Japan’s second largest pachinko hall operator, Dynam Japan Holdings, has cited an increase in depreciation expenses of its pachinko and pachislot machines and “unprecedented skyrocketing utilities expenses” as the reasons for a substantial decline in profit for the financial year ended 31 March 2023.
According to the company’s FY23 financial results, published Wednesday, consolidated net profit attributable to owners for the year was JPY1.81 billion (US$13.0 million), down 63.9% year-on-year despite total revenues rising by 11.5% to JPY117.2 billion (US$841 million).
Dynam said the significant increase in expenses came despite the group making headway in the implementation of low-cost operation and trying to improve profitability via the closure of unprofitable halls. The company operated 429 halls as of 31 March, down from 433 a year earlier.
“Under this environment, we will continue to review the cost structure of the Group and make efforts to strengthen profitability with steady preparations for smart pachinko starting from April 2023,” it said.
“In the pachinko industry, amid a situation where the market size was in decline due to continuous closure and discontinuance of business, operating revenue was on the rise thanks to the arrival of many popular pachinko and pachislot machines pursuant to new rules and regulations.
“Moreover, the smart pachislot in the progress of installation from November 2022 drew a lot of attention from customers and a positive sign was appearing in the market with the smart pachinko expected to be installed from April 2023.”
Dynam said that revenue from high playing cost halls had increased by 9.2% to JPY56.0 billion (US$402 million) while revenue from low playing cost halls increased by 11.6% to JPY58.4 billion (US$419 million). Expenses, meanwhile, had increased by 17.6% to JPY110.5 billion (US$793 million).
Outlining its long-term business strategy, Dynam explained it plans to “maximize leverage of its position as the pachinko industry’s leading company in terms of the number of pachinko halls and will steadily accumulate profits over the long-term through multiple-hall development and low-cost operations.
“Our vision is to reinvent pachinko gaming as a form of everyday entertainment that everyone can easily enjoy, as a regional infrastructure. To realize everyday entertainment, we must manage our business so that our customers consider the time and money they spend in our halls are at acceptable levels for everyday entertainment.
“Therefore, the Group practices chain store management as one of its management policies. We are building a framework that enable us to fully leverage the advantages derived from multiple-hall development, and manage all hall operations at low cost.
Managing our pachinko halls at low-cost leaves space to enable us to entertain customers with low playing cost games, which in turn leads to the realizing of everyday entertainment.”