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IR Top Page > Financial Information > Financial Review

Financial Review (Japan GAAP)

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(as of October 29, 2020)

Here we breakdown our consolidated business results for the six months ended September 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
42,059
million yen
( 12.8%
increase YoY)
17,863
million yen
( 27.7%
increase YoY )
17,571
million yen
( 25.5%
increase YoY )
12,993
million yen
( 32.0%
increase YoY )
121.72 yen

Net sales (cumulative)

Operating income (cumulative)

Ordinary income (cumulative)

Net income attributable
to owners of the parent (cumulative)

During the six months ended September 30, 2020, changes in the business environment further accelerated within the industry due to the COVID-19 pandemic.

In continuing to prevent the spread of COVID-19 among its employees and business partners after the state of emergency was lifted in Japan, the Company maintains previously implemented working arrangements. These consist of, combining telecommuting and staggered work schedules while also implementing infection prevention measures for those working at the office in an effort to minimize the impact of the pandemic on work performance. In such an environment, the Company’s core Digital Contents business drove profitability with growth in sales of major new titles and catalog titles due to strengthened digital sales, which the Company has been actively pursuing in recent years.

Tokyo Game Show, Japan's largest game event, was held online in September for the first time in its history due to the ongoing COVID-19 pandemic, under the name Tokyo Game Show 2020 Online. In addition, announcements for the Company’s upcoming new game releases generated strong feedback, including for Resident Evil Village for next generation platforms (PlayStation 5, Xbox Series X|S and PC), and for Monster Hunter Rise (for Nintendo Switch), which will be the latest release in the series.

As a result, for the six months ended September 30, 2020, consolidated net sales were 42,059 million yen (up 12.8% from the same term in the previous fiscal year). In terms of profitability, operating income was 17,863 million yen (up 27.7% from the same term in the previous fiscal year), ordinary income was 17,571 million yen (up 25.5% from the same term in the previous fiscal year), and net income attributable to the owners of the parent was 12,993 million yen (up 32.0% 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, new title Resident Evil 3 (for PlayStation 4, Xbox One and PC) was released in April 2020 and delivered solid sales. Meanwhile, high-margin catalog titles demonstrated their long product lives, including with the continued growth of Monster Hunter World: Iceborne (for PlayStation 4, Xbox One and PC), which was released in the previous fiscal year, all of which drove up profits.

In the Mobile Contents sub-segment, licensing revenue from the use of the Company’s major IP also contributed to profit.

The resulting net sales were 35,378 million yen (up 21.3% from the same term in the previous fiscal year) and operating income was 19,849 million yen (up 36.9% 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, the Company was forced to temporarily close stores due to the impact of COVID-19. However, after the state of emergency was lifted in Japan, it has gradually reopened them in due order and has worked toward recovery.

Plaza Capcom Kochi was remodeled during the period under review. However, the total number of stores remains unchanged from the end of the previous fiscal year at 40 stores, as there were no new openings or closures of stores during this period.

The resulting net sales were 4,031 million yen (down 35.3% from the same term in the previous fiscal year) with an operating loss of 262 million yen (operating profit was 915 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, demand was weak amid the spread of COVID-19 due to the suspension of operations of amusement halls and the extension of deadlines for the removal of game machines manufactured before recent rule revisions. In such an environment, the Company launched the new machine Ring-ni-Kakero1 -World champion carnival version- while expanding its licensing business.

The resulting net sales were 1,325 million yen (up 448.7% from the same term in the previous fiscal year) and operating income was 18 million yen (down 72.2% 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 film adaptations and the sales of character merchandise using our flagship intellectual property to enhance the brand value of our titles worldwide. In addition, in eSports, the Company steadily continued to expand the user base and create business opportunities toward the medium term. As part of this strategy, the opening match of the team-based league Street Fighter League: Pro-JP 2020 was aired on the official Tokyo Game Show 2020 Online channel.

As a result, net sales were 1,323 million yen (down 19.0% from the same term in the previous fiscal year) and operating income was 552 million yen (down 24.6% 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 second quarter decreased by 5,659 million yen from the end of the previous fiscal year to 137,806 million yen. The primary increase was 3,402 million yen in cash on hand and in banks and 2,607 million yen in work in progress for game software. The primary decrease was 10,175 million yen in notes and accounts receivable - trade.

Liabilities

Total liabilities as of the end of the second quarter decreased by 15,910 million yen from the end of the previous fiscal year to 27,820 million yen. The primary decreases were as follows: 6,790 million yen in deferred income, 2,364 million yen in notes and accounts payable - trade, 1,738 million yen in accrued income taxes and 1,524 million yen in accrued bonuses.

Net assets

Net assets as of the end of the second quarter increased by 10,250 million yen from the end of the previous fiscal year to 109,986 million yen. The primary increase was 12,993 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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