Consolidated Financial Results
Masaru Inoue: I am Masaru Inoue, Executive Operating Officer of SANKYO CO., LTD. I will walk you through the overview of our financial results for FY3/2026.
These are the key highlights of our financial results for FY3/2026. Net sales and net income decreased year on year, as sales volumes of pachinko machines increased while those of pachislot machines decreased.
The Pachinko Machines Business captured the top market share for the fourth consecutive year, with our market share exceeding 30%.
Summary of Financial Results by Segment
I will summarize the consolidated financial results by segment. First, regarding the market overview, in the pachinko market, the debut of models equipped with “LUCKY TRIGGER (LT) 3.0 PLUS” has spurred the adoption of Smart Pachinko machines. Nevertheless, the market as a whole has yet to be fully revitalized.
Meanwhile, in the pachislot market, the format inspection pass rate remains low—constraining the rollout of new models—several hit models were successively launched, maintaining solid machine utilization.
In the Pachinko Machines Business, sales volume increased year on year due to the extensive line-up, releasing mainstay titles, new tie-up titles featuring popular anime series and the machines equipped with “LT 3.0 PLUS.” As a result, we captured the top market share for the fourth consecutive year.
In the Pachislot Machines Business, although we released only four new titles, “L Pachislot Valvrave the Liberator 2” surpassed 30,000 units, while each of the other new titles also sold over 10,000 units in sales. As a result, we maintained a double-digit market share and secured our position among the industry’s leading players.
Summary of Financial Results
This slide summarizes our financial results. The main changes in key figures are as shown here.
Factors of Change in Consolidated Net Sales
We have also outlined the key factors behind changes in consolidated net sales, as shown here.
Factors of Change in Consolidated Operating Income/Costs and Expenses
Consolidated operating income declined mainly due to lower gross profit in the Pachislot Machines Business, reflecting the decrease in sales volumes.
In addition, R&D expenses increased by ¥3.1 billion as we strengthened product competitiveness.
Summary of Balance Sheet
The consolidated balance sheet is shown here. Net assets decreased by ¥34.8 billion, mainly reflecting the impact of approximately ¥60.0 billion in share repurchases.
Pachinko Machines Business
Turning to the business overview, this slide shows the key factors behind changes in net sales in the Pachinko Machines Business. In the Bisty brand, increased production of “e Tokyo Ghoul” and strong sales of “NEON GENESIS EVANGELION –Memories of the Beginning–” drove higher sales volumes and boosted net sales.
Pachinko Machines Business <lineup>
The number of new pachinko machine titles increased by one year on year to nine titles. Including reused models and other units, total sales volume reached approximately 250,000 units.
Pachislot Machines Business
This slide shows the key factors behind changes in net sales in the Pachislot Machines Business. Due to delays in passing format inspections, we postponed three planned new titles, limiting new launches to four titles and causing the decline in net sales.
Pachislot Machines Business <lineup>
The number of new pachislot machine titles decreased by two year on year to four titles. Meanwhile, we are increasing production of the SANKYO-brand titles “Pachislot Karakuri Sākasu” and “L Pachislot Kaguya-sama wa Kokurasetai.”
Pachinko Machines Market Share <unit basis>
I will explain changes in market share later in the section covering progress on the Medium-Term Management Plan, so I will skip pages 14 and 15 for now. That concludes the overview of our business operations.
Mid-Term Management Plan (MTMP): Review through FY3/2026
Hiroshi Takahashi (hereinafter “Takahashi”): I am Hiroshi Takahashi, Representative Director, Senior Executive Vice President of SANKYO CO., LTD. I will explain the progress of the Medium-Term Management Plan.
This slide reviews progress through the second year of the Medium-Term Management Plan. In FY3/2025, the first year of the plan, we exceeded the numerical targets.
Meanwhile, in FY3/2026, the second year of the plan, we revised our targets downward mainly due to divergence from initial market assumptions. Even so, net sales and earnings came in largely in line with the revised plan.
Mid-Term Management Plan
Sales Share Achievement
This slide shows progress toward our sales share targets. In the Pachinko Machines Business, we consistently maintained a high market share against our 30% target and captured the top market share for the fourth consecutive year.
