Sega Sammy Holdings Consolidated Financial Statements: 3 Months Ended June 30, 2014

Key insights

6 takeaways

01
Sega Sammy Holdings reported a significant decline in profitability for the quarter ending June 30, 2014, with operating income falling 42.3% to 9,307 million yen and net income dropping 57.4% to 5,520 million yen.See it on page 1
02
Net sales for the group decreased 2.6% year-over-year to 88,366 million yen, driven by a sluggish amusement market and demand fluctuations following a consumption tax increase.See it on page 3
03
The Pachislot and Pachinko segment, the company's primary revenue driver, saw net sales fall 8.5% to 47,476 million yen, with operating income declining 31.0% due to weak pachislot machine sales.See it on page 3
04
The Consumer Business segment achieved a 13.3% increase in net sales to 21,402 million yen behind strong digital and packaged software performance, though it recorded an operating loss due to higher advertising costs.See it on page 4
05
Both the Amusement Machine Sales and Amusement Center Operations segments reported operating losses for the quarter, attributed to the absence of major market-driving titles and the impact of the consumption tax hike.See it on page 3
06
Management maintained its full-year financial forecasts despite the weak first-quarter results, citing the need to monitor upcoming product schedules and market conditions.See it on page 4

Summary

Sega Sammy Holdings reported a challenging start to the fiscal year ending March 31, 2015, as consolidated financial results for the three-month period ending June 30, 2014, showed declines across key performance metrics. Net sales fell 2.6% year-over-year to 88,366 million yen, while operating income dropped 42.3% to 9,307 million yen. Net income experienced a significant contraction of 57.4%, totaling 5,520 million yen. These results reflect a broader economic environment characterized by post-consumption tax increase demand fluctuations and a sluggish amusement market.

Performance varied across the company’s primary business segments. The Pachislot and Pachinko segment, a major revenue driver, saw net sales decrease by 8.5% to 47,476 million yen, with operating income falling 31.0%. While pachinko machine sales exceeded the prior year’s figures, pachislot sales fell short. The Amusement Machine Sales and Amusement Center Operations segments both reported operating losses, hampered by the absence of major market-driving titles and the impact of the consumption tax hike. Conversely, the Consumer Business segment achieved a 13.3% increase in net sales to 21,402 million yen, driven by strong performance in packaged software and digital games, though the segment ultimately recorded an operating loss due to increased advertising expenditures.

Management maintained its existing full-year forecasts despite the first-quarter performance, citing the need to monitor product sales schedules and service conditions. The company adopted new accounting standards for retirement benefits during this period, which resulted in adjustments to retained earnings but had an insignificant impact on operating income. The group continues to operate 201 amusement centers domestically while focusing on revitalizing its machine businesses through the development of products tailored to evolving consumer needs.