| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥17503.1B | ¥17417.9B | +0.5% |
| Operating Income | ¥894.4B | ¥844.0B | +6.0% |
| Ordinary Income | ¥845.8B | ¥815.4B | +3.7% |
| Net Income | ¥263.3B | ¥253.2B | +4.0% |
| ROE | 3.8% | 4.1% | - |
For the fiscal year ended March 2026, Revenue was ¥1兆7,503B (YoY +¥85B, +0.5%), Operating Income was ¥894B (YoY +¥50B, +6.0%), Ordinary Income was ¥846B (YoY +¥30B, +3.7%), and Net Income Attributable to Owners of Parent was ¥538B (YoY +¥29B, +6.2%). The operating margin improved by 0.3pt to 5.1% (from 4.8% a year ago), driven by revenue increases in Transportation +4.1%, Real Estate +5.7%, and Hotels & Leisure +7.1%. International Logistics declined -5.5% amid softer market conditions, but overall group profit grew due to margin recovery in Transportation & Distribution. Non-operating items weighed on profit with interest expense of ¥146B (YoY +24%), and special gains/losses had a net negative contribution of ▲¥20B. Operating Cash Flow (OCF) was ¥1,181B, a substantial increase of +31.6% YoY and 2.2x Net Income, indicating high cash quality; however, aggressive capital expenditure of ¥1,519B led to Free Cash Flow (FCF) of ▲¥208B, signaling an investment-led phase.
[Revenue] Revenue was ¥1兆7,503B (YoY +0.5%), a marginal increase. Segment composition: Transportation 43.0%, International Logistics 43.0%, Hotels & Leisure 21.0%, Distribution 12.8%, Real Estate 8.4%, Other 2.0%; Transportation and International Logistics together account for 86% of total. Transportation was ¥2,233B (+4.1%), supported by recovery in rail and bus demand and fare adjustments, with the highest operating margin at 17.0%. Real Estate was ¥1,472B (+5.7%), performing solidly in both sales and leasing. Hotels & Leisure grew to ¥3,672B (+7.1%) benefiting from inbound demand. Distribution was ¥2,235B (+4.8%) as customer spend per visit improved at department stores and stores. In contrast, International Logistics fell to ¥7,531B (−5.5%) due to softness in air and ocean freight markets; price effects limited revenue decline but weak volumes weighed on results.
[Profitability] Operating Income was ¥894B (+6.0%), with an operating margin of 5.1% (up 0.3pt from 4.8% a year ago). By segment: Transportation Operating Income ¥381B (+9.8%, margin 17.0%) drove the largest contribution; Real Estate ¥144B (+3.6%, margin 9.8%); Hotels & Leisure ¥138B (−1.4%, margin 3.8%); International Logistics ¥120B (−7.4%, margin 1.6%); Distribution ¥92B (+30.4%, margin 4.1%). Transportation sustained margin through demand recovery and price pass-through; Distribution posted a large +30.4% profit increase via efficiency gains. International Logistics recorded revenue and profit declines and a low margin of 1.6%, while Hotels & Leisure saw slight profit decrease due to cost pressures. SG&A was ¥2,406B (13.7% of Revenue), up +1.7% YoY, outpacing Revenue growth of +0.5% and indicating remaining fixed-cost absorption challenges. Non-operating items had a net charge of ▲¥48B (prior year ▲¥63B); interest expense of ¥146B materially exceeded interest & dividend income ¥63B, FX gains ¥18B, and equity-method gains ¥23B. Special gains/losses netted ▲¥20B (special gains ¥154B, special losses ¥174B), primarily driven by impairment losses of ¥59B. Profit before tax was ¥826B, tax burden ¥200B, non-controlling interests ¥88B, resulting in Net Income Attributable to Owners of Parent of ¥538B, with revenue and profit increases.
The Transportation segment recorded Operating Income of ¥381B (+9.8%), accounting for 42.6% of group Operating Income. Its margin of 17.0% was the highest among segments, driven by fare adjustments and demand recovery. Real Estate generated Operating Income of ¥144B (+3.6%) with a stable margin of 9.8%, performing well in both sales and leasing. International Logistics posted Operating Income of ¥120B (−7.4%) with a depressed margin of 1.6% due to softness in air and ocean freight markets causing continued revenue and profit declines. Distribution achieved Operating Income of ¥92B (+30.4%) with efficiency improvements lifting margin to 4.1%. Hotels & Leisure produced Operating Income of ¥138B (−1.4%), margin 3.8%; strong inbound demand was offset by higher energy and labor costs compressing margins. Other delivered Operating Income of ¥25B (+7.7%), a small increase.
