DYNAM JAPAN cuts costs in response to outbreak

Japanese pinball machine operator DYNAM JAPAN (06889-hk) reported a profit of 141.919 billion yuan (yen) for the year ended march, down 3% from a year earlier.
Net profit attributable to shareholders was 12.748 billion yuan, up 1.2% year on year;
Earnings per share: 16.6 yuan;
The final dividend is $3.
Kueno katsuda, an executive at the company, said that in order to control the loss of revenue caused by the coronavirus, the company will reduce the cost of game consoles, labor, variable costs and fixed costs by 20%, 10%, 15% and 5% respectively, and ensure stable revenue through productivity reform and restructuring.

After April this year, the Japanese government declared a national state of emergency, and several business sectors suspended business operations. Nearly all the japanese-made pinball machine game halls owned by the company were closed from the end of April to the beginning of may due to the epidemic.
Referring to the impact of the epidemic on the company’s game halls, katsuda said that at the end of April 2020, the company closed 428 game halls for Japanese pinball machines, accounting for about 96% of the total game halls of the group.
Console usage fell to about 50% and operating income fell 65% from normal levels.
By may, the number of days the company was operating was about 53% normal, and operating income was down 70%.

Mr. Katsuda added that the government has now lifted the moratorium.
All the japanese-style pinball machine game halls under the company will resume operation in June 2020. It is expected that the operating income of the company will gradually recover from July 2020, and will return to normal from October 2020.

During the period, the amount of bets was $732.862 billion, down 4.7% year on year;
The total amount of lottery tickets was 590.943 billion yuan, down 5.1% year on year.
By the end of March 2020, the number of game halls was 448.
According to the types of game halls, the company operates 174 high – bet game halls and 274 low – bet game halls.
Low bets accounted for 61% of the total.

In addition to the pinball game tube business, the company is also active in the layout of new business areas.
Since July 2019, it has entered the aircraft leasing business. It has purchased three popular narrow-body aircraft in the market and started leasing them to Spanish carrier Vueling Airlines and Indian carrier IndiG.
Mr Katsuda said the company wanted to continue buying more planes to gain market share and planned to buy up to 20 aircraft in three years.

The company also continues to develop time-wasting video slot machines, and has installed three in November 2019 and January 2020 at the lai gong casino in macau, as well as 10 new machines already in development at the casino in the xupu resort in macau.
Mr Katsuda said the new console had now been approved by Macao regulators and had applied for a licence in Singapore in March.
As a result of the outbreak, macau imposed non-resident entry restrictions and the number of visitors fell by 94% compared with the previous year.

“Once the number of visitors returns to normal levels, it will be possible to restart the game trial by changing the software.
We are very interested in our business in Macao and are considering other business opportunities in Macao following the outbreak.”
Katsuda said.

Chief executive officer matsumaku sakamoto, chief financial officer yoshiyuki mizutani, and executive officer kuzio katada attended the press conference and answered reporters’ questions. Excerpts are as follows:

Q: how does the epidemic affect the business of Japanese pinball machines?
What measures will the company take to deal with the outbreak?

A: in terms of the Japanese pinball machine business, the epidemic has not changed our business strategy. We still hope to expand our market share.
Covid-19 is a common problem faced by enterprises all over the world. The company has decided to increase its cash reserves to ensure sustainable profits in the future.

Q: is the company planning to downsize?
How many employees are there now?

A: the company has no layoff plans at the moment.
The company employs about 16,000 people.

Q: besides introducing new game consoles in macau, has the company introduced new game consoles in more countries or regions?

A: we’ll consider introducing new machines to other southeast Asian countries, such as Vietnam, Malaysia, Singapore, etc.

Q: how does the epidemic affect the company’s operations?

A: due to the epidemic, many of our businesses were delayed and some businesses could not be operated. Our employees had to adopt flexible working hours.
With the Japanese government lifting the moratorium, different regions may reopen at different times, such as the company’s pachinko arcade in Tokyo, which will reopen tomorrow, while other locations will reopen as soon as possible.
Even after the venue is reopened, we will take more preventive measures to reduce the impact of the outbreak on our operations.

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