ANA HOLDINGS (9202) FY2026 Q3 Earnings Report

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Executive Summary

While securing higher revenue, profitability declined slightly, although profit progress against the full-year plan remains at a high level. Revenue was ¥1,8773.8B (+10.3% YoY), Operating Income was ¥1807.1B (+5.6%), Ordinary Income was ¥1826.2B (+0.6%), and Net Income was ¥1410.5B (including ¥1392.3B attributable to owners of the parent, +3.9%). Cost of sales growth (+11.1%) exceeded revenue growth, causing the gross margin to decline to 18.9%; however, progress toward the full-year Operating Income plan was 90.4%, substantially exceeding the standard progress rate.

Factors Affecting Earnings

【Revenue】Revenue increased +10.3% YoY. By segment, the core AirTransportation segment accounted for ¥1,7076.8B (approximately 91% of total revenue), generating Operating Income of ¥1738.9B and a margin of 10.2%. It was followed by AirlineRelated (¥2657.4B, 3.5% margin), TradeAndRetail (¥1174.2B, 5.3% margin), and TravelServices (¥499.6B, 1.3% margin), indicating a composition highly dependent on the air transportation business.

【Profit and Loss】Operating Income increased +5.6%, but growth in gross profit (+6.9%) fell below revenue growth, causing the gross margin to decline from 19.5% in the same period of the previous year to 18.9%. Selling, general and administrative expenses increased +8.3%, below the rate of revenue growth, indicating continued discipline in indirect expenses. Meanwhile, although there were interest income and foreign exchange gains in non-operating income and expenses, the surplus narrowed. Combined with an increase in interest expenses (¥180.4B, +4.1%), this limited Ordinary Income growth to +0.6%. Extraordinary income included a gain on the sale of investment securities of ¥47.3B and a gain on bargain purchase of ¥71.7B, while extraordinary losses consisted solely of an impairment loss of ¥10.3B, resulting in a temporary net positive contribution of ¥108.7B. In conclusion, although the company achieved revenue and profit growth, the rate of profit growth is declining, with cost growth constraining earnings growth.

Segment Analysis

AirTransportation accounted for approximately 91% of revenue and the majority of Operating Income (¥1738.9B), recording the highest margin among the four segments at 10.2%. AirlineRelated (3.5% margin), TradeAndRetail (5.3%), and TravelServices (1.3%) had relatively low margins, indicating that the earnings structure is highly dependent on the air transportation business.

Key Financial Indicators

【Profitability】Operating margin was 9.6% (flat to slightly down from approximately 9.6% in the previous year), Net Income margin was 7.4%, and annualized ROE was 13.0%. The gross margin of 18.9% declined from 19.5% in the same period of the previous year, indicating that rising costs are pressuring profitability.【Cash Flow Quality】Of extraordinary income of ¥119.0B, the gain on the sale of investment securities of ¥47.3B and the gain on bargain purchase of ¥71.7B have limited recurrence potential; therefore, trends in Operating Income and Ordinary Income should be given greater weight.【Investment Efficiency】Total assets were ¥38,236.8B, the Equity Ratio was 37.9%, and ROE was 13.0%, maintaining a certain level despite capital strengthening (Net Assets +27.2%).【Financial Soundness】The Equity Ratio was 37.9%, Cash and deposits were ¥5415.7B, and long-term borrowings were ¥7583.5B. Interest-bearing debt is primarily long-term, suggesting a decline in financial leverage due to capital accumulation.

Cash Flow Analysis

Individual data from the cash flow statement were not provided, but funding trends can be confirmed from changes in the balance sheet. Cash and deposits increased by ¥868.6B (+19.1%) from ¥4547.1B in the previous year to ¥5415.7B, indicating an expansion of liquidity on hand. Meanwhile, property, plant and equipment (aircraft, net) increased +12.4% YoY, suggesting that investment activity centered on fleet investment has continued. Long-term borrowings increased +9.6%, indicating that capital-intensive investment in equipment continues to be financed with long-term funds. Retained earnings increased +42.3%, with the accumulation of retained earnings contributing to an improvement in the financial base.