[Profitability] Operating margin was 5.1% (prior year 4.8%), up 0.3pt. Net margin rose to 3.1% (prior year equivalent 2.7%), led by margin improvements in Transportation and Distribution. ROE was 7.8% (prior year equivalent 6.2%), driven mainly by higher net margin. ROA was 3.3%, roughly flat. [Cash Quality] OCF was ¥1,181B (YoY +31.6%), 2.2x Net Income; OCF/EBITDA was 0.69x, low, but accrual ratio ▲2.5% was healthy. OCF/Operating Income was 1.32x, absorbing depreciation of ¥809B and working capital increase of ¥204B. [Investment Efficiency] ROIC was 4.8% (NOPAT ¥895B / Invested Capital ¥1兆8,588B), and total asset turnover was low at 0.68x. Investment securities increased to ¥915B (YoY +30.6%). Tangible fixed assets were ¥1兆4,640B, representing 56.5% of total assets, indicating an asset-intensive business. [Financial Soundness] Equity Ratio improved to 26.7% (prior year 24.5%). D/E ratio was high at 2.75x (interest-bearing debt ¥9,488B / equity ¥3,448B). Debt/EBITDA was 5.6x. Interest coverage (EBIT / interest expense) was 6.1x, and on an EBITDA basis 11.7x, indicating near-term ability to meet interest obligations. Current ratio was 116.5%, and cash & deposits ¥2,149B nearly covered short-term debt of ¥2,154B.
OCF was ¥1,181B (prior year ¥897B, +31.6%), a substantial increase. The subtotal was ¥1,473B, driven by depreciation ¥809B and profit before tax ¥826B. Working capital saw increases: inventories ▲¥204B and trade receivables ▲¥58B, while trade payables ▲¥8B were modest. After corporate tax payments of ¥247B, OCF stood at ¥1,181B. Investing Cash Flow was ▲¥1,389B, mainly due to acquisitions of tangible and intangible fixed assets of ¥1,519B. Net purchase of investment securities was ¥42B, net collection of loans ▲¥16B, and construction contribution receipts ¥29B. Free Cash Flow was ▲¥208B, negative as growth investments lead. Financing Cash Flow was ▲¥199B, composed of net increase in long-term borrowings ¥515B (proceeds ¥2,090B − repayments ¥1,573B), net decrease in bonds ▲¥424B (issuances ¥447B − redemptions ¥871B), lease liability repayments ▲¥185B, dividends paid ▲¥105B, and share buybacks ▲¥1B. Cash & deposits decreased by ▲¥316B during the period to ¥2,149B. OCF/EBITDA 0.69x suggests room to improve cash conversion efficiency.
Of Operating Income ¥894B, Transportation ¥381B, Real Estate ¥144B, and Distribution ¥92B constitute the recurring core earnings, accounting for 69% of the total. Non-operating items netted ▲¥48B; recurring non-operating items (equity-method gains ¥23B, FX gains ¥18B, interest & dividend income ¥19B) sum to ¥60B but are more than offset by interest expense ¥146B, compressing net profit. Special gains/losses netted ▲¥20B, modest, with impairment losses of ¥59B (estimated related to Hotels & Leisure and International Logistics assets) offset by special gains ¥154B. Total comprehensive income was ¥877B, substantially exceeding Net Income ¥263B (Net Income Attributable to Owners of Parent ¥538B + Non-controlling interests ¥88B); currency translation adjustments +¥145B, valuation differences on available-for-sale securities +¥40B, and retirement benefit adjustments +¥57B contributed. Goodwill amortization was ¥33B (estimated ¥3B in SG&A, ¥30B in non-operating), likely tied to M&A in International Logistics. OCF ¥1,181B was 4.5x Net Income ¥263B, supported by non-cash expenses ¥809B and differences in working capital, indicating sufficient cash generation.
