Earnings Results Briefing for the First Quarter Ended June 30, 2009
Business results (consolidated)
The Vector Group posted net sales of 955,806,000 yen for the first quarter of the 22nd term, up 20.1% from the corresponding period of the previous fiscal year (from April 1, 2008 to June 30, 2008; hereinafter the abbreviation “y-o-y” is used), due to the strong performance of the online game business. Operating income was 77,289,000 yen, against an operating loss of 6,577,000 yen a year ago.
Ordinary income was 81,877,000 yen, an improvement from the loss of 6,219,000 yen posted in the previous year. Net income before taxes was 81,604,000 yen, a turnaround from last year’s loss of 6,283,000 yen.
As a result, net income after corporate tax was 80,870,000 yen (compared with a net loss of 19,963,000 yen in the same period of the previous fiscal year).
Internet sales business
Sales of the mainstay Internet sales business leveled off, recording 574,427,000 yen, up 1.1% y-o-y. The Internet sales business is related to personal consumption, which remained sluggish. In the software download sales field, mobile PCs, such as Net books, emerged, and this drastically changed demand for PCs. However, the degree of consumers’ interest in software continued to fall. Accordingly, sales from the Pro-Reji service dropped 19.4% y-o-y to 294,124,000 yen, and sales from the Share-Reji service also fell 19.0% to 6,829,000 yen.
Meanwhile, in the software package and hardware sales sector, which deals with mainly PC peripherals, package software and household appliances, sales jumped 40.3% y-o-y to 273,474,000 yen, thanks to our sales at major online shopping malls, such as Yahoo, Rakuten Ichiba and Amazon. However, this Net mail-order sector suffered from low profitability, though improving, because of an increase in low-gross-profit merchandise amid price-cutting competition and the burden of commissions paid to operators of online shopping malls where the sector sells products that account for 80% of total sales.
Online game business
The Group pours its efforts and resources into the online game business, as the secondary core business. In this business, sales soared 104.9% or about double from the previous fiscal year to 298,760,000 yen. This increase is attributable to newly started operations of browser games (online games that can be run on browsers without needing to download them). For these games we started up the specialty portal site Browser Game Time at the beginning of the current fiscal year, in addition to conventional online games (played by downloading client software).
The conventional online game Sangoku Heroes, whose services were formally started in April 2009, and the first browser game Dragon Crusade both made a good start.
As a result, the ratio of the online game business to the Group’s net sales rose to 31.3% for the period under review, up from 18.3% in the previous fiscal year. As the sharp growth in sales offset an increase in fixed expenses, the online game business turned a profit.
Site advertisement sales business
Sales of the site advertisement sales business sector were 49,697,000 yen, down 11.2% y-o-y, affected by the sluggish economy. Of advertisements placed on the website that the Company operates, keyword ads, which account for one-third of the sector’s total sales, were strong until a year ago. After that, however, sales of keyword ads decreased rapidly, and fell 24.6% from the same period of the previous term.
Sales from other businesses were 32,921,000 yen, up 27.6% from the previous fiscal year. The reason for this rise is that sales of the comprehensive support service for download sales for software houses, which made up 80% of total sales of other businesses, soared 62.3% from the corresponding period of the previous fiscal year.
Press Releases » 2009