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IR Top Page > Financial Information > Financial Review

Financial Review (Japan GAAP)

(as of January 28, 2021)

Here we breakdown our consolidated business results for the nine months ended December 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
64,867
million yen
( 22.6%
increase YoY)
24,382
million yen
( 32.2%
increase YoY )
24,088
million yen
( 28.8%
increase YoY )
17,523
million yen
( 34.1%
increase YoY )
164.15 yen

Net sales (cumulative)

Operating income (cumulative)

Ordinary income (cumulative)

Net income attributable
to owners of the parent (cumulative)

During the nine months ended December 31, 2020, amid lingering uncertainty of the future driven by the widening global COVID-19 pandemic, the business environment continued to demand change within the industry.

The Company continued to work to prevent the spread of COVID-19 among its employees and business partners after the state of emergency was lifted in Japan last year to minimize the impact of the pandemic on work performance. Specifically, the Company endeavored to optimize working methods and schedules while also implementing infection-prevention measures for those working at the office. In such an environment, the Company’s core Digital Contents business drove profitability with growth in sales of major new titles and catalog titles and greater digital distribution, which the Company has been actively pursuing in recent years.

Additionally, the Company released a new title on next-generation platforms in November: Devil May Cry 5 Special Edition (for PlayStation 5 and Xbox Series X|S).

As a result, for the nine months ended December 31, 2020, consolidated net sales were 64,867 million yen (up 22.6% from the same term in the previous fiscal year). In terms of profitability, operating income was 24,382 million yen (up 32.2% from the same term in the previous fiscal year), ordinary income was 24,088 million yen (up 28.8% from the same term in the previous fiscal year), and net income attributable to the owners of the parent was 17,523 million yen (up 34.1% 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 the continued growth of Monster Hunter World: Iceborne (for PlayStation 4, Xbox One and PC), which was released in the previous fiscal year and won an Award for Excellence at the Japan Game Awards: 2020, all of which drove up profits. In addition, licensing revenue from the use of the Company’s major intellectual property also contributed to profit.

The resulting net sales were 48,966 million yen (up 20.6% from the same term in the previous fiscal year) and operating income was 24,787 million yen (up 24.6% 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, the Company was forced to temporarily close stores due to the spread of COVID-19. However, after the state of emergency was lifted in Japan last year, it has reopened them in due order and worked toward the resumption of normal business.

The total number of stores increased to 41 during the period under review, following the opening of Capcom Store Osaka in Shinsaibashi PARCO (Osaka Prefecture), a showroom that carries merchandise featuring the Company’s popular characters. This is the Company’s second store of this type in Japan.

The resulting net sales were 7,018 million yen (down 23.7% from the same term in the previous fiscal year) and operating income was 86 million yen (down 92.7% from 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, Monster Hunter: World, a new model that launched in November, performed well.

The resulting net sales were 6,712 million yen (up 911.6% from the same term in the previous fiscal year) and operating income was 2,431 million yen (up 546.3% 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. This included the live-action film adaptation of Monster Hunter, which was released in December beginning with markets outside of Japan.

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 Company aired a series of heated battles ahead of the Grand Final for the team-based league Street Fighter League: Pro-JP 2020, which is scheduled for January 2021.

As a result, net sales were 2,170 million yen (down 11.5% from the same term in the previous fiscal year) and operating income was 861 million yen (up 140.7% 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 third quarter decreased by 5,867 million yen from the end of the previous fiscal year to 137,598 million yen. The primary increase was 2,732 million yen in work in progress for game software. The primary decreases were 4,403 million yen in notes and accounts receivable – trade and 1,563 million yen in cash on hand and in banks.

Liabilities

Total liabilities as of the end of the third quarter decreased by 17,881 million yen from the end of the previous fiscal year to 25,849 million yen. The primary decreases were as follows: 7,499 million yen in deferred revenue, 3,699 million yen in accrued income taxes, 1,406 million yen in accrued bonuses and 1,400 million yen in notes and accounts payable - trade.

Net assets

Net assets as of the end of the third quarter increased by 12,013 million yen from the end of the previous fiscal year to 111,748 million yen. The primary increase was 17,523 million yen in quarterly net income attributable to owners of the parent. The primary decrease was 5,337 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 announced on January 21, 2021.

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

(million yen)

  Net sales Operating income Ordinary income Net income attributable to owners of the parent Earnings per share (yen)
Previous forecast (A) 85,000 25,500 25,500 18,000 168.62
Revised forecast (B) 92,000 30,500 30,000 21,000 196.72
Variance (B) - (A) 7,000 5,000 4,500 3,000 -
Variance (%) 8.2 19.6 17.6 16.7 -
(Reference)
Previous year's results
(FY ended Mar. 31, 2020)
81,591 22,827 22,957 15,949 149.41

For details, see the January 21, 2021 announcement titled, "Capcom Announces Revision of Consolidated Full-Year Earnings Forecast, Variances Between its Non-Consolidated Estimated Earnings and the Previous Fiscal Year's Actual Results, and a Dividend Forecast Revision (Upward)."

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.