| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥3075.7B | ¥2921.8B | +5.3% |
| Operating Income | ¥388.3B | ¥378.2B | +2.7% |
| Ordinary Income | ¥357.0B | ¥348.1B | +2.5% |
| Net Income | ¥255.2B | ¥191.3B | +33.4% |
| ROE | 12.5% | 10.5% | - |
For the fiscal year ended March 2026, Revenue was ¥3075.7B (YoY +¥153.9B +5.3%), Operating Income was ¥388.3B (YoY +¥10.1B +2.7%), Ordinary Income was ¥357.0B (YoY +¥8.9B +2.5%), and Net Income attributable to owners of the parent was ¥255.2B (YoY +¥63.9B +33.4%). The company achieved revenue and profit growth, with Net Income significantly higher YoY due to reduced tax burden and improvement in extraordinary gains/losses. Operating margin was 12.6%, down 0.3pt from 12.9% a year earlier, but EPS was ¥258.56 (YoY +13.0%), recording double-digit per-share earnings growth. ROE remained at a healthy 12.5%.
[Revenue] Total Revenue was ¥3075.7B (+5.3%). By segment, Hotel Business grew the most at ¥750.6B (+12.8%), supported by recovery in lodging demand and higher average room rates. Transportation Business was ¥443.8B (+3.5%), benefiting from increased ridership and cost control; Retail Business was steady at ¥972.0B (+2.5%). Real Estate Business recorded ¥688.0B (+2.8%) with slower growth momentum. Other Businesses grew to ¥221.4B (+5.5%). Revenue mix: Hotel 24.4%, Retail 31.6%, Real Estate 22.4%, Transportation 14.4%, Other 7.2%.
[Profitability] Operating Income was ¥388.3B (+2.7%), lagging revenue growth. SG&A expenses were ¥752.5B (SG&A ratio 24.5%), up from ¥706.9B the prior year, weighing on profitability. Non-operating items included dividend income of ¥3.2B and foreign exchange gains of ¥9.3B, but increased interest expense of ¥41.7B (up +26.4% from ¥33.0B) was a drag, resulting in Ordinary Income of ¥357.0B (+2.5%). Extraordinary items were net ▲¥8.0B (extraordinary gains ¥22.6B, extraordinary losses ¥30.6B), improved from net ▲¥42.9B a year earlier. Gain on sale of investment securities of ¥17.8B contributed to extraordinary gains, while impairment losses of ¥14.5B and loss on retirement of fixed assets of ¥4.5B were recorded. Income taxes were ¥100.5B (effective tax rate 28.8%), up from ¥81.3B, but the reduction in reversal of deferred tax assets relatively eased the tax burden. As a result, Net Income attributable to owners of the parent rose significantly to ¥255.2B (+33.4%), delivering revenue and profit growth.
The Hotel Business was the most profitable segment with Operating Income of ¥164.5B (+30.1%) and margin of 21.9%. Both lodging-focused and city hotels saw improvements in occupancy and ADR, greatly enhancing profitability. Real Estate Business posted Operating Income of ¥139.6B (▲26.7%) and margin of 20.3%, with decline due to changes in property handover composition and impairment recognition. Transportation Business had Operating Income of ¥57.3B (+16.6%) and margin of 12.9%, supported by recovery in railway and bus demand and cost optimization. Retail Business turned profitable with Operating Income of ¥8.9B (+486.9%) and margin of 0.9%, moving from a loss the prior year but remaining low-return. Other Businesses posted Operating Income of ¥21.6B (+28.8%) and margin of 9.8%, steadily increasing profits. Hotels and Real Estate account for the majority of profits, while Retail remains on a recovery path, highlighting marked profitability dispersion across segments.
