| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥5132.9B | ¥9011.3B | -43.0% |
| Operating Income / Operating Profit | ¥455.2B | ¥2927.3B | -84.4% |
| Ordinary Income | ¥458.2B | ¥2876.4B | -84.1% |
| Net Income | ¥1061.9B | ¥199.1B | +433.5% |
| ROE | 18.5% | 3.5% | - |
For the fiscal year ended March 2026, Seibu Holdings Inc. reported Revenue of ¥5132.9B (YoY -¥3,878.4B, -43.0%), Operating Income of ¥455.2B (YoY -¥2,472.1B, -84.4%), Ordinary Income of ¥458.2B (YoY -¥2,418.2B, -84.1%), and Net Income attributable to owners of parent of ¥1,061.9B (YoY +¥862.8B, +433.5%). The large decline in Revenue and Operating Income was primarily driven by a drop in the Real Estate Business from the pullback of large transactions and the absence of last year’s negative goodwill gain of ¥541.0B. However, special gains—gain on sale of fixed assets ¥55.7B and negative goodwill gain ¥541.0B—substantially boosted Net Income. Operating margin contracted to 8.9% from 32.5% a year earlier (down 23.6ppt), while Net Income margin improved to 20.7% from 2.2% (up 18.5ppt). Thus, operating performance deteriorated significantly, but special items led to a large increase in final profit.
[Revenue] Revenue was ¥5132.9B (YoY -43.0%), a steep decline. The Real Estate Business fell sharply to ¥666.2B (-85.8%), the primary factor, reflecting the pullback from large property sales and asset disposals in the prior year. Meanwhile, the Hotel & Leisure Business recorded ¥2,466.6B (+2.8%) and the Urban Transportation & Railway-side Business ¥1,504.6B (+2.7%), both showing modest increases and continued structural recovery. Other businesses were steady at ¥495.4B (+7.4%). Segmental revenue composition was: Hotel & Leisure 48.1%, Urban Transportation & Railway-side 29.3%, Real Estate 13.0%, Other 9.7%; the Real Estate share fell substantially from 51.9% a year earlier.
[Profitability] Operating Income was ¥455.2B (-84.4%) with an operating margin of 8.9% (prior year 32.5%), a significant deterioration. SG&A expenses were ¥492.2B (SG&A ratio 9.6%), compressed from ¥515.7B in the prior year, but the magnitude of revenue decline reversed operating leverage. By segment, Hotel & Leisure improved profitability with Operating Income of ¥226.6B (+21.6%), whereas Real Estate plunged to ¥124.0B (-94.8%, margin 18.6%) from ¥237.6B a year earlier. Urban Transportation & Railway-side posted ¥95.5B (-15.6%, margin 6.3%), a decline as cost absorption lagged. Non-operating items included dividend income ¥16.6B and foreign exchange gains ¥35.1B, contributing to non-operating income of ¥85.1B. Interest expenses of ¥68.7B weighed on non-operating expenses of ¥82.1B, resulting in Ordinary Income of ¥458.2B (-84.1%). Extraordinary items comprised extraordinary gains of ¥681.0B (gain on sale of investment securities ¥8.9B, gain on sale of fixed assets ¥55.7B, negative goodwill gain ¥541.0B) and extraordinary losses of ¥685.5B (impairment losses ¥53.9B, loss on retirement of fixed assets ¥23.6B, write-down of construction cooperation receipts ¥58.4B, etc.), which nearly offset each other. Profit before income taxes was ¥453.8B; after deducting income taxes of ¥62.5B, Net Income attributable to owners of parent was ¥1,061.9B (+433.5%), driven by the effect of special items. In conclusion, revenue and operating profit declined due to the pullback in large Real Estate transactions, but final profit increased significantly because of special gains.
The Real Estate Business reported Revenue ¥666.2B (-85.8%) and Operating Income ¥124.0B (-94.8%) with a margin of 18.6%. Both revenue and profit fell sharply due to the pullback from last year’s large transactions and asset disposals, substantially reducing the segment’s contribution to consolidated profit. The Hotel & Leisure Business posted Revenue ¥2,466.6B (+2.8%) and Operating Income ¥226.6B (+21.6%) with a margin of 9.2%. Improved room occupancy and average rates drove about a 0.8ppt improvement in margin year-on-year, making this the largest contributor to consolidated Operating Income (about 50%). The Urban Transportation & Railway-side Business recorded Revenue ¥1,504.6B (+2.7%) and Operating Income ¥95.5B (-15.6%) with a margin of 6.3%. Despite slight revenue growth, rising personnel and energy costs delayed cost absorption, causing lower profits. Other businesses (including Izu Hakone, Omi, sports, etc.) had Revenue ¥495.4B (+7.4%) and Operating Income ¥16.5B (-20.2%) with a margin of 3.3%; revenue increased but profitability declined and margins remained low.