In the Pachislot Machines Business, we continued to generate hit titles and expand successful series, consolidating our position among the industry’s leading players against our 15% market share target.
Mid-Term Management Plan
Divergence from initial market assumptions
I will explain the divergence from the market assumptions at the time of formulating the Medium-Term Management Plan. When we formulated the plan, we assumed higher sales volumes for both pachinko and pachislot machines. In reality, pachinko sales volumes declined, while pachislot sales volumes remained flat.
For the pachinko market, we believe the main factor was lower parlor investment appetite due to sluggish machine utilization. Meanwhile, the pachislot market remained flat, although machine utilization itself was solid, as supply constraints caused by low format inspection pass rates had an impact.
For FY3/2027, in the pachinko market, we expect pachinko machine sales volume to decline year on year, as parlors become increasingly selective about new machine installations.
For the pachislot market, we expect unit sales to increase YoY, as solid machine utilization is likely to drive a further shift in parlor investment toward pachislot machines.
Key Initiatives
Pachinko market contraction and structural challenges
This slide explains the background behind the launch of “SANKYO YELL PRICE,” one of our key initiatives aimed at addressing the contraction of the pachinko market. It outlines the structural factors driving the market decline.
In recent years, pachinko machine prices have continued to rise, reflecting higher parts and materials costs as well as more sophisticated machine designs and components. As a result, the investment burden on parlors has increased, raising the hurdle for securing returns.
This has made machines less accessible and user-friendly, leading to lower machine utilization. Lower utilization, in turn, has weakened parlor purchasing power, creating a negative cycle of continued market contraction.
We aim to help the market recover by addressing the starting point of this negative cycle from a pricing perspective.
Key Initiatives
Market recovery scenario under the new pricing policy
This slide illustrates the expected impact of our new pricing policy. By reducing the installation burden on parlors, we aim to improve operations and restore machine utilization, ultimately supporting a recovery in the overall market.
As a result, we expect higher sales volumes and further market share gains. We also believe our initiative could encourage competitors to review their pricing strategies, creating a broader positive impact across the market.
Key Initiatives
Three drivers for maintaining and strengthening profitability
I will explain our approach to maintaining and strengthening profitability under the new pricing policy. We position the pricing revision not as a simple price reduction, but as a medium- to long-term growth investment.
To enhance profitability, we are focusing on three key measures: first, cost structure optimization; second, market share expansion; and third, new revenue opportunities through shifts in surroundings of pachinko and pachislot industry.
Specifically, we aim to improve profitability through cost reductions driven by lower production costs, higher sales volumes from expanded product adoption opportunities, and demand recovery supported by a revitalized market.
Mid-Term Management Plan
FY 3/2027 Forecast
I will explain our earnings plan for FY3/2027. In the final year of the Medium-Term Management Plan, we expect results to fall below the plan’s financial targets, mainly due to the divergence from initial assumptions at the time of formulating the plan.
We forecast net sales of ¥174.0 billion, operating income of ¥56.0 billion, and net income attributable to owners of the parent of ¥40.0 billion.
We will maintain our market share targets for both pachinko and pachislot machines, although deteriorating market conditions remain the primary factor behind the weaker earnings outlook. In addition, we expect SG&A expenses to increase due to changes in sales mix under the new pricing policy, efforts to strengthen product competitiveness, and enhanced machine promotions.
Mid-Term Management Plan
Pachinko Share Trend: Maintaining Around 30%
This slide shows progress in market share. In FY3/2026, our pachinko machine sales share reached the 30% target, capturing the top market share for the fourth consecutive year.
In FY3/2027, we aim to maintain a market share of more than 30% and capture the top market share for the fifth consecutive year.
Mid-Term Management Plan
Pachislot Share Trend: From a temporary decline to a recovery trend
I will now explain pachislot machine sales share. In FY3/2026, due to delays in passing format inspections, we postponed three titles to future periods and launched only four new titles.
Meanwhile, our flagship title sold more than 30,000 units, while each of the other new titles also exceeded 10,000 units in sales. As a result, we maintained a double-digit market share and secured our position among the market’s leading players.
In FY3/2027, we aim to achieve a market share of more than 15% and further strengthen our position as one of the industry’s top players.
