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Sanrio

Sanrio 8136

サンリオ
Sanrio Company, Ltd.
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1-11-1 Osaki Shinagawa-ku Tokyo, Japan 141-8603
https://www.sanrio.co.jp/corporate/
03-3779-8111
Summary
Social communication” underpins Sanrio’s corporate philosophy. According to the company, it operates under the concept of “small gift, big smile.” Sanrio’s businesses include the development of characters who convey the spirit of thoughtfulness, the planning and development of gift merchandise featuring the company’s characters, and the operation of theme parks.
Multiline Retail
Key dates
2012-08-29
Coverage initiation
Full Report
2022-05-16
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Executive summary

Overview

Sanrio Co., Ltd. has a vision of "One World, Connecting Smiles." With an unchanging corporate philosophy that proclaims that "We’re all friends," Sanrio creates characters that spread joy throughout the world. It also provides products and services based on their characters, and licenses them to other companies. Established in 1960, some of its numerous characters include world-famous Hello Kitty (1974), My Melody (1975), and Little Twin Stars (1975). The company’s sales follow the Pareto principle, in that approximately 80% are generated by the top 20% of high-performing characters. Hello Kitty is especially popular and generates around 50% of sales. In FY03/21, the company reported consolidated sales of JPY41.0bn (-25.7% YoY) and an operating loss of JPY3.2bn (operating profit of JPY2.1bn in FY03/20).

Business model: Many of Sanrio’s characters have become famous through merchandising rather than their animated films and books, which is quite different from other companies. This means it’s important for the company to gain exposure for the characters it develops through product sales at brick-and-mortar stores, where customers are able to experience their appeal directly. Brick-and-mortar product sales are crucial for generating licensing income from characters, which is why the company does not focus solely on its licensing businesses with its high profit margins. Sanrio’s theme park business provides places for fans to have fun and meet their favorite characters in person, while providing data for analysis and developing characters.

Reporting segments: For reporting purposes, the company breaks down its businesses geographically into the Domestic segment and the Overseas segment, and further breaks down overseas operations by region, into Europe (the UK and Germany), the Americas (North America and South America), and Asia (Hong Kong, Taiwan, South Korea, and China). In FY03/21, the company reported sales of JPY34.9bn (-26.4% YoY) for the Domestic segment, JPY1.2bn for Europe (-17.4% YoY), JPY2.4bn for the Americas (-21.2% YoY) and JPY6.8bn for Asia (-23.7% YoY). In terms of operating profit/loss after the remittance of master license fees to the parent, it reported an operating loss of JPY2.9bn for the Domestic segment (operating profit of JPY1.7bn in FY03/20), a loss of JPY300mn for Europe (loss of JPY500mn in FY03/20), a loss of JPY1.1bn for the Americas (loss of JPY1.1bn in FY03/20), and profit of JPY1.9bn for Asia (-31.9% YoY).

Domestic segment: The parent company’s main business divisions are Product Sales, Licensing, Entertainment, and Overseas (overseas subsidiaries’ royalty payments and exports). Subsidiaries run the theme park business. In the Product Sales division, the company develops its own character goods, has them produced by contract manufacturers, and sells them through various channels, starting with its nationwide chain of directly managed Sanrio shops and company-run stores inside of department stores and mass retailers. The division also includes wholesale and e-commerce sales. In the Licensing division, Sanrio licenses its characters for use by other companies, collecting licensing fees in return for allowing its characters to be used in merchandising, advertisements, and sales promotions. Merchandising involves the use of Sanrio characters in various third-party products such as toys, foods, and apparel, as well as character-shaped products (such as figurines) and various character goods. In the Entertainment division, the company is diversifying into new areas such as animation and games. Theme parks, including the indoor Sanrio Puroland theme park and open-air Harmonyland theme park, are run by subsidiaries. Traditionally, Sanrio has used the product sales business to nurture characters into future sources of revenue for the high-margin licensing business. For this reason, the domestic product sales business has come to be regarded as something approaching sacred ground, with its low profitability seemingly overlooked. One of the company’s top priorities accordingly is to improve profitability at the domestic product sales business.

Overseas segment: Sanrio’s overseas business is focused primarily on licensing, though the proportion of sales from licensing and product sales varies from region to region. Overseas segment earnings are disclosed on an individual subsidiary basis. Overseas subsidiaries pay master license fees (booked as cost of sales) to the parent company (the copyright holder) proportional to their royalty income. All of the company’s overseas subsidiaries have January–December fiscal years. In keeping with standard accounting practices, the company includes the quarterly results of these subsidiaries in consolidated results with a three-month lag (i.e., Sanrio’s FY03/21 results reflect the results at its overseas subsidiaries in the 2020 calendar year). The US business accounts for the bulk of overseas segment losses, and in turn the product sales business accounts for the bulk of US business losses prior to common costs (JPY600mn loss for product sales and JPY0bn loss for licensing). Thus in order to move the US business into profit, the company must stem losses at the product sales business in the US.

Changes in representative directors: On July 1, 2020, Shintaro Tsuji vacated the office of representative director, president and CEO and assumed the position of representative director, founder and chairman. On the same day, Tomokuni Tsuji, formerly senior managing director, became the company’s representative director, president and CEO. Tomokuni Tsuji is the grandson of Shintaro Tsuji. He became a director in 2016 after joining the company in 2014. With this change, the company’s management will be entrusted to a young executive born in 1988.

