NIPPON PARKING DEVELOPMENT (2353) FY2026 Q2 Earnings Report

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Executive Summary

The Company maintained revenue and profit growth, but the rate of increase in SG&A expenses exceeded revenue growth, resulting in a slight decline in the operating margin. Revenue was ¥199.1B (+8.1% YoY), Operating Income was ¥44.3B (+6.3%), Ordinary Income was ¥45.6B (+7.6%), and Net Income attributable to owners of the parent was ¥26.6B (+3.4%). Revenue and profit growth in both the Parking and Theme Park Businesses offset the decline in the Ski Resort Business’s profit margin, allowing the Company overall to maintain its revenue and profit growth trajectory.

Factors Affecting Performance

【Revenue】Revenue of ¥199.1B represented an 8.1% increase YoY, with all segments contributing to revenue growth: Parking (+6.5%), Theme Park (+8.0%), and Ski (+10.0%). The Parking Business is the core business, accounting for 47.0% of the revenue mix, while the Ski Resort Business recorded revenue growth but experienced a decline in its profit margin.

【Profit and Loss】While Operating Income was ¥44.3B (+6.3%) and Ordinary Income was ¥45.6B (+7.6%), Net Income of ¥26.6B increased by only 3.4%, with the profit growth rate below those of the higher-level indicators. This was attributable to SG&A expenses increasing by +9.0%, exceeding revenue growth (+8.1%), as well as temporary pressure on profit from extraordinary losses of ¥0.9B (impairment loss of ¥0.5B and loss on disposal of fixed assets of ¥0.4B). In non-operating items, a foreign exchange gain of ¥1.2B boosted Ordinary Income. Overall, the Company achieved revenue and profit growth, but the pace of Net Income growth has slowed.

Segment Analysis

The Parking Business generated revenue of ¥93.7B (+6.5%), Operating Income of ¥24.0B (+11.7%), and a profit margin of 25.7% (24.5% in the prior year), showing improvement and representing the core business at approximately 50% of total segment profit. The Theme Park Business generated revenue of ¥46.1B (+8.0%), profit of ¥12.3B (+11.9%), and a profit margin of 26.7% (25.9% in the prior year), also improving. The Ski Resort Business recorded revenue growth to ¥54.5B (+10.0%), but profit declined to ¥10.3B (△5.3%), and the profit margin fell to 18.8% (22.0% in the prior year), with higher expenses offsetting part of the revenue growth. The profit margin of the Other Businesses also declined to 20.1% (27.3% in the prior year). The adjustment for Company-wide expenses was △¥3.3B, widening from △¥3.0B in the prior year, making indirect cost management another issue.

Key Financial Metrics

【Profitability】The Operating Margin of 22.3% declined slightly from 22.6% in the same period of the prior year, while the Gross Profit Margin also edged down to 41.1% from 41.3%. The Net Profit Margin attributable to owners of the parent was 13.3%, down from 14.0% in the prior year.【Cash Flow Quality】Operating Cash Flow (OCF) was ¥32.3B, or 1.21 times Net Income, indicating adequate cash backing; however, it declined from ¥37.2B in the prior year, and the ¥11.3B increase in accounts receivable placed pressure on working capital.【Investment Efficiency】Annualized ROE remained high at 26.1%; together with an Equity Ratio of 42.5%, this indicates a balanced relationship between capital efficiency and capital structure.【Financial Soundness】Liquidity is ample, with current assets of ¥275.1B versus current liabilities of ¥90.0B, while cash and deposits of ¥207.5B substantially exceed short-term borrowings of ¥6.3B. Long-term borrowings increased by +25.1% YoY to ¥197.8B, providing financing to support capital expenditures of ¥40.9B.

Cash Flow Analysis

OCF was ¥32.3B, down 13.2% from ¥37.2B in the same period of the prior year. The primary factor behind the decline was working capital headwinds, centered on the ¥11.3B increase in accounts receivable, while ¥11.6B in income taxes paid also constrained cash generation. Investing Cash Flow was △¥36.7B, with capital expenditures of ¥40.9B reaching approximately 3.9 times depreciation and amortization of ¥10.6B, indicating that the Company is in a phase of growth investment. As a result, Free Cash Flow was △¥4.4B, meaning that current-period investments could not be funded solely by operating cash flow. Financing Cash Flow was +¥1.5B, with the net increase in long-term borrowings covering funding needs following capital expenditures and shareholder returns, including ¥8.7B in share buybacks. Cash and cash equivalents declined by ¥1.8B during the period, but the Company maintained an ending balance of ¥207.4B, preserving ample financial capacity.