Mid-Term Management Plan
Outcome of Initiatives: Strengthening and diversifying earnings base
I will explain the results of the Medium-Term Management Plan initiatives. During the plan period, the Pachislot Machines Business delivered significant growth. Pachislot machine sales share expanded by approximately 3.1 times compared with the average over the previous five fiscal years.
As a result, our earnings structure has shifted from a pachinko-centered model to a dual-pillar earnings structure supported by both pachinko and pachislot machines. In addition, the diversification of our business portfolio has improved earnings stability.
Mid-Term Management Plan
Initiatives for pachinko market revitalization (Project “KUGITAMA”)
In addition to “SANKYO YELL PRICE,” I would like to explain the “Project KUGITAMA,” our initiative to help revitalize the market.
This project aims to promote the essential appeal of traditional pachinko “kugi” (pin) and “tama” (ball) gameplay, re-engaging lapsed players and attract new fans.
Since launching the project last August, we have offered browser-based retro pachinko simulations that allow users to experience retro pachinko. Starting today, we have also renewed the fan site as the “SANKYO Online Museum” to strengthen outreach to beginners and lapsed players.
In addition, we plan to introduce actual machines to parlors around this autumn. Through low-cost rental plans, we will offer “Hanemono” type machines and create an environment where players can enjoy pachinko more casually and easily.
Through these initiatives, we aim to expand our fan base, maintain and grow the overall market, and drive sustainable growth over the long term.
Mid-Term Management Plan
Status of New Business Initiatives
I will explain the progress of our new business initiatives. Our investments in content IP, aimed at creating synergies with pachinko and pachislot businesses, continue to make steady progress.
Specifically, we are steadily building our IP portfolio by expanding the number of manga titles and increasing investments in anime production committees. Going forward, we will continue to strengthen our integrated approach from IP creation through pachinko and pachislot machine launches.
Mid-Term Management Plan
Management Focused on Cost of Capital and Share Price
I will explain our current view on management with a focus on capital costs and share price performance. Our PBR remains above 1x, and ROE has reached our 15% target, indicating that we continue to maintain solid capital efficiency.
Meanwhile, PER remains at a low single-digit level, and we believe there is still significant room to enhance our valuation by creating new growth opportunities.
Mid-Term Management Plan
Management Focused on Cost of Capital and Share Price
Based on this understanding, we will work to improve ROE by increasing net sales and profit margins while maintaining appropriate shareholder returns.
At the same time, we will advance initiatives designed to strengthen expectations for sustained business growth. Through new business development, sustainability initiatives, and enhanced disclosure, we aim to deepen investor understanding of our business and improve PER. Through these efforts, we will continue to enhance corporate value.
Mid-Term Management Plan
About return of profits to shareholders
I will now explain our shareholder return policy. Our basic policy is to provide performance-linked dividends targeting a payout ratio of 40%, together with agile share buyback.
For FY3/2027, we plan to pay an annual dividend of ¥80 per share, down ¥10 year on year, reflecting the lower earnings outlook.
We will continue to execute agile share buyback, comprehensively taking into account share price levels, business performance, and investment opportunities.
Pachinko Market
Atsushi Morita (hereinafter “Morita”): I am Atsushi Morita, Manager of Corporate Planning Dept. & Investor Relations Office of SANKYO CO., LTD. I will explain our FY3/2027 outlook. First, regarding the outlook for the pachinko market this fiscal year, we expect sales volumes to decline year on year as parlors take a more selective approach to machine choice and installation volumes.
Meanwhile, in the near term, we expect a certain level of recovery supported by new machine lineups that capitalize on the expanded gameplay features of “LT 3.0 PLUS.”
Pachislot Market
Turning to the pachislot market outlook, we expect parlors to prioritize investment in pachislot machines over pachinko machines, supported by strong machine utilization. As a result, total sales volumes are expected to exceed the previous fiscal year’s level.
Financial Forecasts
These are the key highlights of our FY3/2027 earnings forecast. Although we expect combined sales volume of pachinko and pachislot machines to increase, we forecast lower net sales and earnings year on year due to changes in unit prices under the new pricing policy in the Pachinko Machines Business and higher R&D expenses aimed at strengthening product competitiveness.