Trends and outlook

FY03/22 results: The company reported full-year consolidated sales of JPY52.7bn (+28.5% YoY), gross profit of JPY33.8bn (+33.9% YoY), operating profit of JPY2.5bn (versus loss of JPY3.2bn in FY03/21), recurring profit of JPY3.3bn (versus loss of JPY1.7bn in FY03/21), and net income attributable to owners of the parent of JPY3.4bn (versus loss of JPY3.9bn in FY03/21). Sales amounted to 102.9% of the company's revised full-year forecast issued on February 10, 2022, operating profit for 211.4%, recurring profit for 174.6%, and net income attributable to owners of the parent 136.9%. Sales came in ahead of the company’s revised estimate thanks to strong demand both domestically and overseas. Operating profit similarly came in higher than the revised estimate, thanks to higher sales, a decline in CoGS accompanying structural reforms dictated under the company's medium-term management plan, and lower SG&A expenses. 

FY03/23 forecast: The company's FY03/23 forecast is JPY54.6bn sales (+3.5% YoY), JPY3.0bn operating profit (+18.2% YoY), JPY3.5bn recurring profit (+5.5% YoY), JPY2.1bn net income attributable to owners of the parent (-38.7% YoY), and JPY26.07 EPS. In short, the company expects to meet the operating profit target of JPY3.0bn for FY03/24, the final year of the medium-term management plan, one year earlier than projected. Sanrio says that it will closely monitor progress in achieving its medium-term targets and consider an upward revision. The company's 1H FY03/23 forecast is JPY25.2bn sales (+5.9% YoY), JPY700mn operating profit (+143.1% YoY), JPY900mn recurring profit (+41.5% YoY), JPY400mn net income attributable to owners of the parent (-79.5% YoY), and JPY4.97 EPS.

Medium-term business plan: On May 25, 2021, the company announced a three-year medium-term business plan ending in FY03/24, with the aim of achieving a turnaround in operating profit to JPY3.0bn in FY03/24. The main pillars of this medium-term business plan are: 1) improving profitability at the domestic product sales business, where margins have narrowed; 2) lifting the US business out of the red and into the black; and 3) planting seeds for regrowth and corporate culture reform. Sanrio aims to post operating profit of JPY3.0bn in FY03/24 (versus an operating loss of JPY3.2bn in FY03/21). To lift operating profit to JPY3.0bn by FY03/24, the company will need to achieve a JPY6.2bn improvement at the operating level relative to FY03/21. The company assumes recovery by FY03/24 from the COVID-19-induced slump in the theme park business (JPY1.6bn operating loss in FY03/21, after three consecutive years of operating profits through FY03/20), and also thinks it necessary to boost profitability at the domestic product sales business (from an operating loss of JPY1.8bn in FY03/21) and achieve a shift to profit at the US business (from an operating loss of JPY1.1bn in FY03/21). Sanrio targets sales of JPY53.0bn in FY03/24 (versus sales of JPY41.0bn in FY03/21). However, the company says the sales target of JPY53.0bn is what is required to achieve operating profit of JPY3.0bn; it is not a firm commitment.

Strengths and weaknesses

Shared Research thinks Sanrio’s strengths are: 1) strong IP with a track record of establishing many well-known and highly popular characters; 2) a relatively stable flow of income in Japan, as a consequence of customer connections constructed thus far; and 3) completion of a domestic business model in which it cultivates the popularity of characters through its product sales and theme park businesses before leveraging them in the licensing business.

We believe the company’s weaknesses are: 1) decline in the market for Hello Kitty products for young children could lead a decrease in future customers, 2) vulnerability of overseas income (mainly derived from licensing) to local market sentiment, and 3) the company has not been able to monetize their characters to their full potential since it mainly focuses on selling physical products.

Key financial data

Income statementFY03/13FY03/14FY03/15FY03/16FY03/17FY03/18FY03/19FY03/20FY03/21FY03/22FY03/23
(JPYmn) Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons. Est.
Sales74,23377,00974,56272,47662,69560,22059,12055,26141,05352,76354,600
YoY-1.0%3.7%-3.2%-2.8%-13.5%-3.9%-1.8%-6.5%-25.7%28.5%3.5%
Gross profit49,45453,35950,56247,30640,47038,71837,87135,01725,29033,870
YoY2.8%7.9%-5.2%-6.4%-14.5%-4.3%-2.2%-7.5%-27.8%33.9%-
Gross profit margin66.6%69.3%67.8%65.3%64.6%64.3%64.1%63.4%61.6%64.2%-
Operating profit20,19821,01917,46812,6756,9045,7344,7862,106-3,2802,5373,000
YoY6.8%4.1%-16.9%-27.4%-45.5%-16.9%-16.5%-56.0%--18.2%
Operating profit margin27.2%27.3%23.4%17.5%11.0%9.5%8.1%3.8%-4.8%5.5%
Recurring profit19,64620,18018,52513,1787,2556,0205,8363,274-1,7313,3183,500
YoY7.0%2.7%-8.2%-28.9%-44.9%-17.0%-3.1%-43.9%--5.5%
Recurring profit margin26.5%26.2%24.8%18.2%11.6%10.0%9.9%5.9%-6.3%6.4%
Net income12,53612,80212,8049,6096,4754,9283,880191-3,9603,4232,100
YoY-12.8%2.1%0.0%-25.0%-32.6%-23.9%-21.3%-95.1%---38.7%
Net margin16.9%16.6%17.2%13.3%10.3%8.2%6.6%0.3%-6.5%3.8%
Per-share data (JPY)
No. of shares outstanding('000 shares) 89,06589,06589,06589,06589,06589,06589,06589,06589,06589,065
EPS142.1145.2146.5112.176.358.145.72.3-47.942.526.1
EPS (fully diluted)142.1145.2--------
Dividend per share45.080.080.080.080.055.030.035.0-16.016.0
Book value per share553.3699.3757.1641.2622.9618.7614.1548.8461.3541.7
Balance sheet (JPYmn)
Cash and cash equivalents35,62752,26554,81641,08041,17244,29043,81440,05336,87638,404
Accounts receivable10,75212,77011,5679,4337,6987,8246,8666,2115,269-
Inventories3,1103,5443,9164,3004,3064,2114,4234,8544,6063,531
Total current assets55,67272,23874,31157,75756,29557,87156,38753,78048,93749,987
Tangible fixed assets17,64819,02218,89118,74418,53916,43015,91215,89016,09812,845
Intangible assets4,0004,8655,2545,2004,7153,9053,3972,4742,2162,236
Investments and other assets19,98921,35923,56924,06021,71120,03319,45817,33917,76618,727
Total fixed assets41,63845,24847,71448,00644,96740,36838,76835,70436,08133,808
Total assets97,425117,585122,124105,826101,31298,27495,18589,51585,04083,809
Accounts payable4,4814,6584,8215,0193,9114,5634,4333,9643,1803,797
Short-term debt12,06912,00011,0937,38510,9009,5768,92110,43118,29410,840
Total current liabilities24,87929,28829,37323,02224,82424,50822,89122,59529,33624,230
Long-term debt14,73814,55214,94213,63111,17711,81212,33911,79012,66811,833
Total fixed liabilities23,56326,41326,48128,07023,42921,03319,89620,53218,41715,778
Total liabilities48,44355,70155,85551,09248,25345,53942,78843,12747,75440,008
Total net assets48,98261,88366,26954,73353,05852,73452,39646,38737,28543,800
Total interest-bearing debt26,80726,55226,03521,01622,07721,38821,26022,22130,96222,673
Cash flow statement(JPYmn)
Cash flows from operating activities17,08517,44814,43810,0117,0373,9364,868834-2,2875,064
Cash flows from investing activities-485-8,651-7,818-6,3988,7364,376-2,576-3,6247,0072,300
Cash flows from financing activities-9,651-5,417-11,921-19,582-6,111-7,958-3,053-4,993-862-9,106
Financial ratios
ROA (RP-based)21.1%18.8%15.5%11.6%7.0%6.0%6.0%3.5%-2.0%3.9%
ROE29.2%23.2%20.1%16.0%12.1%9.4%7.4%0.4%-9.5%8.5%
Financial leverage (equity multiplier)2.21.91.91.91.91.91.81.92.12.1
Total asset turnover0.80.70.60.60.60.60.60.60.50.6
Net margin16.9%16.6%17.2%13.3%10.3%8.2%6.6%0.3%-6.5%
Equity ratio50.1%52.4%54.0%51.4%52.2%53.4%54.7%51.5%43.7%52.1%
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Reversal of allowance for sales returns is subtracted from gross profit.

