Sega Sammy financials looking up

TOKYO--Today, Sega Sammy reported its consolidated results for the nine-month period ended December 31, 2005, and the results were largely positive--so much so that the company inflated its projected take for the fiscal year.

Across the company, net sales were up 5.4 percent to 421 billion yen ($3.55 billion) compared to the same period last year, while the net profit saw a sharp rise of 37.3 percent to 63.5 billion yen ($535 million). While the largest of the company's divisions, its Pachinko and Pachislot operation, actually saw declining figures, the company's arcade and home consumer product lines more than compensated for the decline.

The Pachinko and Pachislot machine business, which makes up about half of the company's annual revenue, saw its sales fall 8 billion yen ($67 million) to 212 billion yen ($1.78 billion), while its operating profits fell 6 billion yen ($51 million) to 82.7 billion yen (697 million). Despite the declining numbers, Sega Sammy did have a number of big hits. The Ultraman Club ST and Aladdin 2 Evolution Pachislot machines sold 122,000 and 77,000 units, respectively. Meanwhile, Hokuto No Ken Pachinko machine, based on the Fist of the North Star anime series, became the company's best-selling machine ever, moving 178,000 units during the nine-month period.

The consumer game division had a number of hit titles in Japan including Mushiking: Road to Greatest Champion and Ryu Ga Gotoku, while Shadow the Hedgehog and other Sonic titles led Sega Sammy's sales in the overseas market. For the nine-month period, the company has sold 11.47 million games worldwide, leading to a 14 billion yen ($118 million) increase in consumer game division sales to 62.2 billion yen ($524 million). The division also managed to post a profit this year, contributing 2.2 billion yen ($18.5 million) to the bottom line, as opposed to the same period last year, when it was running 5 million yen ($42 million) in the hole.

Sega Sammy didn't have much to say about its amusement machine sales, but its figures did all the talking. Sales were up by 7 billion yen ($59 million) to 56.9 billion yen ($479 million), and operating profit was up 4 billion yen ($34 million) to 10.5 billion yen (88.5 million). While action and sports games used to be Sega Sammy's primary profit maker for arcades, the company's major hits for the period were its latest network-enabled mahjong game, MJ3, and the horse-racing simulator Star Horse 2: New Generation.

As for the arcades it operates itself, Sega Sammy has opened 14 new locations and closed down 48 so far this fiscal year, leaving it with a total of 472 amusement centers. For the nine-month period, that group's revenue was up by 15.6 billion yen ($132 million) to 77.9 billion yen ($657 million), and operating profit was up 3 billion yen ($25 million) to 8 billion yen ($67.4 million).

Given the favorable results during the past nine months, Sega Sammy has increased its net sales forecast for the fiscal year ending March 31, 2006, to 570 billion yen ($4.81 billion), up 3 billion yen ($25 million) from its previous estimate. The company also increased its net income estimate by 12 billion yen ($10 million) to 68 billion yen ($573 million).