Full-year guidance plans Revenue ¥1兆8,400B (+5.3%), Operating Income ¥900B (+0.6%), Ordinary Income ¥820B (▲3.0%), Net Income ¥470B (▲12.7%), and EPS ¥247.18. While revenue is expected to increase, Operating Income is expected to be flat and Ordinary Income to decline, reflecting conservative assumptions for a slower recovery in International Logistics, continued increase in interest expense, and rising labor and energy costs. Operating Income progress rate is 99.4%, near completion, while Ordinary Income progress rate is 103.1%, exceeding forecast. Net Income progress rate is 114.4%, likely aided by smaller-than-expected special items. Dividend guidance is ¥35 per year (interim undecided), a reduction from the actual ¥60 per year, interpreted as a capital policy balancing investment burden and rising interest costs.
Annual dividend was ¥60 (interim ¥30, year-end ¥30), with a payout ratio of 20.4%. Total dividends amount to approximately ¥105B, representing 8.9% of OCF ¥1,181B, indicating ample capacity. Share buybacks were limited to ¥1B, and total return ratio was about 20.5%, remaining low. Next fiscal year forecast dividend of ¥35 is a ¥25 reduction versus actual, but reflects a conservative stance given continued investment phase and higher interest burden. Despite negative FCF of ▲¥208B, dividends are being maintained, suggesting an appropriate balance with retained earnings. Medium-term re-expansion of dividend capacity depends on improvements in cash conversion efficiency and leverage reduction.
Prolonged soft market in International Logistics: The International Logistics segment experienced Revenue ▲5.5% and Operating Income ▲7.4%, with margin falling to 1.6%. Recovery timing in air and ocean freight markets is uncertain, and as this segment accounts for 43% of group Revenue, prolonged market weakness could pressure overall earnings. Volume trough timing and freight rate trends are key.
High leverage and rising interest burden: Interest-bearing debt ¥9,488B, D/E ratio 2.75x, Debt/EBITDA 5.6x indicate high leverage, and interest expense of ¥146B (YoY +24%) is rising. Interest coverage of 6.1x indicates near-term ability to service interest, but in a rising rate environment, increased financing costs could materially compress profits. Cash / short-term debt = 1.00x indicates maturity mismatch risk.
Cost inflation eroding profitability: SG&A was ¥2,406B (+1.7%), outpacing Revenue growth of +0.5%. Labor and energy cost increases are reflected in Hotels & Leisure Operating Income ▲1.4%, and declining fixed-cost absorption could become a concern for Transportation and Distribution. Progress on price pass-through and efficiency gains is critical.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.1% | 6.3% (3.7%–8.5%) | -1.2pt |
| Net Margin | 1.5% | 2.7% (1.6%–4.7%) | -1.2pt |
Both operating margin and net margin are below industry medians, and profitability is relatively low among transportation operators.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 0.5% | 5.0% (-0.4%–9.4%) | -4.5pt |
Revenue growth trails the industry median by 4.5pt, with International Logistics decline restraining group growth.
※Source: Company compilation
Stable earnings base from Transportation & Real Estate: Transportation generated Operating Income ¥381B (margin 17.0%), accounting for 42.6% of group Operating Income, and continues to see revenue and profit growth from fare revisions and demand recovery. Real Estate also delivered a stable margin of 9.8%, and these two segments underpin group earnings. While waiting for International Logistics recovery, the strength of core segments supports defensive characteristics.
Balance between cash generation and investment phase: OCF ¥1,181B is 2.2x Net Income and of high quality, but OCF/EBITDA 0.69x indicates room to improve conversion efficiency. Large capex of ¥1,519B resulted in negative FCF of ▲¥208B, but investments in Transportation and Hotels are positioned to drive medium-term revenue growth. Early improvement in ROIC 4.8% is key to enhancing shareholder value.
Interest resilience and capital policy under high leverage: D/E ratio 2.75x and interest expense ¥146B (+24%) show rising interest burden; interest coverage 6.1x indicates the ability to meet obligations for now. Payout ratio 20.4% and available OCF provide cushion, but the planned dividend cut next year reflects a cautious policy given investment needs and interest cost increases. Progress on deleveraging and timing of International Logistics recovery will be turning points for future valuation.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference data compiled by our firm based on public financial statements. Investment decisions should be made at your own responsibility, and, if necessary, after consulting a professional advisor.