Earnings Quality

Operating Income increased +5.6%, whereas Ordinary Income increased only +0.6%; the narrowing surplus in non-operating income and expenses and the increase in interest expenses (¥180.4B, +4.1%) weighed on earnings quality. Pretax Income of ¥1934.9B included net extraordinary income of ¥108.7B, with low-recurring items such as the gain on the sale of investment securities of ¥47.3B and the gain on bargain purchase of ¥71.7B contributing to results. Excluding these items, it is appropriate to evaluate underlying earnings power based on the levels of Operating Income and Ordinary Income. The decline in gross margin (18.9%, compared with 19.5% in the previous year) suggests that increases in operating costs may not have been fully passed on through fares. Comprehensive Income was ¥1545.7B, exceeding Net Income of ¥1410.5B, with the difference attributable to positive contributions from valuation differences on securities and deferred hedge gains and losses.

Earnings Forecast and Guidance

The full-year company plan calls for Revenue of ¥2,4800B (+9.6% YoY), Operating Income of ¥2000B (+1.7%), Ordinary Income of ¥1940B (-3.0%), EPS of ¥306.96, and a dividend of ¥60. Progress through Q3 was 75.7% for Revenue, 90.4% for Operating Income, and 94.1% for Ordinary Income, substantially exceeding the standard progress rate of 75%, indicating favorable progress against the profit plans. As the company’s plan itself incorporates a slowdown from Q4 onward, with Operating Income of +1.7% and Ordinary Income of -3.0%, trends in fuel, maintenance, labor, and other costs in Q4 will determine the full-year outcome.

Shareholder Returns

The full-year forecast dividend is ¥60 per share, unchanged from the previous year’s actual annual dividend of ¥60. Based on forecast Net Income attributable to owners of the parent of ¥1450B, the forecast Payout Ratio is approximately 19.4%, remaining at a low level below 20%. The company appears to prioritize recovery of its financial base and the preservation of capacity for capital investment over earnings growth, while pursuing stable dividends.

Risk Factors

1. Profitability Risk (Declining Gross Margin): The gross margin declined to 18.9% from 19.5% in the same period of the previous year. There is a possibility that increases in operating costs, including fuel, maintenance, and airport-related expenses, have not been sufficiently absorbed through fare increases.

2. Quality of Non-Operating Income and Expenses: Operating Income increased +5.6%, while Ordinary Income increased only +0.6%. Interest expenses increased to ¥180.4B (+4.1%), and the narrowing surplus in non-operating income and expenses constrained Ordinary Income growth.

3. Capital Investment and Capital Allocation Risk: Construction in progress was substantial at ¥2513.1B, while aircraft, net reached ¥1,800.8B (+12.4%). Capital-intensive investment is continuing, and any divergence from utilization rates or demand outlooks could affect future depreciation expenses and asset efficiency.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

The Operating Margin exceeds the industry median, while the Net Income Margin is below the median; the company’s positioning within the industry is therefore mixed.

Growth and Capital Efficiency

The Revenue Growth Rate is slightly above the industry median.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. While Revenue increased +10.3%, the gross margin declined to 18.9% (19.5% in the previous year), making the extent to which cost increases have been passed on through fares a key issue identifiable from the earnings data.

2. Progress toward the full-year plan was 90.4% for Operating Income and 96.0% for Net Income, substantially exceeding the standard Q3 progress rate of 75%; progress toward achieving the plan is therefore favorable.

3. Net Assets increased +27.2%, reducing financial leverage, while the Equity Ratio improved to 37.9%. The forecast Payout Ratio is low at approximately 19.4%, indicating a structure in which strengthening the financial base and preserving capacity for capital investment are prioritized.

Theoretical Share Price (Reference Value)

Sensitivity: ¥2,898–¥3,074 at ±1% for the cost of equity, and ¥2,976–¥2,996 at ±0.1 for ω.

Notes:

• Because Net Income progress against the full-year forecast (96%) exceeds the standard rate (75%), forecast EPS has been adjusted upward within a range of up to +10% (because companies ahead of schedule tend to exceed forecasts; the adjustment may be excessive for businesses with strong seasonality).
• Net Assets as of the quarter-end have been used (there is a timing difference relative to the full-year forecast).

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / This is a mechanically calculated value based solely on publicly disclosed data; it 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 through analysis of XBRL earnings summary 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 discretion and responsibility, after consulting with professionals as necessary.

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