| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥4187.3B | ¥4227.0B | -0.9% |
| Operating Income | ¥526.6B | ¥514.3B | +2.4% |
| Ordinary Income | ¥540.3B | ¥504.7B | +7.0% |
| Net Income | ¥243.2B | ¥415.9B | -41.5% |
| ROE | 4.8% | 8.7% | - |
For the fiscal year ended March 2026, Revenue was ¥4,187.3B (YoY -39.7B -0.9%), Operating Income was ¥526.6B (YoY +12.3B +2.4%), Ordinary Income was ¥540.3B (YoY +35.6B +7.0%), and Net Income attributable to owners of the parent was ¥243.2B (YoY -172.7B -41.5%). Despite a slight decrease in revenue, operating profitability improved: Operating margin was 12.6% (prior year 12.2%, +0.4pt) and Ordinary margin was 12.9% (prior year 11.9%, +1.0pt). However, Net Income declined sharply due to adverse special gains/losses. Special gains decreased from ¥302.7B in the prior year to ¥143.8B, and special losses increased from ¥86.9B to ¥172.4B, driving Pre-tax Income down by ¥208.9B from ¥720.5B to ¥511.6B. Non-operating items showed improvement with Dividend income received of ¥17.3B and Interest expense of ¥61.6B, resulting in a net positive non-operating balance of ¥13.6B. By segment, the Transportation Business led with Revenue of ¥1,787.9B (+3.7%) and Operating Income of ¥295.2B (+11.4%); the Real Estate Business was flat with Revenue ¥848.4B (-0.0%) and Operating Income ¥154.7B (-2.4%); the Lifestyle Services Business declined with Revenue ¥1,551.0B (-6.2%) and Operating Income ¥76.6B (-15.5%). Comprehensive Income was ¥469.0B (prior year ¥505.1B, -7.2%), boosted by ¥42.3B unrealized gains on securities and ¥42.6B adjustments for retirement benefits. In conclusion, recovery in Transportation and SG&A cost control supported top- and operating-level profitability, but volatility in special items led to a significant decline in final profit.
[Revenue] Revenue of ¥4,187.3B was a slight decrease of -0.9% YoY. By segment, Transportation recorded ¥1,787.9B (42.7% of total) up +3.7% YoY, driven by recovery in rail/bus travel demand and higher fare revenue. Real Estate generated ¥848.4B (20.3%) and was flat YoY (-0.0%), with stable performance in both for-sale and rental operations. Lifestyle Services posted ¥1,551.0B (37.0%) down -6.2% YoY, pressured by weak consumer spending at department stores, hotels, and restaurants. Overall, Transportation's growth did not fully offset declines in other segments, resulting in a slight revenue contraction.
[Profitability] Operating Income was ¥526.6B (YoY +2.4%), with an operating margin of 12.6% (prior year 12.2%, +0.4pt). SG&A expenses of ¥696.5B decreased -6.8% from ¥747.3B, an improvement that outpaced the revenue decline (-0.9%) and provided operating leverage. By segment, Transportation Operating Income was ¥295.2B (margin 16.5%, YoY +11.4%) as core profitability improved; Real Estate Operating Income was ¥154.7B (margin 18.2%, YoY -2.4%) with a slight decline but still high margin; Lifestyle Services Operating Income was ¥76.6B (margin 4.9%, YoY -15.5%) showing deteriorating profitability. Ordinary Income was ¥540.3B (YoY +7.0%), supported by improved non-operating balance (Non-operating income ¥92.8B, Non-operating expense ¥79.2B, net +¥13.6B). Dividend income received ¥17.3B and equity-method investment gains ¥12.2B were positive factors, while interest expense ¥61.6B was a negative factor; overall, non-operating items improved by ¥22.2B YoY, lifting the ordinary-profit level. Pre-tax Income was ¥511.6B (YoY -29.0%), as Special gains ¥143.8B (prior year ¥302.7B) included gains on sales of investment securities ¥77.0B, gains on sales of subsidiary shares ¥171.8B, and construction burden receipts ¥63.2B; Special losses ¥172.4B (prior year ¥86.9B) included impairment losses ¥36.4B, loss on retirement of fixed assets ¥19.4B, and construction burden compression ¥62.2B. Net special items worsened by ¥244.4B from prior year net +¥215.8B to current net -¥28.6B, the primary reason for the Net Income decline. After income taxes of ¥136.0B (effective tax rate 26.6%), Net Income attributable to owners of the parent was ¥243.2B (YoY -41.5%), with a Net Income margin of 5.8% (prior year 9.8%, -4.0pt). In summary, core business achieved revenue and operating profit growth driven by Transportation, but volatility in special items led to a substantial decline in final profit.
