FY Ending March 2018 1st Quarter Results Presentation

Key insights

5 takeaways

01
Sega Sammy Holdings reported a strong Q1 FY2018 with 107.2 billion JPY in consolidated sales and 16.6 billion JPY in operating income, driven primarily by the Pachislot and Pachinko segment.See it on page 1
02
The Entertainment Contents division saw a 7% sales increase to 50.2 billion JPY, though operating income fell 24% to 3.7 billion JPY due to a 50% decline in digital games profit.See it on page 14
03
Packaged game sales in North American and European markets surged by 111%, providing a significant offset to the underperformance in the digital games sector.See it on page 14
04
Management maintains a conservative outlook for the remainder of the fiscal year due to anticipated regulatory changes affecting the Japanese gaming machine market.See it on page 4
05
The company is actively diversifying its business model through an integrated resort strategy, marked by the launch of PARADISE CITY in South Korea and upgrades to the Phoenix Seagaia Resort.See it on page 20

Summary

Sega Sammy Holdings achieved a robust start to the fiscal year ending March 2018, recording consolidated sales of 107.2 billion JPY and operating income of 16.6 billion JPY. This performance was largely anchored by the Pachislot and Pachinko segment, which experienced substantial year-over-year growth in both revenue and profit following the successful introduction of key titles. Despite these gains, the company maintains a conservative outlook for the latter half of the fiscal year, citing impending regulatory shifts within the Japanese gaming machine market that may impact future operations.

The Entertainment Contents division presented a mixed performance, characterized by a 7% increase in total sales to 50.2 billion JPY, contrasted by a 24% decline in operating income to 3.7 billion JPY. While the packaged games segment demonstrated significant momentum, particularly in North American and European markets where unit sales surged by 111%, the digital games sector struggled, suffering a 21% decrease in sales and a 50% drop in operating income. These results underscore a period of transition as the company balances legacy strengths with evolving digital demands.

Beyond core gaming operations, the organization continues to prioritize its long-term integrated resort strategy. This expansion is highlighted by the successful launch of PARADISE CITY in South Korea and ongoing capital improvements at the Phoenix Seagaia Resort. By synthesizing historical financial data spanning from 2005 through mid-2017, the company provides a comprehensive view of its operational trajectory, reflecting the impact of various segment restructurings and accounting adjustments. This strategic focus on diversifying into the resort sector serves as a critical pillar for future growth alongside its established entertainment and gaming machine businesses.