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Universal Entertainment’s 1Q23 Profit Decline on Poor Pachinko Machine Sales

May 16, 2023 JapanPhilippines Earnings & Filings

Lower pachislot and pachinko machine sales contributed to a 64.8% year-over-year decline in net profit attributable to owners of the parent for Japan’s Universal Entertainment Corp, which includes the Philippines integrated resort Okada Manila among its core assets.

According to the company’s report released on Friday, the total number of units sold in its Amusement Equipment Business for the March quarter decreased by 12,836 units, to 24,903 units, resulting in a 31.4% reduction in net sales to JPY11.15 billion (US$82.1 million). It did, however, mention that the implementation of Japan’s new 6.5 standards and the creation of intelligent pachislot machines had resulted in orders for 50,000 units in the June quarter alone.

It was further stated that smart pachislot machines, which provide a “broader range of game playing characteristics,” were replacing older machines in pachinko halls, leading to a “steady recovery of the pachislot market following a prolonged slump.”

Despite a weak March quarter for the pachinko and pachislot segment, Universal said that overall group sales increased by 22.0% year over year to JPY35.5 billion (US$261 million), helped by Okada Manila’s revival.

Okada Manila’s net sales increased by 114% to JPY24.1 billion (US$177 million), producing an operating profit of JPY4.1 billion (US$30.2 million) and Adjusted EBITDA of JPY7.93 billion (US$58.4 million), both of which were up 226% year over year.

“Business performance has remained strong,” said Universal, which also provided details on its expansion strategies for the upcoming months. “In the first quarter, there was a gradual increase in the number of visitors [to Okada Manila] from both within the Philippines and from other countries,” it added.

“A priority is expanding the number of online games that may be played within the Philippines in order to draw an even wider spectrum of local visitors in the gaming industry. This includes taking action against the demand for gaming in regions of the Philippines besides Luzon Island, where Manila is situated.

We are also engaging in a significant amount of marketing in Japan, South Korea, Thailand, and other Asian nations to draw in more foreign tourists.

Tiger Resort, Leisure and Entertainment Inc., the entity that runs Okada Manila, released its 1Q23 financial results last month.

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