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Koei Tecmo Reports Mixed Q1 Financial Results Amid Increased Development Costs

Decline in Revenue Attributed to Lack of New Game Releases
Japan
k 3635.TSE Mid and Small Cap 2000 Games 75 Entertainment 100
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Koei Tecmo Holdings released its financial results for the first quarter ending June 2024, revealing a mixed performance. The company experienced a decline in revenue due to the absence of new game launches compared to the previous year.

Revenue for the quarter fell by 3.8% year-on-year to ¥17.67 billion (US$123 million). Operating profit dropped 23.8% to ¥5.72 billion (US$39.9 million) due to increased development expenses from two additional in-house smartphone titles. However, ordinary profit surged 27.3% to ¥18.70 billion (US$130 million), and net profit rose 29.2% to ¥13.64 billion (US$95.2 million), driven by other income sources.

The primary revenue driver, the entertainment business, generated ¥16.58 billion (US$115 million) in sales and ¥5.70 billion (US$39.8 million) in segment profit. Key activities included collaboration events, announcements of new titles such as “Dynasty Warriors: Origins,” and sustained sales of existing games like “Rise of the Ronin.”

The amusement business reported sales of ¥757 million (US$5.3 million) and a segment profit of ¥15 million (US$105,000). Existing amusement facilities performed well, supported by contract development of LCD software for slot and pachinko machines.

The real estate business achieved ¥280 million (US$2 million) in sales and a segment profit of ¥65 million (US$454,000), bolstered by high occupancy rates at KT Zepp Yokohama. Other businesses recorded ¥78 million (US$545,000) in sales with a segment loss of ¥58 million (US$405,000) due to fund management expenses in the venture capital sector.

Koei Tecmo maintained its full-year forecast with expected sales of ¥90 billion (US$628 million), a 6.4% increase year-on-year. However, operating profit is projected to grow modestly by 5.3% to ¥30 billion (US$209 million), while ordinary profit and net profit are anticipated to decline by 12.6% and 11.2% to ¥40 billion (US$279 million) and ¥30 billion (US$209 million), respectively.

Koei Tecmo continues to navigate the challenges of fluctuating game release schedules and increased development costs while maintaining its strategic focus on new title development and existing product enhancements.

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