[Profitability] Operating margin of 12.6% declined 0.3pt from 12.9% a year earlier, but Net Income margin improved to 8.3% (up +1.8pt from 6.5%) due to improvement in extraordinary items and lighter tax burden. ROE at 12.5% indicates solid return on equity. EBITDA margin was 20.6% (EBITDA ¥638.2B = Operating Income ¥388.3B + Depreciation ¥249.9B), signaling robust cash generation. [Cash Quality] Operating Cash Flow/Net Income ratio was 0.89x (Operating CF ¥227.9B / Net Income ¥255.2B), with cash conversion efficiency slightly reduced due to working capital increases. OCF/EBITDA was 0.36x, held down by inventory increase (▲¥150.2B) and trade receivables increase (▲¥50.0B). Free Cash Flow was ▲¥76.1B (Operating CF ¥227.9B − Investing CF ¥304.1B), as capital expenditures of ¥322.3B (1.29x depreciation) exceeded operating cash flow. [Investment Efficiency] Total asset turnover was 0.38x (Revenue ¥3075.7B / Total Assets ¥8134.6B), reflecting heavy real estate and infrastructure assets. EPS ¥258.56 (YoY +13.0%) alongside BPS ¥2,117.75 implies a PBR of around 1.4x. [Financial Soundness] Equity ratio was 25.0% (up +1.0pt from 24.0%), standard for a fixed-asset-intensive model. Interest-bearing debt was ¥2656.0B (short-term borrowings ¥672.4B, long-term borrowings ¥1983.5B), with a D/E ratio of 1.43x indicating use of leverage. Current ratio was 126.1% and quick ratio 57.1%, preserving minimal short-term liquidity safety, but short-term borrowings remain high relative to cash ¥181.4B, making refinancing management important.
Operating CF was ¥227.9B (YoY ▲37.9%)—declining from operating subtotal before working capital of ¥349.1B due to a large increase in working capital. Main drivers were inventory increase ▲¥150.2B (accumulation of real estate inventory) and trade receivables increase ▲¥50.0B; corporate tax payments ▲¥121.7B also affected cash flow. Investing CF was ▲¥304.1B, centered on capital expenditures ▲¥322.3B, strengthening future revenue base through acquisition of tangible fixed assets. Financing CF was ¥97.5B, with proceeds from long-term borrowings ¥520.3B and bond issuance ¥99.4B, offset by long-term borrowings repayments ▲¥294.6B, bond redemptions ▲¥100.0B, and dividend payments ▲¥62.6B. Free Cash Flow remained negative at ▲¥76.1B as investments outpaced Operating CF, indicating dependence on external funding to cover capex and dividends. Cash and cash equivalents at period-end were ¥180.2B (up ¥20.1B from ¥160.1B at the beginning of the period), reflecting financing CF filling the investment shortfall.
Against Ordinary Income of ¥357.0B, non-operating net items were a negative ▲¥31.4B. Non-operating income totaled ¥17.3B (including dividend income ¥3.2B and foreign exchange gains ¥9.3B), while non-operating expenses were ¥48.7B (primarily interest expense ¥41.7B), indicating interest burden pressuring profits. Extraordinary items were net ▲¥8.0B: gain on sale of investment securities ¥17.8B contributed positively, but impairment losses ¥14.5B and loss on retirement of fixed assets ¥4.5B were one-off negatives. Prior year extraordinary losses were large at ¥65.4B including impairment losses ¥23.3B, so this period’s improvement in extraordinary items boosted Net Income. Comprehensive income was ¥304.0B, exceeding Net Income ¥255.2B; other comprehensive income contributed positively from valuation differences on available-for-sale securities ¥28.8B and actuarial adjustments related to retirement benefits ¥29.3B, while foreign currency translation adjustments were a negative ▲¥9.3B. Ordinary-stage profits reflect improvement in operating base and reduced one-off items, enhancing earnings quality YoY.
Full Year guidance projects Revenue ¥3213.0B, Operating Income ¥370.0B (YoY ▲4.7%), Ordinary Income ¥327.0B (YoY ▲8.4%), Net Income attributable to owners of the parent ¥221.0B, EPS ¥230.28, and dividend ¥35.0. This period’s results (Revenue ¥3075.7B, Operating Income ¥388.3B, Net Income ¥255.2B) represent achievement rates of 95.7% for Revenue, 104.9% for Operating Income, and 115.5% for Net Income vs. the full-year guidance, with Operating and Net Income already exceeding the full-year targets. The planned year-on-year profit decline in the guidance appears to factor in changes in project mix in Real Estate, cost pressure, and conservative demand assumptions. Given this period’s outperformance, attention will focus on the possibility of upward revisions to guidance.
