| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥4224.1B | ¥4078.3B | +3.6% |
| Operating Income / Operating Profit | ¥895.9B | ¥869.4B | +3.0% |
| Ordinary Income | ¥792.3B | ¥770.1B | +2.9% |
| Net Income / Net Profit | ¥563.3B | ¥518.8B | +8.6% |
| ROE | 7.7% | 7.2% | - |
For the fiscal year ended March 2026, Revenue was ¥4,224.1B (YoY +¥145.8B, +3.6%), Operating Income was ¥895.9B (YoY +¥26.5B, +3.0%), Ordinary Income was ¥792.3B (YoY +¥22.2B, +2.9%), and Net Income was ¥563.3B (YoY +¥44.5B, +8.6%), achieving both top-line and bottom-line growth. The core Transportation Business accounted for 90.9% of revenue, and steady ridership alongside high-margin non-transport businesses such as station retailing and advertising drove consolidated performance. Operating margin remained high at 21.2%, a slight decrease of 0.1pt from 21.3% a year earlier. Extraordinary gains of ¥202.2B (valuation gain on donated railway facilities ¥101.5B, gain from revision of retirement benefit plan ¥64.1B, etc.) boosted Net Income, resulting in pronounced growth at the final stage. Operating Cash Flow was ample at ¥1,337.6B (YoY +8.3%), funding Investing CF of -¥874.0B and producing Free Cash Flow of ¥463.6B. Dividend and share buybacks totaling ¥361.9B were covered 1.3x, indicating a high sustainability of shareholder returns.
[Revenue] The Transportation Business recorded ¥3,841.1B (+3.8%), accounting for 90.9% of revenue, led by steady central Tokyo transport demand and stable fare income. Life & Business Services was ¥236.0B (+2.4%), with stable performance from station commercial facility operations (Echika) and advertising & information communications. Real Estate was ¥144.6B (+0.2%), a slight increase, with stable office building and hotel leasing including Shibuya Mark City. Segment revenue composition was Transportation 90.9%, Life & Business Services 5.6%, Real Estate 3.4%, reflecting a business structure highly concentrated in Transportation.
[Profitability] Operating Income was ¥895.9B (+3.0%), a slightly lower increase than revenue (+3.6%). SG&A of ¥552.9B (+3.7%) and higher operation-related costs weighed on results, leading to a slight decline in operating margin to 21.2% (-0.1pt). By segment, Transportation generated Operating Income of ¥761.9B (+2.7%, margin 19.8%), contributing roughly 85% of consolidated operating profit. Life & Business Services produced ¥85.3B (+3.2%, margin 36.1%), and Real Estate ¥44.0B (+4.7%, margin 30.4%), with high margins in non-transport businesses supporting consolidated profitability. Non-operating items included dividend income received of ¥22.9B, while interest expense of ¥120.6B remained roughly flat. Ordinary Income was ¥792.3B (+2.9%). Extraordinary items included Extraordinary Gains of ¥202.2B (valuation gain on donated railway facilities ¥101.5B, gain from revision of retirement benefit plan ¥64.1B, gain on sale of fixed assets ¥3.7B, etc.) and Extraordinary Losses of ¥138.2B (impairment loss on fixed assets ¥134.7B, valuation loss on investment securities ¥1.8B, etc.), resulting in net extraordinary income of +¥64.0B that lifted the final stage. After deducting income taxes of ¥266.2B (effective tax rate 31.1%), Net Income was ¥563.3B (+8.6%), finishing with both revenue and profit increases.
The Transportation Business recorded Revenue ¥3,841.1B (+3.8%), Operating Income ¥761.9B (+2.7%), and margin 19.8%, serving as the core segment that produces approximately 85% of consolidated operating profit. Operating a nine-line subway network, fare revenue remained resilient due to steady central Tokyo transport demand. Life & Business Services posted Revenue ¥236.0B (+2.4%), Operating Income ¥85.3B (+3.2%), and margin 36.1%, reflecting high profitability from station commercial facility operations (Echika) and advertising & information communications. Real Estate showed Revenue ¥144.6B (+0.2%), Operating Income ¥44.0B (+4.7%), and margin 30.4%, with stable income from office building and hotel leasing including Shibuya Mark City. High margins in non-transport businesses (over 30%) helped lift consolidated margins, confirming a portfolio effect combining the scale of Transportation and profitability of non-transport segments.
