Keio Corporation FY2026 FY Earnings Report

クイックビュー

Executive Summary

For the fiscal year ended March 2026, Revenue was ¥4,969B (YoY +¥440B +9.7%), Operating Income was ¥523B (YoY -¥18B -3.4%), Ordinary Income was ¥512B (YoY -¥21B -3.9%), and Net Income attributable to owners of the parent was ¥302B (YoY -¥21B -6.4%). Revenue increased supported by a large rise in the Real Estate Business (+34.3%) and strong orders in the Construction & Facilities Business (+14.6%), but Operating Margin contracted to 10.5% (prior year 11.9%, -1.4pt) due to higher operating expenses in the Transportation Business and margin deterioration in the Hotel Business, resulting in lower profits. The decline in Net Income was partly mitigated by Special Gains of ¥159B (including ¥103B gain on sale of investment securities), but the period revealed a tangible deterioration in core business profitability.

業績変動要因

[Revenue] Revenue was ¥4,969B (YoY +9.7%), a solid increase. By segment, Real Estate recorded ¥1,148B (+34.3%) driving the Company, supported by progress in delivery of sold properties and expansion of rental income. Construction & Facilities recorded ¥538B (+14.6%) with double-digit growth as orders from both inside and outside the group remained strong. Transportation was ¥1,323B (+2.4%) showing marginal growth, and Lifestyle Services was ¥1,364B (+0.9%) remaining roughly flat. Hotels recorded ¥597B (+6.3%) maintaining revenue growth amid inbound demand recovery. Overall, growth in Real Estate and Construction & Facilities supported revenue expansion.

[Profitability] Operating Income was ¥523B (YoY -3.4%). The main factor was a large decline in Transportation segment Operating Income to ¥133B (-15.5%), impacted by higher operating costs and a change in revenue mix. Hotels also saw Operating Income decline to ¥101B (-7.0%), with margins falling to 17.0% (prior year 19.3%, -2.3pt) due to one-off effects of pricing and increased expenses. Real Estate posted Operating Income of ¥172B (-2.6%), largely flat, with margins down to 15.0% (prior year 19.3%, -4.3pt) but remaining high in absolute terms. Construction & Facilities achieved Operating Income of ¥74B (+32.3%), a significant increase; margin improved to 13.8% (prior year 7.3%, +6.5pt) due to higher orders and efficiency gains. Lifestyle Services also increased Operating Income to ¥58B (+9.7%). Company-wide Operating Margin contracted to 10.5% (prior year 11.9%, -1.4pt), with margin declines in Transportation and Hotels weighing on overall profitability. Ordinary Income was ¥512B (-3.9%); Non-operating expenses ¥54B (including interest expenses ¥46B) exceeded Non-operating income ¥42B (dividend income ¥22B), creating a negative contribution. Extraordinary items produced net Special Gains of ¥72B — Special Gains ¥159B (including gain on sale of investment securities ¥103B and loss on disposal of fixed assets etc. ¥16B) and Special Losses ¥87B (impairment losses ¥14B, loss on disposal of fixed assets ¥16B, asset retirement obligations related ¥39B) — which boosted pre-tax income. After recording corporate taxes of ¥154B, Net Income attributable to owners of the parent was ¥302B (-6.4%). The smaller decline in bottom-line relative to operating results was largely due to one-off sale gains. In conclusion, the results reflect higher revenue but lower profit.

セグメント別分析

Transportation: Revenue ¥1,323B (+2.4%), Operating Income ¥133B (-15.5%), Margin 10.0% (prior year 12.1%, -2.1pt). Fare revenue saw slight growth, but higher personnel, energy and maintenance costs eroded margins.

Real Estate: Revenue ¥1,148B (+34.3%), Operating Income ¥172B (-2.6%), Margin 15.0% (prior year 19.3%, -4.3pt). Increased deliveries of sold properties drove revenue, but higher cost of sales and SG&A reduced margin; still the largest absolute profit contributor.

Hotels: Revenue ¥597B (+6.3%), Operating Income ¥101B (-7.0%), Margin 17.0% (prior year 19.3%, -2.3pt). Inbound recovery supported revenue, but higher operating expenses and diminished pricing effects reduced margins.

