August 2, 2022

Summary of Financial Results for the First Quarter of Fiscal Year Ending March 31, 2023 (FY2022)

(Three Months Ended June 30, 2022) [Japanese GAAP]

Company name:

Sanrio Company, Ltd.

Listed Stock Exchange: Tokyo Stock Exchange

Stock code:

8136

URL: https://www.sanrio.co.jp/english/corporate/ir/

Representative:

Tomokuni Tsuji, President and Chief Executive Officer

Inquiries:

Jiro Kishimura, Senior Managing Director

TEL: +81-3-3779-8058

Scheduled date of filing of Quarterly Report: August 12, 2022

Starting date of dividend payment: -

Preparation of supplementary materials for quarterly financial results: Yes

Holding of quarterly financial results meeting: None

(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the First Quarter of FY2022 (April 1, 2022 - June 30, 2022)

(1) Consolidated results of operations

(Percentages represent year-on-year changes)

Sales

Operating Profit

Ordinary Profit

Net Profit Attributable

to Owners of Parent

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Three months ended Jun. 30, 2022

13,829

28.0

2,383

-

2,512

-

785

(68.2)

Three months ended Jun. 30, 2021

10,802

48.2

(59)

-

102

-

2,470

-

Note: Comprehensive income (millions of yen)

Three months ended Jun. 30, 2022: 2,833 (down 20.8%)

Three months ended Jun. 30, 2021: 3,579 (-%)

Net Profit per Share

Fully-Diluted Net

Profit per Share

Yen

Yen

Three months ended Jun. 30, 2022

9.75

-

Three months ended Jun. 30, 2021

30.67

-

(2) Consolidated financial position

Total Assets

Net Assets

Equity Ratio

Millions of yen

Millions of yen

%

As of Jun. 30, 2022

93,298

45,960

49.0

As of Mar. 31, 2022

83,809

43,800

52.1

Reference: Shareholders' equity (millions of yen)

As of Jun. 30, 2022: 45,737

As of Mar. 31, 2022: 43,642

2. Dividends

Dividend per Share

1Q-end

2Q-end

3Q-end

Year-end

Total

Yen

Yen

Yen

Yen

Yen

FY2021

-

8.00

-

8.00

16.00

FY2022

-

FY2022 (forecast)

10.00

-

10.00

20.00

Note: Revisions to the most recently announced dividend forecast: Yes

3. Consolidated Forecast for FY2022 (April 1, 2022 - March 31, 2023)

(Percentages represent year-on-year changes)

Sales

Operating Profit

Ordinary Profit

Net Profit Attributable

Net Profit per

to Owners of Parent

Share

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Yen

First half

27,800

16.8

3,300

-

3,500

450.1

1,300

(33.3)

16.13

Full year

57,400

8.8

4,700

85.2

5,200

56.7

2,500

(27.0)

31.02

Note: Revisions to the most recently announced consolidated forecasts: Yes

* Notes

  1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None

Newly added: -

Excluded: -

  1. Application of special accounting methods for presenting quarterly consolidated financial statements: None
  2. Changes in accounting policies and accounting-based estimates, and restatements
    1. Changes in accounting policies due to revisions in accounting standards, others: Yes
    2. Changes in accounting policies other than 1) above: None
    3. Changes in accounting-based estimates: None
    4. Restatements: None

Note: Please refer to "2. Quarterly Consolidated Financial Statements and Notes, (3) Notes to Quarterly Consolidated Financial Statements, Changes in Accounting Policies" on page 12 of the attachments for details.

(4) Number of outstanding shares (common stock)

1) Number of outstanding shares at the end of the period (including treasury stock)

As of Jun. 30, 2022:

89,065,301 shares

As of Mar. 31, 2022:

89,065,301 shares

2) Number of shares of treasury stock at the end of the period

As of Jun. 30, 2022:

8,503,861 shares

As of Mar. 31, 2022:

8,503,829 shares

3) Average number of shares outstanding during the period

Three months ended Jun. 30, 2022:

80,561,448 shares

Three months ended Jun. 30, 2021:

80,541,555 shares

Note 1: The current quarterly financial report is not subject to quarterly review by certified public accountants or auditing firms.

