| Metric | Current Period | Prior Year Comparable | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥10861.8B | ¥10549.8B | +3.0% |
| Operating Income | ¥1031.9B | ¥1034.8B | -0.3% |
| Ordinary Income | ¥1161.3B | ¥1077.2B | +7.8% |
| Net Income | ¥484.7B | ¥399.5B | +21.3% |
| ROE | 5.1% | 4.6% | - |
For the fiscal year ended March 2026, Revenue was ¥10,861.8B (YoY +¥312.0B, +3.0%), Operating Income was ¥1,031.9B (YoY -¥2.9B, -0.3%), Ordinary Income was ¥1,161.3B (YoY +¥84.1B, +7.8%), and Net Income attributable to owners of the parent company was ¥870.7B (YoY +¥74.4B, +9.3%). Despite top-line growth, Operating Income was essentially flat while Ordinary and bottom-line profits increased. Revenue growth occurred across all segments, led by Hotel & Resort +9.9% and Real Estate +4.2%. Operating Income was constrained by increases in personnel expenses and depreciation, but equity-method investment gains doubled to ¥239.2B (prior year ¥117.6B), including a one-off negative goodwill gain of ¥66.5B that boosted results at the ordinary-income stage. The effective tax rate fell to 18.5% (prior year 23.1%), supporting double-digit Net Income growth. Operating margin was 9.5% (prior 9.8%, -30bp), Net margin improved to 8.0% (prior 7.6%, +40bp). ROE slightly declined to 9.1% (prior 9.8%). With investment-led cash flows, Free Cash Flow was ▲¥472.4B, interest-bearing debt totaled ¥8,587B, and Debt/EBITDA was 4.48x—elevated leverage—while Interest Coverage was 8.72x, indicating sufficient interest-servicing capacity.
Revenue: Revenue of ¥10,861.8B (+3.0%) was achieved through increases across all segments. Hotel & Resort at ¥1,387.9B (+9.9%) posted the largest growth rate, aided by inbound demand recovery and higher average spend per guest. Real Estate at ¥2,127.4B (+4.2%) benefited from steady sales and leasing activity. Transport at ¥2,231.3B (+2.9%) was supported by resilient passenger and freight demand. Lifestyle Services at ¥5,115.2B (+0.8%) rose slightly on retail and advertising. Segment revenue mix: Lifestyle Services 47.1%, Transport 20.5%, Real Estate 19.6%, Hotel 12.8%. External factors—sustained tourism demand and progress on real estate development deliveries—supported top-line expansion.
Profitability: Operating Income of ¥1,031.9B (-0.3%) was roughly flat despite revenue growth. Selling, general and administrative expenses were ¥2,382.8B (SG&A ratio 21.9%) and depreciation was ¥885.5B, both pressuring margins; Operating margin declined to 9.5% (-30bp). By segment, Real Estate generated the largest Operating Income at ¥435.9B (42.3% of segment profit) but declined -9.9%; Transport generated ¥273.4B (26.5% of segment profit) down -5.7%, so the two core segments were weaker. Conversely, Hotel & Resort Operating Income rose to ¥97.1B (+46.0%) and Lifestyle Services to ¥218.7B (+13.0%), providing support. Ordinary Income of ¥1,161.3B (+7.8%) reflected a doubling of equity-method investment gains to ¥239.2B (prior ¥117.6B), including a one-off negative goodwill gain of ¥66.5B related to the equity-method application for Tokyu Real Estate Investment Corporation. Non-operating items: dividend income ¥17.0B and interest expense ¥118.3B produced net non-operating income of +¥129.4B. Extraordinary items were net ▲¥69.7B (extraordinary losses ¥129.9B, extraordinary gains ¥60.2B), including impairment losses of ¥61.4B and loss on disposal of fixed assets ¥20.2B. Profit before tax was ¥1,091.6B; after deducting income taxes of ¥201.5B (effective tax rate 18.5%, prior 23.1%), Net Income attributable to owners of the parent was ¥870.7B (+9.3%). In summary: revenue up, Operating Income slightly down, but expanded equity-method gains and lower tax rate led to higher Ordinary and Net Income.