Construction & Facilities: Revenue ¥538B (+14.6%), Operating Income ¥74B (+32.3%), Margin 13.8% (prior year 7.3%, +6.5pt). Strong orders from within and outside the group led to revenue growth; efficiency improvements and better project mix materially improved margins, achieving both growth and profitability.

Lifestyle Services: Revenue ¥1,364B (+0.9%), Operating Income ¥58B (+9.7%), Margin 4.3% (prior year 3.7%, +0.6pt). Revenue was roughly flat, but stronger cost control delivered profit and margin improvement.

主要財務指標

[Profitability] ROE was 6.8% (Net Income attributable to owners of the parent ¥302B ÷ average shareholders’ equity during the period approx. ¥4,442B), Operating Margin was 10.5% (prior year 11.9%, -1.4pt) contracting, and Net Margin declined to 6.1% (prior year 7.1%, -1.0pt). Return on Assets (ROA) was 4.4% (prior year 4.8%, -0.4pt), deteriorating as operating profitability weakened and pressured company returns. [Cash Quality] Operating Cash Flow (OCF) / Net Income ratio was 0.86x (OCF ¥371B ÷ Net Income attributable to owners of the parent ¥302B), at a borderline level; inventory increases (Inventories +¥254B) constrained working capital and weakened cash conversion. OCF/EBITDA ratio was 0.43x (OCF ¥371B ÷ EBITDA approx. ¥867B; EBITDA calculated as Operating Income ¥523B + Depreciation ¥344B) indicating low cash generation versus EBITDA, reflecting working capital expansion. Free Cash Flow (FCF) was ¥14B (OCF ¥371B - Investing CF ¥356B), minimal, with limited conversion to available cash due to capex and working capital tie-up. [Investment Efficiency] Total Asset Turnover was 0.41x (Revenue ¥4,969B ÷ average total assets approx. ¥12,113B), stable. Equity Ratio was 37.0% (prior year 36.9%, +0.1pt), maintaining a healthy level. [Financial Soundness] Current Ratio was 95.9% (Current Assets ¥3,166B ÷ Current Liabilities ¥3,301B), below 100% indicating short-term liquidity stress. Cash and deposits of ¥478B cover short-term interest-bearing debt (short-term borrowings ¥1,109B + CP ¥100B + bonds maturing within 1 year ¥151B) by 0.36x, making refinancing and funding capacity critical. Interest-bearing debt was ¥2,841B (short-term borrowings ¥1,109B + long-term borrowings ¥1,732B + total bonds ¥1,901B - CP double-count adjustments etc.), resulting in a Debt/EBITDA ratio of 3.27x (interest-bearing debt ¥2,841B ÷ EBITDA approx. ¥867B), somewhat elevated. Interest coverage was 11.31x (EBITDA approx. ¥867B ÷ interest expenses ¥46B), indicating solid ability to service interest and a level unlikely to impede rating maintenance. Debt/Equity ratio was 0.64x (interest-bearing debt ¥2,841B ÷ net assets ¥4,442B), within an appropriate range.

キャッシュフロー分析

OCF was ¥371B (YoY +29.6%) increasing, but conversion against profit before tax (profit before tax ¥584B) was only 0.64x, primarily due to deterioration in working capital. OCF subtotal (before working capital changes) was ¥556B, and major deductions included an increase in inventories of ¥218B (cash outflow from inventory buildup) and corporate tax payments of ¥158B. Inventories were ¥642B including work-in-process, up +65% YoY, with accumulation of sold properties and construction work-in-process strongly tying up cash. Investing CF was -¥356B, with acquisitions of tangible and intangible fixed assets of ¥676B (Capex/Depreciation ratio about 1.96x, in a growth investment phase) partially offset by proceeds from sale of fixed assets ¥175B and construction contribution receipts ¥98B. FCF was ¥14B (OCF ¥371B - Investing CF ¥356B), minimal, and well below shareholder distributions of dividends ¥124B and share buybacks ¥100B (total return approx. ¥224B), meaning internal funds alone could not cover shareholder returns. Financing CF was -¥19B: while long-term borrowings raised ¥318B and bond issuance ¥199B secured funds, the Company made net increases in short-term borrowings of ¥32B, repaid long-term borrowings of ¥278B, redeemed bonds ¥151B, repurchased treasury stock ¥100B, and paid dividends ¥124B. Cash at end of period was ¥477B (prior year ¥482B, -¥0.5B), largely unchanged. Overall cash flow shows working capital expansion (notably inventories) materially hampering cash generation, with total returns exceeding FCF; short-term priorities are normalizing inventory turnover and building liquidity buffers.

