| Indicator | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥3041.9B | ¥2938.6B | +3.5% |
| Operating Income | ¥335.5B | ¥356.4B | -5.9% |
| Ordinary Income | ¥288.5B | ¥349.7B | -17.5% |
| Net Income | ¥199.7B | ¥182.8B | +9.3% |
| ROE | 5.1% | 4.9% | - |
For the fiscal year ended March 2026, Revenue was ¥3041.9B (YoY +¥103.3B +3.5%), Operating Income was ¥335.5B (YoY -¥20.9B -5.9%), Ordinary Income was ¥288.5B (YoY -¥61.2B -17.5%), and Net Income attributable to owners of the parent was ¥199.7B (YoY +¥17.0B +9.3%). Despite higher revenue, operating-level profits declined; Net Income increased due to non-recurring items, with Special Income of ¥239.3B (including ¥197.5B gain on sale of fixed assets) exceeding Special Losses of ¥161.1B, producing a net one-time gain. By segment, the Transportation Business remained core with Revenue of ¥1205.9B (+3.0%) and Operating Income of ¥186.8B (-1.0%). The Leisure & Services Business recorded high growth with Revenue ¥309.5B (+8.5%) and Operating Income ¥55.6B (+12.4%). Conversely, the Real Estate Business saw a significant decline with Revenue ¥451.4B (-6.5%) and Operating Income ¥46.8B (-32.4%), dragging on consolidated results.
[Revenue] Revenue was ¥3041.9B (YoY +3.5%), driven by Transportation (+3.0%), Retail (+4.9%), and Leisure & Services (+8.5%). Transportation recorded ¥1205.9B as rail and bus demand continued to recover; Leisure & Services expanded to ¥309.5B supported by strong hotel/inn and restaurant performance. Retail grew to ¥837.2B due to higher department store and store sales. Conversely, Real Estate declined to ¥451.4B (-6.5%) from lower land/building sales and leasing, affected by market conditions and timing of large projects. Other Businesses (construction, civil engineering, electrical equipment works, etc.) rose significantly to ¥238.0B (+17.9%). Segment revenue composition: Transportation 39.6%, Retail 27.5%, Real Estate 14.8%, Leisure & Services 10.2%, Other 7.8%.
[Profitability] Operating Income was ¥335.5B (YoY -5.9%), with an operating margin of 11.0%, down approximately 1.1pt from 12.1% a year earlier. The main reasons were SG&A expense increases (¥464.8B, YoY +8.2%) outpacing revenue growth (+3.5%), and higher depreciation of ¥292.9B (+2.6%). By segment, Real Estate Operating Income fell sharply (-32.4%), weighing on the consolidated result; Transportation also slightly declined (-1.0%). Leisure & Services achieved +12.4% growth in Operating Income but could not offset the overall cost deterioration. Ordinary Income was ¥288.5B (-17.5%), with Non-operating income of ¥28.5B against Non-operating expenses of ¥75.5B. Interest expense rose substantially to ¥55.0B from ¥41.4B, pressuring the ordinary level. Profit before tax was ¥366.8B (prior year ¥315.6B), improved as Special Income exceeded Special Losses by ¥78.2B. Special Income of ¥239.3B included ¥197.5B gain on sale of fixed assets and ¥9.5B gain on sale of subsidiary shares; Special Losses of ¥161.1B included ¥101.0B impairment losses and ¥39.4B loss on disposal of fixed assets. Net Income attributable to owners of the parent was ¥199.7B (+9.3%), but the increase was mainly due to one-off asset sale gains, indicating a decline in recurring earning power. In conclusion, revenue rose while operating and ordinary income fell; Net Income increased due to special factors.
Transportation Business: Revenue ¥1205.9B (YoY +3.0%), Operating Income ¥186.8B (-1.0%), Operating Margin 15.5%. Rail and bus demand remained firm, but rising operating costs slightly reduced margins.
Real Estate Business: Revenue ¥451.4B (-6.5%), Operating Income ¥46.8B (-32.4%), Operating Margin 10.4%. Reduced revenue and profit due to timing of sales and market fluctuations, with margins deteriorating substantially from the prior year.
