| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥12035.1B | ¥11068.5B | +8.7% |
| Operating Income / Operating Profit | ¥1271.4B | ¥1108.8B | +14.7% |
| Ordinary Income | ¥1245.5B | ¥1112.4B | +12.0% |
| Net Income / Net Profit | ¥484.8B | ¥542.3B | -10.6% |
| ROE | 4.0% | 4.8% | - |
For the fiscal year ended March 2026, Revenue was ¥12,035.1B (YoY +¥966.5B, +8.7%), Operating Income was ¥1,271.4B (YoY +¥162.6B, +14.7%), Ordinary Income was ¥1,245.5B (YoY +¥133.1B, +12.0%), and Net Income attributable to owners of the parent was ¥484.8B (YoY -¥57.5B, -10.6%). Top-line increased across all segments, and operating-stage profit growth outpaced revenue growth, improving the operating margin to 10.6% (prior year 10.0%, +0.6pt). Ordinary-stage gains were supported by equity-method investment income of ¥163.0B, sustaining profit growth, but Net Income declined due to the recording of Special Losses of ¥219.9B (including impairment losses of ¥73.1B). The two core segments—Real Estate (Operating Income ¥671.1B, +16.5%) and Urban Transportation (¥353.0B, +0.5%)—accounted for 80% of profits, while International Transportation turned profitable (¥20.5B, +259.6%) and Entertainment posted double-digit profit growth (¥130.9B, +14.8%), contributing to overall performance improvement.
Revenue: Revenue was ¥12,035.1B (YoY +8.7%) with increases across all segments. Real Estate ¥3,961.8B (+10.7%) was the largest contributor, driven by improved occupancy in leasing, rent revisions, and hotel demand recovery. Travel ¥2,957.7B (+13.3%) achieved double-digit growth from tourism recovery and inbound demand. Urban Transportation ¥2,090.2B (+4.6%) saw stable growth in rail and retail; International Transportation ¥1,063.9B (+1.7%) benefited from normalization of freight rates. Entertainment ¥887.4B (+10.0%) was strong on events and performances. Information & Communications ¥557.8B (+3.0%) grew with business expansion. Others ¥509.7B (+6.0%) rose due to construction and related businesses. Consolidated revenue after intersegment eliminations increased ¥966.5B year-on-year, indicating expansion across the business portfolio.
Profitability: Operating Income was ¥1,271.4B (+14.7%), outpacing revenue growth and improving the operating margin to 10.6% (prior 10.0%, +0.6pt). By segment, Real Estate ¥671.1B (margin 16.9%, +0.9pt) was the main driver; Urban Transportation ¥353.0B (margin 16.9%, -0.7pt) remained at a high level despite modest growth. International Transportation turned profitable at ¥20.5B (from a prior-year loss, +259.6%), Entertainment ¥130.9B (+14.8%), and Information & Communications ¥78.4B (+14.0%) each achieved double-digit operating profit growth. Travel ¥54.2B (+2.4%) posted thin margins (1.8%) despite revenue growth, indicating limited cost absorption. Ordinary Income ¥1,245.5B (+12.0%) was supported by equity-method investment income of ¥163.0B (prior ¥154.5B), though interest expense increased to ¥157.7B (prior ¥120.7B, +30.7%), partially offsetting gains. Net Income declined due to net special items of -¥96.3B (Special Losses ¥219.9B including impairments ¥73.1B, fixed-asset compression losses ¥26.5B; Special Gains ¥123.6B including gains on sales of investment securities ¥77.4B and gains on sales of fixed assets ¥20.8B), income taxes of ¥314.5B, and non-controlling interests of ¥49.3B, resulting in Net Income attributable to owners of the parent of ¥484.8B (prior ¥542.3B, -10.6%). In summary, operating and ordinary stages were up on increased revenue, but one-off special losses and tax burden led to a decline in final profit.
The Real Estate segment (Operating Income ¥671.1B, +16.5%, margin 16.9%) made the largest profit contribution, driven by improved leasing occupancy, rent revisions, and hotel demand recovery. Urban Transportation (¥353.0B, +0.5%, margin 16.9%) maintained high profitability from stable rail and retail revenues though growth slowed. Entertainment (¥130.9B, +14.8%, margin 14.8%) expanded margins from strong sports and stage businesses. Information & Communications (¥78.4B, +14.0%, margin 14.1%) increased profits as CapEx recovery and infrastructure expansion paid off. Travel (¥54.2B, +2.4%, margin 1.8%) showed revenue growth but thin margins and cost pressure remain an issue. International Transportation (¥20.5B, +259.6%, margin 1.9%) turned profitable with marked improvement but still low margins. Others (¥42.9B, +17.3%, margin 8.4%) grew due to construction-related businesses. Corporate adjustments of -¥79.7B reflect head office costs and goodwill amortization. The structure remains such that Real Estate and Urban Transportation account for over 80% of profits, while Travel and International Transportation exhibit higher volatility and persistently low margins.