Note 2: Cautionary statement with respect to forward-looking statements and other special items

Forecasts regarding future performance in these materials are based on assumptions judged to be valid and information currently available to the Company. These materials are not promises by the Company regarding future performance. Actual results may differ significantly from these forecasts for a number of factors. Please refer to "1. Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Forecasts and Other Forward-looking Statements" on page 6 of the attachments for forecast assumptions and notes of caution for usage.

Sanrio Company, Ltd. (8136) Financial Results for the First Quarter of FY2022

Contents of Attachments

1. Qualitative Information on Quarterly Consolidated Financial Performance

2

(1)

Explanation of Results of Operations

2

(2)

Explanation of Financial Position

6

(3)

Explanation of Consolidated Forecasts and Other Forward-looking Statements

6

(4)

Basic Policy Regarding Profit Distribution and Dividends for FY2022

7

2. Quarterly Consolidated Financial Statements and Notes

8

(1)

Consolidated Balance Sheets

8

(2)

Consolidated Income Statements and Consolidated Comprehensive Income Statements

10

Consolidated Income Statements

For the Three-month Period

10

Consolidated Comprehensive Income Statements

For the Three-month Period

11

(3)

Notes to Quarterly Consolidated Financial Statements

12

Going Concern Assumption

12

Significant Changes in Shareholders' Equity

12

Changes in Accounting Policies

12

Segment and Other Information

13

1

Sanrio Company, Ltd. (8136) Financial Results for the First Quarter of FY2022

1. Qualitative Information on Quarterly Consolidated Financial Performance

(1) Explanation of Results of Operations

During the first quarter of the fiscal year under review, economic activity slowly began to recover both in Japan and overseas as the number of COVID-19 cases declined. In Japan, especially, there were signs of movement toward the normalization of social and economic activity after priority measures to prevent the spread of COVID-19 were lifted on March 21, 2022, and the risk of severe cases from mutant strains diminished. Nevertheless, the outlook remains uncertain due to a sharp rise in infections in Japan since July of this year, the prolonged conflict in Europe, and concerns about downside risks to the economy due to fluctuations in financial and capital markets.

The current fiscal year is set as the second year of the three-yearmedium-term management plan "Creating and Challenging for our Future" concluding in the fiscal year ending March 31, 2024, and we continue to implement various initiatives based on the three pillars of this plan: (1) corporate culture reform, (2) initiation and completion of domestic and overseas structural reforms, and (3) planting the seeds for regrowth strategies and growth markets.

In the first quarter of the current fiscal year, three new directors were appointed at the annual general meeting of shareholders held in June 2022, and a new management structure was initiated. In Japan, a major reorganization was implemented in April, including the consolidation of the licensing division, and the Company is pushing ahead with the strengthening its profit-earning structure following the product sales business, which we began to strengthen the earnings structure in the previous fiscal year. We have steadily implemented the three pillars of the plan both in Japan and overseas, including the conclusion in June of a master licensee contract in China for the next fiscal year and beyond.

In terms of sales, in Japan, both the brick-and-mortar stores and theme parks were able to operate normally for the entire period, including Golden Week, for the first time in three years. Moreover, the resumption of in-store events and live concerts as well as the acquisition of new licensing contracts led to a significant increase in overall sales. In addition, each overseas region performed well, resulting in a major year-on-year increase in sales.

In addition, the membership of Sanrio+, an application for Sanrio fan members, continued to grow steadily after surpassing the one million mark in October 2021 to reach 1,240,000 members as of the end of June 2022.

As for consolidated operating profit, the Company posted a significant increase due to sales growth both in Japan and overseas, as well as improved sales profitability resulting from a lower cost of sales ratio due to progress in structural reforms.