Leisure & Services Business: Revenue ¥309.5B (+8.5%), Operating Income ¥55.6B (+12.4%), Operating Margin 18.0%. Strong performance from hotels/inns and leisure facilities drove high-margin growth.
Retail Business: Revenue ¥837.2B (+4.9%), Operating Income ¥21.6B (+3.5%), Operating Margin 2.6%. Increased sales at department stores and stores led to higher revenue and profit, though margins remain low.
Other Businesses: Revenue ¥238.0B (+17.9%), Operating Income ¥38.1B (+4.6%), Operating Margin 16.0%. Order increases in construction, civil engineering, and electrical equipment works drove substantial revenue growth.
[Profitability] Operating margin was 11.0%, down about 1.1pt from 12.1% last year. Net margin was 6.6%, up 0.4pt from 6.2%, but the improvement was primarily due to one-time Special Income. ROE was 5.1%, below the prior year, and the level of returns on equity remains low.
[Cash Quality] Operating Cash Flow (OCF) was ¥479.2B, 2.4x Net Income of ¥199.7B, indicating solid cash conversion. Free Cash Flow was -¥207.9B, with capital expenditures of ¥868.0B significantly exceeding OCF and causing continued cash outflow.
[Investment Efficiency] Total asset turnover declined to 0.27x (prior 0.28x), pressured by the buildup of non-productive assets such as Construction in Progress of ¥1902.5B. Capital expenditures amounted to approximately 3.0x depreciation of ¥292.9B, indicating a large investment phase.
[Financial Soundness] Equity Ratio was 34.6%, down from 35.7% a year earlier, as net assets grew only modestly relative to total assets. Current Ratio was 88.4%, below 1.0, with Current Assets ¥1976.3B versus Current Liabilities ¥2236.1B, raising short-term liquidity concerns. Interest-bearing debt is approximately ¥3613B (estimated from short-term borrowings ¥1192B + long-term borrowings ¥2421B + bonds ¥1500B), and interest expense of ¥55.0B continues to rise.
Operating Cash Flow was ¥479.2B (YoY +222.7%), calculated from subtotal ¥392.4B adjusted for working capital changes and tax payments etc. of ¥130.0B. Increases in trade receivables -¥108.7B and inventories -¥63.9B were detractors, while increase in trade payables ¥74.2B was a positive factor. Investing Cash Flow was -¥687.1B, primarily due to capital expenditures of -¥868.0B, partially offset by proceeds from sale of fixed assets ¥204.7B and construction burden receipts ¥148.8B. Free Cash Flow was -¥207.9B, reflecting continued cash outflow from large investments. Financing Cash Flow was ¥138.7B, funded mainly by long-term borrowings ¥391.0B and bond issuance proceeds ¥248.6B, while repayments of long-term borrowings -¥270.4B, dividend payments -¥108.7B, and share buybacks -¥103.2B were cash outflows. As a result, cash and cash equivalents declined to ¥670.3B (prior ¥740.1B), reducing liquidity on hand.
Ordinary Income of ¥288.5B was boosted by a net increase of ¥78.2B in special items — Special Income ¥239.3B (¥197.5B gain on sale of fixed assets, ¥9.5B gain on sale of subsidiary shares, etc.) minus Special Losses ¥161.1B (¥101.0B impairment losses, ¥39.4B loss on disposal of fixed assets, etc.) — raising Profit before tax to ¥366.8B. A substantial portion of Net Income attributable to owners of the parent ¥199.7B depends on one-time asset sale gains, limiting earnings repeatability. Non-operating income of ¥28.5B comprised dividend income ¥6.2B and other ¥13.3B; non-operating expenses ¥75.5B comprised interest expense ¥55.0B and commission expenses ¥15.3B, indicating increased interest burden is pressuring ordinary earnings. OCF ¥479.2B is 2.4x Net Income ¥199.7B, suggesting good cash conversion from an accrual perspective and decent earnings quality. However, the large gap between Ordinary Income and Net Income shows earnings are materially influenced by variability in special items.