Real Estate: Revenue ¥2,127.4B (+4.2%), Operating Income ¥435.9B (-9.9%); margin down to 20.5% (prior 23.8%, -330bp). Changes in sales/development mix and cost increases drove the decline.
Transport: Revenue ¥2,231.3B (+2.9%), Operating Income ¥273.4B (-5.7%); margin down to 12.3% (prior 13.1%, -80bp). Higher operating and personnel costs compressed margins.
Lifestyle Services: Revenue ¥5,115.2B (+0.8%), Operating Income ¥218.7B (+13.0%); margin improved to 4.3% (prior 3.7%, +60bp). Progress in cost control and improved gross margins at department stores and shopping centers contributed.
Hotel & Resort: Revenue ¥1,387.9B (+9.9%), Operating Income ¥97.1B (+46.0%); margin improved to 7.0% (prior 5.2%, +180bp). Rising occupancy and higher ADR were notable, benefiting from inbound demand recovery. Overall, high-margin Real Estate accounts for 42.3% of segment Operating Income and stabilizes profitability, but this period saw declines in Real Estate and Transport offset by gains in Hotel and Lifestyle Services, resulting in flat consolidated Operating Income.
Profitability: Operating margin 9.5% (prior 9.8%, -30bp); Net margin 8.0% (prior 7.6%, +40bp). Operating-stage margin fell due to cost increases, but Net margin improved due to lower tax rate. ROE 9.1% (prior 9.8%) slightly declined as total assets expanded (+8.7%), partially offsetting leverage effects. ROA (Ordinary Income/Total Assets) 4.0% (prior 4.0%) unchanged. EBITDA margin 17.7% (Operating Income ¥1,031.9B + depreciation ¥885.5B = EBITDA ¥1,917.4B / Revenue ¥10,861.8B), reflecting a high fixed-asset-intensive business.
Cash Quality: Operating Cash Flow (OCF) ¥1,277.5B / Net Income ¥870.7B = 1.47x, indicating good accrual quality. OCF/EBITDA 0.67x is somewhat low, affected by working capital increases (inventory ▲¥502.7B, accounts receivable ▲¥105.9B).
Investment Efficiency: Total asset turnover 0.372x (Revenue ¥10,861.8B / Total Assets 2.92兆円) down from 0.391x, indicating asset expansion. CapEx/Depreciation ≈ 1.8x (Investing CF acquisitions ▲¥1,593.2B / Depreciation ¥885.5B), reflecting a growth investment phase.
Financial Soundness: Equity Ratio 31.2% (prior 30.7%, +50bp), D/E 2.05x, Debt/EBITDA 4.48x—relatively high leverage—yet Interest Coverage 8.72x (EBITDA ¥1,917.4B / interest expense ¥118.3B on a non-operating basis) and EBITDA Coverage 16.21x indicate sufficient interest-servicing capacity. Current ratio 0.74 and quick ratio 0.73 signal a weaker short-term liquidity cushion, though cash and deposits were increased to ¥835.2B (+34% YoY), partially mitigating short-term funding risk.
Operating Cash Flow was ¥1,277.5B (prior ¥1,551.0B, -17.6%). The subtotal before working-capital changes was ¥1,539.5B; after working-capital movements ▲¥262.0B (inventory ▲¥502.7B, accounts receivable ▲¥105.9B, accounts payable +¥178.7B), OCF settled at the reported level. OCF/Net Income 1.47x indicates solid cash backing of earnings, but OCF/EBITDA 0.67x shows somewhat weak conversion, influenced by working capital increases and corporate tax payments ▲¥243.1B. Investing Cash Flow was ▲¥1,749.8B, driven mainly by acquisitions of tangible and intangible fixed assets ▲¥1,593.2B, well above depreciation of ¥885.5B, consistent with growth investment. Proceeds from asset disposals were limited at ¥14.6B. Free Cash Flow was ▲¥472.4B; dividends ¥155.7B and share buybacks ¥100.1B were funded from external sources. Financing Cash Flow was +¥683.9B, reflecting bond issuance ¥507.6B and new long-term borrowings ¥976.1B, offset by long-term borrowings repayments ▲¥414.1B, bond redemptions ▲¥200.0B, and net decrease in short-term borrowings ▲¥91.4B. Cash and cash equivalents increased to ¥796.3B at year-end (prior ¥583.2B, +¥213.1B), providing a liquidity buffer. Cash cycle analysis: Days sales outstanding 58.4 days (accounts receivable ¥1,737.6B / daily sales ¥30.1B), days payable outstanding 38.7 days; there is room to improve working-capital turnover.
