Sega raises forecasts after strong H1

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Sega Sammy is reporting a solid first half to its financial year, driven by its pachinko and pachislot business.

Net sales for the six months ended September 30, 2023 rose 47.3% year-on-year to ¥221.2 billion ($1.5 billion) while operating income increased by a whopping 313.4% to ¥39.6 billion ($262.5 million).

That's in the face of weaker-than-expected sales from some of its new game releases and losses from its ongoing structural reform.

As a result, the company raised its forecasts for the current fiscal year, now expecting net sales of ¥474 billion ($3.1 billion), operating income of ¥60 billion ($397.7 million), and ¥63 billion ($417.6 million).

Here's what you need to know:

The numbers

• Net sales: ¥221.2 billion ($1.5 billion, up 47.3% year-on-year)
• Operating income: ¥39.6 billion ($262.5 million, up 313.4%)
• Ordinary income: ¥23.1 billion ($153.1 million, up 242%)

The highlights

For the Entertainment Contents segment of the business, net sales came in at ¥121 billion ($802 million, up 3.8%) with operating income at ¥7.4 billion ($49 million, down 46.4%).

The Consumer division of Entertainment Contents, which includes video games, saw sales rise 3.9% to ¥77.9 billion ($516.3 million), while operating income dropped 52.8% to ¥5 billion ($33.1 million).

Sales of new games came in at 1.66 million units (up from 1.48 million in the same period last year, while catalogue titles sold 8.85 million (up from 8.65 million), for a total of 10.5 million full game sales.

Sega released a number of titles during the first half, including Samba de Amigo: Party Central, Sonic Origins Plus, Etrian Odyssey Origins Collection and the console editions of Humankind and Company of Heroes 3.

However, the company referred to sales of new titles as "weak" with some unnamed titles performing below expectations.

Sega Sammy reaffirmed that it's currently undergoing a structural reform, which involves reviewing its portfolio of titles and reducing fixed expenses. This is primarily going to affect its European operations, as we've seen with the redundancies at Creative Assembly and cancellation of Hyenas.

The company also reminded shareholders that Rovio was now a wholly-owned subsidiary of Sega Sammy, with their financial results incorporated into those of Sega from September.

For the overall business, Sega Sammy reported strong performances from its pachislot and pachinko machines, with net sales increasing 240% to ¥93.4 billion ($616.4 million).