Earnings Quality

Ordinary Income of ¥45.6B represented Operating Income of ¥44.3B plus net non-operating income and expenses, comprising non-operating income of ¥2.9B, including interest income, and non-operating expenses of ¥1.6B. While a foreign exchange gain of ¥1.2B contributed to profit growth, interest expenses of ¥1.3B were recorded as costs. Extraordinary losses of ¥0.9B (impairment loss of ¥0.5B and loss on disposal of fixed assets of ¥0.4B) exceeded extraordinary gains of ¥0.1B, acting as a temporary factor suppressing the conversion of Profit Before Tax of ¥44.8B into Net Income. OCF was 1.21 times Net Income attributable to owners of the parent, indicating sound cash backing for accounting earnings; however, cash conversion efficiency relative to EBITDA has been trending lower than in the prior year, and funding efficiency during the growth investment phase warrants monitoring. Comprehensive Income of ¥33.9B exceeded Net Income of ¥29.9B, with valuation differences on securities of ¥3.4B and other items contributing to the increase.

Earnings Forecast and Guidance

The full-year Company forecast calls for Revenue of ¥408.0B (+10.8% YoY), Operating Income of ¥85.0B (+11.0%), and Ordinary Income of ¥85.0B (+8.5%). First-half progress rates were 48.8% for Revenue, 52.1% for Operating Income, and 53.6% for Ordinary Income, representing a pace slightly above the standard first-half progress rate of 50%. Meanwhile, first-half progress toward the full-year forecast of ¥57.0B in Net Income attributable to owners of the parent was 46.6%, slightly below the standard level. Trends in the tax burden and temporary losses in the second half will therefore be key to achieving the full-year forecast. There were no revisions to the earnings forecast or dividend forecast during the quarter.

Shareholder Returns

The interim dividend for Q2 was ¥0 per share, and no interim dividend was paid. The full-year dividend forecast is ¥9.0 per share, implying a Payout Ratio of approximately 50.4% based on forecast EPS of ¥17.87. The Company conducted ¥8.7B in share buybacks during the period, providing shareholder returns in combination with dividends; however, Free Cash Flow for the period was △¥4.4B, meaning that the funding source for shareholder returns was partly supplemented by cash on hand (¥207.5B) and borrowings. If borrowings continue to increase, the balance between the total scale of shareholder returns and capital allocation will become an issue.

Risk Factors

1. Declining profitability in the Ski Resort Business: While revenue increased by +10.0% YoY, segment profit declined by △5.3%, and the profit margin fell from 22.0% to 18.8%. If the effects of seasonality and higher costs persist, they could affect the Company-wide profit margin in the second half.

2. Declining cash conversion efficiency and aggressive investment: Capital expenditures of ¥40.9B exceeded OCF of ¥32.3B, resulting in Free Cash Flow of △¥4.4B. Long-term borrowings increased by +25.1% YoY to ¥197.8B, and delays in investment recovery could lead to additional borrowing or the use of cash on hand.

3. Sharp increase in accounts receivable: Accounts receivable increased by +64.6% YoY to ¥29.2B, substantially exceeding the revenue growth rate (+8.1%). Continued monitoring of collection terms and receivables aging is therefore necessary.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (real_estate)

Profitability and Returns

Due to insufficient industry median data, only the Company’s figures are presented.

Growth and Capital Efficiency

Due to insufficient industry median data, only the Company’s figures are presented.

Source: Compiled by the Company

Key Takeaways from the Financial Results

1. The pattern continues whereby improved profit margins in the Parking Business and Theme Park Business offset the decline in the Ski Resort Business’s profit margin. First-half progress rates for Operating Income and Ordinary Income exceeded 50%, indicating generally steady progress toward the full-year plan.

2. OCF was 1.21 times Net Income, providing adequate cash backing, but declined YoY, and the conversion efficiency of OCF relative to EBITDA has been trending downward. The fact that capital expenditures exceeded OCF and Free Cash Flow was negative is a structural characteristic requiring monitoring from the perspective of funding efficiency during the growth investment phase.

3. Aggressive capital investment accompanied by increased long-term borrowings continues. Progress in investment recovery and changes in borrowing dependence will be key factors influencing the Company’s future financial structure.

Theoretical Share Price (Reference Value)

Sensitivity: ¥106–¥112 at Cost of Equity ±1%; ¥108–¥110 at ω±0.1.

Notes:

• Goodwill amortization of ¥0.1 per share has been added back to earnings (as a non-cash expense and to improve comparability with IFRS companies).
• Net assets as of the quarter-end have been used (there is a timing difference relative to the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

（Calculation model: Residual Income Model (Ohlson-type; explicit 5-year fade) / Interest rate reference month: 2026-07 / This is a mechanically calculated value based solely on publicly disclosed data; it is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.）

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting a professional as necessary.

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