Slide 1: Presentation on Business Results of FY 3/2021
Presentation on Business Results of FY 3/2021 (April 1, 2020 to March 31, 2021) May 14, 2021 SANKYO CO., LTD. 1st Sec. of the TSE #6417
Slide 2: Contents
Contents Overview of Financial Results P3 Overview of Business P11 Initiatives of Pachinko and Pachislot Industry P18 FY 3/2022 Forecast P21 Appendix P38 © 2021 SANKYO CO., LTD. 2
Slide 3: Financial Highlights
Financial Highlights Year-on-year decreases in both net sales and profits due to the impact of the COVID-19 pandemic. Failed to reach the initial sales target in the challenging market environment despite efforts to stimulate demand by offering diverse products. Net Sales 58,129 million yen YoY
Slide 4: Summary of Financial Results
Summary of Financial Results The business environment of pachinko parlors has been deteriorating owing to the COVID-19 pandemic and parlor operators’ willingness to purchase new models has been Pachinko declining. Improvement of the machine utilization at pachinko parlors has stalled at a level of
Slide 5: Summary of Financial Results
Summary of Financial Results million yen FY 3/2020 FY 3/2021 YoY Net Sales 78,416 58,129 -20,287 -25.9% Pachinko Machines Business 60,514 52,310 -8,204 -13.6% Pachislot Machines Business 11,441 3,022 -8,419 -73.6% Cost of Sales 36,671 27,403 -9,268 -25.3% Gross Profit 41,745 30,726 -11,019 -26.4% Pe
Slide 6: Factors of Change in Consolidated Net Sales
Factors of Change in Consolidated Net Sales Million yen Pachinko Machines Business Pachislot Machines 78,416 -8,204 Business Ball Bearing Supply -8,419 Business Other Business -3,367 -297 58,129 FY3/2020 FY3/2021 -20,287 million yen（-25.9%） © 2021 SANKYO CO., LTD. 6
Slide 7: Factors of Change in Consolidated Operating Income
Factors of Change in Consolidated Operating Income Million yen The gross profit of the pachinko machine sales decreases 12,551 -3,785 The gross profit of the pachislot machine sales decreases -4,581 +1,714 -1,720 +1,337 Other factors 6,587 R&D +1,071 expenses Sales decreases commission Advertising d
Slide 8: Costs and Expenses
Costs and Expenses million yen FY 3/2020 FY 3/2021 YoY SG & A Expenses 29,193 24,138 -5,055 -17.3% Advertising Expenses 1,942 871 -1,071 -55.1% Sales Commission 3,509 2,172 -1,337 -38.1% R&D Expenses 13,847 12,133 -1,714 -12.4% Salaries & Wages 3,017 2,937 -80 -2.7% Depreciation & Amortization 3,476
Slide 9: Summary of Balance Sheet
Summary of Balance Sheet million yen As of 31-Mar-20 As of 31-Mar-21 YoY Factors of Change Total current assets 276,041 243,343 -32,698 Decrease in cash and deposits and notes and accounts Quick assets 259,589 234,738 -24,851 receivable-trade Total fixed assets 49,190 48,761 -429 Investment securiti
Slide 10: Contents
Contents Overview of Financial Results P3 Overview of Business P11 Initiatives of Pachinko and Pachislot Industry P18 FY 3/2022 Forecast P21 Appendix P38 © 2021 SANKYO CO., LTD. 10
Slide 11: Pachinko Machines Business
Pachinko Machines Business Factors of Change in Net sales Data Million yen million yen FY 3/2020 FY 3/2021 YoY FY 3/2020 (Apr-Mar) 60,514 Net Sales 60,514 52,310 -8,204 Sales volume of SANKYO-brand Operating Income 14,804 12,916 -1,888 and JB-brand pachinko machines -566 decreases. Percentage 24.5%
Slide 12: Pachinko Machines Business
Pachinko Machines Business New Title x9 Reused Models 1Q 1Q 2Q 3Q 4Q Fever Symphogear 2 Fever BIOHAZARD REVELATIONS 2 Fever Queen Ⅱ CODE GEASS Lelouch of Fever Shinkagetsu 2 Yozakura ver. Light / Light middle ver. the Rebellion Fever Aquarion ALL STARS NEON GENESIS EVANGELION Fever Shinkagetsu 2 Yoz
Slide 13: Pachislot Machines Business
Pachislot Machines Business Factors of Change in Net sales Data Million yen million yen FY 3/2020 FY 3/2021 YoY FY 3/2020 (Apr-Mar) 11,441 Net Sales 11,441 3,022 -8,419 Sales volume of SANKYO-brand Operating Income 2,449 (1,890) -4,339 pachislot machines decreases. -6,030 Percentage 21.4% (62.5%) Al
Slide 14: Pachislot Machines Business
