Recovery in the profitability of existing businesses

「Higher sales of dedicated units for smart gaming machines following their full-scale market introduction resulted in segment revenue of ¥1,622 million, up 56.2% year on year, and segment profit of ¥287 million, compared with a loss of ¥61 million in the same period of the previous year.」

「Following the start of the market rollout of smart gaming machines at pachinko halls nationwide last November, higher sales of dedicated units for smart gaming machines and other factors resulted in segment revenue of ¥4,345 million, up 16.0% from the previous consolidated fiscal year. The segment loss narrowed to ¥125 million, compared with a loss of ¥391 million in the previous consolidated fiscal year.」

「Following the start of the market introduction of smart gaming machines, higher sales of dedicated units for smart gaming machines and other factors resulted in segment revenue of ¥3,377 million, up 14.9% year on year, and a segment loss of ¥71 million, compared with a loss of ¥78 million in the same period of the previous year.」

「Pachinko halls remained cautious about capital investment ahead of the planned market introduction of smart gaming machines from November this year. Nevertheless, segment revenue was ¥1,989 million, up 6.5% year on year, and the segment loss narrowed to ¥147 million, compared with a loss of ¥178 million in the same period of the previous year.」

「Although sales of core products, primarily automatic medal replenishment systems, declined, an increase in construction projects related to changes in equipment specifications at pachinko halls and other factors resulted in segment revenue of ¥1,038 million, up 21.3% year on year, and a segment loss of ¥61 million, compared with a loss of ¥122 million in the same period of the previous year.」

「As customers continued to defer purchases of peripheral equipment while prioritizing the replacement of new-regulation machines, which reached their removal deadline at the end of January this year, segment revenue was ¥2,940 million, down 15.0% year on year, while the segment loss narrowed to ¥78 million, compared with a loss of ¥641 million in the same period of the previous year.」

「Demand for capital investment remained subdued as pachinko halls prioritized replacing old-regulation machines, whose removal deadline was approaching at the end of January next year, while the transition to new-regulation machines stagnated amid the COVID-19 pandemic. Lower sales of core products such as automatic medal replenishment systems and other factors resulted in segment revenue of ¥1,867 million, down 10.3% year on year, and a segment loss of ¥178 million, compared with a loss of ¥473 million in the same period of the previous year.」

「Lower sales of core products such as automatic medal replenishment systems resulted in segment revenue of ¥856 million, up 1.8% year on year but remaining at approximately the level of the same period of the previous year, when hall operations were voluntarily suspended due to the COVID-19 pandemic. The segment posted a loss of ¥122 million, compared with a loss of ¥245 million in the same period of the previous year.」

「In addition to the difficult market environment caused by tighter regulations and other factors, demand for replacing pachinko hall equipment stagnated due to the impact of voluntary business suspensions accompanying the spread of COVID-19. Lower sales of core products, primarily automatic medal replenishment systems, resulted in segment revenue of ¥2,082 million, down 31.1% year on year, and a segment loss of ¥473 million, compared with a loss of ¥56 million in the same period of the previous year.」

「In addition to the difficult market environment caused by tighter regulations and other factors, the spread of COVID-19 led to pachinko halls being closed. Lower sales of core products, primarily automatic medal replenishment systems, resulted in segment revenue of ¥841 million, down 52.1% year on year, and a segment loss of ¥245 million, compared with profit of ¥27 million in the same period of the previous year.」

「In addition to the continued difficult market environment, lower sales of the core automatic medal replenishment systems and other factors resulted in segment revenue of ¥4,811 million, down 12.7% year on year, and a segment loss of ¥69 million, compared with a loss of ¥165 million in the same period of the previous year.」

「Sales of new ball dispensers and medal dispensers increased, but lower sales of the core automatic medal replenishment systems and other factors resulted in segment revenue of ¥3,021 million, down 9.7% year on year. The segment posted a loss of ¥56 million, compared with a loss of ¥412 million in the same period of the previous year.」

「Although there was substantial replacement demand for equipment at the beginning of the period, capital investment declined from May onward, partly due to the industry’s voluntary suspension of equipment replacement. As a result, segment revenue was ¥1,758 million, down 2.7% year on year, and segment profit was ¥27 million, down 73.1%.」

「In addition to the decline in revenue resulting from the discontinuation of the amusement business during the previous consolidated fiscal year, lower sales of core products such as automatic medal replenishment systems and ball dispensers resulted in segment revenue of ¥7,136 million, down 11.1% from the previous consolidated fiscal year. However, following a reduction in inventory carrying values, among other factors, the segment loss narrowed to ¥228 million, compared with a loss of ¥489 million in the previous consolidated fiscal year.」

「In the gaming venue equipment market, we conducted proactive sales activities and worked to secure orders despite the difficult environment. As a result, revenue for the nine-month consolidated cumulative period was ¥5,512 million, down 15.2% year on year, and the segment posted a loss of ¥165 million, compared with profit of ¥87 million in the same period of the previous year.」

「Due in part to lower sales of core products, including automatic medal replenishment systems and ball dispensers, segment revenue was ¥3,348 million, down 16.9% year on year. While the effects of various cost reductions under the business restructuring plan are beginning to emerge toward the second half, the Company reduced the carrying value of part of its inventories to strengthen its financial position, in view of the ongoing decline in selling prices in this market. As a result, the segment posted a loss of ¥412 million, compared with a loss of ¥19 million in the same quarter of the previous year.」

「However, efforts to improve profitability through the business restructuring plan resulted in segment profit of ¥102 million, up 338.1% year on year.」

「In light of industry trends in recent years and the market’s tendency to contract due to tighter regulations, we began fundamental structural reforms of the gaming venue equipment business, aiming to rebuild a structure capable of securing earnings even in a low-growth market by reducing fixed costs, including through the consolidation and closure of sales offices, and by reducing inventories.」

「② Improving the profitability of existing business areas We will improve the integrated earnings structure and operating foundation, centered on the sales division and covering development, production, quality, and maintenance and servicing businesses.」

「For the gaming venue equipment market, we worked to maintain and expand market share by strengthening our product lineup through the business transfer carried out last year.」

「The Group will work to improve performance under the themes of “maintaining and expanding the market share of existing businesses” and “accelerating the promotion of growth in new businesses.”」

「For the existing gaming and gaming venue equipment businesses, we will seek to maintain and expand a stable market share by actively leveraging products, markets, customers, assets and other resources newly acquired through acquisitions or business transfers, with the aim of maximizing synergies with the existing businesses.」

「In response to the shift in capital investment toward pachislot areas within the pachinko industry, the Company focused on selling related equipment, including the automatic medal replenishment and collection systems in which the Group specializes. As a result, segment revenue was ¥3,895 million, up 4.2% year on year, and segment profit was ¥95 million, up 405.7%.」

「Amid a continued trend of restrained capital investment across the industry, sales of related equipment, including the automatic medal replenishment systems in which the Group specializes, helped drive segment revenue to ¥1,885 million, up 2.5% year on year, and segment profit to ¥76 million, compared with a segment loss of ¥20 million in the same quarter of the previous year.」

「Using “recovery in the profitability of existing businesses” and “active expansion into new businesses that will become new earnings pillars” as key themes, we will address the respective challenges.」