収益の質

Earnings quality is moderate: Operating Income of ¥523B, a recurring source of profit, forms the core, but this period saw Special Gains of ¥159B (including ¥103B gain on sale of investment securities) boost pre-tax income to ¥584B, making roughly 26% of the final Net Income ¥302B attributable to one-off factors. Special Losses of ¥87B (impairment losses ¥14B, loss on disposal of fixed assets ¥16B, asset retirement obligations related ¥39B) were also recorded, with a net Special Gains amount of ¥72B offsetting the operating-stage decline. Non-operating income ¥42B (dividend income ¥22B, interest income ¥1B, etc.) is a stable source, but Non-operating expenses ¥54B (interest expenses ¥46B) exceeded it, producing a net negative contribution of ¥12B at the non-operating stage. The gap between Ordinary Income and Net Income is mainly due to taxes (corporate taxes ¥154B, effective tax rate approx. 26%); non-controlling interests attributable ¥1B is immaterial. It is positive that OCF ¥371B exceeds Net Income ¥302B, but OCF/EBITDA ratio of 0.43x shows low cash conversion efficiency, and accruals are taking time to convert to cash. Given the sizable one-off contribution to Net Income this period, future earnings quality will depend on improvement in core margins and normalization of working capital.

業績予想・ガイダンス

The company’s plan for the full year projects Revenue ¥5,040B (vs. actual +1.4%), Operating Income ¥510B (vs. actual -2.5%), Ordinary Income ¥478B (vs. actual -6.6%), and Net Income attributable to owners of the parent ¥218B (vs. actual -27.8%). The Operating Income guidance is slightly conservative against actual ¥523B, reflecting cautious assumptions for cost increases in Transportation and Hotels and timing variability in Real Estate sales. The large drop in forecasted Net Income reflects the one-off nature of this year’s Special Gains ¥159B and aligns with the Ordinary Income decline (-6.6%). EPS forecast is ¥74.28 (reflecting shares outstanding after buybacks), and dividend forecast is ¥11 (post-stock-split basis; effectively annual equivalent ¥110 split into five), indicating continuation of a stable dividend policy. Key to achieving future performance will be Transportation cost control, Hotel profitability recovery, normalization of Real Estate inventory turnover, and maintaining high margins in Construction & Facilities.

株主還元

Dividends are annual ¥110 (interim ¥55 + year-end ¥55), totaling about ¥120B; the payout ratio versus Net Income attributable to owners of the parent ¥302B is 28.3%, a reasonable level. Share buybacks amounted to ¥100B (treasury stock acquisitions in CF), making total shareholder returns approximately ¥220B. However, FCF of ¥14B is far below total returns (approximately 15.7x), meaning internal funds could not cover shareholder distributions and the Company supplemented with interest-bearing debt and asset disposals (gain on sale of investment securities ¥103B). The dividend policy appears to maintain stable payouts; a payout ratio in the high-20% range is sustainable. Meanwhile, Total Return Ratio (dividends + buybacks) is about 49% (total return ¥220B ÷ consolidated Net Income ¥449B; evaluated on consolidated profit base rather than Net Income attributable to owners of the parent ¥302B), which is high, and continuation of current total return levels requires careful consideration unless FCF improves. Medium term, normalization of working capital and expansion of OCF to secure internal funding for dividends will be a prerequisite for sustainable shareholder returns. Note: a 5-for-1 stock split for ordinary shares was implemented effective April 1, 2026; the FY2027 dividend forecast of ¥11 is on a post-split basis (effectively equivalent to ¥55 pre-split).

