Management Policies/
Mid-Term Management Plan

MANAGEMENT POLICY, MANAGEMENT STRATEGY, ETC.

1) Management policy
The basic philosophy of SANKYO Co., Ltd. (the Company) and its consolidated subsidiaries and affiliates (SANKYO Group) is to fulfill its mission, namely, to contribute to the sound development of pachinko and pachislot, which are popular leisure activities in Japan, and to the quality of life in society as a leading company in the pachinko and pachislot industry. Moreover, by concentrating its resources on the game machines business (pachinko machines business, pachislot machines business, and ball bearing supply systems business), which are expected to be highly profitable, the Group aims to revitalize the pachinko and pachislot industry and achieve sustainable enhancement of corporate value.

2) Business strategy by segment
i. Pachinko Machines Business and Pachislot Machines Business
By offering highly competitive innovative products imbued with the spirit of “ingenuity,” which is our company motto, we aim to earn the trust and support of players and parlor operators so as to increase our market share of pachinko and pachislot machines in terms of sales volume. In addition, as initiatives to strengthen profitability, we will focus on the sharing of parts, improvement of the recycling rate, and improvement of development efficiency to achieve cost reduction as well as improvement of the top line through increased sales volumes.
Regarding the pachinko machines business, the Group has been securing a top-tier share in the pachinko machines market for a quarter century. To further increase market share, we will continue to offer products that earn the support of players and parlor operators by developing diverse products that capitalize on the Group’s three brands and creating popular series of products.
As for the pachislot machines business, we recognize that the Group has ample room for growth, and we will work to secure resources, strengthen alliances, offer a stable number of titles slated for introduction, and create hit titles, with the aim of securing a formidable presence similar to that in the pachinko market.

ii. Ball Bearing Supply Systems Business
We handle ball bearing supply systems and various products necessary for the interiors and operations of pachinko parlors. Capitalizing on our system capable of providing one-stop services combined with supply of pachinko and pachislot machines, we are committed to meeting the needs of parlor operators to the fullest extent possible.

PERFORMANCE INDICATORS

SANKYO Group aims to achieve sustainable growth by establishing a solid position in the industry through increasing its share of the pachinko and pachislot markets. The Company believes that the results of this effort are reflected in the ratio of operating income to net sales and formulates and implements various measures to increase competitive advantage in product planning, development, production, and marketing with the objective of increasing this ratio. The Group will continuously engage in cost reduction measures, including improvement of the efficiency of advertising and sales promotion, the sharing of parts and materials, and the streamlining of logistics.
The table below depicts change in the ratio of operating income to net sales for the most recent three-year period. In the fiscal year ended March 31, 2023, the Group achieved a ratio of operating income to net sales that was unprecedentedly high compared with the ratio in recent years owing to a significant increase in net sales, mainly attributable to growth in the Group’s market share in both the pachinko machines business and the pachislot machines business. Going forward, the Group will continue striving to increase its shares of pachinko and pachislot machine markets while aiming to maintain and enhance the ratio of operating income to net sales.

On May 9, 2024, the Group announced its three-year Mid-term Management Plan which started from the fiscal year ending March 31, 2025. In this plan, in addition to three-year targets for sales and profits, we have set a target of achieving return on equity (ROE) at a level between 15% and 20%, which is considerably higher than the level of the capital cost recognized by the Group or the capital cost required by investors.

Mid-Term Management Plan

• Mid-Term Management Plan（March 31,2025 to March 31,2027）(PDF) (618KB)

MANAGEMENT ISSUES

In the pachinko and pachislot industry, although the number of pachinko parlors and the numbers of pachinko and pachislot machines installed continue to decline, the Smart Pachislot machines that have debuted ahead of Smart Pachinko machines have gained support from players and parlor operators and are invigorating the pachislot market, indicating positive developments are gaining traction. Smart Pachinko machines debuted in April 2023, and full-scale diffusion of Smart Pachinko and Pachislot machines has finally begun. The diffusion of Smart Pachinko and Pachislot machines enable pachinko parlors to reduce operational costs while giving them greater freedom in terms of parlor locations and machine layout, and as a result, there are expectations that the player population will increase, new parlors will open, and the numbers of pachinko and pachislot machines installed will grow. We believe the advent of Smart Pachinko and Pachislot machines will trigger revitalization of the pachinko and pachislot industry, which continues to operate in a challenging environment.
In this environment, in order to make the transition to Smart Pachinko and Pachislot machines an opportunity for development of the industry and further growth of the Group, we will promote development of Smart Pachinko and Pachislot machines along with current pachinko and pachislot machines, thereby fulfilling our social mission as a leading company. Meanwhile, with regard to the brand power that has underpinned the increase of the Group’s market share in recent years, in the mainstay pachinko machines business, while focusing on mainstay titles such as the Mobile Suit Gundam series and the NEON GENESIS EVANGELION series, which have secured popularity in the market, we will vigorously roll out new tie-up machines to meet diversifying player needs so as to maintain and enhance our brand power. In the pachislot machines business, the Group will also endeavor to build up trust and support from players and parlor operators while increasing the Group’s market share along with the Group’s presence.