From 11:30 A.M. on Wednesday, May 11, 2022, FIELDS CORPORATION (hereinafter, “FIELDS”) held a briefing for the financial results for the year ended March 31, 2022 and medium-term management plan.
This page provides information on our explanation (summaries) at the briefing.
Consolidated financial results for FY 2021
⇒Page 3 of briefing material
Consolidated P/L is shown in the table.
Net sales were ¥94.9 billion (up ¥56.1 billion YoY), operating profit was ¥3.44 billion (up ¥5.68 billion YoY), ordinary profit was ¥3.63 billion (up ¥5.66 billion YoY), and profit attributable to owners of parent was ¥2.47 billion (up ¥5.92 billion YoY), which was roughly in line with the forecast. The Company also plans to pay a dividend of ¥20 for the fiscal year under review.
⇒Page 4 of briefing material
P/L by business is shown in the table.
In the contents and digital business, operating profit was ¥1.46 billion (up ¥1.01 billion YoY), ordinary profit was ¥1.46 billion (up ¥1.02 billion YoY), and profit was ¥1.06 billion (up ¥880 million YoY). The main reason for the increase in profits was the strong non-consolidated results of Tsuburaya Productions Co., Ltd. (hereinafter, “TPC”). The PS business posted operating profit of ¥1.75 billion (up ¥5.28 billion YoY), ordinary profit of ¥1.88 billion (up ¥5.77 billion YoY), and profit of ¥1.70 billion (up ¥6.23 billion YoY). In the fiscal year under review, the company sold 140,000 units, six pachinko titles and 51,000 units, seven pachislot titles, bringing the total to 191,000 pachinko and pachislot (hereinafter, “PS”) machines at 13 titles.
*The results of contents and digital and PS businesses are calculated by considering the elimination of intra-group transactions from the simple sum of the figures within the respective businesses.
⇒Page 5 of briefing material
The table below shows trends in MD and license revenue at TPC.
Domestic and overseas MD and license revenues are growing, and in the fiscal year under review it was ¥3.47 billion (up107.6% YoY). In particular, MD and license revenues in China has been growing significantly, and it was ¥1.54 billion (up 195.3% YoY) in the fiscal year under review.
⇒Page 6 of briefing material
Consolidated B/S and C/F are shown in the table.
Total assets and total liabilities and net assets were ¥70.08 billion (up ¥17.71 billion YoY). This was mainly due to increased accounts receivable-trade and accounts payable-trade associated with PS sales.
⇒Page 7 of briefing material
The outlook for the next fiscal year is as shown in the table.
The outlook for the next fiscal year is for net sales to be ¥98 billion (up 3.3% YoY), operating profit to be ¥4 billion (up 16.1% YoY), ordinary profit to be ¥4 billion (up 10.1% YoY), and profit attributable to owners of the parent to be ¥3 billion (up 21.4% YoY). In addition, the Company is forecasting video revenue of ¥2.2 billion and MD and license revenue of ¥5 billion at TPC. In the PS business, the company is planning to sell seven titles pachinko and eight titles pachislot machines, and expects to sell a total of 220,000 units. By business segment, the Company expects operating profit of ¥2 billion (up 36.3% YoY) in the contents and digital business, and operating profit of ¥2.5 billion (up 42.8% YoY) in the PS business.
Medium-term management plan (FY2022 - FY2024)
⇒Pages 9 to 10 of the briefing materials
The chart below shows management reforms from FY2018, the future management and the basic framework of the medium-term management strategy.
We have grown up to now as a distributor in PS industry. Going forward, the Company will work on a new medium-term management plan (hereinafter, “Mid-term plan”) centered on TPC which is responsible for our dynamic growth, and FIELDS which is responsible for a central role for our profitability. TPC will develop the North American market while expanding its business not only domestically, but also in the Asian region, particularly China. In addition, the Digital Frontier Inc. (hereinafter, “DF”) will actively engage in technological development that utilizes its assets.
⇒Page 11 of briefing material
The chart below shows the reorganization of the Group to realize the Mid-term plan.
As announced on March 22, 2022 in the Notice of Commencement of Consideration on Transition to a Holding Company Structure, we plan to shift to a holding company structure in October 2022 and become TSUBURAYA FIELDS HOLDINGS, subject to a resolution of the General Meeting of Shareholders.
Contents and digital business domain
⇒Page 13 of the briefing material
The history of TPC since the participation of the FIELDS group is shown in the chart below.
TPC became a member of the Group in 2010 and has since developed their business under various management reforms and strategies.
⇒Page 14 of briefing material
The scale of the global content market is shown in the chart below.
Currently, Japanese content is highly regarded overseas. Further, the U.S. and Chinese content markets are much larger than in Japan, and we believe that there are significant growth opportunities for TPC’s IP business.
⇒Page 15 of the briefing material
TPC’s revenue model is shown in the chart below.
The MD and licensing business accounts for a large percentage of both domestic and overseas sales. In particular, toys and apparel account for the majority of merchandise, and others including food, has been growing in recent years. MD also accounts for a large percentage of the overseas market, and we are developing its business through partners in various regions, agencies, and other organizations. In addition, licensing is growing, with increased use in TV commercials and collaboration on games, etc. in response to the increased value of Ultraman IP. The video business will also expand through the distribution of various video titles, including the film SHIN ULTRAMAN released on May 13, 2022. The digital business is a growth area for the future.
⇒Page 16 of briefing material
The main sources of revenue in the contents and digital segment are shown in the chart below.
The figure shows the sales components of two companies, TPC and DF, in each fiscal year. The majority of the MD licensing and video businesses are accounted for by TPC, and most of DF’s net sales are included in the digital domain business.
