Tokyo Kisen (9193) FY2026 Q3 Earnings Report

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Executive Summary

For the cumulative Q3 period of the fiscal year ending March 2026, operating results improved substantially but the core business did not achieve profitability, while net income declined due to the reversal of the prior-year extraordinary gain. Revenue was ¥99.7B (+9.1% YoY), Operating Income was ¥-0.2B (improving from ¥-1.8B in the prior year), Ordinary Income was ¥2.1B (+275.6%), and Net Income attributable to owners of the parent was ¥5.6B (-74.9%). The decrease in Net Income was due to the reversal of the prior-year extraordinary gain of ¥20.8B from the sale of investment securities. The Company also recorded extraordinary gains of ¥4.1B in the current period, mainly comprising a ¥4.0B gain on the sale of fixed assets.

Factors Affecting Results

【Revenue】Revenue increased 9.1% YoY to ¥99.7B. By segment, the core Towing Business generated ¥70.7B (70.9% of total revenue), up 8.9% YoY, while the Maritime-Related Business expanded substantially by 119.5% to ¥16.1B (16.2% of total revenue). In contrast, the Passenger Ship Business declined 32.6% to ¥12.9B (12.9% of total revenue). The capture of demand related to CTVs (offshore wind power transportation vessels) is driving the rapid expansion of the Maritime-Related Business.

【Profitability】Gross Profit was ¥15.4B (gross margin of 15.4%, improving by +1.1pt from 14.3% in the prior year). SG&A expenses were ¥15.6B, with a growth rate of +5.3%, below the revenue growth rate, reducing the Operating Loss to ¥-0.2B from ¥-1.8B in the prior year. By segment, the Towing Business returned to profitability with ¥1.1B in profit, the Passenger Ship Business deteriorated to a ¥-0.4B loss, and the Maritime-Related Business remained loss-making at ¥-1.3B despite higher revenue. Ordinary Income was ¥2.1B, supported by ¥2.9B in non-operating income, including ¥0.9B in dividend income and ¥1.1B in equity in earnings of affiliates. Net Income was ¥5.6B, despite including ¥4.1B in extraordinary gains, including a ¥4.0B gain on the sale of fixed assets, due to the reversal of the prior year’s large extraordinary gain. Although revenue increased and operating results improved, the improvement through the Ordinary Income level was not reflected in Net Income. In substance, this can be characterized as a decline in earnings despite higher revenue and improved operating results.

Segment Analysis

The Towing Business generated revenue of ¥70.7B (+8.9% YoY) and Operating Income of ¥1.1B (margin of 1.6%), returning from a loss to profitability and becoming the only profitable consolidated segment. The Maritime-Related Business recorded substantial revenue growth of 119.5% to ¥16.1B, but posted an Operating Loss of ¥1.3B (margin of ▲7.8%), with the loss actually widening from the prior year despite its larger scale. Expansion has not translated into profitability. The Passenger Ship Business declined 32.6% to ¥12.9B and fell from a profit of ¥0.3B in the same period of the prior year to an Operating Loss of ¥0.4B (margin of ▲3.2%). In addition, segment classifications were changed in Q1 in connection with a business transfer, and prior-year figures were restated based on the revised classifications.

Key Financial Indicators

【Profitability】The Operating Income Margin was ▲0.2%, improving by +1.7pt from ▲1.9% in the prior year. The Net Profit Margin was 5.6%; however, this includes the effects of extraordinary gains and tax effects and does not represent the profitability of the core business. The gross margin improved by +1.1pt YoY to 15.4%, while the SG&A ratio declined by ▲0.6pt YoY to 15.7%, indicating improved cost efficiency amid revenue growth. 【Cash Quality】Cash and deposits were ¥56.4B, a decrease of ¥22.5B from the end of the prior year, suggesting a relationship with the increase in investments and other assets, which totaled ¥95.0B, primarily comprising shares of affiliated companies and investment securities. 【Investment Efficiency】Annualized ROE was 3.1%. Given that operating results remained loss-making, this level appears dependent on non-recurring items such as extraordinary gains. 【Financial Soundness】The Equity Ratio was high at 78.2%, indicating substantial loss-absorption capacity even under a capital-intensive business structure centered on ¥128.4B in property, plant and equipment. Total assets were ¥310.9B and Net Assets were ¥243.2B, both showing slight declines from the prior year.

Cash Flow Analysis

Individual figures from the statement of cash flows were not included in the disclosed information; however, cash trends can be inferred from changes in the balance sheet. Cash and deposits were ¥56.4B, down ¥22.5B (28.5%) from ¥78.9B in the same period of the prior year, while investments and other assets increased to ¥95.0B. Of this amount, shares of affiliated companies were ¥54.1B, an increase of ¥18.4B from the prior year. This suggests that cash on hand was allocated to investments in shares of affiliated companies and investment securities. Property, plant and equipment was ¥128.4B, down ¥3.7B from the prior year, potentially indicating progress in the sale or disposal of assets, including vessels. Short-term borrowings were largely unchanged at ¥15.0B, while cash and deposits remained equivalent to 3.7 times that amount, providing ample liquidity for the time being.