Recent updates

Change in representative director, extraordinary loss on payment of special bonus to retiring chairman

2022-03-16

On March 15, 2022, Sanrio Company, Ltd. announced planned changes in its senior management team, including its representative director and plans to pay a special merit bonus to its retiring chairman/founder, and also indicated that it would need to record an extraordinary loss in connection with this payment.

Change in representative director

The company announced a change in representative director planned in June 2022. Mr. Shintaro Tsuji plans to retire his current position as Representative Director and Chairman as of the closing of ordinary general meeting of shareholders to be held in June 2022. The purpose of his retirement is to facilitate the reforms in its operating structure that are being carried out under its medium-term business plan. He will be assuming a new role as Honorary Chairman.

Current Representative Director and Chairman Shintaro Tsuji will assume the post of Honorary Chairman

Extraordinary loss on payment of special merit bonus

At a meeting of Sanrio's board of directors on March 15, 2022, the board voted to approve a proposal to be presented at the 62nd Ordinary General Meeting of Shareholders (to be held in late June 2022) authorizing the award of a special merit bonus to retiring Chairman Shintaro Tsuji. The company also indicated that it would need to book an extraordinary loss in connection with this bonus payment at both the parent company and consolidated level in FY03/22. 

Special merit bonus award

Specifically, the company's board of directors voted to approve a special merit bonus of JPY300mn on top of the benefits the outgoing chairman has accumulated under the company's retirement benefit program for directors (terminated in June 2015). Under the proposal, the special merit bonus is seen as a fitting reward upon the retirement of the company's founder and long-serving chairman, who has been leading Sanrio since its founding in 1960 and contributed greatly to its successes over these many years.  

Extraordinary loss to be recorded in connection with special bonus payment

The company said that the special bonus payment, if approved by shareholders at upcoming general shareholders meeting to be held in late June 2022, would require it to book a related extraordinary loss at both the parent company and consolidated level in current the fiscal year ending March 31, 2022.

Capital alliance with Yaruki Switch Group Holdings

2022-03-01

On February 28, 2022, Sanrio Company, Ltd. announced that it was entering into a capital alliance with Yaruki Switch Group Holdings.

Sanrio reported that it had acquired a 10% stake in Yaruki Switch Group Holdings at a cost of roughly JPY3.0bn, buying the shares from funds operated by Advantage Partners, a major shareholder.

Purpose of capital alliance

By entering into a capital alliance, the two companies are aiming to benefit from joint-efforts in a number of different areas as outlined below.

  • Sales of Yaruki Switch Group-brand educational toys through stores operated by Sanrio
  • Special events at Sanrio Puroland and Harmonyland sponsored by the Yaruki Switch Group’s educational brand services 
  • The leveraging Sanrio's strong presence in Southeast Asia and Taiwan to help establish and promote Yaruki Switch Group businesses in those markets
  • The utilization and sale of educational materials currently being developed by Sanrio (as a new business) in classrooms operated by Yaruki Switch Group companies
  • The licensing of Sanrio characters for use by Yaruki Switch Group companies

Yaruki Switch Group has worked to support the education of children for more than 40 years, operating a total of seven different school brands, including School IE (personalized cram schools), Kids Duo (all-English afterschool childcare), and Kids Duo International (bilingual kindergartens). In Japan and overseas, Yaruki Switch Group companies operate a combined total of more than 2,000 classrooms with more than 110,000 enrolled students. 

