Universal Entertainment revenue up in Q1 as machine sales and Okada rebound

Universal’s amusement equipment business - which sells Pachinko machines - reported sales of JPY16.23bn, slightly more than triple the sales in Q1 of 2021. The business sold 37,739 machines in Q1, just less than triple the amount sold the year before.

The business said that many of its sales were replacements for machines that did not comply with regulations introduced in January 2022. However, it noted that many Pachinko operators had been “cautious” about replacing their machines because the pandemic continues to limit player numbers.

Its Okada Manila integrated resort, meanwhile, brought in JPY11.29bn, up from JPY8.95bn a year earlier. During the last month of the quarter, Okada was able to operate at 100% capacity again following Covid-19 restrictions.

Other parts of the business brought in JPY179m, though JPY79m of this were inter-segment sales.

Universal reported costs of sales of JPY12.14bn. While this was up from JPY7.54bn a year prior, this increase was slower than the growth in revenue.

This left Universal with a gross profit of JPY15.61bn, more than double Q1 of 2021’s gross profit.

After JPY13.28bn in selling, general and administrative expenses, up 18.8%, the business was left with an operating profit of JPY2.33bn, after a loss of JPY4.04bn in the previous year.

The business also made JPY8.55bn from the cancellation of leasehold contracts, plus a JPY4.10bn from foreign exchange gains and JPY1.83bn in other income.

This was somewhat offset by JPY2.96bn in losses from businesses in which Universal holds a non-controlling stake, JPY1.65bn in interest on bonds and JPY1.20bn in other interest.

However, this meant the business still made JPY8.58bn in net non-operating income, meaning its ordinary profit was JPY10.91bn. In Q1 of 2021, it made a Q1 loss of JPY1.96bn.

The business also made a JPY818m non-recurring loss related to the period when Okada Manila was closed due to Covid-19. However, with less closure time in 2022 than 2021, this loss was down from JPY1.95bn a year earlier.

As a result, Universal made a pre-tax loss of JPY10.12bn, compared to a JPY4.10bn loss a year earlier. After JPY227m in current income taxes and JPY1.53bn in deferred income taxes, Universal reported a net profit of JPY8.36bn, having lost JPY5.21bn a year before.

After the quarter ended, the Philippine government allowed foreigners to enter the country again after extended border restrictions due to the Covid-19 pandemic. This, Universal said, should boost business at Okada Manila.