Full year guidance forecasts Revenue ¥4015.0B, Operating Income ¥450.0B (YoY +34.1%), Ordinary Income ¥440.0B (+52.5%), and Net Income attributable to owners of the parent ¥245.0B (+22.7%). Operating margin is expected to improve slightly to about 11.2% from this year’s 11.0%. Assumptions behind the sizable operating profit increase include continued firm transportation demand and fare level maintenance, profit recovery in Real Estate, realization of depreciation recoveries from Construction in Progress coming into operation, and a plateauing of interest burden. Dividend guidance is ¥23.00 per annum; forecast EPS is ¥115.06, implying a Payout Ratio of about 20.0%. Recovery in the Real Estate Business and EBITDA increases from commissioning large investments are key to achieving the forecast.
Annual dividend was ¥46.00 (interim ¥23.00, year-end ¥23.00), with total dividends of approximately ¥108.7B. The payout ratio relative to Net Income attributable to owners of the parent ¥199.7B is calculated at 54.4%, while the effective payout ratio relative to EPS ¥101.9 was 45.1%. Additionally, share repurchases of ¥103.2B were conducted, making total shareholder returns ¥211.9B and a Total Return Ratio of about 106.1%, exceeding internally generated funds. Given Free Cash Flow of -¥207.9B, shareholder returns rely on external financing. Maintaining dividends amid a large investment phase is commendable, but medium-term sustainability depends on EBITDA increases and OCF improvement as Construction in Progress becomes operational.
Investment recovery risk: Construction in Progress of ¥1902.5B (26.1% of tangible fixed assets) is recorded; delays in commissioning or cost overruns could cause impairment risk or deterioration in profitability. Capital expenditures of ¥868.0B reach approximately 3.0x depreciation of ¥292.9B, making investment progress and post-commission revenue realization critical.
Liquidity risk: Current Ratio is 88.4%, below 1.0, with Current Assets ¥1976.3B versus Current Liabilities ¥2236.1B, raising concerns over short-term payment capacity. Cash and deposits ¥672.5B versus short-term borrowings ¥1192.1B leave a cash/short-term debt ratio of only 0.56x. Attention is needed on refinancing and maturity-concentration funding risks for interest-bearing debt.
Interest rate risk: Interest expense rose to ¥55.0B (prior year ¥41.4B); Interest Coverage (Operating Income / Interest Expense) is about 6.1x, providing headroom, but changes in the interest rate environment could pressure Ordinary Income. Repricing higher on approximately ¥3613B of interest-bearing debt would directly affect profitability and shareholder return capacity.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 11.0% | 6.3% (3.7%–8.5%) | +4.7pt |
| Net Margin | 6.6% | 2.7% (1.6%–4.7%) | +3.8pt |
Profitability indicators substantially exceed the industry median, reflecting strengths from a transportation-centric diversified business model and沿線開発 (railway-adjacent development).
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 3.5% | 5.0% (-0.4%–9.4%) | -1.5pt |
Revenue growth is slightly below the industry median. Declines in the Real Estate Business have constrained overall growth, though Leisure & Services and Retail have provided support.
※Source: Company compilation
Path to earnings recovery amid a large investment phase: Commissioning of Construction in Progress ¥1902.5B and realization of depreciation recovery are key to future profitability improvement. The next fiscal year’s guidance targets Operating Income +34.1% and assumes sustained transportation demand and a turnaround in Real Estate. Peak-out in capital expenditures and return to positive Free Cash Flow will be a medium-term evaluation point.
Monitor shareholder returns vs. financial balance: Total Return Ratio of 106.1% exceeds internally generated funds, and Free Cash Flow is -¥207.9B, indicating continued reliance on external financing. With Current Ratio 88.4%, interest-bearing debt ~¥3613B, and rising interest expense ¥55.0B, dividend capacity may change depending on interest rates and investment recovery. Trends in OCF/EBITDA, Debt/EBITDA, and Interest Coverage will be key indicators of sustainability.
This report is an AI-generated earnings analysis document based on XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are compiled by our firm from public financial statements for reference only. Investment decisions are your responsibility; consult advisors as necessary.