Trends and outlook

Quarterly trends and results

Earnings (cumulative)FY03/20FY03/21FY03/22FY03/22
(JPYmn) Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4% of Est.FY Est.
Sales13,37927,66042,15155,2617,28917,07029,44941,05310,80223,79338,56252,763102.9%51,300
YoY-3.8%-2.2%-3.4%-6.5%-45.5%-38.3%-30.1%-25.7%48.2%39.4%30.9%28.5%25.0%
Adjusted gross profit8,62317,87727,20135,0174,52010,48418,12625,2907,14715,26624,76533,870103.3%32,800
YoY-5.3%-2.5%-3.4%-7.5%-47.6%-41.4%-33.4%-27.8%58.1%45.6%36.6%33.9%29.7%
Gross profit margin64.5%64.6%64.5%63.4%62.0%61.4%61.6%61.6%66.2%64.2%64.2%64.2%63.9%
SG&A expenses7,92916,50224,76832,9105,69813,13020,64228,5707,20614,97822,72931,33299.2%31,600
YoY2.1%2.0%1.7%-0.5%-28.1%-20.4%-16.7%-13.2%26.5%14.1%10.1%9.7%10.6%
SG&A ratio59.3%59.7%58.8%59.6%78.2%76.9%70.1%69.6%66.7%63.0%58.9%59.4%61.6%
Operating profit6941,3742,4332,106-1,177-2,645-2,516-3,280-592882,0362,537211.4%1,200
YoY-48.1%-36.3%-36.1%-56.0%---------
Operating profit margin5.2%5.0%5.8%3.8%-----1.2%5.3%4.8%2.3%
Recurring profit9442,0393,3073,274-999-1,938-1,766-1,7311026362,4653,318174.6%1,900
YoY-44.3%-25.3%-27.9%-43.9%---------
Recurring profit margin7.1%7.4%7.8%5.9%----0.9%2.7%6.4%6.3%3.7%
Net income-2913261,540191-858-2,847-2,357-3,9602,4701,9493,1723,423136.9%2,500
YoY--78.5%-48.9%-95.1%---------
Net margin-1.2%3.7%0.3%----22.9%8.2%8.2%6.5%4.9%
QuarterlyFY03/20FY03/21FY03/22
(JPYmn) Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4
Sales13,37914,28114,49113,1107,2899,78112,37911,60410,80212,99114,76914,201
YoY-3.8%-0.6%-5.6%-15.4%-45.5%-31.5%-14.6%-11.5%48.2%32.8%19.3%22.4%
Adjusted gross profit8,6239,2549,3247,8164,5205,9647,6427,1647,1478,1199,4999,105
YoY-5.3%0.2%-5.1%-19.5%-47.6%-35.6%-18.0%-8.3%58.1%36.1%24.3%27.1%
Gross profit margin64.5%64.8%64.3%59.6%62.0%61.0%61.7%61.7%66.2%62.5%64.3%64.1%
SG&A expenses7,9298,5738,2668,1425,6987,4327,5127,9287,2067,7727,7518,603
YoY2.1%1.9%1.1%-6.7%-28.1%-13.3%-9.1%-2.6%26.5%4.6%3.2%8.5%
SG&A ratio59.3%60.0%57.0%62.1%78.2%76.0%60.7%68.3%66.7%59.8%52.5%60.6%
Operating profit6946801,059-327-1,177-1,468129-764-593471,748501
YoY-48.1%-17.3%-35.9%----87.8%-----
Operating profit margin5.2%4.8%7.3%---1.0%--2.7%11.8%3.5%
Recurring profit9441,0951,268-33-999-939172351025341,829853
YoY-44.3%5.8%-31.7%----86.4%---963.4%2,337.1%
Recurring profit margin7.1%7.7%8.8%---1.4%0.3%0.9%4.1%12.4%6.0%
Net income-2916171,214-1,349-858-1,989490-1,6032,470-5211,223251
YoY-37.1%-19.1%----59.6%---149.6%-
Net margin-4.3%8.4%---4.0%-22.9%-8.3%1.8%
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Quarterly (three-month) performance figures calculated based on the difference from the preceding quarter.
 