Annual dividend is ¥70.0 (interim ¥30.0, year-end ¥40.0), with a payout ratio of 28.4% (total dividends ¥63.4B / Net Income ¥224.1B) at an appropriate level. Dividends were significantly increased from prior year interim of ¥30.0, strengthening shareholder returns. Share buybacks were also executed, with ¥28.7B of repurchases during the period (treasury stock increased from ▲¥19.2B to ▲¥47.9B). The combined total return ratio (dividends plus buybacks) is about 41.0%, reflecting a focus on capital efficiency. Operating CF of ¥227.9B is sufficient to cover dividend payments of ¥62.6B, but Free Cash Flow is negative at ▲¥76.1B, so the sum of dividends and buybacks has been kept within Operating CF and investment funding relies on external financing. The payout ratio is at a sustainable level, and stable dividends plus opportunistic buybacks are expected to continue.
Working Capital Management Risk: Inventory is ¥99.55B (up +25.2% from ¥79.53B), and trade receivables are ¥20.95B (up +31.4% from ¥15.94B), significantly increasing and pressuring Operating CF. Continued delays in real estate inventory handovers or prolonged receivable collection could erode cash generation and increase refinancing burdens. OCF/EBITDA of 0.36x is well below industry norms, making normalization of working capital urgent.
Rising Interest Burden Risk: With interest-bearing debt of ¥2656.0B, interest expense rose sharply to ¥41.7B (up +26.4% from ¥33.0B). In a rising interest rate environment, interest burden could increase further and compress Ordinary Income. With D/E ratio of 1.43x and Debt/EBITDA of 4.16x, leverage is material; interest coverage (EBIT / interest expense) is 9.3x and currently provides some cushion, but monitoring interest rate trends is important.
Segment Profitability Volatility Risk: Real Estate operating profits declined substantially YoY (▲26.7%), and earnings can fluctuate due to handover mix and impairments. Hotels posted strong profit growth (+30.1%) but lodging demand is sensitive to economic conditions and inbound tourism; Transportation’s sustained recovery depends on external environment. Profitability dispersion across segments (Hotel 21.9% vs. Retail 0.9%) is large, posing challenges for portfolio-wide stability.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 12.6% | 6.3% (3.7%–8.5%) | +6.3pt |
| Net Income Margin | 8.3% | 2.7% (1.6%–4.7%) | +5.6pt |
The company’s profitability substantially exceeds the transportation industry median, driven by high returns in Hotel and Real Estate businesses.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 5.3% | 5.0% (-0.4%–9.4%) | +0.3pt |
Revenue growth is broadly in line with the industry median, reflecting sector-wide recovery.
※ Source: Company compilation
Continued demand recovery in Hotel and Transportation segments helped achieve Revenue ¥3075.7B (+5.3%), Operating Income ¥388.3B (+2.7%), and Net Income ¥255.2B (+33.4%). Hotel Business delivered Operating Income ¥164.5B (+30.1%) with a margin of 21.9%, remaining a key growth driver. Transportation also recovered with Operating Income ¥57.3B (+16.6%), benefiting from diversified revenue on the transit-oriented mixed-use model.
Working capital expansion (inventory +25.2%, trade receivables +31.4%) reduced Operating CF to ¥227.9B (YoY ▲37.9%) and Free Cash Flow to ▲¥76.1B. Capex of ¥322.3B (1.29x depreciation) can be viewed as growth investment, but continued working capital expansion could reduce cash generation and raise refinancing pressure. Normalization of inventory and receivables and progress on investment recovery will be focal points going forward.
Shareholder returns were strengthened via a large dividend increase to ¥70.0 (payout ratio 28.4%) and ¥28.7B of share buybacks, bringing total return ratio to about 41% and demonstrating a commitment to capital efficiency. Dividends are coverable by Operating CF, indicating sustainability, but negative Free Cash Flow means balancing dividends and investment requires external financing; leverage management and working capital efficiency improvements are medium- to long-term priorities.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company from publicly disclosed financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.