In the Pachinko Machines Business, we aim to maintain a market share of more than 30% and capture the top market share for the fifth consecutive year. In the Pachislot Machines Business, we will expand the number of titles releases and work to increase market share.
Summary of Financial Forecasts
This slide summarizes our financial forecasts. The key figures are expected to change as shown here.
Factors of Change in Consolidated Net Sales
We have also outlined the key factors behind changes in consolidated net sales, as shown here.
Factors of Change in Consolidated Operating Income/Costs and Expenses
Consolidated operating income is projected to decline mainly due to lower gross profit in the Pachinko Machines Business and higher R&D expenses.
Pachinko Machines Business
This slide shows the key factors behind changes in net sales in the Pachinko Machines Business. The decline in net sales was driven mainly by lower sales volumes in the Bisty brand, lower unit prices under the new pricing policy for the SANKYO brand, and changes in the overall sales mix.
Pachinko Machines Business <lineup>
For pachinko machines, we plan to launch 11 titles this fiscal year, up two titles year on year.
Launch of Pachinko Title “e Fever MOBILE SUIT GUNDAM SEED CLIMAX”
Let me introduce one of our new products. The pachinko machine “e Fever MOBILE SUIT GUNDAM SEED CLIMAX” features a wide range of popular scenes from “Mobile Suit Gundam SEED” and related series, delivering game presentation designed to appeal to a broad fan base.
By incorporating multiple dedicated devices, the machine delivers a highly immersive gameplay experience that surpasses previous models.
In addition, we will roll out a broad promotional campaign, including TV commercials, to increase awareness and strengthen initial momentum. We position this machine as one of our mainstay titles for the current fiscal year and expect it to contribute to both sales volumes and machine utilization.
Pachislot Machines Business
This slide shows the key factors behind changes in net sales in the Pachislot Machines Business. We expect both the SANKYO and Bisty brands to achieve higher sales volumes and unit prices, driving a significant increase in net sales.
Pachislot Machines Business <lineup>
Turning to pachislot machine titles, we plan to launch eight new titles this fiscal year, up four titles year on year.
Launch of Pachislot Title “L Pachislot Karakuri Sākasu 2”
Let me introduce a new pachislot product, “L Pachislot Karakuri Sākasu 2.” This machine is the second title in the popular “Karakuri Sākasu” series, following the strong machine utilization achieved by the previous model.
The machine adopts our dedicated pachislot cabinet and delivers further evolution not only in game specifications and presentation, but also in hardware performance. We also expect this series title to generate stable sales and strong machine utilization.
This concludes our presentation. Thank you very much for your attention.
Q&A: Risks to Earnings from Rising Parts/Materials and Memory Costs
Morita: The question is: “Could you explain the impact that rising parts and materials and memory prices may have on earnings, and whether there is any risk of production disruptions?”
Takahashi: Recently, the media has reported various price increases related to memory components and geopolitical tensions in the Middle East. However, based on the lessons we learned during the COVID-19 pandemic, we have thoroughly strengthened our advance procurement of parts and materials.
As a result, we are working to prevent opportunity losses caused by supply shortages, and at this stage we do not view the risk of cost inflation as particularly significant.
At this point, we do not see a significant risk of major impacts from memory components or petroleum-based materials. However, given the uncertainty over when the Middle East conflict will end, we cannot rule out risks such as procurement disruptions or sharp increases in purchasing costs if the situation becomes prolonged.
To minimize these risks, we will work even more closely with suppliers and take steady, proactive measures to secure stable procurement.
Q&A: Timing of Benefits from the New Pricing Policy
Morita: The question is: “When do you expect the benefits of the new pricing policy to begin materializing?”
Takahashi: We launched the new pricing policy this fiscal year, and we believe that if pricing revisions spread across the industry—not just at our company—the operating environment for parlors will improve further, which should in turn support stronger capital investment appetite. As a result, we expect it will take some time before the full benefits become visible.
We believe that continuing these efforts will help revitalize the industry as a whole. While some benefits may begin to emerge from the current fiscal year, we anticipate that it will take some time—likely into the next fiscal year and the one after that—before we see the full impact of these efforts.