Pachislot Machines Business ©窪岡俊之 ©BANDAI NAMCO Entertainment Inc. ©創通・サンライズ ©BNEI／PROJECT iM＠S ©BANDAI NAMCO Sevens Inc. 1Q 2Q 3Q 4Q Pachislot for CHAR AZNABLE Pachislot THE iDOLM@STERx4 -RED COMET's Counterattack- MILLION LIVE! New Title x2 Sales of Unit 314 units 3,531 units 300 units 3,534 units
Slide 15: Pachinko Machines Market Share (unit basis)
Pachinko Machines Market Share (unit basis) 25% 20% Sanyo SANKYO 15% Newgin Sammy 10% Kyoraku 5% 0% 2015 2016 2017 2018 2019 2020 Source: Yano Research Institute ※2020：Estimate of SANKYO © 2021 SANKYO CO., LTD. 15
Slide 16: Pachislot Machines Market Share (unit basis)
Pachislot Machines Market Share (unit basis) 30% 25% Sammy 20% 15% Daito Heiwa・Olympia 10% Universal 5% SANKYO 0% 2015 2016 2017 2018 2019 2020 Source: Yano Research Institute ※2020：Estimate of SANKYO © 2021 SANKYO CO., LTD. 16
Slide 17: Contents
Contents Overview of Financial Results P3 Overview of Business P11 Initiatives of Pachinko and Pachislot Industry P18 FY 3/2022 Forecast P21 Appendix P38 © 2021 SANKYO CO., LTD. 17
Slide 18: Status of Install of the Machines with the former regulations
Status of Install of the Machines with the former regulations Schedule of Removal of the Machines with the former regulations Parlors are going to remove all the machines with the former regulations by January, 2022 in stages ・The due date for removal of machines compliant with the former regulati
Slide 19: Format Inspection
Format Inspection Pachinko：Ｍanufacturers have been able to secure a definite number of pachinko titles for launch. Pachislot：The supply environment of new models remains tight. On the other hand, we expect a higher format inspection pass rate due to deregulation. Number of titles passed format i
Slide 20: Contents
Contents Overview of Financial Results P3 Overview of Business P11 Initiatives of Pachinko and Pachislot Industry P18 FY 3/2022 Forecast P21 Appendix P38 © 2021 SANKYO CO., LTD. 20
Slide 21: Pachinko Market
Pachinko Market Sales volume forecast FY3/2022： 1,000 thousand units Sales Volume (April 1, 2021 to March 31, 2022) Total number of units sold FY3/2021： 800 units YoY Approx.-33％ thousand Thousand units 2,100 (April 1, 2020 to March 31, 2021) （6 titles sold 30,000 units or more. ） 1,800 Total sale
Slide 22: Pachislot Market
Pachislot Market Sales volume forecast FY3/2022： 400 thousand units Sales Volume (April 1, 2021 to March 31, 2022) Total number of units sold FY3/2021： 440 units YoY Approx.-22％ thousand Thousand units 1,400 (April 1, 2020 to March 31, 2021) （4 titles sold 20,000 units or more. ） 1,200 Total sales
Slide 23: Financial Forecasts
Financial Forecasts The Company will capture pachinko parlor operatorsʼ replacement demand with machines compliant with the new regulations. Year-on-year increases in sales and profits are forecast, but decisive recovery of the profit level is not in prospect. Net Sales 73,000 million yen YoY +2
Slide 24: Summary of Financial Forecasts
Summary of Financial Forecasts FY 3/2022 million yen FY 3/2021 Forecast YoY Net Sales 58,129 73,000 +14,871 +25.6% Pachinko Machines Business 52,310 56,700 +4,390 +8.4% Pachislot Machines Business 3,022 11,500 +8,478 +280.5% Cost of Sales 27,403 34,500 +7,097 +25.9% Gross Profit 30,726 38,500 +7,774
Slide 25: Factors of Change in Consolidated Net Sales
Factors of Change in Consolidated Net Sales Million yen Pachislot Ball Bearing Supply Other Machines Business Business Business Pachinko Machines +1,967 +38 73,000 Business +8,478 +4,390 58,129 FY3/2021 FY3/2022 +14,871 million yen（+25.6%） © 2021 SANKYO CO., LTD. 25
Slide 26: Factors of Change in Consolidated Operating Income
Factors of Change in Consolidated Operating Income Million yen +5,108 -1,161 Advertising -1,729 expenses Other factors The gross profit increases of the pachinko Sales -2,726 +2,462 8,900 machine sales commission increases increases +360 The gross profit 6,587 of the pachislot R&D machine sales expe
Slide 27: Costs and Expenses
