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Integrated Report 2019

Key insights

5 takeaways

01
Fiscal 2019 operating income was ¥13.0 billion, the second consecutive year below initial targets, with the report citing a regulatory revision and a lack of hit digital games as main causes.See it on page 18
02
Pachislot unit sales fell 21% year on year in fiscal 2019 because low approval rates for machines under the revised regulation limited the number of titles released.See it on page 43
03
The Digital Games area recorded an operating loss of ¥1.9 billion in fiscal 2019, after new titles fell short of expected sales and existing titles stagnated.See it on page 51
04
The company forecasts fiscal 2020 pachislot unit sales of 120,000 units, an increase of 53,000 units from the previous fiscal year.See it on page 45
05
The Packaged Games area operating income margin rose 3.6 percentage points year on year to 15.0% in fiscal 2019, mainly driven by overseas sales growth.See it on page 19

Summary

SEGA SAMMY Group's Integrated Report 2019 explains the challenges encountered while pursuing its Road to 2020 medium-term management strategy, covering the company's fiscal years through March 2019 and its outlook for fiscal year 2020, the strategy's final year. The Group recorded results below initial targets for the second consecutive fiscal year, and the report states it does not expect to reach its fiscal 2020 targets of an operating income margin of at least 15% and ROA of at least 5%.

The report attributes the shortfall mainly to two areas. In the Pachislot and Pachinko Machines Business, a February 2018 regulatory revision lowered approval rates, which reduced unit sales; pachislot unit sales fell 21% year on year in fiscal 2019. In the Entertainment Contents Business, the Digital Games area recorded an operating loss of ¥1.9 billion in fiscal 2019 after delayed or canceled new titles and stagnation of existing titles.

Fiscal 2019 consolidated net sales were ¥331.6 billion, up 2% year on year, while operating income was ¥13.0 billion, down 26%. The Group reported that cost-improvement measures raised the Pachislot and Pachinko Machines Business operating income margin to 13.2%, and that the Packaged Games area margin rose to 15.0%. The company expects fiscal 2020 pachislot unit sales of 120,000 units and states that it plans to pursue overseas packaged games and existing IP.