[Profitability] Operating margin of 8.9% (prior year 32.5%) contracted significantly due to the Real Estate transaction pullback and relatively high SG&A. Net Income margin improved to 20.7% (prior year 2.2%) due to gain on sale of fixed assets and recognition of negative goodwill, but operating profitability materially weakened. ROE 18.5% (prior year 52.2%) declined due to the year-on-year large swing in Net Income (one-off gains), yet remained in double digits supported by special items. DuPont decomposition shows Net Income margin 20.7%, total asset turnover 0.30x, financial leverage 3.01x; Net Income margin is high due to special gains, but asset turnover fell from 0.49x last year, indicating deteriorated efficiency. [Cash Quality] Operating Cash Flow (OCF) was ¥15.3B, extremely low relative to Net Income ¥1,061.9B, giving OCF/Net Income 0.01x and indicating very weak cash realization of earnings. From operating cash subtotal ¥964.1B, corporate tax payments ¥904.2B and decrease in advance receipts (recognition of construction cooperation receipts -¥583.7B) had large impacts, leaving limited real cash-generation capacity. OCF/EBITDA 0.02x (EBITDA ¥1,016.8B) is also low, presenting near-term cash-quality issues. [Investment Efficiency] Capital expenditures were ¥1,542.6B, 2.7x depreciation ¥561.6B, indicating continued aggressive investment. Free Cash Flow (FCF) was -¥1,442.3B, a large negative, highlighting an investment-led phase. Investment securities increased by ¥357.7B to ¥1,224.4B (prior year ¥866.7B), showing strengthened use of surplus funds. [Financial Soundness] Equity Ratio 33.2% (prior year 30.6%) improved slightly, but interest-bearing debt of ¥5,877.9B (short-term borrowings ¥1,065.7B, long-term borrowings ¥4,812.2B) yields D/E 2.01x and Debt/Capital 50.6%, indicating continued high leverage. Debt/EBITDA 5.78x suggests considerable room to reduce leverage; Interest Coverage 6.62x (EBIT ¥455.2B / interest paid ¥68.7B) maintains some interest-payment resilience. Current ratio 42.3% and quick ratio 42.0% indicate weak short-term liquidity, with cash and deposits ¥661.7B versus short-term borrowings ¥1,065.7B and cash/short-term liabilities 0.18x, revealing maturity mismatch. Working capital was -¥2,094.0B, making short-term cash management a critical issue.
Operating Cash Flow was ¥15.3B (prior year ¥4,743.8B), a YoY decline of -99.7%. From operating cash subtotal of ¥964.1B, corporate tax payments ¥904.2B heavily constrained cash, and the accounting deduction for receipt of construction cooperation funds of ¥583.7B also caused cash outflow. Last year, a large decrease in inventories (+¥1,390.4B) boosted Operating Cash Flow; this year inventories increased (-¥39.4B), so working capital changes turned into a negative contribution. Investing Cash Flow was -¥1,457.6B (prior year -¥936.9B), primarily due to acquisition of tangible and intangible fixed assets of ¥1,542.6B. Receipt of construction cooperation funds ¥167.0B partially offset this, but aggressive capex expanded investing cash outflow. FCF (Operating CF + Investing CF) was -¥1,442.3B, remaining substantially negative. Financing Cash Flow was -¥767.3B (prior year -¥1,363.9B): procurement included long-term borrowings ¥231.2B and net increase in short-term borrowings ¥114.4B, while outflows included long-term borrowings repayments ¥493.8B, share buybacks ¥489.3B, and dividend payments ¥127.7B. Consequently, cash and cash equivalents decreased by ¥2,208.4B from opening ¥2,769.5B to closing ¥561.1B, substantially reducing the cash position. Cash-to-sales ratio fell to 12.9% (prior year 26.1%), reaching a level that necessitates caution on short-term liquidity.
Of Net Income attributable to owners of parent ¥1,061.9B, extraordinary gains ¥681.0B and extraordinary losses ¥685.5B were sizeable, yielding a net extraordinary item of -¥4.5B (effectively neutral). However, recognition of negative goodwill ¥541.0B and gain on sale of fixed assets ¥55.7B boosted Net Income, while the write-down of construction cooperation receipts ¥583.7B was deducted. Net Income is 2.3x Ordinary Income ¥458.2B, indicating a large impact from extraordinary items and tax effects. Non-operating income ¥85.1B included foreign exchange gains ¥35.1B, showing some temporary factors tied to FX movements. Equity-method gains (losses) were -¥0.1B and immaterial. From an accrual perspective, Operating Cash Flow ¥15.3B versus Net Income ¥1,061.9B gives OCF/Net Income 0.01x, indicating that most Net Income is composed of non-cash items (negative goodwill, asset sale gains, etc.). Comprehensive income was ¥668.9B, and the ¥393.0B gap versus Net Income ¥1,061.9B arises from changes in other comprehensive income (valuation difference on securities +¥202.4B, actuarial gains related to retirement benefits +¥100.2B, foreign currency translation adjustments -¥25.0B, etc.). Quality of earnings is highly dependent on extraordinary and non-cash items; restoring sustainable ordinary profit generation is the key focus going forward.