Costs and Expenses FY 3/2022 million yen FY 3/2021 Forecast YoY SG & A Expenses 24,138 29,600 +5,462 +22.6% Advertising Expenses 871 2,032 +1,161 +133.3% Sales Commission 2,172 3,901 +1,729 +79.6% R&D Expenses 12,133 14,859 +2,726 +22.5% Salaries & Wages 2,937 2,785 -152 -5.2% Depreciation & Amortiz
Slide 28: Pachinko Machines Business
Pachinko Machines Business Factors of Change in Net sales Data Million yen FY 3/2022 million yen FY 3/2021 Forecast YoY FY 3/2021 52,310 (Apr-Mar) Net Sales 52,310 56,700 +4,390 Sales volume of SANKYO-brand Operating Income 12,916 10,900 -2,016 and JB-brand pachinko machines -8 Percentage 24.7% 19.2
Slide 29: Pachinko Machines Business
Pachinko Machines Business 1Q 1Q 2Q New Title Fever Valvrave the Liberator 2 xx 44 x9 Fever Powerful Ⅲ x3 Reused Fever Golgo13 2 Models Sales of - units - units Unit Forecast of Sales of Unit 154,000 units © 2021 SANKYO CO., LTD. ※ Introduction of titles is in line with the current plan to date, but
Slide 30: Pachislot Machines Business
Pachislot Machines Business Factors of Change in Net sales Data Million yen FY 3/2022 FY 3/2021 million yen FY 3/2021 Forecast YoY (Apr-Mar) 3,022 Net Sales 3,022 11,500 +8,478 Sales volume of SANKYO-brand +9,142 Operating Income (1,890) 2,000 +3,890 pachislot machines increases. Percentage (62.5%)
Slide 31: Pachislot Machines Business
Pachislot Machines Business 1Q 1Q 2Q Pachislot Macross DELTA xx 24 New Title x4 x1 Sales of - units - units Unit Forecast of Sales of Unit 30,000 units © 2021 SANKYO CO., LTD. ※ Introduction of titles is in line with the current plan to date, but may be subject to changes. 31
Slide 32: Gross profit margin and OP margin
Gross profit margin and OP margin Gross profit margin and OP margin Gross profit margin 60% 56.2% 50.7% 53.2% 52.9% 52.7% In FY 3/2021 gross profit margin of around 50% has been maintained and OP margin decreased compared 50% with the previous year. 40% • Gross profit margin：The decrease due to th
Slide 33: R&D expenditure
R&D expenditure R&D expenditure million yen 25,000 A great decrease partly due to ongoing efforts to improve efficiency 20,000 In FY 3/2022 the Group plans the increase 17,482 compared with the previous year. 14,631 14,859 15,000 13,847 12,133 10,000 5,000 0 FY3/2018 FY3/2019 FY3/2020 FY3/2021 F
Slide 34: Initiatives of SANKYO in The Pachinko and Pachislot Machine Markets
Initiatives of SANKYO in The Pachinko and Pachislot Machine Markets To January 2022 Capture pachinko parlor operatorsʼ replacement demand with machines compliant with the new regulations. The Group intends to respond to replacement demand by offering pachinko machines that strongly appeal to playe
Slide 35: Utilization of TV Commercial
Utilization of TV Commercial TV commercials of machines is resumed for the first time in 10 years since April 2021. The Group will utilize TV Commercial in light of an assessment of cost-effective per a title. • Support of the machine utilization at pachinko parlors. • Facilitating the increase
Slide 36: Forecast of Dividend for FY 3/2022
Forecast of Dividend for FY 3/2022 Dividend Policy The Company’s dividend policy is to continue stable dividend payments, taking into consideration financial results, the financial position, the payout ratio, and other factors comprehensively. Forecast of Dividend for FY 3/2022 Regrettably, for
Slide 37: Contents
Contents Overview of Financial Results P3 Overview of Business P11 Initiatives of Pachinko and Pachislot Industry P18 FY 3/2022 Forecast P21 Appendix P38 © 2021 SANKYO CO., LTD. 37
Slide 38: Business Results for the Full Year of FY 3/2021
Business Results for the Full Year of FY 3/2021 FY 3/2020 FY 3/2021 FY 3/2022 FY 3/2020 FY 3/2021 Consolidated:milion yen Full year Full Year YoY Forecast Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Net Sales 78,416 58,129 -20,287 73,000 11,351 22,142 28,245 16,678 17,960 7,372 15,668 17,129 Pachinko 60,514 52,310 -8,2
Slide 39: Margin / Expenses etc.