Recurring income is composed of Operating Income ¥1,031.9B, dividend income ¥17.0B, and equity-method investment gains ¥239.2B (including one-off negative goodwill gain ¥66.5B). The doubling of equity-method gains from ¥117.6B in the prior year was largely due to the negative goodwill gain of ¥66.5B from applying equity-method accounting to Tokyu Real Estate Investment Corporation; normalized equity-method earnings are roughly ¥239.2B - ¥66.5B = ¥172.7B. Of non-operating income of ¥318.0B, ¥239.2B (75.2%) came from equity-method gains, indicating concentration and volatility risk from equity-method items. Extraordinary items were net ▲¥69.7B, including impairment losses ¥61.4B and loss on disposal of fixed assets ¥20.2B. The gap between Ordinary Income ¥1,161.3B and Net Income ¥870.7B (¥290.6B) is explained by income taxes ¥201.5B, non-controlling interests ¥19.4B, and extraordinary items ▲¥69.7B. The accrual ratio is ▲1.4% (OCF ¥1,277.5B - Net Income ¥870.7B = ¥406.8B / Total Assets 2.92兆円), indicating high accrual quality and earnings substantiation. The divergence between OCF/Net Income 1.47x and OCF/EBITDA 0.67x reflects working-capital increases and significant interest/tax outflows. Overall, core operating earnings are stable, but non-operating equity-method items include one-offs, and next year should consider potential reversions.
For the fiscal year ending March 2027, the company forecasts Revenue ¥11,400B (YoY +5.0%), Operating Income ¥1,100B (YoY +6.6%), Ordinary Income ¥1,114B (YoY -4.1%), Net Income attributable to owners of the parent ¥900B (YoY +3.4%), EPS ¥158.15. Revenue is expected to rise on delivery progress of rail-adjacent development projects, sustained hotel occupancy, and improved gross margin in Lifestyle Services. Operating Income is projected to improve +6.6% on price adjustments and cost optimization. Ordinary Income is forecast to decline -4.1%, conservatively reflecting the impact of the current period’s one-off equity-method gain (negative goodwill ¥66.5B) and higher interest burden. The company expresses confidence in operating improvements while acknowledging uncertainty in non-operating items. Progress rate at the end of H1 was approximately 47% of full-year Operating Income (based on H1 estimated results), and delivery timing of development projects skewed to H2 will be key to achieving targets.
Actual dividends were interim ¥14 and year-end ¥16 for an annual dividend of ¥30, a substantial increase from prior year annual ¥11. Payout ratio reported as 21.5% (total dividend ¥155.7B / consolidated Net Income ¥870.7B; back-calculation yields ~17.9%, company statement uses payout ratio 17.8%)—a conservative level with high sustainability. Share buybacks totaled ¥100.1B, indicating an active capital policy. Total shareholder distributions (dividends + buybacks) of ¥255.8B versus Free Cash Flow ▲¥472.4B yields an FCF coverage ratio of ▲2.52x; shareholder returns this period were supplemented by external funding (bonds and long-term borrowings). Total Return Ratio (dividends + buybacks) / Net Income is about 29.4%, a moderate level. The company indicates expected year-end dividend ¥16 for next year, but a clear full-year dividend policy (annual total) and the presence of an interim dividend should be monitored. Medium term, realization of returns from CapEx and reduction in Debt/EBITDA will determine capacity for higher shareholder distributions. The current low payout policy reflects a prioritization of growth investments, with room for phased increases as investments yield returns.