As a result of these factors, sales rose 28.0% year-on-year to 13.8 billion yen, operating profit was 2.3 billion yen (following an operating loss of 59 million yen in the same period of the previous year), and ordinary profit rose 2,341.8% year-on-year to 2.5 billion yen. As disclosed today (August 2, 2022), net profit attributable to owners of parent fell 68.2% year-on-year to 0.7 billion yen due to additional taxes (including local taxes) of around 1.3 billion yen imposed as a corrective by the Tokyo Regional Taxation Bureau, of which 1.2 billion yen was recorded as income taxes for prior periods.

Moreover, the former non-consolidated subsidiary SANRIO SOUTHEAST ASIA PTE. LTD. (incorporated in Singapore) is included in the scope of consolidation from the first quarter of the current fiscal year due to its increased importance. Since the accounting period for all overseas consolidated subsidiaries runs from January to December, the first quarter under review for these subsidiaries covers the period from January to March 2022.

2

Sanrio Company, Ltd. (8136) Financial Results for the First Quarter of FY2022

Reportable Segment

(100 millions of yen)

Sales

Segment profit (operating profit)

First three months of

FY2021

FY2022

Increase/

Change

FY2021

FY2022

Increase/

Change

decrease

(%)

decrease

(%)

Product sales/others

59

73

14

23.9

Japan

Royalties

20

22

1

7.2

1

17

16

1,228.1

Total

80

95

15

19.5

Product sales/others

0

(0)

(0)

-

Europe

Royalties

3

4

0

19.4

(0)

(0)

0

-

Total

3

4

0

16.4

North

Product sales/others

2

4

1

56.6

Royalties

3

7

4

132.1

(1)

1

2

-

America

Total

5

11

5

96.6

Latin

Product sales/others

0

0

0

519.1

Royalties

0

1

0

60.8

0

0

0

268.0

America

Total

0

1

0

70.1

Product sales/others

1

1

(0)

(34.1)

Asia

Royalties

15

23

8

53.5

6

10

4

72.7

Total

17

25

7

44.6

Adjustment

-

-

-

-

(5)

(5)

0

-

Product sales/others

64

79

15

23.6

Consolidated Royalties

43

59

15

34.4

(0)

23

24

-

Total

108

138

30

28.0

Note: Regional subsidiaries overseas pay the amount of royalties commensurate as the cost of sales while the Japanese parent company (the copyright holder) calculates this income as sales. Because consolidated transactions are eliminated, however, these are not included in Japan's sales figures stated above (although included in segment profit (operating profit)).

Further, the above sales figures are "sales to customers," and the inter-segment sales, which are not limited to the above-mentioned royalties, are eliminated as internal transaction sales.

i. Japan: Sales rose 19.5% year-on-year to 9.5 billion yen and operating profit rose 1,228.1% to 1.7 billion yen.

1. Product sales business

In April 2022, the convenience store-related business and the Global Sales Business were both transferred to the Product Sales Division. By consolidating product planning and manufacturing functions, we are working to enhance the value of the Sanrio brand on a global scale.

During the first quarter, the lockdown in Shanghai had some impact, including postponement of the release of "lucky draws" for convenience stores. However, brick-and-mortar stores were able to operate normally for the first time in three years, with no restrictions on activities during the entire period. In addition, sales grew significantly due to a favorable turnaround in the external environment, including product development related to the 2022 Sanrio Character Awards, for which voting took place in-store, and the resumption of live concerts, which led to the popularity of the Enjoy Idol Series and other fan-based support items.

Operating profit increased due to sales growth, a reduction in the number of stock-keeping units (SKUs) accompanying structural reforms, and success in reducing the cost-of-sales ratio due to systematic inventory control and other actions.

2. Licensing business

In April of this year, the Entertainment Business Division was consolidated into the License Business Department. Through the consolidation of operations, a structure was established at the License Business Department that allows for collaboration with other departments, customer analysis, and proposals that exploit the Company's character strengths. At the same time, we succeeded in strengthening our ability to make client proposals by linking the digital and non-digital divisions, and the number of new projects obtained has increased in each category. Moreover, collaborations with animations, game characters, and artists performed well. By category, in

3

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Sanrio Co. Ltd. published this content on 17 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 August 2022 07:13:31 UTC.