Margin / Expenses etc. GP Margin/OP Margin FY 3/2020 FY 3/2021 FY 3/2022 FY 3/2020 FY 3/2021 Consolidated Full Year Full Year YoY Forecast Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 GP Margin 53.2% 52.9% -0.4pt 52.7% 53.5% 52.6% 55.3% 50.5% 51.0% 46.0% 57.6% 53.4% OP Margin 16.0% 11.3% -4.7pt 12.2% (5.3%) 16.6% 26.5%
Slide 40: Pachinko Machines Business
Pachinko Machines Business FY 3/2020 FY 3/2021 FY 3/2022 FY 3/2020 FY 3/2021 Consolidated:milion yen Full Year Full Year YoY Forecast Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Net Sales 60,514 52,310 -8,204 56,700 7,064 20,214 20,247 12,989 16,952 5,432 14,668 15,258 Operating Income 14,804 12,916 -1,888 10,900 (238)
Slide 41: Pachislot Machines Business
Pachislot Machines Business FY 3/2020 FY 3/2021 FY 3/2022 FY 3/2020 FY 3/2021 Consolidated:milion yen Full Year Full Year YoY Forecast Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Net Sales 11,441 3,022 -8,419 11,500 2,635 394 6,516 1,896 210 1,303 185 1,324 Operating Income 2,449 (1,890) -4,339 2,000 718 (711) 2,394 48
Slide 42: Financial Indicates
Financial Indicates million yen FY 3/2014 FY 3/2015 FY 3/2016 FY 3/2017 FY 3/2018 FY 3/2019 FY 3/2020 FY 3/2021 Net Sales 158,453 146,579 137,130 81,455 86,220 88,558 78,416 58,129 Operating Income 28,023 13,233 18,826 5,059 10,181 21,286 12,551 6,587 Recurring Income 30,144 14,870 19,965 3,832 11,3
Slide 43: Pachinko/Pachislot Machine Market
Pachinko/Pachislot Machine Market Market size Situation of Parlors that Are Members of Zennichiyuren for recent a year 3,000 2,833 3,500 12,000 2,749 2,637 2,557 11,000 2,500 3,000 10,000 2,500 2,000 2,288 2,273 2,266 2,261 2,254 2,246 2,244 2,245 2,232 2,219 2,187 1,691 1,687 2,050 9,000 1,665 1,63
Slide 44: Others
Others Number of Titles Sold (All Manufacturers) Compliance with Format Inspection Pachinko machines 2016 2017 2018 2019 2020 2021J-M 2015 18,401 Sales per title (Left) 104 Number of titles Applicant 864 875 711 945 912 252 2016 17,046 93 Pass 396 361 336 430 295 102 Fail 458 463 333 560 499 146 201
Slide 45: Contact Us
Contact Us Investor Relations Office 【Notes of forecasts】 The Company's plans, strategies and forecasts, except Corporate Planning Division historical facts, contained in this document may be subject to change due to factors of risk and uncertainty. Therefore, the Company does not guarantee their at