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IR Top Page > Financial Information > Financial Review

Financial Review (Japan GAAP)

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(as of May 8, 2020)

Here we breakdown our consolidated business results for the year ended March 31, 2020 with graphs and diagrams.

1. Operating results overview

Net sales Operating income Ordinary income Net income attributable to owners of the parent Earnings per share
81,591
million yen
( 18.4%
decrease YoY)
22,827
million yen
( 25.8%
increase YoY )
22,957
million yen
( 26.2%
increase YoY )
15,949
million yen
( 27.1%
increase YoY )
149.41 yen

Net sales (cumulative)

Operating income (cumulative)

Ordinary income (cumulative)

Net income attributable
to owners of the parent (cumulative)

During the fiscal year ended March 31, 2020, advances in the communications environment, including the start of commercial service of the next-generation communication standard "5G", provided a backdrop for new momentum in the sector as a spate of IT giants entered the market, including U.S.-based Apple with its Apple Arcade game subscription service, along with a new cloud-based game streaming service from Google.

In such an environment, in addition to focusing resources on the development and sales of home video game software, which is the source of its competitive advantage, the Company enhanced its development structure by bolstering its developer workforce and workplace environment. In such a situation, Monster Hunter World: Iceborne (for PlayStation 4, Xbox One and PC), the flagship title for the current fiscal year, shipped over 5 million units worldwide, supported by consistent popularity. In addition, profit improved due to the continued popularity of major catalog titles, particularly in overseas markets, and the growth of highly profitable digital download sales.

Meanwhile, the Company released Shinsekai: Into the Depths, a new title for the Apple Arcade game subscription service, in a bid to promote its multi-platform business strategy. In addition, the Company remained committed to building a new business model in order to put on track its eSports Business Division, which has garnered attention for its future growth potential. These initiatives included holding events in Japan, such as Street Fighter League: Pro-JP operated by RAGE, and in the U.S., such as Capcom Cup 2019, the world championship tournament that caps the Capcom Pro Tour.

The resulting net sales were 81,591 million yen (down 18.4% from the previous fiscal year), the decrease due in part to the change from physical package sales to digital sales. In terms of profitability, profit improved at all levels due to the contribution of the hit title Monster Hunter World: Iceborne, primarily sold digitally, as well as to an increase in the percentage of highly profitable digital sales within catalog title sales. Specifically, operating income was 22,827 million yen (up 25.8% from the previous fiscal year), ordinary income was 22,957 million yen (up 26.2% from the previous fiscal year), and net income attributable to the owners of the parent was 15,949 million yen (up 27.1% from the previous fiscal year). Following the previous fiscal year, all three figures increased to record-highs once again due to success in streamlining the Company’s profit structure.

Status of business by operating segment

1. Digital Contents business

Net sales (cumulative)

Operating income (cumulative)

Operating margins (cumulative)

In this business segment, Monster Hunter World: Iceborne (for PlayStation 4, Xbox One and PC) delivered solid sales and served as the key driver of profitability growth owing to a focus on high-margin digital sales. Further, healthy sales of catalog titles also contributed to profit. Specifically, Resident Evil 2 (for PlayStation 4, Xbox One and PC) and Devil May Cry 5 (for Xbox One, PlayStation 4 and PC), both released in the previous fiscal year and recipients of an Award for Excellence at the Japan Game Awards: 2019, saw continued growth in sales buoyed by a growing user base. Monster Hunter: World (for PlayStation 4, Xbox One and PC), released two fiscal years ago, also continued to display its long sales life, achieving cumulative sales of 15 million units.

The resulting net sales were 59,942 million yen (down 27.8% from the previous fiscal year) due to an increase in the percentage of digital sales. Operating income was 24,161 million yen (up 3.6% from the previous fiscal year) due to contributions from Monster Hunter World: Iceborne and catalog titles.

2. Arcade Operations business

Net sales (cumulative)

Operating income (cumulative)

Operating margins (cumulative)

In this business, the Company worked to secure a wide range of customers through community-based promotion activities, such as holding various events and conducting service day campaigns, under the banner of "the No. 1 arcade in the community." In addition to repeat customers, targeted segments included females and families as well as new customer segments such as middle-aged and elderly people, and inbound tourists.

During the period under review the total number of stores reached 40 with the opening of Capcom Store Tokyo in Shibuya Parco (Tokyo), a specialty store that sells original merchandise and limited-edition items and represents a new business endeavor for Capcom, as well as two new arcades: Plaza Capcom Ikebukuro (Tokyo) and Plaza Capcom Fujiidera (Osaka).

The resulting net sales were 12,096 million yen (up 9.5% from the previous fiscal year) and operating income was 1,211 million yen (up 10.5% from the previous fiscal year).

3. Amusement Equipments business

Net sales (cumulative)

Operating income (cumulative)

Operating margins (cumulative)

In recent years, the pachislo machine market has been sluggish due to factors such as the revision in pachislo model certification methods. Despite this, Shin Onimusha delivered a strong performance after its March release this year, exceeding unit sales expectations while providing a sign that the market may have finally bottomed out and is heading toward recovery.

