TSUBURAYA FIELDS HOLDINGS INC. FY2027 Q1 Earnings Report

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Executive Summary

The Q1 of the fiscal year ending March 2027 resulted in lower revenue and lower profit; however, the decline in profit (-11.9%) was substantially smaller than the decline in revenue (-21.3%), confirming an improvement in profitability driven by better pricing and product mix and cost discipline. Revenue was ¥437.1B (-21.3% YoY), Operating Income was ¥68.8B (-11.9%), Ordinary Income was ¥70.7B (-11.6%), and consolidated Net Income was ¥49.9B (-11.5%; Net Income attributable to owners of the parent was ¥47.4B, -15.0%). While lower sales volume in the core Amusement Business pushed down revenue, both the gross margin and Operating Income margin improved, with higher profitability partially offsetting the decline in volume.

Factors Affecting Performance

【Revenue】The decline in Revenue to ¥437.1B (-21.3% YoY) was primarily attributable to the 22.6% decline in the Amusement Business, which accounted for 91.5% of the revenue mix. The Content & Digital Business declined by only 4.9%, serving as a relative support factor. Other Businesses, including fitness, generated ¥4.4B (-1.6%), with a limited impact.

【Profit and Loss】The gross margin was 26.9%, improving by approximately 3.5pt from 23.4% in the previous year (gross profit of ¥130.2B / revenue of ¥555.6B). SG&A expenses were ¥48.7B, down from ¥52.1B in the previous year, while the SG&A ratio was 11.1% (9.4% in the previous year). As a result, the Operating Income margin improved to 15.7% from 14.1% in the previous year, an improvement of approximately 1.7pt. Non-operating and extraordinary items were both limited in scale, consisting of extraordinary income of ¥0.1B (gain on sale of fixed assets) and extraordinary losses of ¥0.4B (loss on disposal of fixed assets of ¥0.3B and business restructuring expenses of ¥0.1B). The difference between Ordinary Income and Net Income was primarily attributable to income taxes of ¥20.4B and Net Income attributable to non-controlling interests of ¥2.5B, with limited impact from one-time factors. In summary, this was a decline in revenue and profit in which improved pricing and product mix and cost discipline were effective despite lower volume; profitability remains on an improving trend.

Segment Analysis

The Amusement Business recorded revenue of ¥400.1B (91.5% of the mix, -22.6% YoY), Operating Income of ¥69.6B (-14.9%), and a margin of 17.4% (down from approximately 19.1% in the previous year). Although it was primarily affected by the decline in revenue, the margin remained at a high level. The Content & Digital Business generated revenue of ¥33.7B (7.7% of the mix, -4.9% YoY), while Operating Income increased significantly to ¥9.2B (+107.7%), resulting in a substantial improvement in the margin to 27.3% (approximately 12.5% in the previous year). Profitability improved substantially in the content area, where the decline in revenue was limited, indicating further diversification of earnings sources within the portfolio. Other Businesses generated revenue of ¥4.4B (-1.6%) and an Operating Loss of ¥0.1B, with a limited impact on the overall results.

Key Financial Indicators

【Profitability】The Operating Income margin was 15.7%, improving by approximately 1.7pt from 14.1% in the previous year, while the gross margin also improved to 26.9% (23.4% in the previous year). The Net Income margin was 10.8% on a basis attributable to owners of the parent (10.0% in the previous year) and 11.4% on a consolidated basis, with both exceeding the previous-year levels.【Cash Flow Quality】Cash and deposits decreased to ¥264.2B from ¥309.4B in the previous year, but interest-bearing debt remained low, centered on long-term borrowings of ¥43.0B, limiting the impact on financial strength.【Investment Efficiency】ROE was 7.5%. While the improvement in the Net Income margin was a positive factor, accounts receivable and work in process increased amid the decline in revenue, expanding total assets and restraining improvement in total asset efficiency.【Financial Soundness】The Equity Ratio declined to 55.2% (58.9% in the previous year) because total assets increased at a faster pace than equity. Current assets were ¥815.7B against current liabilities of ¥317.9B, resulting in a current ratio of 256.6%, a high level indicating that short-term payment capacity remains strong.

Cash Flow Analysis

Although the statement of cash flows has not been disclosed, trends in the balance sheet indicate that Cash and deposits decreased by ¥45.1B to ¥264.2B from ¥309.4B in the previous year. Meanwhile, accounts receivable and notes receivable increased substantially to ¥129.3B (¥71.5B in the previous year), while accounts payable and notes payable increased to ¥161.6B (¥63.5B in the previous year), indicating that the overall scale of working capital has expanded. Inventories decreased to ¥8.8B from ¥13.5B in the previous year; however, the ratio of work in process to total inventories, including work in process of ¥187.4B, was high at 74.8%, indicating that inventory was concentrated in the pre-productization stage. Interest-bearing debt was small relative to total assets, centered on long-term borrowings of ¥43.0B, and Cash and deposits exceeded this amount, resulting in a net cash position with no signs of funding constraints.