Quarterly results by reportable segment
CumulativeFY03/20FY03/21FY03/22FY03/22
(JPYmn) Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4% of Est.FY Est.
Sales13,37927,66042,15155,2617,28917,07029,44941,05310,80223,79338,56252,763102.9%51,300
YoY-3.8%-2.2%-3.4%-6.5%-45.5%-38.3%-30.1%-25.7%48.2%39.4%30.9%28.5%25.0%
Japan 11,62524,18437,58347,4476,11514,71825,36934,9409,19320,11333,31145,337102.9%44,044
YoY0.0%-0.5%-1.3%-6.5%-47.4%-39.1%-32.5%-26.4%50.3%36.7%31.3%29.8%26.1%
Europe4057121,0041,4842565368851,2253717591,2031,711107.9%1,586
YoY-33.9%-30.7%-27.8%-17.4%-36.8%-24.7%-11.9%-17.5%44.9%41.6%35.9%39.7%29.5%
The Americas7711,3822,1993,1264238111,4752,4646801,5132,4523,980113.4%3,510
YoY-11.3%-8.2%-4.6%-3.3%-45.1%-41.3%-32.9%-21.2%60.8%86.6%66.2%61.5%42.5%
Asia2,1034,2676,2028,9811,5153,2174,8316,8481,9604,2125,8707,85699.5%7,899
YoY-15.6%-10.8%-14.2%-12.7%-28.0%-24.6%-22.1%-23.8%29.4%30.9%21.5%14.7%15.3%
Total14,90530,54746,98961,0408,31119,28432,56245,47912,20526,59842,83858,885103.2%57,040
YoY-4.5%-3.4%-4.1%-7.6%-44.2%-36.9%-30.7%-25.5%46.9%37.9%31.6%29.5%25.4%
Adjustments-1,525-2,886-4,837-5,778-1,022-2,213-3,112-4,426-1,402-2,805-4,276-6,121--5,740
Operating profit6941,3742,4332,106-1,177-2,645-2,516-3,280-592882,0362,537211.4%1,200
YoY-48.1%-36.3%-36.1%-56.0%---------
Japan 7711,1842,0851,716-607-2,088-2,527-2,938133-701,2892,206480.6%459
YoY-30.1%-26.6%-23.5%-52.6%---------
Europe-104-276-444-553-220-386-102-305-69-122-70-113--172
YoY-------------
The Americas-173-438-706-1,107-351-711-861-1,160-167-304-344-408--357
YoY-------------
Asia6421,3291,9102,8784309461,4021,9596281,4141,8872,10692.1%2,286
YoY-21.0%-15.6%-22.8%-19.0%-33.0%-28.8%-26.6%-31.9%46.0%49.5%34.6%7.5%16.7%
Total1,1351,7992,8462,933-748-2,239-2,090-2,4455259182,7623,790171.1%2,215
YoY-36.1%-30.5%-32.8%-48.6%---------
Adjustments-441-424-413-827-429-406-426-834-584-629-726-1,253--1,015
QuarterlyFY03/20FY03/21FY03/22
(JPYmn) Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4
Sales13,37914,28114,49113,1107,2899,78112,37911,60410,80212,99114,76914,201
YoY-3.8%-0.6%-5.6%-15.4%-45.5%-31.5%-14.6%-11.5%48.2%32.8%19.3%22.4%
Japan 11,62512,55913,3999,8646,1158,60310,6519,5719,19310,92013,19812,026
YoY0.0%-1.0%-2.6%-22.3%-47.4%-31.5%-20.5%-3.0%50.3%26.9%23.9%25.7%
Europe405307292480256280349340371388444508
YoY-33.9%-26.0%-19.3%17.9%-36.8%-8.8%19.5%-29.2%44.9%38.6%27.2%49.4%
The Americas7716118179274233886649896808339391,528
YoY-11.3%-4.1%2.4%-0.1%-45.1%-36.5%-18.7%6.7%60.8%114.7%41.4%54.5%
Asia2,1032,1641,9352,7791,5151,7021,6142,0171,9602,2521,6581,986
YoY-15.6%-5.6%-20.9%-9.0%-28.0%-21.3%-16.6%-27.4%29.4%32.3%2.7%-1.5%
Total14,90515,64216,44214,0518,31110,97313,27812,91712,20514,39316,24016,047
YoY-4.5%-2.4%-5.3%-17.8%-44.2%-29.8%-19.2%-8.1%46.9%31.2%22.3%24.2%
Adjustments-1,525-1,361-1,951-941-1,022-1,191-899-1,314-1,402-1,403-1,471-1,845
Operating profit6946801,059-327-1,177-1,468129-764-593471,748501
YoY-48.1%-17.3%-35.9%----87.8%-----
Japan 771413901-369-607-1,481-439-411133-2031,359917
YoY-30.1%-19.0%-19.0%---------
Europe-104-172-168-109-220-166284-203-69-5352-43
YoY-----------81.7%-
The Americas-173-265-268-401-351-360-150-299-167-137-40-64
YoY------------
Asia642687581968430516456557628786473219
YoY-21.0%-9.8%-35.4%-10.1%-33.0%-24.9%-21.5%-42.5%46.0%52.3%3.7%-60.7%
Total1,1356641,04787-748-1,491149-3555253931,8441,028
YoY-36.1%-18.3%-36.3%-94.1%---85.8%---1,137.6%-
Adjustments-4411711-414-42923-20-408-584-45-97-527
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Quarterly (three-month) performance figures show the difference between the cumulative quarters and the preceding cumulative quarters.

Having changed its reporting segments at the beginning of FY03/22, the company now has reporting segments based on the structure of sales activities by geographical segment (Japan, Europe, North America and South America, and Asia), with forecasts for the Japan segment further broken down into headquarters, Puroland (SPL), and Harmonyland (HL). Results forecasts for Sanrio headquarters are divided still further by business division, while those for overseas segments are disclosed on an individual subsidiary basis. Previously, Sanrio employed disclosure by segment in financial results summaries and securities reports. In results briefing materials, though, master license fees remitted to the parent company were added back to figures for each regional subsidiary, while the domestic operation was broken down into Product Sales, Licensing, and Other. In principle, Sanrio used the figures reported in results briefing materials as basis for communication with investors. For the purposes of business administration, however, as of FY03/21 the company used individual business divisions to categorize domestic earnings, and individual subsidiaries to do the same for overseas earnings. With the release of its new medium-term business plan Sanrio decided to unify disclosure, employing only the figures used for business administration purposes. Thus under this new method of disclosure, figures may differ even if the name used is the same. This needs to be taken into account when making comparisons with FY03/20 and earlier. 

Key changes
Product supply costs (for merchandise production and distribution centers) previously were treated as companywide costs, but they are now allocated to the product sales business as that is where they are mainly incurred (as a consequence, the product sales operating profit margin appears lower than it did previously). Costs for the e-commerce business previously came under the Domestic Other business but now are included in the domestic product sales business. Costs for the entertainment (animation, games, etc.) business previously were allocated to the Domestic Licensing business but now are treated separately. Similarly, costs associated with corporate licensing and deals with convenience stores previously were divided between the Domestic Licensing business and Domestic Other business, but now are allocated solely to the domestic licensing business. As a result of the above, costs falling into the domestic other business category now are limited to animation/movie production and advertising costs and other companywide costs that are not associated directly with any single business division. Master license fees remitted by overseas subsidiaries to the parent company are no longer added back to the earnings of subsidiaries in each region (subsidiaries’ profitability accordingly can be compared directly with that of non-group companies also paying licensing fees). 