Company plan for the fiscal year ending March 2027: Revenue ¥5,590.0B, Operating Income ¥530.0B (YoY +¥74.8B, +16.4%), Ordinary Income ¥470.0B (YoY +¥11.8B, +2.6%), EPS ¥106.22, Dividend ¥21. Compared with this period, the plan assumes Revenue +8.9% and Operating Income +16.4%, premised on normalization of the Real Estate Business and continued strength in Hotel & Leisure. The Operating Income progress ratio is 455.2/530.0 = 85.9%, indicating this period’s operating result is close to plan, and normalization of operating profit is the focal point for next year. The modest Ordinary Income growth +2.6%, well below Operating Income +16.4%, suggests a conservative view that incorporates higher non-operating expenses (interest expense, etc.). Dividend ¥21 indicates a dividend cut from ¥42 this period (interim ¥20, year-end ¥22), signaling a priority on stabilizing returns under DOE criteria. Because one-off extraordinary gains (negative goodwill ¥541.0B) drop out, Net Income is forecasted to decline, making recovery of operating profitability the key evaluation metric.
Annual dividend was ¥42 (interim ¥20, year-end ¥22), with total dividends paid ¥127.7B. Dividend payout ratio to Net Income attributable to owners of parent ¥1,061.9B was 12.0%, low because Net Income was inflated by special items; using Ordinary Income ¥458.2B as the base gives a payout ratio of 27.9%. Share buybacks totaled ¥489.3B; combined dividend and buybacks amounted to total return ¥617.0B, with a Total Return Ratio of 58.1% (Net Income basis), indicating active shareholder returns via dividends and buybacks. However, FCF was -¥1,442.3B, substantially negative, so dividends and buybacks were indirectly financed by borrowings and asset management gains rather than operating cash. The company emphasizes DOE criteria, and the forecast dividend ¥21 next year is a reduction from ¥42 this period, reflecting a stance that prioritizes balancing normalized Net Income with investment and financial soundness. Maintaining dividends depends on normalization of Operating Cash Flow and reduction in Debt/EBITDA; a flexible return policy tied to investment phase progress is expected.
Liquidity risk: Current ratio 42.3% and quick ratio 42.0% are well below 1.0x. Cash and deposits ¥661.7B versus short-term borrowings ¥1,065.7B and cash/short-term liabilities 0.18x reveal a maturity mismatch. The large gap between Operating Cash Flow ¥15.3B and Net Income ¥1,061.9B highlights short-term cash management as the top priority. Refinance risk and management of working capital -¥2,094.0B require vigilance.
High leverage risk: Interest-bearing debt ¥5,877.9B, D/E 2.01x, Debt/Capital 50.6%, Debt/EBITDA 5.78x indicate high leverage. Interest expenses ¥68.7B mean Interest Coverage 6.62x, providing some resilience, but rising interest rates could increase interest burden and pressure earnings. Reducing Debt/EBITDA below 4x is a mid-term target for improved financial health.
Business-segment earnings volatility risk: The Real Estate Business is project-dependent and prone to large swings in revenue and profit. This period saw Revenue -85.8% and Operating Income -94.8% from a pullback in large projects, and future earnings may vary significantly depending on project timing. Hotel & Leisure depends on occupancy and ADR, sensitive to economic cycles, inbound tourism, and FX, while Urban Transportation & Railway-side faces profit risk from delayed cost absorption. Stabilizing segment profitability and strengthening cost control are key challenges.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.9% | 6.3% (3.7%–8.5%) | +2.6pt |
| Net Income Margin | 20.7% | 2.7% (1.6%–4.7%) | +18.0pt |
Operating margin exceeds the industry median 6.3% by 2.6ppt, indicating relatively high operating profitability, but Net Income margin 20.7% is largely a temporary level driven by extraordinary items and significantly above the industry median 2.7%.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -43.0% | 5.0% (-0.4%–9.4%) | -48.0pt |
Revenue growth -43.0% lags the industry median 5.0% by 48.0ppt, reflecting large YoY decline driven by pullback in Real Estate large transactions.
※ Source: Company aggregation
Profitability improvement and structural recovery in the Hotel & Leisure Business are underpinning consolidated profit, with Operating Income ¥226.6B (+21.6%) and margin improving to 9.2% (prior year 7.6%). As long as inbound demand and domestic occupancy remain firm, this segment is expected to continue functioning as a core profit contributor.
The Real Estate Business saw Revenue ¥666.2B (-85.8%) due to the pullback from large projects and asset sales last year, but the company plans for normalization next year. The project-dependent revenue structure carries volatility risk; monitoring project progress and sales plans is important for near-term stability.
Normalization of short-term liquidity and cash generation is the top watch point. Operating Cash Flow ¥15.3B, OCF/Net Income 0.01x, cash and deposits down 71.9%, and current ratio 42.3% indicate a significant deterioration in liquidity metrics. Next year, recovery of OCF as tax payments normalize and one-off adjustments fall away is central. Gradual reduction of Debt/EBITDA from 5.78x and improvement of OCF/EBITDA to ≥0.7x are prerequisites for expanding shareholder returns and improving valuation.
This report is an earnings analysis automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions should be made at your own responsibility and, as necessary, after consulting a professional advisor.