[Profitability] Operating margin was 21.2% (prior year 21.3%), a slight decrease of 0.1pt while remaining at a high level. Net profit margin improved to 13.3% (prior year estimated 12.7%), up 0.6pt, as extraordinary gains and dividend income contributed to improved profitability at the final stage. ROE was 7.7% (prior year 7.8%), slightly lower, reflecting growth in net assets (+2.5%) offsetting net income growth (+8.6%). [Cash Quality] Operating Cash Flow / Net Income was 2.37x (=¥1,337.6B/¥563.3B), indicating high cash quality, and the accrual ratio was -3.6%, a negative value that underscores strong cash generation. Despite recording depreciation of ¥739.2B, OCF of ¥1,337.6B was secured and cash conversion was favorable. [Investment Efficiency] Total asset turnover was 0.206x (=¥4,224.1B/¥20,471.7B), reflecting a capital-intensive business structure with a fixed asset ratio of 84.8%. EPS was ¥101.63 (prior year ¥92.51, +9.9%), BPS was ¥1,265.51 (prior year ¥1,233.27, +2.6%), indicating steady per-share accumulation. [Financial Soundness] Equity Ratio improved to 35.9% (prior year 35.3%), up 0.6pt, and with interest-bearing debt (bonds + borrowings total ¥8,580.9B) and EBITDA of ¥1,635.1B, Debt/EBITDA was 5.25x. Net interest-bearing debt (interest-bearing debt - cash & deposits - securities = 8,580.9 - 532.9 - 149.9 = ¥7,898.1B) yields a ratio of 4.83x, which is within acceptable range for a capital-intensive infrastructure business. Current ratio was 165.8% and cash and deposits were ¥532.9B, indicating good short-term debt resilience.
Operating Cash Flow was ¥1,337.6B (YoY +8.3%), which is after deducting changes in working capital and income taxes paid of ¥107.1B from operating CF subtotal of ¥1,563.7B. Adding back depreciation of ¥739.2B, Operating CF multiple versus Net Income was 2.37x, demonstrating high quality. Investing Cash Flow was -¥874.0B, centered on investments in tangible and intangible fixed assets of ¥917.7B (purchases - disposals), continuing safety and renewal investments. Free Cash Flow was ¥463.6B (=¥1,337.6B - ¥874.0B), covering dividends of ¥354.3B and share buybacks of ¥7.7B totaling ¥361.9B at 1.3x, indicating high sustainability of shareholder returns. Financing Cash Flow was -¥518.5B, primarily due to repayment of long-term borrowings of -¥403.1B, bond redemptions of -¥100.0B, and dividends of -¥354.3B. Cash and cash equivalents at year-end were ¥682.8B, down ¥54.8B YoY, but given robust Operating CF and ample liquidity (current assets ¥3,119.5B), there is no concern over funding.
Core recurring earnings are centered on fare revenue from the Transportation Business and non-transport sources such as station retail, advertising, and real estate leasing, producing stable Operating Income of ¥895.9B. Non-operating income was ¥20.2B (including dividend income received ¥22.9B), less than 0.5% of Revenue, indicating limited reliance on non-core activities. Extraordinary items were significant relative to Net Income: Extraordinary Gains ¥202.2B (valuation gain on donated railway facilities ¥101.5B, gain from revision of retirement benefit plan ¥64.1B, etc.) and Extraordinary Losses ¥138.2B (impairment loss on fixed assets ¥134.7B, etc.), with net +¥64.0B lifting Net Income. Valuation gains on donated railway facilities and plan revision gains are highly one-off in nature, and Net Income margin normalization is expected next fiscal year. Operating CF / Net Income = 2.37x and accrual ratio -3.6% indicate high cash-based earnings quality, and the divergence between Ordinary Income and Net Income can be explained by extraordinary items and tax effects. Comprehensive Income was ¥543.4B, below Net Income of ¥563.3B, with a negative contribution to Other Comprehensive Income of -¥47.0B related to retirement benefit adjustments.
The company’s plan for the fiscal year ending March 2027 projects Revenue ¥4,372.0B (YoY +3.5%), Operating Income ¥814.0B (YoY -9.1%), Ordinary Income ¥690.0B (YoY -12.9%), Net Income ¥500.0B, EPS ¥86.10, and dividend ¥22.00. While topline growth is assumed to be firm, the guidance is conservative on operating and ordinary profit levels, incorporating declines. Operating margin is projected at 18.6% (down -2.6pt from 21.2% this period), and Ordinary Income margin at 15.8% (down -3.0pt from 18.8% this period), implying margin compression. This likely reflects continued safety and maintenance investments, accelerating depreciation, and potential upside in energy and labor costs. Net Income decline reflects the expiration of one-off extraordinary items, but the dividend of ¥22 is planned to be maintained, with an implied payout ratio of approximately 26%, demonstrating a continued shareholder return stance. Progress will be evaluated using first-half trends in Revenue and Operating Income and monthly ridership and transport revenue data.
