Sega Sammy Holdings: Actual Results for the Third Quarter of the Year Ending March 2015

Key insights

6 takeaways

01
Sega Sammy Holdings issued a downward revision to its full-year operating results for the fiscal year ending March 2015, driven by extraordinary losses from structural reforms and reduced deferred tax assets.See it on page 1
02
The company is targeting a 6 billion yen reduction in fixed expenses, with the amusement segment identified as the primary focus for these cost-cutting measures.See it on page 1
03
Consumer Business performance underperformed due to weak packaged software sales and sluggish mobile pachinko and pachislot titles, leading to the strategic delay of several smartphone games to the next fiscal year.See it on page 2
04
The Pachislot and Pachinko Machines Business is adjusting to new regulatory testing methods, with compliant product releases scheduled to begin in the first quarter of the next fiscal year.See it on page 2
05
Development of a resort complex in Incheon, South Korea, remains on track for completion in the first half of 2017.See it on page 3
06
To maintain financial flexibility for long-term capital requirements, the company is currently acquiring treasury stocks without immediate plans for cancellation.See it on page 3

Summary

Sega Sammy Holdings implemented a significant downward revision to its full-year operating results forecast for the fiscal year ending March 2015. This adjustment is primarily driven by extraordinary losses associated with ongoing structural reforms and a reduction in deferred tax assets, which negatively impacted net income. The company is actively pursuing a strategy to reduce fixed expenses, targeting a 6 billion yen reduction, with the amusement segment serving as the primary area for these cost-cutting measures.

Performance in the Consumer Business segment fell short of previous expectations due to the sluggish performance of packaged software and mobile-based pachinko and pachislot games. Furthermore, the company strategically delayed the release of several smartphone titles to the next fiscal year to prioritize quality improvements, while also deferring the recognition of license income from overseas online games. Despite these setbacks, the company remains committed to its digital game strategy, with plans to launch multiple new titles in the upcoming fiscal year to enhance overall profitability.

The Pachislot and Pachinko Machines Business continues to navigate regulatory changes, specifically the introduction of new testing methods by the Security Communications Association. Management is preparing to release compliant products starting in the first quarter of the next fiscal year to mitigate potential market disruptions. Simultaneously, the company is progressing with the development of a resort complex in Incheon, South Korea, which is slated for completion in the first half of 2017. To support these long-term capital requirements and maintain financial flexibility, the company is currently acquiring treasury stocks, though it has no immediate plans for stock cancellation.