■ The performance trends of Fuji Shoji <6257>

1. Overview of the 2025 Fiscal Year First Half Results

For the interim period ending March 2025, the consolidated performance reported revenue of 25,114 million yen, an increase of 37.3% compared to the previous year, operating profit of 5,725 million yen, an increase of 121.6% year-on-year, ordinary profit of 5,833 million yen, an increase of 125.2% year-on-year, and net profit attributed to the parent company shareholders of 3,809 million yen, an increase of 58.2% year-on-year, achieving results overall in line with plans.

Revenue breakdown shows that the pachinko gaming machines had revenue of 21,108 million yen, an increase of 96.4% year-on-year, while the pachi-slot gaming machines reported revenue of 4,005 million yen, a decrease of 46.9% year-on-year. The pachinko gaming machines launched four main specifications and achieved a sales increase of 85.2% in terms of passengers carried, totaling 53.4 thousand units, while the pachi-slot gaming machines launched one model with a decrease of 40.6%, totaling 10.0 thousand units. Among the pachinko gaming machines, the panel sales ratio was about 50%, slightly decreasing from the previous year, which contributed to an increase in the average sales unit price.

※ There are two sales forms: the main sales, which includes the outer frame (main body), the panel, and the side unit as a complete set, and the panel sales, which only include the panel and the side units. The first model that underwent a frame model change will be sold with the frame included. The gross profit margin is higher for panel sales, which have lower material costs.

The gross profit margin decreased from 55.8% in the same period of the previous year to 53.1%, and the gross profit increased by 30.7% year-on-year to 13,337 million yen. The decrease in the panel sales ratio, as well as the increased recycling costs of the hit model "L Goblin Slayer," which was launched in the previous term, were contributing factors. There are many reusable materials in the new models planned for launch, and recycling has been strengthened. Therefore, the material costs for future new models are expected to decrease due to the use of reusable parts, which will improve the gross profit margin when viewed on average.

Selling, general and administrative expenses decreased by 0.1% year-on-year to 7,611 million yen. Examining the main factors for increases and decreases, advertising expenses rose by 101 million yen due to events like "Misaka Mikoto's Birth Celebration 2024," while other selling, general and administrative expenses increased by 251 million yen due to rising delivery costs. On the other hand, research and development expenses, mainly for the software development of pachinko gaming machines, decreased by 369 million yen, and personnel costs decreased by 38 million yen. Although salary and bonuses increased, retirement benefit costs decreased.

"P Sadako" and "Sma Slot GeGeGe no Kitaro Awakening" exceeded the planned number of passengers carried.

2. Sales Status of Pachinko and Pachislot Gaming Machines

In the interim period of the fiscal year ending March 2025, the number of pachinko gaming machines sold reached 53,400 units, a significant increase of 85.2% compared to the same period last year. New titles launched as main specs include "P FAIRY TAIL: This is the Power of the Seven Flame Dragons," "P Academy of Demon Kings’ Misfits" (released in May 2024), "P Sadako" (released in June of the same year), and "P A Certain Scientific Railgun 2" (released in July of the same year), in addition to continuing sales of successor models from the series. The flagship title "P A Certain Scientific Railgun 2" sold the planned number of units and had steady operational conditions. On the other hand, the new IP "P Academy of Demon Kings’ Misfits" experienced slightly unsatisfactory operational conditions as it overlapped with popular models from other manufacturers but was generally as expected. Meanwhile, "P Sadako" was introduced as a challenging machine incorporating new gameplay features, such as the "BIG Start" with a size twice that of the company's standard and the "Shrine Challenge Mechanism" that allows players to feel excitement through the movement of balls. It continues to operate, gathering support from a wide demographic of customers, and due to the initially low sales numbers, two additional rounds of production increase were conducted, showcasing the company's innovative development capabilities.

On the other hand, the number of pachislot gaming machines sold decreased by 40.6% year-on-year to 10,000 units. While two models were introduced in the same period last year, this interim period saw the launch of only one model, "Smart Slot: Gegege no Kitaro Awakening" (released in July 2024), but the sales numbers are estimated to have exceeded the initial plan by about 20%.

The company operates with no debt, maintaining ample cash reserves exceeding 22 billion yen.

3. Financial Condition and Management Indicators

As of the end of the interim period for the fiscal year ending March 2025, total assets increased by 9,376 million yen from the end of the previous period to 60,720 million yen. Looking at the main factors of change, while current assets saw a decrease in inventory by 484 million yen, cash and deposits along with marketable securities increased by 2,334 million yen, and accounts receivable increased by 5,015 million yen respectively. In fixed assets, deferred tax assets decreased by 746 million yen and long-term prepaid expenses decreased by 363 million yen, while investments in marketable securities increased by 3,653 million yen due to the rise in stock prices of held shares.

Total liabilities increased by 3,946 million yen from the end of the previous period to 12,349 million yen. In current liabilities, accounts payable increased by 1,657 million yen, and unpaid corporate taxes, etc., increased by 1,236 million yen, along with the inclusion of deferred tax liabilities of 564 million yen in long-term liabilities. Total net assets increased by 5,430 million yen to 48,371 million yen. Dividends of 626 million yen were paid out, while interim net profit attributable to the parent company's shareholders recorded 3,809 million yen, and the valuation difference on other securities increased by 2,345 million yen.

Looking at the Financial Indicators, the equity ratio decreased slightly from 83.6% at the end of the previous period to 79.7%, but it can be determined that the financial health is secured, as the company operates with no debt and maintains ample cash reserves exceeding 22 billion yen. Although cash on hand is at a high level relative to sales size, the business model is development-oriented, which necessitates substantial internal reserves and cash for the continuous development of gaming machines.

(Written by FISCO guest analyst, Jo Sato)