Annual dividend is ¥42 (interim ¥21, year-end ¥21), with a payout ratio of 43.2% (=¥24.3B/¥563.3B), within a healthy range. Against Free Cash Flow of ¥463.6B, dividends of ¥354.3B represent a FCF coverage of 1.3x; total returns including share buybacks of ¥7.7B (total ¥361.9B) are also covered at 1.3x, indicating high sustainability of returns. Net assets are ¥7,347.5B, cash and deposits ¥532.9B, and Operating CF ¥1,337.6B, providing ample financial headroom. Although next-year guidance assumes lower profits, the planned dividend of ¥22 maintains a stable dividend policy aimed at smoothing profits. The payout ratio based on guided Net Income of ¥500.0B is about 26%, conservative and intended to preserve funds for future capital investment and buffers while continuing shareholder returns.
Business concentration risk: The Transportation Business accounts for 90.9% of revenue and about 85% of Operating Income, resulting in high concentration and sensitivity to fluctuations in central Tokyo transport demand (permanent shift to remote work, changes in tourism and event demand). Quantitatively, Transportation revenue only grew +3.8% YoY, and growth pace depends on the pace of passenger recovery. While the margin is stable at 19.8%, a high fixed-cost ratio means downside leverage when demand falls.
Rising safety and renewal costs: Continued renewal of aging equipment and safety investments are contributing to an upward trend in depreciation of ¥739.2B (prior year ¥720.9B, +2.5%). Investment in tangible fixed assets was ¥917.7B (prior year ¥1,159.8B), and prolonged equipment renewal cycles and strengthened disaster countermeasures will increase cash outflows. The company’s guidance showing Operating Income -9.1% likely reflects increases in depreciation and maintenance costs, posing a risk of compressed operating margins.
Interest rate rise risk and financial burden: Interest-bearing debt is ¥8,580.9B (bonds ¥5,770.0B, long-term borrowings ¥2,587.1B, etc.) with interest expense of ¥120.6B; in a rising rate environment, financial costs could increase and pressure Ordinary Income. Debt/EBITDA is 5.25x, standard for capital-intensive infrastructure, but an estimated 1% rise in rates would increase interest expense by approximately ¥86B, equivalent to about 11% of Ordinary Income. Retirement benefit liability of ¥659.5B also poses risk to comprehensive income and equity through actuarial variance.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 21.2% | 6.3% (3.7%–8.5%) | +14.9pt |
| Net Profit Margin | 13.3% | 2.7% (1.6%–4.7%) | +10.6pt |
Within the Transport industry, both operating and net profit margins substantially exceed medians, supported by the entry barriers and scale advantages of a central-city subway operation.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 3.6% | 5.0% (-0.4%–9.4%) | -1.4pt |
Revenue growth trails the industry median of 5.0%, reflecting a stable growth pace in a mature central-city transport market.
※ Source: Company aggregation
High margins and strong cash generation: Operating margin of 21.2% exceeds the transport industry median of 6.3% by +14.9pt, supported by the monopolistic and scale advantages of a central-city subway. Operating CF / Net Income is 2.37x and accrual ratio is -3.6%, indicating high cash quality. Free Cash Flow of ¥463.6B covers dividends and share buybacks of ¥361.9B at 1.3x, demonstrating sustainable returns. Debt/EBITDA is 5.25x, Equity Ratio 35.9%, and Current Ratio 165.8%, showing high financial resilience and capacity to maintain stable dividends.
Conservatism in next-year guidance and upside cost risk: For FY2027 the company plans Revenue +3.5% but Operating Income -9.1% and Ordinary Income -12.9%, reflecting conservative assumptions that incorporate ongoing safety and maintenance investments, rising depreciation, and potential energy and labor cost pressures. Operating margin is forecast to decline to 18.6% (-2.6pt), which can be interpreted as a buffer given historically high margins. Monthly ridership and transport revenue, and the CapEx/depreciation trend, will be leading indicators of achievement. The planned dividend of ¥22 is maintained, confirming a return policy focused on profit smoothing.
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 responsibility; please consult a professional advisor as needed.