To Our Shareholders and Investors
We would like to express our gratitude to our shareholders for your continued support. We hereby present our report for the consolidated fiscal year ended March 31, 2023.
During the consolidated fiscal year under review, the Japanese economy remained uncertain, despite the easing of behavioral restrictions caused by the COVID-19 pandemic, due in part to sharp fluctuations in foreign exchange rates and the rise in consumer prices as a result of the sudden rise in global raw material prices.
In the pachinko parlor industry, the Group’s main customer base, the number of visitors to parlors is on a recovery trend, but has not yet reached the levels seen before the pandemic, and earnings continue to face difficult conditions.
The launch of the next-generation pachislo machines in November 2022 is expected to revitalize the industry. From January 2023, however, advertising demand remained sluggish, as advertising spending was largely restrained to secure the investment funds necessary for the introduction of popular models to be launched in April and beyond.
On the other hand, in advertising areas other than pachinko parlors, demand for advertising in fitness facilities, where we are currently focusing our efforts, is on a recovery track.
In such environment, the Group has pursued initiatives with a view to acquiring new customers and deepening business relationships with customers other than pachinko parlors in its mainstay advertising business in order to increase its bottom line. In addition, we continued our efforts to curb SG&A and other expenses.
As a result of these initiatives, we recorded net sales of 7,545 million yen (up 1.6% YoY), operating income of 401 million yen (up 35.4% YoY), ordinary income of 420 million yen (up 34.4% YoY) and net income attributable to owners of the parent of 369 million yen (up 49.4% YoY).
Based on the above operating results, we have decided to pay a year-end dividend of 8 yen per share, which together with the interim dividend (7 yen) will bring the total annual dividend to 15 yen per share.
Breakdown by Business Segment
In the pachinko parlor advertising market during the consolidated fiscal year under review, announcements of next-generation pachislo machines introduced in November of last year and advertisement placements for the year-end and New Year holidays temporarily increased. However, expenditures including advertising expenses were largely restrained due to the extremely low frequency of new machine replacements since January of this year and the need to secure funds for capital investment in the popular new machines coming in April of this year and thereafter. In January of this year, the National Police Agency issued a notice titled “Handling of Advertisements and Promotions in Pachinko Businesses,” which prompted a review of advertising regulations for pachinko parlors in each prefecture, and this is expected to have a positive impact on future advertising demand. However, this did not have any such impact during the consolidated fiscal year under review. In terms of category, print advertisement, which has a large transaction volume but low profit margin, declined significantly compared with pre-COVID levels, due in part to soaring paper prices, and the shift to Internet advertising became more pronounced.
In the advertising market for sectors other than pachinko parlor advertisements, demand for advertising for fitness facilities and housing-related sectors remained strong.
In this environment, the Group more aggressively pursued new customer acquisition in sectors where advertising demand is expected to grow.
As a result, although net sales increased only 1.7% YoY to 7,482 million yen, mainly due to a decrease in demand for print advertisements, segment income grew 18.4% YoY to 632 million yen due to strong sales in high-margin Internet advertisements.
Real Estate Business
In the consolidated fiscal year under review, in addition to rental income from land in Kashiwa City, Chiba Prefecture owned by consolidated subsidiary Land Support Inc., commission income of 2 million yen was recorded in connection with the transfer of lease brokerage properties.
As a result, net sales were 53 million yen (down 10.5% YoY) and segment income was 22 million yen (down 21.0% YoY).
In the consolidated fiscal year under review, the camper rental business and other activities resulted in net sales of 10 million yen (down 7.4% YoY) and segment loss of 1 million yen (0-million-yen loss in the same period of the previous fiscal year).
Medium to Long-term Management Strategies
The Group will ceaselessly pursue enhancement of the added value and productivity of its advertising services in the mainstay pachinko parlor advertising field and work to maximize profitability despite the adverse business environment. At the same time, the Group will continuously seek out new business opportunities and proactively work on business development to avoid excessive dependence on any particular industry and diversify its revenue sources in order to achieve sustained growth for the entire Group.
The main strategic issues to be addressed in order to achieve sustained growth are as follows.
- Develop markets in fields other than pachinko parlor advertising
- Work to firmly establish digital media market for customer-drawing commercial facilities
- Expand business domain
As we work to maximize our corporate value, we will disclose information to all of our shareholders and investors in a proactive and timely manner and follow a policy of providing returns to shareholders that reflect our business performance.
We look forward to your continued understanding and support.