Japanese pachinko hall operator Dynam Japan Holdings Co. Ltd. (Dynam) continued to bear the brunt of severe business environment in the country, with revenues dropping 4.4 percent in the first quarter of fiscal year 2019.
Dynam announced before the Hong Kong Stock Exchange that its total revenue for Q1FY19 stands at ¥35.87 billion ($322.92million), down from ¥37.51 billion ($337.73 million) in the same period last year. Its total gross pay-ins for the first quarter ended June 30, 2018, also slipped 4.1 percent to ¥189.04 billion ($1.70 billion) from ¥197.11 billion ($1.77 billion) in Q1FY19.
On the flip side, Dynam’s hall operating expenses also declined 16.1 percent to ¥29.52 billion ($265.8 million) from ¥35.19 billion ($316.84 million).
The company attributed the decrease of its operating expenses to the reduction of pachinko and pachislot machine expenses. Data showed that pachinko and pachislot machine expenses for Q1 FY2019 stands at ¥5.18 billion ($46.64 million), a 46.9 percent plunge from ¥9.75 billion ($87.79 million) in the same period last fiscal year.
“The Group has made efforts to grow and develop with local communities and to improve the machine utilization through various together business measures under the important policies of setting up our halls from the customers’ viewpoints and operating each of our halls with a focus on customers’ needs,” Dynam said in a statement.
Gradually decreasing the percentage of high playing cost machines also helped improved playing environment in pachinko halls, according to Dynam.
International brokerage Union Gaming said Dynam’s first quarter revenue really didn’t come much as a surprise to them. In its forecast, Union Gaming expected Dynam’s revenue to fall 4.7 percent during the first half of FY2019.
Union Gaming analyst Grant Govertsen noted that the pachinko regulatory environment became stricter as a result of the upcoming integrated resorts (IR) and due to “Japan’s desire to create a line of demarcation between true gambling, which is the IR, and pachinko.”
“Dynam over the last several years has done an admirable job cutting costs in order to maintain cash flows. Much of the cost saves have been HR related, or buying discounted machines (e.g. switching to private label machines),” Govertsen said in a note on Sunday.