Quality of Earnings

The current-period earnings structure combines recurring earning power with temporary factors, and the sustainability of Net Income is lower than that of Operating Income and Ordinary Income. Non-operating income of ¥2.9B mainly comprised dividend income of ¥0.9B and equity in earnings of affiliates of ¥1.1B, which are relatively recurring items. Meanwhile, most of the ¥4.1B in extraordinary gains consisted of a ¥4.0B gain on the sale of fixed assets, resulting in a temporary net profit contribution of ¥1.0B after extraordinary losses of ¥3.1B. In the same period of the prior year, the temporary gain of ¥20.8B from the sale of investment securities boosted Net Income. Accordingly, a simple comparison with current-period Net Income of ¥5.6B appears to indicate a substantial decline, but in substance this reflects the difference in the scale of temporary gains. The fact that income taxes amounted to a gain of ¥2.5B (negative tax expense) also reflects the impact of tax effects. It is therefore inappropriate to use the Net Profit Margin of 5.6% as an indicator of recurring earning power.

Earnings Forecast and Guidance

Progress against the full-year Company plan varies by indicator. Revenue progress was 76.2% against the full-year plan of ¥130.9B, exceeding the standard quarterly progress rate of 75%. Ordinary Income progress was similarly solid at 77.1% against the full-year plan of ¥2.8B. In contrast, Operating Income was a cumulative loss of ¥-0.2B against the full-year plan of ¥0.1B, requiring a return to profitability in Q4. Net Income progress was only 9.1% against the full-year plan of ¥5.5B, meaning that achieving the full-year plan assumes the realization of a considerable amount of extraordinary gains and losses or similar items in Q4. Neither the earnings forecast nor the dividend forecast had been revised as of the current quarter.

Shareholder Returns

The year-end dividend forecast consists of an ordinary dividend of ¥20 and a special dividend of ¥30, for a total of ¥50, which is planned to be at the same level as the prior-year actual result. Using the average number of shares outstanding during the period of 9,952 thousand shares, the annual total dividend is approximately ¥49.8B, resulting in a high Payout Ratio of approximately 89.8% against the full-year Net Income plan of ¥5.5B. Since the special dividend of ¥30 accounts for 60% of the annual dividend, the dividend level is structured to depend more on achievement of the full-year earnings plan, including gains from asset sales, than on recurring business profits. The cumulative Q3 Net Income of ¥5.0B alone is insufficient to cover the annual total dividend, making achievement of the Q4 earnings plan a prerequisite for maintaining the dividend. The financial base, including an Equity Ratio of 78.2% and cash and deposits of ¥56.4B, supports payment capacity; however, establishing sustained operating profitability remains a challenge in order to improve dividend sustainability.

Risk Factors

1. Weak core-business profitability: Although the Operating Income Margin is improving at ▲0.2%, it remains in negative territory. The low gross margin of 15.4% increases sensitivity to fluctuations in fuel costs, personnel expenses, and vessel maintenance costs, resulting in a structure in which even small changes in fares or utilization rates can cause earnings to fluctuate significantly.

2. Deterioration in the profitability of the Passenger Ship Business: Revenue in the Passenger Ship Business declined 32.6% YoY to ¥12.9B, and the business fell from a profit in the same period of the prior year to an Operating Loss of ¥0.4B. Demand trends and weather and sea conditions may contribute to fluctuations in performance.

3. Decrease in cash and deposits and increase in investment assets: Cash and deposits decreased by ¥22.5B (▲28.5%) YoY, while investments and other assets, primarily shares of affiliated companies and investment securities, increased by ¥24.4B. Changes in market prices of shares and the performance of equity-method affiliates could affect Net Assets and earnings.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (transport)

Profitability and Returns

The Company’s profitability is substantially below the industry median, with its Operating Income Margin in particular at a level near the bottom of the industry.

Growth and Capital Efficiency

The Revenue Growth Rate is broadly in line with the industry median, indicating that the pace of growth is approximately in line with the industry average.

※Source: Compiled by the Company

Key Points from the Earnings Results

1. The return to profitability of the Towing Business (Operating Income of ¥1.1B, margin of 1.6%) was the core driver of the improvement in consolidated operating results. The conversion to profitability of the Maritime-Related Business, which continues to deliver revenue growth (+119.5%), will be a key focus going forward.

2. Net Income was affected by extraordinary gains, primarily the ¥4.0B gain on the sale of fixed assets, as well as tax effects, and diverges from the underlying performance of the core business as indicated by the Operating Income Margin of ▲0.2%. Trends in Operating Income and Ordinary Income are more appropriate for evaluating recurring earning power.

3. Progress against the full-year Net Income plan was only 9.1%, and achievement of the plan assumes the realization of extraordinary gains and losses or similar items in Q4. Meanwhile, the strength of the financial base, reflected in the Equity Ratio of 78.2%, supports resilience against fluctuations in business performance.

Theoretical Share Price (Reference Value)

Sensitivity: ¥1,755–¥1,855 at Cost of Equity ±1%, and ¥1,784–¥1,817 at ω±0.1.

Notes:

• Normalized EPS calculated from Ordinary Income and other figures is used to exclude the impact of temporary gains and losses (the Company’s forecast EPS is ¥557.1).
• As forecast ROE is below the Cost of Equity, the theoretical value is below Book Value Per Share.
• Net Assets as of the end of the quarter are used (there is a time lag relative to the full-year forecast).
• Because Net Assets include non-controlling interests, the theoretical value may be calculated at a somewhat high level.

(Calculation model: Residual Income Model (Ohlson type; explicit 5-year fade) / Interest-rate reference month: 2026-08 / Mechanically calculated value based solely on publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with a professional where necessary.

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