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IR Top Page > Financial Information > Financial Review

Financial Review (Japan GAAP)

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(as of August 3, 2020)

Here we breakdown our consolidated business results for the three months ended June 30, 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
23,722
million yen
( 32.2%
increase YoY)
10,711
million yen
( 39.1%
increase YoY )
10,619
million yen
( 37.9%
increase YoY )
7,815
million yen
( 44.2%
increase YoY )
73.21 yen

Net sales (cumulative)

Operating income (cumulative)

Ordinary income (cumulative)

Net income attributable
to owners of the parent (cumulative)

During the three months ended June 30, 2020, the industry was forced to respond to changes in the business environment due to the COVID-19 pandemic.

Given this situation, to prevent the spread of COVID-19 among its employees and business partners, the Company closed all its offices for the state of emergency declared by the Japanese government, and all employees (except for those essential for maintaining business operations) worked from home for most of this period. Additionally, the Company adjusted its development process to minimize the impact of COVID-19, leveraging the ingenuity and collective knowhow of its employees. In such an environment, the Arcade Operations business struggled mainly due to the temporary closure of arcades. In its core Digital Contents business, the Company delivered improved results by growing digital sales of major new titles and catalog titles, backed by its success in pursuing stronger digital sales in recent years.

As a result, for the three months ended June 30, 2020, consolidated net sales were 23,722 million yen (up 32.2% from the same term in the previous fiscal year). In terms of profitability, operating income was 10,711 million yen (up 39.1% from the same term in the previous fiscal year), ordinary income was 10,619 million yen (up 37.9% from the same term in the previous fiscal year), and net income attributable to the owners of the parent was 7,815 million yen (up 44.2% from the same term in the previous fiscal year).

Status of business by operating segment

1. Digital Contents business

Net sales (cumulative)

Operating income (cumulative)

Operating margins (cumulative)

In this business segment, the Resident Evil series, whose cumulative sales have exceeded 100 million units, saw new title Resident Evil 3 (for PlayStation 4, Xbox One and PC) deliver solid sales. Additionally, high-margin catalog sales continued to contribute to expansion of the user base while driving profitability growth; this included the continued growth in sales for titles such as Monster Hunter World: Iceborne (for PlayStation 4, Xbox One and PC), released in the fiscal year ended March 2020, and Resident Evil 2 (for PlayStation 4, Xbox One and PC), released in the fiscal year ended March 2019.

The resulting net sales were 21,476 million yen (up 53.7% from the same term in the previous fiscal year) and operating income was 11,804 million yen (up 52.6% from the same term in the previous fiscal year).

2. Arcade Operations business

Net sales (cumulative)

Operating income (cumulative)

Operating margins (cumulative)

In this business, stores were forced to close temporarily due to the impact of COVID-19. Although they subsequently resumed operation, their performance did not recover to normal levels, and they posted a significant decrease in both sales and profits.

As there were no new openings or closures of stores during the period under review, the total number of stores remains unchanged from the end of the previous fiscal year at 40 stores.

The resulting net sales were 1,184 million yen (down 56.3% from the same term in the previous fiscal year) with an operating loss of 554 million yen (operating profit was 299 million yen in the same term in the previous fiscal year).

3. Amusement Equipments business

Net sales (cumulative)

Operating income (cumulative)

Operating margins (cumulative)

In this business, in an environment in which demand was weak mainly due to amusement halls suspending operations amid the spread of COVID-19, no new models were launched. However, due to license revenues earned, net sales were 181 million yen (down 19.4% from the same term in the previous fiscal year) and operating income was 71 million yen (down 46.7% from the same term in the previous fiscal year).

4. Other Businesses

Net sales (cumulative)

Operating income (cumulative)

Operating margins (cumulative)

In Other Businesses, the Company focused on promoting the sales of character merchandise and film adaptations using our flagship intellectual property, aiming to enhance the brand value of our titles worldwide. In eSports, the Company steadily continued to expand the user base and create business opportunities toward the medium term. As part of these efforts, in June 2020 the Company began the CAPCOM Pro Tour Online 2020, a global online competition.

As a result, net sales were 879 million yen (down 14.2% from the same term in the previous fiscal year) and operating income was 511 million yen (down 20.2% from the same term in the previous fiscal year).

2. Financial position overview for the fiscal year under review

Assets

Total assets as of the end of the first quarter decreased by 6,009 million yen from the end of the previous fiscal year to 137,456 million yen. The primary increase was 3,997 million yen in cash on hand and in banks. The primary decrease was 8,913 million yen in notes and accounts receivable - trade.

Liabilities

Total liabilities as of the end of the first quarter decreased by 11,181 million yen from the end of the previous fiscal year to 32,549 million yen. The primary decreases were as follows: 1,915 million yen in notes and accounts payable - trade, 3,556 million yen in accrued income taxes and 3,342 million yen in deferred income.

Net assets

Net assets as of the end of the first quarter increased by 5,172 million yen from the end of the previous fiscal year to 104,907 million yen. The primary increase was 7,815 million yen in quarterly net income attributable to owners of the parent. The primary decrease was 2,668 million yen in dividends from retained earnings.

3. Forecast and Outlook

The forecast for the consolidated business results for the current fiscal year ending March 31, 2021 remains the same as what was projected at the financial results announcement on May 8, 2020.

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

This fiscal year, we aim to grow our core Consumer business with multiple major new title releases and a continued focus on bolstering digital sales, targeting record profit at all levels.

Looking at Consumer, along with major new releases such as Resident Evil 3, which was released on April 3., we will work to maximize sales by pursuing sales of catalog titles such as Monster Hunter: World and Monster Hunter World: Iceborne. Further, as with the previous year, we plan to expand our regions around the globe and strengthen support for the PC platform via digital sales.

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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