Transportation (Revenue ¥1,787.9B, Operating Income ¥295.2B) posted Revenue +3.7% YoY and Operating Income +11.4% YoY. The segment margin of 16.5% improved +1.1pt YoY, reflecting recovery in passenger volumes, higher fare revenue, and cost efficiencies. Segment assets increased to ¥7,106B (prior ¥6,796B), +4.6% YoY. Real Estate (Revenue ¥848.4B, Operating Income ¥154.7B) was flat YoY in revenue (-0.0%) and down -2.4% in Operating Income. Margin of 18.2% was slightly down -0.2pt from 18.4% but remains high; segment assets rose to ¥5,392B (prior ¥4,889B), +10.3% due to accumulation of investment properties. Lifestyle Services (Revenue ¥1,551.0B, Operating Income ¥76.6B) declined Revenue -6.2% YoY and Operating Income -15.5% YoY. Margin of 4.9% worsened -0.6pt from 5.5%, with notable weakness in department stores and hotels impacting profitability. Segment assets were ¥1,234B (prior ¥1,225B), nearly flat. Consolidated Operating Income after corporate adjustments was ¥526.6B, with Transportation accounting for 56.1% of consolidated operating profit and serving as the main earnings pillar.
[Profitability] Operating margin 12.6% (prior 12.2%) improved +0.4pt due to SG&A control. Net Income margin 5.8% (prior 9.8%) deteriorated -4.0pt due to special items. ROE 4.8% (prior 8.7%) declined substantially due to lower Net Income. ROA (on Ordinary Income basis) was 4.0% vs prior 3.9%, a slight improvement. [Cash Quality] Operating Cash Flow (OCF) ¥599.1B is 2.46x Net Income ¥243.2B, a high level. OCF/EBITDA ratio 0.62x (EBITDA = Operating Income ¥526.6B + Depreciation ¥443.5B = ¥970.1B) declined due to increases in working capital. Interest coverage (EBIT / Interest expense) was 8.5x, indicating sufficient capacity to bear interest costs. [Investment Efficiency] Capital expenditures ¥846.2B were 1.91x depreciation ¥443.5B, significantly exceeding replacement investment and indicating a growth investment phase. Free Cash Flow was -¥243.6B, reflecting investment overhang. [Financial Soundness] Equity Ratio 36.5% (prior 36.8%) is stable. Interest-bearing debt totals ¥6,822.7B (short-term borrowings ¥1,925.5B + long-term borrowings ¥2,827.2B + corporate bonds ¥1,870.0B + bonds maturing within one year ¥200.0B), Debt/EBITDA 7.03x, Net Debt/EBITDA (interest-bearing debt - cash & deposits ¥399.4B) 6.62x. Current ratio 54.8% (prior 41.0%) and Quick ratio 54.1% improved but remain below 1.0. Cash ¥399.4B / short-term borrowings ¥1,925.5B = 0.21x, indicating high reliance on short-term funding rollovers.
Operating Cash Flow was ¥599.1B (prior ¥558.8B, +7.2%), 2.46x Net Income ¥243.2B. OCF subtotal ¥748.7B (after non-cash charges including Depreciation ¥443.5B, Goodwill amortization ¥2.9B, Impairment losses ¥36.4B etc.) less working capital change -¥149.6B (inventory increase -¥216.4B, trade receivables increase -¥26.4B, trade payables increase +¥48.9B etc.) and income taxes paid -¥115.6B produced the cash generated. Non-operating cash items included interest and dividends received ¥25.0B and interest paid -¥59.0B. Investing Cash Flow was -¥842.7B, with major items CapEx -¥846.2B (mainly tangible fixed assets), acquisition of investment securities -¥212.1B, sales of investment securities +¥110.9B, and proceeds from sale of subsidiary shares +¥209.6B. Free Cash Flow was -¥243.6B (prior -¥185.9B), indicating continued investment excess. Financing Cash Flow was +¥292.7B, including long-term borrowings raised ¥833.0B, corporate bonds issued ¥300.0B, long-term borrowings repaid -¥436.8B, net increase in short-term borrowings ¥36.0B, dividends paid -¥173.1B, and treasury stock purchases -¥0.1B, with financing covering investments and dividends. Cash and equivalents increased by ¥49.1B from ¥349.5B at the beginning of the period to ¥398.6B at the end.
Operating Income ¥526.6B vs Ordinary Income ¥540.3B, net +¥13.7B indicates a positive contribution from non-operating items. Of Non-operating income ¥92.8B, Dividend income received ¥17.3B and equity-method investment gains ¥12.2B are recurring in nature, but investment securities-related gains are market-sensitive and volatile. Non-operating expenses ¥79.2B are largely Interest expense ¥61.6B, a relatively fixed cost. Between Ordinary Income and Pre-tax Income, net special items were -¥28.6B (Special gains ¥143.8B - Special losses ¥172.4B), exerting downward pressure on final profit due to one-off items. Special gains included gains on sales of investment securities ¥77.0B, gains on sales of subsidiary shares ¥171.8B, and construction burden receipts ¥63.2B, indicating high deal-specificity. Special losses included impairment losses ¥36.4B, loss on retirement of fixed assets ¥19.4B, and construction burden compression ¥62.2B, reflecting non-recurring fixed-asset related items. Comprehensive Income ¥469.0B comprises Net Income ¥243.2B plus unrealized gains on securities ¥42.3B, retirement benefit adjustments ¥42.6B, and equity-method OCI ¥8.3B, showing significant contribution from valuation items. Earnings quality on an OCF basis is high, but cash conversion efficiency OCF/EBITDA at 0.62x declined due to working capital increases; timing factors such as inventory and construction burden payments are influencing this.
