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Silicon Studio Faces Steep Decline in Q2 Profits Amid Market Shifts

Subsidiary Restructuring and Reduced Hiring Demand Impact Performance
Japan
s 3907.TSE Games 75 Tech 350
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Silicon Studio reported a significant drop in its consolidated financial results for the second quarter ending May 2024. The company experienced declines in both revenue and profit, primarily due to reduced sales from large-scale projects, increased restructuring costs at subsidiaries, and a marked decrease in the recruitment business.

The company’s sales reached ¥2.191 billion, a 6.9% decrease from the previous year. Operating profit plummeted by 81% to ¥46 million, while ordinary profit fell by 93.2% to ¥15 million. The company recorded a net loss of ¥7 million, contrasting sharply with a net profit of ¥184 million in the same period last year.

Sales in the Development Promotion and Support segment dropped by 4.1% year-on-year to ¥1.367 billion, with segment profit declining by 25.5% to ¥180 million. This downturn was driven by the scaling back of large projects and restructuring costs. However, middleware and online solutions sales showed resilience, buoyed by network services for online games.

In the Human Resources segment, sales fell by 11.2% year-on-year to ¥823 million, and segment profit decreased by 46.2% to ¥130 million. The recruitment business struggled with a sudden decline in hiring demand from game companies, though the temporary staffing business showed signs of recovery.

Despite the challenges faced in the second quarter, Silicon Studio has maintained its full-year financial forecast. The company projects sales of ¥4.599 billion, a 1% increase from the previous period, and anticipates an operating profit of ¥254 million, a 6.6% increase. Ordinary profit is expected to rise by 3.6% to ¥255 million, with a net profit forecasted at ¥217 million, up 8.4% from the previous year.

Silicon Studio’s strategic focus on restructuring and adapting to market conditions is critical as it navigates these financial challenges. The company’s ability to stabilize and grow its middleware and online solutions segments will be essential for future profitability.

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