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Japanese pachinko giant Dynam sees profits soar on cost cutting measures

Wednesday, 22 November 2017 05:55
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Leading Japanese pachinko hall operator Dynam Japan Holdings Co Ltd reported a 26.7% increase in profit before tax to ¥8.4 billion (HK$583 million) and a 40.7% increase in profit attributable to owners to ¥5.4 billion (HK$376 million) for the six months to 30 September 2017 on the back of streamlining measures and “chain store theory.”

The improved results come despite a 3.3% decrease in revenue for the period to ¥77.2 billion (HK$5.4 billion) following a reduction in gross pay-ins to ¥397.1 billion (HK$27.5 billion). Outlining the reasons for the profit boost, Dynam credited its renewed business focus on the operation of low playing cost halls which saw the total number of halls in Japan under its control grow from 444 to 450.

“For the six months ended 30 September 2017, we opened five low playing cost halls. In addition, we closed one low playing cost hall in line with a change in our business areas and converted one high playing cost hall to low playing cost hall,” the company said.

“One of the group’s management policies is implementing chain store management. Chain store theory is to maximize profit with low cost operation, which means that the greater the expansion in the number of halls, the more the profit and the greater the ratio of return to customers.

“A feature of the group’s chain store management is multiple-hall development and low cost operations centered on low playing cost games. Devising low cost measures and the expertise needed from store openings to store management are crucial in promoting low playing cost games. By reaping the benefits of the economies of scale through multiple-hall development when purchasing game machines and general prizes, the group will continue to leverage our status as the pachinko industry’s leading company in terms of the number of pachinko halls and steadily accumulate profits over the long term by implementing chain store management.”

Dynam said its strategy included targeting small business areas with 30,000 to 50,000 residents, standardizing hall specifications including interior layout and installation of gaming machines, and “constructing wood-frame halls on land leased for 20 years to avoid excessive investment in land purchases, so as to scrap the halls easily if market conditions change in the future.”

 

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