Performance of Japan segment
Japan segment(cumulative) FY03/20FY03/21FY03/22FY03/22
(JPYmn) Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4% of Est.FY Est.
Sales
Head office9,22018,91029,86338,0445,68213,24122,40230,5637,97116,75527,58537,527104.6%35,860
YoY-3.5%---6.8%-38.4%-30.0%-25.0%-19.7%40.3%26.5%23.1%22.8%17.3%
Sanrio Entertainment (SET)2,3395,4357,9029,3401981,1812,7234,0141,1493,1035,3257,33997.9%7,499
YoY15.4%---1.9%-91.5%-78.3%-65.5%-57.0%480.3%162.7%95.6%82.8%86.8%
Sanrio Puroland (SPL)1,8604,3796,3897,5771228752,0533,0989002,5154,2695,92998.3%6,031
YoY14.7%---1.1%-93.4%-80.0%-67.9%-59.1%637.7%187.4%107.9%91.4%94.7%
Harmony Land (HL)4791,0561,5131,763753056699152485871,0551,41096.0%1,468
YoY18.6%---5.3%-84.3%-71.1%-55.8%-48.1%230.7%92.5%57.7%54.1%60.4%
Other subsidiaries7151,2802,0302,7724608611,3771,8854711,1151,8612,41591.7%2,635
YoY21.0%---10.7%-35.7%-32.7%-32.2%-32.0%2.4%29.5%35.1%28.1%39.8%
Total12,27525,62639,79650,1586,34115,28426,50336,4629,59220,97434,77247,282102.8%45,996
YoY0.8%---6.1%-48.3%-40.4%-33.4%-27.3%51.3%37.2%31.2%29.7%26.1%
Intra-segment-649-1,441-2,213-2,710-226-566-1,133-1,522-398-861-1,460-1,944--1,951
Total sales11,62524,18437,58347,4476,11514,71825,36934,9409,19320,11333,31145,337102.9%44,044
YoY0.0%---6.5%-47.4%-39.1%-32.5%-26.4%50.3%36.7%31.3%29.8%26.1%
Inter-segment-1,201-2,261-3,720-4,362-764-1,724-2,335-3,357-1,162-2,394-3,533-5,154--4,668
External sales10,42321,92333,86243,0845,35112,99423,03331,5828,03117,71829,77740,183102.0%39,376
YoY1.8%---4.7%-48.7%-40.7%-32.0%-26.7%50.1%36.4%29.3%27.2%24.7%
Operating profit
Head office8288341,7561,144-271-1,075-930-9206056091,8952,902310.7%934
YoY-35.0%---64.8%---------
Sanrio Entertainment (SET)33375454483-154-775-1,163-1,636-324-569-373-460--346
YoY---63.7%---------
Sanrio Puroland (SPL)17311391434-96-554-890-1,215-194-357-188-199--132
YoY---63.8%---------
Harmony Land (HL)15646249-58-220-272-421-129-211-184-261--214
YoY---63.3%---------
Other subsidiaries291851141-82-172-200-233-71-107-117-146--58
YoY----38.7%---------
Total8911,2292,2621,771-509-2,023-2,294-2,791210-671,4042,295433.8%529
YoY-27.5%---53.1%---------
Intra-segment-119-44-177-55-98-64-232-147-76-2-114-88--70
Total operating profit7711,1842,0851,716-607-2,088-2,527-2,938133-701,2892,206480.6%459
YoY-30.1%---52.6%---------
Japan segment(quarterly) FY03/20FY03/21FY03/22
(JPYmn) Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4
Sales
Head office9,2209,69010,9538,1815,6827,5599,1618,1617,9718,78410,8309,942
YoY-3.5%---80.0%-38.4%-22.0%-16.4%-0.2%40.3%16.2%18.2%21.8%
Sanrio Entertainment (SET)2,3393,0962,4671,4381989831,5421,2911,1491,9542,2222,014
YoY15.4%---84.9%-91.5%-68.2%-37.5%-10.2%480.3%98.8%44.1%56.0%
Sanrio Puroland (SPL)1,8602,5192,0101,1881227531,1781,0459001,6151,7541,660
YoY14.7%---84.5%-93.4%-70.1%-41.4%-12.0%637.7%114.5%48.9%58.9%
Harmony Land (HL)47957745725075230364246248339468355
YoY18.6%---86.6%-84.3%-60.1%-20.4%-1.6%230.7%47.4%28.6%44.3%
Other subsidiaries715565750742460401516508471644746554
YoY21.0%---76.1%-35.7%-29.0%-31.2%-31.5%2.4%60.6%44.6%9.1%
Total12,27513,35114,17010,3626,3418,94311,2199,9599,59211,38213,79812,510
YoY0.8%---80.6%-48.3%-33.0%-20.8%-3.9%51.3%27.3%23.0%25.6%
Intra-segment-649-792-772-497-226-340-567-389-398-463-599-484
Total sales11,62512,55913,3999,8646,1158,60310,6519,5719,19310,92013,19812,026
YoY0.0%---80.6%-47.4%-31.5%-20.5%-3.0%50.3%26.9%23.9%25.7%
Inter-segment-1,201-1,060-1,459-642-764-960-611-1,022-1,162-1,232-1,139-1,621
External sales10,42311,50011,9399,2225,3517,64310,0398,5498,0319,68712,05910,406
YoY1.8%---79.6%-48.7%-33.5%-15.9%-7.3%50.1%26.7%20.1%21.7%
Operating profit
Head office8286922-612-271-8041451060541,2861,007
YoY-35.0%------84.3%---786.9%9,970.0%
Sanrio Entertainment (SET)333427929-154-621-388-473-324-245196-87
YoY----90.2%--------
Sanrio Puroland (SPL)172948043-96-458-336-325-194-163169-11
YoY----83.8%--------
Harmony Land (HL)1549-2-13-58-162-52-149-129-8227-77
YoY------------
Other subsidiaries29-113390-82-90-28-33-71-36-10-29
YoY----60.9%--------
Total8913381,033-491-509-1,514-271-497210-2771,471891
YoY-27.5%-----------
Intra-segment-11975-133122-9834-16885-7674-11226
Total operating profit771413901-369-607-1,481-439-411133-2031,359917
YoY-30.1%-----------
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Quarterly (three-month) performance figures show the difference between the cumulative quarters and the preceding cumulative quarters.

