development capabilities by acquiring THQ Canada and the 'Company of Heroes' franchise.See it on page 1
07
Despite operational headwinds, the company maintained a stable financial position with an equity ratio of 59.0% and initiated resort development projects in Busan, South Korea.See it on page 2

Summary

Sega Sammy Holdings experienced a significant decline in financial performance during the first three quarters of the fiscal year ending March 2013. Consolidated net sales fell by 33.6% to 207.0 billion yen, while operating income dropped by 89.1% to 7.0 billion yen. This downturn was primarily driven by the postponement of key pachislot and pachinko title releases, which necessitated a downward revision of full-year earnings forecasts. Despite these challenges, the company maintained a sound financial position with an equity ratio of 59.0%.

The pachislot and pachinko segment, a core revenue driver, saw substantial volume declines, with pachislot unit sales falling to approximately 130,000 and pachinko units to 89,000. Conversely, the consumer business showed signs of stabilization, shifting from an operating loss of 5.5 billion yen in the previous year to an operating profit of 500 million yen. This improvement was supported by solid sales of packaged software like the Ryu ga Gotoku 5 series and the strong performance of digital titles, most notably Phantasy Star Online 2, which reached 1.7 million registered users by the end of 2012.

Strategic expansion efforts remained a priority during this period. The company secured a development project for the "Centum City" complex in Busan, South Korea, to build expertise in resort operations. Additionally, the acquisition of THQ Canada and specific intellectual properties, such as the Company of Heroes franchise, was executed to bolster PC and online game development capabilities in Western markets. While the company faced immediate headwinds from shifting release schedules and structural reforms, these investments in digital growth and international infrastructure represent a long-term effort to diversify revenue streams beyond traditional amusement and gaming hardware.