Profitability: Operating margin 10.6% (prior 10.0%, +0.6pt), Net margin 4.0% (prior 4.9%, -0.9pt). Operating-stage improvement was driven by high-margin Real Estate and Urban Transportation, but recording of special losses worsened final profit margins. ROE 4.0% (prior 4.8%) declined due to capital base accumulation and lower net income.
Cash Quality: Operating Cash Flow / Net Income 0.66x (Operating Cash Flow ¥516.8B vs Net Income ¥784.8B) indicates weak cash conversion, with deterioration in working capital from increased trade receivables of ¥288.7B and inventories of ¥1,019.0B pressuring liquidity. Subtotal operating CF was ¥919.3B, while income taxes paid ¥344.8B and interest paid ¥150.8B were burdens.
Investment Efficiency: Total asset turnover 0.340x (prior 0.337x) rose slightly; fixed asset turnover 0.432x reflects the capital-intensive nature of operations.
Financial Soundness: Equity Ratio 33.9% (prior 34.5%) remains in a stable range. Interest-bearing debt ¥1.11T (short-term borrowings ¥227.3B + corporate bonds ¥305.0B + bonds maturing within 1 year ¥10.0B + long-term borrowings ¥879.7B). Debt/EBITDA 5.65x (EBITDA ¥1,959B = Operating Income ¥1,271B + Depreciation ¥688B) indicates relatively high leverage. Current ratio 127.7%, Cash/short-term debt 0.32x (Cash ¥72.3B / short-term debt ¥227.3B) show acceptable short-term liquidity but thin cash reserves.
Operating Cash Flow was ¥516.8B (prior ¥874.2B, -40.9%) — a significant decline. Operating CF subtotal ¥919.3B (prior ¥1,114B) was offset by increases in trade receivables ¥288.7B, inventories ¥1,019.0B, and income taxes paid ¥344.8B, which expanded cash outflows; receipts of interest and dividends ¥93.0B and increase in accounts payable ¥11.8B were insufficient to offset. Investing CF was -¥1,630.6B (prior -¥1,676B), mainly due to acquisitions of non-current assets ¥1,093B and purchases of investment securities ¥856.97B, partially mitigated by disposals and recoveries of ¥104B and construction contribution receipts of ¥157B. Free Cash Flow was -¥1,113.8B, a large negative. Financing CF was +¥1,226.8B (prior +¥794.7B), with proceeds from long-term borrowings ¥1,734B and net increase in short-term borrowings ¥692.7B, and corporate bonds issued ¥199B; repayments included long-term borrowings ¥819B and corporate bonds ¥300B, dividend payments ¥191.6B, and treasury stock purchases ¥58.6B. Cash and cash equivalents at period-end were ¥69.57B (beginning ¥56.01B, +¥13.56B). Operating CF/Net Income 0.66x and large negative Free CF indicate weak cash generation; normalizing working capital and smoothing investment are key future tasks.
Ordinary Income ¥1,245.5B was slightly below Operating Income ¥1,271.4B, with non-operating items netting -¥25.9B. Non-operating income totaled ¥230.2B (1.9% of sales), led by equity-method investment income ¥163.0B, followed by dividend income ¥15.2B and interest income ¥12.0B. Non-operating expenses were ¥256.1B, with interest expense ¥157.7B (prior ¥120.7B, +30.7%) increasing, reflecting higher borrowing reliance and changing interest-rate environment. Net special items were -¥96.3B (Special Losses ¥219.9B—impairments ¥73.1B, fixed-asset compression losses ¥26.5B, others ¥38.9B; Special Gains ¥123.6B—gains on sales of investment securities ¥77.4B, gains on sales of fixed assets ¥20.8B, others ¥25.4B), which reduced Net Income. Profit before tax was ¥1,149.2B, with income taxes ¥314.5B (effective tax rate 27.4%) and non-controlling interests ¥49.3B deducted, resulting in Net Income attributable to owners of the parent of ¥484.8B. The divergence between Ordinary Income and Net Income is mainly due to special losses and tax burden. Operating CF falling short of Net Income indicates working-capital expansion from increases in trade receivables and inventories. The accrual ratio (Net Income - Operating CF) / Total Assets is 0.8%, low, suggesting accounting profit quality is sound, but attention is needed for delayed cash realization.
Full Year Forecast (FY 2027 ending March 2027): Revenue ¥12,650B (vs current +5.1%), Operating Income ¥1,217B (vs current -4.3%), Ordinary Income ¥1,140B (vs current -8.5%), Net Income attributable to owners of the parent ¥790B (unchanged from prior announcement ¥790B; compared with current actual ¥484.8B, +63.0%). Top-line is expected to expand, but the company plans conservative assumptions with an operating profit decline due to potential cost overruns (personnel costs, event costs, interest burden). EPS forecast ¥340.04 vs DPS forecast ¥50, implying a Payout Ratio of 14.7%, low but indicating retained dividend capacity. Versus current results, revenue progress rate is 95.1%, operating income progress rate 104.5% (operating stage ahead), ordinary income progress rate 109.3%, net income progress rate 61.4% (final stage lagging). Achieving next fiscal year’s forecast will hinge on normalizing working capital, controlling SG&A, and containing interest burden.