The resulting net sales were 6,533 million yen (up 90.9% from the previous fiscal year) and operating income was 2,085 million yen (an operating loss of 2,668 million yen in the previous fiscal year.)

4. Other Businesses

Net sales (cumulative)

Operating income (cumulative)

Operating margins (cumulative)

The net sales from Other Businesses, mainly consisting of royalty income from the licensing and sale of character merchandise, were 3,018 million yen (up 17.2% from the previous fiscal year) and operating income was 544 million yen (down 32.8% from the previous fiscal year).

2. Financial position overview for the fiscal year under review

Assets

Total assets as of the end of the fiscal year ended March 31, 2020 increased by 20,058 million yen from the end of the previous fiscal year to 143,466 million yen.
The primary increases were 12,653 million yen in cash on hand and in banks and 4,295 million yen in work in progress for game software.

Liabilities

Total liabilities as of the end of the fiscal year ended March 31, 2020 increased by 9,073 million yen from the end of the previous fiscal year to 43,731 million yen.
The primary increases were 1,361 million yen in accrued income taxes and 1,229 million yen in electronically recorded monetary obligations.

Net assets

Net assets as of the end of the fiscal year ended March 31, 2020 increased by 10,985 million yen from the end of the previous fiscal year to 99,735 million yen.
The primary increase was 15,949 million yen in net income attributable to owners of the parent. The primary decrease was 4,270 million yen in dividends from retained earnings.

3. Cash flow overview for the fiscal year under review

Cash and cash equivalents as of the end of the fiscal year ended March 31, 2020 increased by 6,667 million yen from the end of the previous fiscal year to 59,672 million yen.

Cash flow positions of each activity and their factors are described below.

Cash flows from operating activities

Net cash gained from operating activities was 22,279 million yen (19,847 million yen in the previous fiscal year).
A breakdown of cash flows is as follows: 22,890 million yen in net income before income taxes (17,770 million yen in the previous fiscal year), a 2,117 million-yen increase in accounts receivable - trade (858 million yen in the previous fiscal year), a 4,293 million-yen increase in work in progress for game software (a 8,876 million yen decrease in the previous fiscal year), and 6,515 million yen in income taxes paid (5,938 million yen in the previous fiscal year).

Cash flows from investing activities

Net cash used in investing activities was 8,437 million yen (2,261 million yen in the previous fiscal year).
The primary items used were 6,019 million yen in payments into time deposits (not recorded in the previous fiscal year) and 2,273 million yen in payments for acquisitions of tangible fixed assets (2,093 million yen in the previous fiscal year).

Cash flows from financing activities

Net cash used in financing activities was 6,351 million yen (11,443 million yen in the previous fiscal year).
A breakdown of the primary uses are as follows: 4,265 million yen in dividends paid by parent company (3,554 million yen in the previous fiscal year).

4. Forecast and Outlook

Earnings forecast for the fiscal year ending March 31, 2021
(From April 1, 2020 to March 31, 2021)

  Net sales Operating income Ordinary income Net income attributable to owners of the parent Earnings per share
Year ending March 31, 2021 85,000 million yen
( 4.2% increase YoY )
25,500 million yen
( 11.7% increase YoY )
25,500 million yen
( 11.1% increase YoY )
18,000 million yen
( 12.9% increase YoY )
168.62 yen

Note: Capcom discloses a full year business forecast, as it manages its business performance on an annual basis.

Outlook

In this industry, it is expected that entertainment choices for customers will undergo diversification; for example, high-definition, cloud-based simultaneous multiplayer games for smartphones should be made possible by the high-speed, large-capacity, low-latency communications accompanying the rollout of commercial 5G services this year in markets including Japan. Further, the possibility of a full-scale market entry by external players has brought a seismic shift in the landscape and a wave of new business opportunities.

Situated in an industry that undergoes rapid environmental change, the Company is focusing on securing stable revenue annually while building a competitive advantage via a strong management system and pursing a high-margin, digital-forward strategy focused on expanding digital download sales. At the same time, the Company has been bolstering developer personnel through securing and training excellent human resources in order to build out its core business of home video game software development. With a maturing market, declining birthrate and aging population in Japan, overseas business expansion is indispensable to the Company’s future growth plans. For this reason, in addition to Europe and the United States—its primary competitive markets—the Company aims to build an advantage in rapidly growing Asia through delighting customers there with releases of world-renowned IP while increasing its share of sales in the region.

Further, the Company sees esports as an integral part of its future growth strategy and is working to consolidate its position in this expanding market with upfront capital allocation and investments in human resources; it plans to found the Esports Academy (tentative name) for training professional players as well as to establish regional teams and leagues for female players.

In addition to implementing organizational reforms in response to changes in the environment, the Company is focused on improving corporate value while aiming to optimize its business portfolio. This is achieved through efficiently allocating management resources via a method of selection and concentration, investing in growth areas and reviewing its position in unprofitable businesses.

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