⇒Page 17 of briefing material
The chart below shows the MD licensing business (domestic).
In addition to expanding the domestic broadcasting area for TPC’s works, various measures have been effective, such as strengthening exposure in owned media such as YouTube official channels and TSUBURAYA IMAGINATION, and MD licensing sales are trending steadily. Other, TPC is working to strengthen touch points through collaborations with various companies and retail strategies.
⇒Page 18 of briefing material
The table below shows the MD licensing business (China).
The effects of various long-standing measures and anti-piracy measures in the development of China have been steadily appearing as a result. In particular, the number of toys such as cards that can be purchased through low unit cost and apparel-related licensees is trending upward, increasing by 50 companies from the previous year. In addition, TPC has created a virtuous cycle in which continued exposure and increased awareness of the works lead to an expansion of fans and licensees, as evidenced by the fact that a total of more than 120 billion viewers have viewed about 60 titles distributed through major distribution platforms.
⇒Page 19 of briefing material
The chart below shows the company’s development in Asian countries other than China.
Currently, TPC is working with YouTube official channels and local TV companies to expand awareness of Ultraman IP. It boasts extremely high recognition in Indonesia, Malaysia, Thailand, and Singapore, and still sees growth potential.
⇒Page 20 of the briefing material
The chart below shows the MD licensing business (North America).
TPC intends to cultivate the North American market throughout the period of the mid-term plan. The 2018 winning ruling made it possible for TPC to expand globally in earnest, and we are currently building a foundation to cultivate the market. There are also many people who have nurtured Ultraman in the North American region, and in order to create new fans in addition to these people, TPC will create and actively develop new contents. The Company has already announced a Netflix title, ULTRAMAN (ILM production), but the timing of the distribution of this title is expected to be from FY2024 onward, and it is considered that this time will be a leap forward in the North American marketplace.
⇒Pages 21 to 22 of briefing material
The imaging products business is shown in the chart below. Currently, TPC is broadcasting TV series for the kids/ family in various regions, and in addition to this, we will develop various new generation works in each region. In addition, TPC plans to expand its business from a Netflix perspective and increase the number of other TV series, anime, etc., but the timing of the release of the titles described is only a guideline.
⇒Pages 23 to 24 of briefing material
The potential of the digital domain and DF is shown in the chart below.
⇒Page 25 of briefing material
The setting targets in the mid-term plan is shown in the chart below.
In the content and digital segment, by growing the MD licensing and digital domain businesses through the aforementioned initiatives and the cultivation of the North American market, the Company intends to achieve its numerical target of operating profit of ¥3 billion in FY2024. In the imaging products business, the Company will continue to enhance the branding power of Ultraman while working to achieve profitability.
PS business field
⇒Page 27 of briefing material
The forecast of future changes in PS market is shown in the chart below. In PS industry, new regulation is being implemented while considering the impact of the current regulation on halls, manufacturers, fans, etc. This trend will be explained on the next page.
⇒Page 28 of briefing material
The cyclical change of the pachislot market is often compared to seasonal change.
With the enforcement of the new regulation, the marketplace enters the winter era. As a result, the impact of the decline in unit sales is becoming more pronounced, but manufacturers have overcome the winter era by seeking out gaming function that can be developed under the new regulation and creating new interests together with technological innovations. This is what we call “spring has come”. For pachinko, spring has finished and summer has started in 2021 as the machine has been well prepared for the cultivation. The pachinko NEON GENESIS EVANGELION -Roar for tomorrow- that we sold in December 2021 has been highly valued by many fans, and is currently trading at a price of nearly 5 times the list price in the used market. If we procure parts and materials properly, we are able to develop and provide high-quality merchandise that are highly regarded by the market. This is the evidence that pachinko is moving from spring to summer after the end of the winter era.
⇒Page 29 of briefing material
The chart below shows the assessment of our sales title based on sales results (units).
As mentioned above, we will develop PS machine that satisfy halls and fans, such as the pachinko NEON GENESIS EVANGELION -Roar for tomorrow-. In terms of the cyclicality of regulatory amendment/revised regulations, the season from summer to autumn will continue until around 2030. Expansion of allied manufacturer numbers, securing title numbers, and improving quality will be sufficient if the company has the skills to overcome regulatory amendment/revised regulations, which will also lead to increased unit sales. On the other hand, due to the emerging problems of geopolitical risks, it is difficult to supply parts and materials in the industry as a whole, and the number of units that can be manufactured is limited. Our ultimate goals are to sell 12 titles of pachinko and 12 titles of pachinko slot machines in the year. For the next fiscal year, we are planning for seven titles of pachinko and eight titles of pachislot machines, even in light of the risk of procuring materials and other factors, though halls are highly motivated to purchase them.
⇒Page 30 of briefing material
We provide not only PS machine sales, but also a variety of services that contribute to the vitalization of all communications in PS industry. Pachinko Pachislot Information Stations are media for halls with more than 10,000 transactions. In addition to the Net-Pachi.com media for fans, the Company is developing Optimize, a website advertising distribution service to help pachinko halls attract customers. In August 2022, the company plans to launch a new service, Pachinko.com. This service was announced in 2018, when I returned to the position of president, and it is PS’ secondary distribution promotion website, which aims to revitalize the market.
⇒Page 31 of briefing material
The targets of the PS business are shown in the chart below.
Conservatively viewed from FY2022 to FY2023 in light of material procurement risks. On the other hand, in FY2024, the Company anticipates that the emerging geopolitical risks will end, and it has raised its operating profit target to ¥4.5 billion.
⇒Page 33 of briefing material
The 3-year business operation plan is shown in the table.