SET: Sanrio Entertainment Co. Ltd.
SPL: Sanrio Puroland
HL: Harmonyland 

Japan HQ : Quarterly performance by business
By head office division (cumulative) FY03/20FY03/21FY03/22
(JPYmn) Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4
Sales9,22018,91029,86338,0445,68213,24122,40230,5637,97116,75527,58537,527
YoY-3.5%---6.8%-38.4%-30.0%-25.0%-19.7%40.3%26.5%23.1%22.8%
Product sales4,7879,90615,66020,3912,3586,27510,99415,3603,7837,82313,31618,094
YoY4.7%--0.3%-50.7%-36.7%-29.8%-24.7%60.4%24.7%21.1%17.8%
Licensing2,4565,0597,8719,9661,9103,8286,7968,8162,2154,7707,76210,321
YoY-12.5%---13.2%-22.2%-24.3%-13.7%-11.5%16.0%24.6%14.2%17.1%
Entertainment6001,3802,1432,5385931,2181,9272,5526991,4452,3803,149
YoY5.1%---1.7%-1.2%-11.7%-10.1%0.6%17.9%18.6%23.5%23.4%
Overseas1,3722,5574,1755,1248151,9092,6683,8101,2662,6884,0555,884
YoY-14.5%---19.5%-40.6%-25.3%-36.1%-25.6%55.3%40.8%52.0%54.4%
Royalty income from subsidiaries1,1132,0263,3374,0586921,5452,0582,9961,0392,1563,2434,790
YoY-13.0%---21.5%-37.8%-23.7%-38.3%-26.2%50.1%39.5%57.6%59.9%
Product sales (exports)2595308371,0651223646098132265328121,093
YoY-20.1%---10.9%-52.9%-31.3%-27.2%-23.7%85.2%46.2%33.3%34.4%
Other3712233916237277077
YoY200.0%---43.9%0.0%28.6%33.3%-1.5%133.3%200.0%337.5%234.8%
Operating profit8288341,756330-271-1,075-930-9206056091,8952,902
YoY-35.0%---85.9%--------
Product sales-120-382-557-889-522-1,289-1,574-1,834-177-566-370-514
YoY------------
Licensing1,2142,4893,8104,9469061,7883,1834,2721,1422,2143,7315,041
YoY-9.8%---6.0%-25.4%-28.2%-16.5%-13.6%26.0%23.8%17.2%18.0%
Entertainment3567571,1521,4063426411,0101,3514178041,3261,751
YoY0.8%---6.5%-3.9%-15.3%-12.3%-3.9%21.9%25.4%31.3%29.6%
Overseas9821,7882,9983,4696151,3831,8172,6799922,0593,0834,566
YoY-16.1%---24.8%-37.4%-22.7%-39.4%-22.8%61.3%48.9%69.7%70.4%
Royalty income from subsidiaries9971,8423,0763,5696371,4211,8672,7449882,0363,0584,521
YoY-12.6%---22.2%-36.1%-22.9%-39.3%-23.1%55.1%43.3%63.8%64.8%
Product sales (exports)-15-54-78-100-22-38-50-654222444
YoY------------
Other-77-144-202-309-195-352-530-722-130-257-441-613
YoY------------
Cost center-1,985-4,114-5,851-8,292-1,840-3,650-5,250-7,505-2,244-4,310-6,186-8,617
Parent operating profit3703941,349-693-1,479-1,344-1,757-0-551,1421,614
Transfer to unallocated expenses4584404074214034148376066657521,287
By head office division (quarterly) FY03/20FY03/21FY03/22
(JPYmn) Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4
Sales9,2209,69010,9538,1815,6827,5599,1618,1617,9718,78410,8309,942
YoY-3.5%---80.0%-38.4%-22.0%-16.4%-0.2%40.3%16.2%18.2%21.8%
Product sales4,7875,1195,7544,7312,3583,9174,7194,3663,7834,0405,4934,778
YoY4.7%---76.7%-50.7%-23.5%-18.0%-7.7%60.4%3.1%16.4%9.4%
Licensing2,4562,6032,8122,0951,9101,9182,9682,0202,2152,5552,9922,559
YoY-12.5%---81.8%-22.2%-26.3%5.5%-3.6%16.0%33.2%0.8%26.7%
Entertainment600780763395593625709625699746935769
YoY5.1%---84.7%-1.2%-19.9%-7.1%58.2%17.9%19.4%31.9%23.0%
Overseas1,3721,1851,6189498151,0947591,1421,2661,4221,3671,829
YoY-14.5%---85.1%-40.6%-7.7%-53.1%20.3%55.3%30.0%80.1%60.2%
Royalty income from subsidiaries1,1139131,3117216928535139381,0391,1171,0871,547
YoY-13.0%---86.0%-37.8%-6.6%-60.9%30.1%50.1%30.9%111.9%64.9%
Product sales (exports)259271307228122242245204226306280281
YoY-20.1%---80.9%-52.9%-10.7%-20.2%-10.5%85.2%26.4%14.3%37.7%
Other345113677720437
YoY200.0%---73.2%0.0%50.0%40.0%-1.5%133.3%233.3%514.3%0.0%
Operating profit8286922-1,426-271-8041451060541,2861,007
YoY-35.0%------84.3%---786.9%9,970.0%
Product sales-120-262-175-332-522-767-285-260-177-389196-144
YoY------------
Licensing1,2141,2751,3211,1369068821,3951,0891,1421,0721,5171,310
YoY-9.8%---78.4%-25.4%-30.8%5.6%-4.1%26.0%21.5%8.7%20.3%
Entertainment356401395254342299369341417387522425
YoY0.8%---83.1%-3.9%-25.4%-6.6%34.3%21.9%29.4%41.5%24.6%
Overseas9828061,2104716157684348629921,0671,0241,483
YoY-16.1%---89.8%-37.4%-4.7%-64.1%83.0%61.3%38.9%135.9%72.0%
Royalty income from subsidiaries9978451,2344936377844468779881,0481,0221,463
YoY-12.6%---89.2%-36.1%-7.2%-63.9%77.9%55.1%33.7%129.1%66.8%
Product sales (exports)-15-39-24-22-22-16-12-15418220
YoY------------
Other-77-67-58-107-195-157-178-192-130-127-184-172
YoY------------
Cost center-1,985-2,129-1,737-2,441-1,840-1,810-1,600-2,255-2,244-2,066-1,876-2,431
Parent operating profit37024955--693-786135-413-0-551,197472
Transfer to unallocated expenses458-18-33-421-18114236065987535
Source: Shared Research, based on company data
Notes: Figures may differ from company materials due to differences in rounding methods.