Liquidity risk: Current ratio 0.74, quick ratio 0.73, cash & deposits / short-term debt 0.26x—short-term liquidity cushion is thin. Reliance on rollover of short-term borrowings ¥3,246.8B and commercial paper ¥950B is high; market shocks could increase refinancing costs or cause liquidity shortages. Investment securities ¥3,167.8B could serve as liquidity buffer but carry market value risk. Short-term debt ratio is 37.8%; while cash balances were increased (+34%), improving working-capital management and promoting refinancing into bonds/long-term borrowings remain priorities.
Leverage & interest-rate risk: Interest-bearing debt ¥8,587B, Debt/EBITDA 4.48x, D/E 2.05x—relatively high leverage. Interest Coverage 8.72x provides capacity to service interest, but rising rates would increase interest burden and refinancing costs. Fixed-rate bonds ¥3,510B and convertible bonds ¥600B help stabilize rates, but short-term and long-term borrowings (¥5,340.5B) carry rate composition risk. Interest expense this period was ¥118.3B (prior equivalent ¥90.5B), showing an increasing trend; future rate environments could pressure financial costs and profitability.
Business portfolio variability: Changes in Real Estate sales mix led to Real Estate Operating Income down -9.9%, and Transport down -5.7% due to cost increases, keeping consolidated Operating Income flat. Hotel & Resort +46.0% and Lifestyle Services +13.0% supported results, but Hotel performance is sensitive to macro conditions and inbound demand volatility. Timing of rail-adjacent development deliveries, vacancy rates, and tenant rent revision rates will materially affect Real Estate earnings; tourism downturns would directly impact Hotel results. Structural increases in Transport personnel and operating costs require successful efficiency measures and fare pass-throughs to preserve margins.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 9.5% | 6.3% (3.7%–8.5%) | +3.2pt |
| Net Margin | 4.5% | 2.7% (1.6%–4.7%) | +1.7pt |
Operating and Net margins exceed industry medians, supported by high-margin Real Estate and Hotel businesses, placing the company favorably within the sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 3.0% | 5.0% (-0.4%–9.4%) | -2.0pt |
Revenue growth lags the industry median of 5.0%; core segments Transport and Real Estate show stable growth, while high-growth segments (Hotel +9.9%) have a smaller proportion, leaving overall performance moderate.
※ Source: Company compilation
Increased reliance on non-operating items for profit growth and normalization risk next year: This year’s increases in Ordinary and Net Income were driven by doubled equity-method gains (¥239.2B, including negative goodwill ¥66.5B) and a lower effective tax rate (18.5%), while Operating Income was flat. Company guidance implies Operating Income +6.6% and Ordinary Income -4.1%, reflecting expected operating improvements and a conservative assumption on reversal of non-operating one-offs. Focus areas are normalized equity-method run-rate (approx. ¥170B) and execution of operating improvements (price adjustments, occupancy, cost reductions).
Liquidity management in an investment-led phase and scenarios for Debt/EBITDA reduction: Free Cash Flow ▲¥472.4B and Debt/EBITDA 4.48x indicate coexistence of investment acceleration and elevated leverage. Current ratio 0.74 and cash/short-term debt 0.26x point to a weak short-term liquidity cushion; refinancing toward bonds/long-term debt and working-capital efficiency are urgent. If rail-adjacent development realizations and CapEx monetization accelerate and Free Cash Flow turns positive, Debt/EBITDA should decline and financial health improve. Monitor investment recovery cycles and refinancing plans closely.
Sustainability of segment performance shifts: The sharp recovery in Hotel & Resort (+46.0%) materially lifted results, but sustainability of inbound demand and ADR increases needs verification. Real Estate’s margin decline (-9.9%) due to development mix may be temporary; reversals depend on delivery schedules and leasing performance. Transport cost inflation is structural; the success of fare adjustments and efficiency measures will determine mid-term margin stability. Continued improvement in Lifestyle Services gross margins should also be monitored.
This report is an earnings analysis automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are compiled by the Company from public financial statements as reference information. Investment decisions are your own responsibility; consult a professional advisor as necessary.