President and Group CEO, Representative Director
The Group carried out “Road to 2020”, a medium term plan for 3 consecutive years starting in FY2018 and in the final year of the plan, the operating income margin was 7.5% and ROA was 3.0%, which fell short of our targets of an operating income margin of at least 15% and ROA of 5%.
While building on the results we achieved under Road to 2020 to target further growth, we recognize the need to continue making every effort to straightforwardly identify and address issues facing the Group.
We were planning to enter a new phase targeting further growth in the fiscal year ending March 2021, but with the onset of COVID-19, the Group is facing a crisis across its business areas.Under these conditions, we are undertaking structural reforms in response to rapidly changing conditions and building a robust business foundation with a view toward future growth. In November 2020, we announced several structural reform initiatives. In order to build a business structure that can adapt to current market conditions, transform to a fixed expenses level commensurate with the business structure, and secure cash flows for growth investments, we are proceeding with a review of the business portfolio, streamlining of fixed expenses, and a review of non-business assets.
We also have to reexamine our new medium-term management plan, which was due to be announced in the fiscal year ending March 2021, and would like to release it after the completion of key structural reforms.
Faced with a crisis of unprecedented proportions, in which the true value of entertainment companies has been called into question, we need to reconsider what we have to do in order to continue to be seen as an “essential” company.
We have redefined the materiality of the SEGA SAMMY Group to reaffirm the value of the experiences that move the heart the Group provides through each of its business areas, and to guide our efforts to realize sustainable solutions to social issues and enhance corporate value. The newly defined materiality includes five categories: the environment, addiction, people, products and services, and governance.
Whenever business is conducted, it has both positive and negative impacts on society. Minimizing the negative impact, and then making an ongoing positive impact that far outweighs the negative by providing experiences that move the heart through our products and services is the underlying idea behind the Group’s ESG and SDG initiatives. SEGA SAMMY’s ultimate raison d’être as an entertainment company is to bring about a more peaceful world by acting through our core entertainment businesses to move people’s hearts and bring excitement to everyday life, and continuing to offer a sense of accomplishment, well-being, joy, peace of mind, and a variety of other emotions.
For the Group to continue to create experiences that move the heart we have to take prompt action, implementing structural reforms to build a framework suited to post-COVID-19 conditions. Unfortunately, the structural reforms that are needed are painful ones. However, embracing the current adversity as an opportunity, I would like to build a robust corporate framework that can adapt to changes in the environment and seek to create a sustainable organization.In recent years, as the notion of sustainable investment has taken root and spread, more importance is placed, not simply on corporate profitability, but on whether or not such investments contribute to the continual enhancement of corporate value in light of the need for social and environmental sustainability.
For SEGA SAMMY to continue to be seen by society as an “essential” company, we will carry out management in a way that is sincere and beyond reproach, continuing to implement sound, far-sighted measures.
Chairman, Representative Director
The novel coronavirus (COVID-19) is rampant, and the situation continues to be unpredictable.In the midst of this unprecedented crisis, entertainment has often been categorized as a “non-essential, non-urgent” activity. In that sense, I feel that this pandemic differs in quality from the many challenges the Group has faced so far in its history. To overcome this adversity, the Group must transform its business model, including the ways in which we provide services and products, in response to sweeping changes in society.
On the other hand, even if the current disaster is prolonged, I believe the essence of entertainment will never change. Since the dawn of history, when faced with unimaginable crises, human beings have sought daily refreshment and enjoyment from entertainment. Entertainment has been passed down and evolved to suit the times, helping to form cultures that make the world a richer place and contributing to the development of society.
Under public health measures directing people to refrain from going out, many entertainment facilities which involve contact between people have been forced to suspend their operations. On the other hand, new ways of playing and enjoying the arts using the internet are showing signs of growth. This is a testament to people’s desire for entertainment no matter what the circumstances. If people’s hearts are not healthy and content, they will be unable to overcome the overwhelming feeling of being locked up that pervades society. I am proud to lead a company that can create such wonderful entertainment. I feel more strongly than ever that this entertainment is the greatest value we can offer to society.
Going forward, to create value that exceeds the expectations of our customers, we will continue striving to foster a culture with “breakthrough power”, in which each and every employee pours their imagination and passion into a project, never giving up until they accomplish it. I am convinced that our repeated efforts to do this will allow us to keep providing experiences that moves the heart to people—the essence of the SEGA SAMMY Group—even in a post-COVID era. We would like to ask our investors and stakeholders for their continued support.