リスク要因

1. Continued margin deterioration risk in Transportation and Hotel businesses: Transportation Operating Margin is 10.0% (prior year 12.1%, -2.1pt) and Hotel Margin is 17.0% (prior year 19.3%, -2.3pt). Rising personnel and energy costs and delayed price pass-through are pressuring profitability. This period’s decline is not purely transitory but reflects structural cost pressures; failure to revise fares/pricing or achieve operational efficiencies could crystallize medium-term profitability deterioration. Transportation Operating Income declined to ¥133B (-15.5%), and deterioration in this core segment (accounting for 25% of company Operating Income) will weigh on ROE.

2. Sharp inventory increase and cash tie-up risk: Inventories rose to ¥643B (+65% YoY), with accumulation of finished goods and work-in-process (real estate development projects and construction) significantly pressuring working capital. Against an OCF subtotal of ¥556B, cash outflow from inventory increases of ¥218B materially reduced cash conversion efficiency. Inventory days are about 47 days (Inventories ¥643B ÷ Revenue ¥4,969B × 365 days), mildly extended; if sales delays or valuation losses materialize, both liquidity and earnings could be adversely affected. Continued timing variability in real estate sales or prolonged construction projects would delay normalization of working capital and increase short-term liquidity pressure.

3. Short-term liquidity tightening risk: Current Ratio is 95.9%; Cash and deposits ¥478B versus short-term interest-bearing debt (short-term borrowings ¥1,109B + CP ¥100B + bonds maturing within 1 year ¥151B) totaling ¥1,360B, with a cash coverage ratio of 0.36x, a low level. FCF of ¥14B versus total shareholder returns of approx. ¥220B is 15.7x, far exceeding internal capacity and creating a structure where capital policy cannot be sustained solely from internal funds. If refinancing and extension of interest-bearing debt are not smoothly executed, short-term funding stress could emerge, raising refinancing costs and potentially affecting ratings. Under a somewhat elevated leverage (Debt/EBITDA 3.27x), continued working capital expansion would heighten liquidity risk.

業種ベンチマーク（参考・当社調べ）

収益性・リターン

Both Operating Margin and Net Margin substantially exceed the industry median, with high profitability in Real Estate and Hotel businesses forming the source of competitive advantage.

成長性・資本効率

Revenue growth also outperformed the industry median, driven by high growth in Real Estate and Construction & Facilities.

※Source: Company compilation

決算上の注目ポイント

1. The near-stable bottom line this period was supported by Special Gains (gain on sale of investment securities ¥103B), but operating-stage results showed revenue up with profits down, indicating deteriorated core profitability. Operating Margin contracted to 10.5% (prior year 11.9%, -1.4pt), with decreases in Transportation (-15.5%) and Hotels (-7.0%) pressuring company margins. At the same time, Real Estate drove revenue with +34.3% growth and remained the largest profit contributor with Operating Income ¥172B, and Construction & Facilities improved significantly with Operating Income +32.3%, widening profit disparity across segments. Going forward, cost control in Transportation and Hotels, price optimization, and disposal of high-margin Real Estate projects will be key to earnings recovery.

2. Low cash generation and tight short-term liquidity have emerged as structural issues. OCF/EBITDA ratio 0.43x and FCF ¥14B are minimal, with inventories +¥254B (+65%) greatly pressuring working capital. Current Ratio 95.9% and Cash/short-term interest-bearing debt 0.36x indicate short-term liquidity stress, and total returns of approx. ¥220B far exceed FCF ¥14B, limiting sustainability from internal funds. With interest-bearing debt ¥2,841B and Debt/EBITDA 3.27x, normalization of working capital (particularly inventory turnover) and OCF expansion are immediate priorities. Interest coverage of 11.31x indicates solid interest servicing ability, but smooth refinancing/extension and building liquidity buffers are prerequisites to maintain financial stability.

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This report is an AI-generated financial analysis document produced by analyzing 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 based on public financial statements. Investment decisions are your own responsibility; please consult a professional advisor as necessary.