The full-year forecast for the fiscal year ending March 2027 is Revenue ¥4,613.0B (YoY +10.2%), Operating Income ¥540.0B (YoY +2.5%), Ordinary Income ¥479.0B (YoY -11.3%), Net Income attributable to owners of the parent ¥383.0B (YoY +57.5%), and forecast EPS ¥112.87. Operating Income progress rate is 97.5% (current period ¥526.6B / forecast ¥540.0B), roughly on track. The projected decline in Ordinary Income reflects normalization of non-operating items (e.g., higher interest costs and a run-off of equity-method gains). The large increase in forecast Net Income assumes normalization of the prior period’s adverse special items. Dividend forecast is annual ¥30.00 (including interim dividend paid ¥25.00), reduced from the current-year ¥55.00, with a forecast payout ratio of 26.6% (¥30 / EPS ¥112.87), reflecting an investment-prioritizing stance.
Current-year dividends were interim ¥25.00 and year-end ¥30.00, totaling ¥55.00 (same as prior year). Payout ratio was 50.8% (dividend ¥55 / EPS ¥108.25), a significant increase from 18.7% in the prior year due to lower Net Income. Total dividends amounted to approximately ¥173.8B, representing 29.0% of Operating Cash Flow ¥599.1B and substantially exceeding Free Cash Flow -¥243.6B. Share buybacks were ¥0.05B nominal. Next-year dividend forecast is annual ¥30.00, a planned cut of -45.5% vs. current year, indicating a shift to prioritizing investment funding and maintaining financial soundness. Forecast payout ratio 26.6% (based on EPS ¥112.87) is conservative. With cash and deposits ¥399.4B and OCF levels, dividend sustainability is maintained, but expanding OCF will be necessary to balance CapEx.
Risk of continued profitability decline in Lifestyle Services: The Lifestyle Services segment recorded Revenue -6.2% and Operating Income -15.5%, with margin 4.9% down from 5.5% prior year (-0.6pt). Slow recovery in demand for department stores, hotels, and restaurants and deteriorating profitability are pronounced. As this segment accounts for 37.0% of revenue, prolonged deterioration could significantly pressure consolidated profits.
Short-term liquidity and refinancing risk: Current ratio 54.8% and Quick ratio 54.1% indicate insufficient short-term coverage. Cash and deposits ¥399.4B cover only 20.7% of short-term borrowings ¥1,925.5B; short-term interest-bearing debt including bonds maturing within one year totals ¥2,125.5B, requiring rollover. There is risk of worsening refinancing terms in the event of rising interest rates or deteriorating market conditions.
Net Income volatility from special items: This fiscal year saw net special items worsen by -¥244.4B, substantially reducing Net Income. Deal-specific gains such as gains on sales of investment securities and subsidiary shares, and losses such as impairment losses and loss on retirement of fixed assets, vary by period and reduce predictability of final profit. Comprehensive Income also includes unrealized gains on securities ¥42.3B, exposing equity to OCI volatility due to market movements.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 12.6% | 6.3% (3.7%–8.5%) | +6.3pt |
| Net Margin | 5.8% | 2.7% (1.6%–4.7%) | +3.1pt |
Both Operating and Net Margins substantially exceed the industry median, indicating high profitability within the peer group.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -0.9% | 5.0% (-0.4%–9.4%) | -5.9pt |
Revenue growth lags the industry median, indicating inferior growth performance versus peers.
※ Source: Company aggregation
Continued improvement in core profitability: Operating margin 12.6% improved +0.4pt YoY, driven by SG&A reductions (-6.8%) and improved Transportation profitability (margin 16.5%, +1.1pt). ROA also improved to 4.0%, indicating stable growth in core earnings power. Next-year Operating Income forecast +2.5% assumes continuation of this improvement trend.
Net Income volatility from special items: Current-year Net Income fell -41.5%, largely due to net special items deteriorating -¥244.4B. Next-year Net Income forecast +57.5% assumes normalization of special items. For investment decisions, separate evaluation of stability at the Ordinary Income level and transitory special-item effects is necessary.
Cash management under heavy investment and shift in dividend policy: CapEx ¥846.2B (1.91x depreciation) led to Free Cash Flow -¥243.6B. Dividend forecast was reduced from ¥55 to ¥30 to prioritize investment funding. Given short-term liquidity (Current ratio 54.8%) and Debt/EBITDA ~7.0x, expanding OCF through investment returns and maintaining stable refinancing conditions are mid-term focal points.
This report was automatically generated by AI analyzing XBRL financial statement data and is a financial analysis document. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed financial statements. Investment decisions are your own responsibility; please consult professional advisors as needed.