Sega Sammy reports US$82 million loss for resort segment in FY21

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Japans Sega Sammy Holdings has a 45% stake in Paradise City, an integrated resort located in Incheon, South Korea.

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Japans Sega Sammy Holdings has reported a 90.7% decline in profit to JPY1.27 billion for the financial year ended 31 March 2021, including a JPY8.98 billion loss in its resort segment.

With the companys three main business segments all impacted by the COVID-19 pandemic, Sega Sammy said its net sales for FY21 fell 24.2% year-on-year to JPY277.75 billion, with operating income down 76.3% to JPY6.55 billion.

Its resort business, comprising integrated resort Paradise City in Incheon, Korea and non-gaming resort Phoenix Seagaia Resort in Miyazaki, Japan, net sales declined 39.7% to JPY6.32 billion.

Paradise City a joint venture partnership with Koreas Paradise Co of which Sega Sammy holds a 45% stake saw the number of guests reach just 45.5% of FY20 levels while table drop reached only 33.8%.

In the resort industry, demand for both domestic and overseas travel was dropped, resulting in a drastically reduced number of tourists due to the impact of COVID-19 and travel restrictions imposed by each country, the company said in its results release.

The Pachislot and Pachinko Machines segment also suffered, with Sega Sammy noting that the purchasing motivation of hall operators significantly dropped in the first half of the fiscal year due to hall closures brought about by COVID-19.

As a result, pachislot machine sales fell from 123,000 in FY20 to 35,000, and pachinko machine sales from 104,000 to 69,000.

Segment net sales declined 51.0% to JPY53.20 billion with an ordinary loss of JPY11.33 billion.

There was better news in the Entertainment segment however, comprising home video game and downloadable content, which reported a profit of JPY27.92 billion, up 71.6% year-on-year, despite a 12% decrease in net sales to JPY217.81 billion.

Notably, Sega Sammy said it expects vastly improved results over the coming year including an ambitious profit target of JPY14 billion for its resort business representing a 1,000% improvement over its FY21 loss.

At Phoenix Seagaia Resort, the Group is working to strengthen the ability to acquire guests, it said. Overseas, the Group will continue to endeavor to accumulate further integrated resorts development and operational know-how through Paradise City.

The business plan for the fiscal year ending 31 March 2022 is based on the assumption that demand will gradually recover throughout the fiscal year, despite the impact of COVID-19.