Note 1: The portion of the cost center that has been reclassified to unclassifiable expenses. Unclassifiable expenses are mainly general and administrative expenses related to the entire consolidation that do not belong to any region.

Quarterly trends for company-wide SG&A costs
SG&A by head office division(cumulative) FY03/20FY03/21FY03/22
(JPYmn) Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4
Personnel expenses1,9143,7281,7533,697
YoY----------8.4%--0.8%
SG&A expenses77205196265
YoY---------154.5%-29.3%
Advertising expenses298624457866
YoY---------53.4%-38.8%
Distribution expenses918816
YoY----------11.1%--11.1%
Right-of-use assets320625430783
YoY---------34.4%-25.3%
General expenses1,0302,3031,4642,987
YoY---------42.1%-29.7%
Total3,6507,5054,3108,617
YoY---------18.1%-14.8%
Source: Shared Research, based on company data
Notes: Figures may differ from company materials due to differences in rounding methods.
Overseas segment: Performance by subsidiary
<
By overseas segment(cumulative) FY03/20FY03/21FY03/22FY03/22
(JPYmn) Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4% of Est.FY Est.
Sales
Europe4057121,0041,4842565368851,2253717591,2031,711107.9%1,586
YoY-33.9%---17.4%-36.8%-24.7%-11.9%-17.5%44.9%41.6%35.9%39.7%29.5%
Germany3275647961,0781663956508762344717541,067106.2%1,005
YoY-33.4%---21.8%-49.2%-30.0%-18.3%-18.7%41.0%19.2%16.0%21.8%14.7%
UK (SGL) *excl. SG&A7814720840690141235349136288449644111.0%580
YoY-36.1%---2.9%15.4%-4.1%13.0%-14.0%51.1%104.3%91.1%84.5%66.2%
North America5661,1181,8362,6173186581,2462,1536001,3422,1823,611114.0%3,168
YoY-17.6%---2.0%-43.8%-41.1%-32.1%-17.7%88.7%104.0%75.1%67.7%47.1%
South America20526436350910415222931179171270368107.6%342
YoY13.3%---9.4%-49.3%-42.4%-36.9%-38.9%-24.0%12.5%17.9%18.3%10.0%
Asia2,1034,2676,2028,9811,5153,2174,8316,8481,9604,2125,8707,85699.5%7,899
YoY-23.7%---12.7%-28.0%-24.6%-22.1%-23.8%29.4%30.9%21.5%14.7%15.3%
Hong Kong4981,1771,8432,4704328271,3091,7783467261,0251,35099.9%1,351
YoY-23.5%---16.4%-13.3%-29.7%-29.0%-28.0%-19.9%-12.2%-21.7%-24.1%-24.0%
Taiwan3666078731,1872815727991,073276497717980100.0%980
YoY-24.7%--0.0%-23.2%-5.8%-8.5%-9.6%-1.8%-13.1%-10.3%-8.7%-8.7%
China1,0372,0962,9684,6086661,5602,3403,4441,1922,6733,6044,78499.4%4,813
YoY-6.2%---6.2%-35.8%-25.6%-21.2%-25.3%79.0%71.3%54.0%38.9%39.8%
Other21941756378214827640858415132854176598.6%776
YoY-16.7%---24.0%-32.4%-33.8%-27.5%-25.3%2.0%18.8%32.6%31.0%32.9%
Intra-segment-17-31-46-66-13-19-25-31-5-14-17-24--24
Total3,2806,3629,40613,5922,1964,5657,19310,5393,0116,4859,52713,548104.2%12,996
YoY-22.6%---11.3%-33.0%-28.2%-23.5%-22.5%37.1%42.1%32.4%28.6%23.3%
Inter-segment sales-324-625-1,117-1,415-257-489-777-1,068-240-410-742-962--984
External sales2,9555,7368,28812,1771,9384,0766,4159,4702,7716,0758,78412,585104.8%12,011
YoY-24.8%---12.6%-34.4%-28.9%-22.6%-22.2%43.0%49.0%36.9%32.9%26.8%
Operating profit3636147601,217-140-1514374933919881,4731,58490.2%1,756
YoY-46.1%---41.7%---42.5%-59.5%--237.1%221.3%256.2%
Europe-104-276-444-553-220-386-102-305-69-122-70-113--172
YoY-------------
Germany-68-167-271-439-169-26654-174-97-204-220-312--327
YoY-------------
UK*excl. SG&A-36-108-172-113-50-119-157-1302782149198128.6%154
YoY-------------
North America-213