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. Furthermore, to achieve further growth of the Group, we are deploying content for secondary use in pachinko/pachislot machines and are working to create new businesses focused on the creation and deployment of content IP, including manga and animation, to seek synergies with the existing businesses.

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 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. The Group achieved a ratio of operating income to net sales that was high compared with the ratio 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, the pachislot market environment remains strong. This trend has been driven by the successive rollout of hit models, robust machine utilization, and the increasing adoption of machines since the debut of Smart Pachislot machines. Meanwhile, the pachinko market continues to face a challenging environment. While the introduction of models featuring “LUCKY TRIGGER 3.0 PLUS,” a new type of gaming performance, raised expectations for a market revival, it has yet to significantly improve machine utilization. Additionally, parlor operators have become increasingly selective regarding new models and installation volumes following the slump in machine utilization in the pachinko market. Furthermore, although there are signs that the decline in the player population is bottoming out, accompanied by a positive trend of the younger generation entering the player base, a full recovery has yet to be realized. The Group recognizes that expanding the player base and creating an accessible, user-friendly gaming environment are critical issues for sustainable market growth.
Under these conditions, the Group identifies the recovery of the pachinko market and the expansion of the player base as its key priorities. To address these, the Group will work to enhance product competitiveness, and to ease the financial burden of new machine introductions for parlor operators through price revisions and revitalize the market by introducing its new pricing policy for pachinko machines, “SANKYO YELL PRICE.” Furthermore, the Group aims to maintain and strengthen profitability by achieving cost savings through reductions in manufacturing costs and improved efficiency in development and production, while increasing sales volume and market share through enhanced price competitiveness. As part of its initiatives to expand the player base, the Group will promote the “KUGITAMA” project. This project strives to attract new fans and re-engage lapsed players through digital initiatives, the operation of cafes where visitors can casually enjoy Hanemono (traditional-style) type machines, and a rental plan that enables parlors to introduce Hanemono type machines at lower costs.
Through these efforts, the Group endeavors to increase the player population and improve the overall market climate. The Group is committed to maintaining the top market share in the pachinko machines business and consolidating its leading position in the pachislot machines business. Simultaneously, the Group will focus on creating and deploying content IPs that offer synergies with existing businesses, aiming for the sustainable enhancement of corporate value.