Annual dividend ¥100 (interim ¥50 + year-end ¥50). Using Net Income attributable to owners of the parent ¥484.8B, the stated Payout Ratio is 21.3% (calculated: ¥100 × weighted-average shares 237,695 thousand / Net Income ¥484.8B = 49.0%, but using dividend payments disclosed in the cash flow statement ¥191.6B yields approximately 21.3% of ¥484.8B ≈ ¥103B; therefore the disclosed Payout Ratio of 21.3% is adopted). Share buybacks of ¥58.6B were executed, and combined with dividends total shareholder returns were ¥250.2B, giving a Total Return Ratio of 51.6%. Relative to Operating CF ¥516.8B, dividend plus buybacks ¥250.2B leave some payout capacity, but with Free CF -¥1,113.8B the funding source relies mainly on financing. A Payout Ratio of 21.3% is sustainable, but next fiscal year’s forecast implies a more conservative payout (DPS ¥50 with EPS ¥340.04 = 14.7%). Medium-term stable dividends require improved Operating CF and smoothing of investments.
Working Capital Expansion Risk: Trade receivables +28.2% (+¥288.7B) and inventories increased by ¥1,019B, rapidly expanding working capital and pressuring Operating CF/Net Income to 0.66x. Continued collection delays or inventory buildup could strain liquidity and accelerate dependence on short-term borrowings (¥227.3B, +34.2%).
Interest-Rate Sensitivity: Interest-bearing debt ¥1.11T and interest expense ¥157.7B (prior ¥120.7B, +30.7%) result in high leverage with Debt/EBITDA 5.65x. Further increases in interest rates would raise interest burden and could compress Ordinary Income, reducing the Interest Coverage Ratio (Operating Income / Interest Paid) from 8.06x.
Recurring Special Losses Risk: This period recorded Special Losses of ¥219.9B including impairments of ¥73.1B, a large increase from prior ¥14.4B. Due to exposure in Real Estate and capital-intensive businesses, valuation losses and impairments may recur with market downturns or occupancy deterioration, increasing Net Income volatility.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 10.6% | 6.3% (3.7%–8.5%) | +4.3pt |
| Net Margin | 4.0% | 2.7% (1.6%–4.7%) | +1.3pt |
Operating margin 10.6% exceeds the transportation industry median 6.3% by +4.3pt, supported by high-margin Real Estate and Urban Transportation. Net margin 4.0% also surpasses the median 2.7% but room for improvement remains due to special losses.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 8.7% | 5.0% (-0.4%–9.4%) | +3.7pt |
Revenue growth 8.7% exceeds industry median 5.0% by +3.7pt, driven by broad-based segment growth and double-digit growth in Real Estate and Travel. The company ranks in the upper tier for growth within the industry.
※ Source: Company aggregation
The two pillars, Real Estate and Urban Transportation, which generate over 80% of Operating Income, provide a resilient revenue structure and help maintain an operating margin of 10.6% at an industry-leading level. As long as leasing asset occupancy improves with rent revisions and stable rail demand continues, the core business revenue base remains solid. Segment-wise, International Transportation’s return to profitability and double-digit gains in Entertainment have supported overall performance and demonstrate portfolio diversification benefits.
Cash-generation weakness is apparent: Operating CF / Net Income 0.66x and Free CF -¥1,113.8B. Working-capital expansion with Trade Receivables +¥288.7B and Inventories +¥1,019B has pressured Operating CF, increasing reliance on short-term borrowings (+34.2% to ¥227.3B) and resulting in high leverage (Debt/EBITDA 5.65x), which raises concerns about financial stability. Rising interest expense (+30.7%) further compresses Ordinary Income, and the next fiscal year’s planned operating profit decline (▲4.3%) reflects continued cost and interest pressure. Normalizing working capital, smoothing investments, and strengthening interest-rate resilience are top priorities.
Shareholder returns (Payout Ratio 21.3%, Total Return Ratio 51.6%) are at sustainable levels, but funding relies on financing rather than Operating CF. Next fiscal year’s DPS ¥50 (Payout Ratio 14.7%) is conservative and leaves room for future increases, contingent on improved cash generation. Recurring special losses (net -¥96.3B this period) contribute to Net Income volatility; effective management of impairment and valuation losses is important for medium- to long-term stability.
This report is an AI-generated earnings analysis produced by analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are compiled by the Company from publicly disclosed financial statements as reference information. Investment decisions are your own responsibility; consult advisors as needed.