6417.T

Overall Company Performance

• The second quarter achieved year-over-year revenue and profit growth, driven primarily by expanded pachinko machine sales volume. H1 performance is on track to meet the full-year plan.
• Consolidated operating profit grew year-over-year, driven by higher gross profit from the pachinko machine segment. Selling, general and administrative (SG&A) expenses increased by 2.575 billion yen, with 1.373 billion yen of the increase from higher sales commissions for strong-performing Bisty brand pachinko machines, and 1.888 billion yen from increased R&D spending to expand product lineups and improve quality.
• Total assets on the consolidated balance sheet decreased by 38.026 billion yen, largely due to the ongoing share repurchase program.

Industry Environment

• Pachinko Market: H1 total industry sales volume reached ~430,000 units. The launch of LT3.0 Plus-equipped machines has accelerated adoption of smart pachinko, and hit machines have emerged, creating positive momentum for market revitalization. Management notes that sustained new hit product launches are required for further market growth.
• Pachislot Market: H1 total industry sales volume reached ~350,000 units. The new Bonus Trigger machine category has expanded product variety, strengthening the market's steady performance. A key ongoing challenge is the persistently low type test approval rate, which may impact future new product launch volume.

New Product and Strategic Initiatives

• H1 new product launches included new tie-in machines with popular anime Tokyo Ghoul and Blue Lock, with e Tokyo Ghoul emerging as a hit product leading overall market utilization. The company also launched the first industry LT3.0 Plus machine and its first Bonus Trigger pachislot machine, successfully driving parlor demand.
• The 17th and latest entry in the company's flagship Evangelion pachinko series (marking the 20th anniversary of the franchise) is scheduled for December launch. The model features upgraded high-quality visuals and an impactful cabinet design, with enhancements across all areas to deliver new customer value.
• The KUGITAMA digital initiative, launched in August, released its first activity: a simulator game launched October 30. The game is designed to be accessible to existing fans, new users, and lapsed users to showcase the core appeal of pachinko. Future plans include expanding the simulator game lineup and launching a digital museum to share the history and culture of SANKYO and the broader pachinko industry.

Shareholder Return

• An interim dividend of 45 yen per share has been approved, with a planned year-end dividend of 45 yen per share, bringing the expected full-year annual dividend to 90 yen per share.
• As of October 31, the ongoing share repurchase program has acquired 52.394 billion yen of shares, reaching 87.3% progress against the planned amount.

• Full-year performance is on track: management confirms that if H2 new product launches proceed as planned, achieving the full-year plan is fully achievable, with potential for upside to the plan.
• H2 pachinko: 4 new titles (including one unannounced model) plus multiple reused machines are scheduled for launch. The company will continue to actively roll out flagship titles and smart pachinko with new game mechanics to grow sales volume.
• H2 pachislot: 5 new titles are scheduled for launch, including the highly anticipated sequel to the hit model L Pachislor Valvrave the Liberator, and the company is working to meet its full-year sales plan.
• No upward or downward revision to the original full-year 2026 March fiscal year earnings guidance was announced in the call.

1. Pachinko Machine Related Business: Revenue grew year-over-year, driven by increased unit sales volume for both SANKYO and Bisty brands, plus a sales mix effect that lifted average selling price for the SANKYO brand. Through the first half (H1), 5 new titles were launched, including the industry's first machine equipped with the new LT3.0 Plus feature and new tie-in machines with popular anime IP, and sales volume recorded a high progress rate against the full-year plan. 2. Pachislot Machine Related Business: Revenue decreased year-over-year, primarily due to lower sales volume for the SANKYO brand. Through H1, 2 new titles (including the company's first Bonus Trigger machine) were sold, and additional production was completed for two popular long-running titles. Full-year progress for sales volume remains low at this point, as most planned new titles are scheduled for the second half (H2). Revenue contribution percentages were not disclosed in the transcript.

• The industry-wide low type test approval rate for pachislot machines is an ongoing issue that may negatively impact the company's H2 sales plan and new product launch schedule. Pachislot new title launch timing will depend on test approval outcomes.
• While pachinko performance is ahead of plan, achieving full-year results still depends on successful execution of planned H2 new product launches, which carries inherent implementation uncertainty.

No question and answer section was included in the provided transcript.