Sega Sammy has announced strong performance in its gaming business during the second quarter of this year, driven by robust sales of casino machines and improved operations by its affiliate, Paradise SegaSammy.
The group has a venture with South Korean foreigner-only casino operator Paradise Co. for the operation of the Paradise City casino resort in Incheon, near South Korea’s main airport.
For the second quarter of 2024, Paradise SegaSammy reported strong casino sales, primarily driven by Japanese VIP customers.
Hotel sales at the affiliate also performed well, maintaining high room rates and occupancy by catering to the demand for extended stays in South Korea.
Sega Sammy forecasts that Paradise SegaSammy will continue to attract a growing number of customers through enhanced marketing efforts, further contributing to profit in equity-method earnings.
In the United States, sales of the “Railroad Riches” gaming machine, compatible with the new Genesis Atmos video slot machine cabinet, were said have been particularly strong, contributing significantly to the company’s results.
Looking ahead, Sega Sammy anticipates continued growth in gaming machine sales, expecting an expansion in unit sales across North America and Asia. Paradise SegaSammy is also projected to sustain its profitability, contributing positively to Sega Sammy’s equity-method earnings.
In a noteworthy transaction, Sega Sammy also transferred all shares of Phoenix Resort to Fortress Investment Group LLC on May 10th, 2024.
This move aims to enhance the corporate value of Phoenix Resort by leveraging Fortress’s extensive experience in the hotel and resort sector. The transfer resulted in an extraordinary income gain of JPY8.4 billion ($57.4 million) for the period under analysis.
Additionally, Sega Sammy disclosed its acquisition of Stakelogic B.V., announced on July 26th, 2024.
The acquisition, valued at €130 million ($142.1 million), positions Sega Sammy to expand into the growing North American online gaming market.
The integration of Stakelogic’s gaming content with Sega Sammy’s existing B2B platform from GAN, acquired in November 2023, is expected to create substantial synergies and accelerate business growth.
Financial highlights for the second quarter of this year include consolidated sales of JPY104.7 billion ($715.8 million) and an operating income of JPY19.3 billion ($131.9 million).
The company reported an extraordinary income of JNY8.8 billion ($60.2 million), primarily due to the Phoenix Resort transaction, and a profit attributable to owners of JPY24.5 billion ($167.4 million).
Sega Sammy’s Entertainment Contents segment, which includes consumer games, animation, amusement machines, and toys, showed a strong performance with sales of JPY72.5 billion ($495.7 million) and an operating income of JPY11.8 billion ($80.6 million).
The company also noted a positive impact from foreign exchange gains, contributing to the overall strong performance.
Looking ahead, Sega Sammy anticipates a steady launch of mainstay titles in its entertainment business from the third quarter onwards, including the highly anticipated “Hokuto no Ken 10” in its Pachislot and Pachinko Machines segment.
The company’s balance sheet remains solid, with a slight decrease in cash and deposits to JPY195.1 billion ($1.33 billion), primarily due to increased inventories related to upcoming title releases.