Quality of Earnings

Current-period profit included only limited amounts of non-operating income of ¥2.4B, primarily consisting of dividend income of ¥1.5B, and extraordinary items (income of ¥0.1B and losses of ¥0.4B). The accounting quality is therefore stable, as recurring business earnings account for the majority of profit. The difference between Ordinary Income of ¥70.7B and Net Income attributable to owners of the parent of ¥47.4B was primarily attributable to income taxes of ¥20.4B and Net Income attributable to non-controlling interests of ¥2.5B, with only a small contribution from non-recurring factors. Comprehensive Income was ¥47.5B, including ¥44.9B attributable to owners of the parent. The difference from Net Income attributable to owners of the parent of ¥47.4B was attributable to deterioration in the valuation difference on available-for-sale securities (-¥2.4B), and the gap itself was limited. On the other hand, the simultaneous increases in accounts receivable and accounts payable and the elevated level of work in process suggest a possible timing mismatch between profit recognition on the income statement and cash collection; progress in converting earnings into cash will be a point to monitor going forward.

Earnings Forecast and Guidance

Progress in Q1 against the full-year plan was 21.3% for Revenue (¥437.1B/¥2053.0B), 30.6% for Operating Income (¥68.8B/¥225.0B), 31.2% for Ordinary Income (¥70.7B/¥226.5B), and 31.6% for Net Income attributable to owners of the parent (¥47.4B/¥150.0B). Against a simple benchmark of one-quarter, or 25%, revenue progress was slower, while all profit measures exceeded the benchmark, indicating that improved profitability rather than volume is supporting progress toward achievement of the plan. The full-year plan calls for higher revenue and profit, with Revenue expected to increase by +17.9% and Operating Income by +28.9% YoY; the pace of recovery from the current quarter’s lower revenue and profit will be a focus through the second half. The fact that the earnings forecast was revised during the current quarter should also be recorded as a review reflecting the gap between the plan and actual conditions.

Shareholder Returns

A special dividend of ¥70 has been announced as the dividend for the end of Q2 of the fiscal year ending March 2027. Based on the full-year forecast EPS of ¥240.95, the Payout Ratio using this forecast dividend of ¥70 is approximately 29.1%. There was no revision to the dividend forecast during the current quarter. Interest-bearing debt remains low relative to Cash and deposits of ¥264.2B, and from the perspective of financial strength, there are no significant constraints on the capacity to pay dividends.

Risk Factors

1. Segment concentration risk: The Amusement Business accounts for 91.5% of Revenue and the majority of Operating Income, creating a structure in which fluctuations in sales volume and business cycles in this segment can readily affect company-wide performance.

2. Working capital expansion: Accounts receivable and notes receivable increased substantially to ¥129.3B (+80.8% YoY), while accounts payable and notes payable increased to ¥161.6B (+154.6% YoY). The ratio of work in process to total inventories was high at 74.8%. The expansion of both assets and liabilities may indicate a widening timing difference between revenue recognition and cash collection and payments.

3. Declining asset efficiency: Total assets increased to ¥1104.3B from ¥1033.6B in the previous year, while Revenue declined, indicating a downward trend in total asset turnover. The Equity Ratio also declined to 55.2% from 58.9% in the previous year, requiring monitoring of developments in asset efficiency.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Both the Operating Income margin and Net Income margin significantly exceeded the industry median, placing profitability in the upper tier of the industry.

Growth and Capital Efficiency

The Revenue growth rate was substantially below the industry median, indicating underperformance within the industry in terms of top-line growth.

※Source: Compiled by the Company

Key Points in the Earnings Results

1. Despite a decline of more than 20% in Revenue, both the gross margin and Operating Income margin improved. The enhancement of profitability through pricing and mix management and cost discipline was a defining feature of these earnings results.

2. Both accounts receivable and accounts payable increased substantially, and the ratio of work in process to total inventories was high at 74.8%, indicating that the overall scale of working capital has expanded. How this trend affects asset efficiency and the timing of cash conversion will be an important focus in evaluating the quality of the earnings results.

3. Progress against the full-year plan was somewhat behind for Revenue at 21.3%, while Operating Income, Ordinary Income, and Net Income were all ahead at more than 30%. The ability to achieve both a recovery in volume and the maintenance of margins in the second half will be the inflection point for achieving the plan.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥1,493–¥1,584 at ±1% for the cost of equity, and ¥1,525–¥1,557 at ±0.1 for ω.

Notes:

• Net assets as of the quarter-end were used (there is a timing difference from the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model / Interest rate reference month: 2026-06 / This value does not forecast or guarantee the future share price)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary 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 discretion and responsibility, and you should consult a professional as necessary.

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