| Metric | Current Period | Prior-Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥982.5B | ¥839.7B | +17.0% |
| Operating Income / Operating Profit | ¥61.7B | ¥16.6B | +270.9% |
| Ordinary Income | ¥63.5B | ¥-25.0B | +105.3% |
| Net Income | ¥32.1B | ¥-5.1B | -65.7% |
| ROE | 3.0% | -0.5% | - |
For the fiscal year ending February 2026, the company achieved significant revenue and profit growth with Revenue of ¥982.5B (YoY +¥142.8B +17.0%), Operating Income of ¥61.7B (YoY +¥45.1B +270.9%), Ordinary Income of ¥63.5B (YoY +¥88.5B -％), and Net income attributable to owners of parent of ¥52.4B (YoY +¥59.0B). The company turned from the prior-year Ordinary loss of ¥25.0B and Net loss of ¥5.1B into profitability, and Operating Margin improved by 4.3pt from 2.0% to 6.3%. Recovery in the Motion Picture-Related Business and Theatrical Business drove substantial profit increases, while the Real Estate Business maintained stable high profitability, leading to marked improvement in group-wide profitability.
[Revenue] Revenue of ¥982.5B (YoY +17.0%) reflected increases across all segments. The Motion Picture-Related Business recorded ¥530.9B (+20.9%) representing a 54.0% share of revenue, leading growth alongside recovery in the Theatrical Business. The Theatrical Business grew double-digits to ¥274.6B (+14.7%), Real Estate Business was stable at ¥164.7B (+3.6%), and Other Businesses showed high growth at ¥34.6B (+33.7%).
[Profitability] Gross Profit was ¥416.2B (Gross Margin 42.4%), up from ¥358.5B (Gross Margin 42.7%) a year earlier, though Gross Margin declined by 0.3pt. SG&A was ¥354.5B (SG&A Ratio 36.1%), up only ¥12.7B from ¥341.8B (SG&A Ratio 40.7%) in the prior year, improving the SG&A Ratio by 4.6pt. As a result, Operating Income was ¥61.7B (Operating Margin 6.3%), up 271% from ¥16.6B (Operating Margin 2.0%) the prior year. Non-operating income totaled ¥15.0B (mainly dividend income ¥9.8B) and non-operating expenses were ¥13.2B (mainly interest expense ¥9.2B), producing Ordinary Income of ¥63.5B, a turnaround from the prior-year Ordinary loss of ¥25.0B. Extraordinary gains were ¥7.9B (including compensation income ¥43.2B, etc.), extraordinary losses were ¥4.9B (including impairment loss ¥5.1B, etc.), and Pre-tax Income was ¥66.4B. After deducting income taxes of ¥14.0B, Net income attributable to owners of parent was ¥52.4B, a substantial improvement from the prior-year Net loss of ¥5.1B. In conclusion, the company is on a revenue- and profit-expanding trajectory.
The Motion Picture-Related Business reported Operating Income of ¥25.2B (prior year ¥4.4B) for a margin of 4.7%, improving 3.7pt from the prior-year margin of 1.0%. Of the ¥530.9B in revenue, ¥529.5B was external customers, with recovery in theatrical box office and increased distribution revenue contributing. The Theatrical Business returned to profitability with Operating Income of ¥17.2B (prior-year loss ¥11.8B) for a margin of 6.3%, driven by recovery in utilization rates and higher box office revenue. The Real Estate Business maintained high profitability with Operating Income of ¥51.5B (prior year ¥58.1B, -11.3%) and a margin of 31.3%, continuing to underpin group profits. Other Businesses turned profitable with Operating Income of ¥1.6B (prior-year loss ¥2.3B), supported by program production and streaming content. Corporate adjustments were -¥33.8B versus -¥31.6B in the prior year; although increased, relative burden was alleviated by revenue growth.
[Profitability] Operating Margin of 6.3% improved 4.3pt from 2.0% year-on-year, primarily due to lower SG&A Ratio. Net Margin of 5.3% represented a large improvement from the prior-year net loss. ROE recovered to 3.0% from negative in the prior year, though it remains low. [Cash Quality] Operating Cash Flow / Net Income ratio was 2.55x (Operating Cash Flow ¥133.6B / Net Income ¥52.4B), indicating sound cash quality, and the accrual ratio was -3.5%, which is favorable. Operating Cash Flow subtotal was ¥134.0B, with working capital change of -¥0.4B, which was minimal. [Investment Efficiency] Total Asset Turnover was 0.43x (Revenue ¥982.5B / Total Assets ¥2,293.8B), slightly up from 0.40x prior year. Capital expenditures were ¥20.2B, well below Depreciation of ¥48.7B, indicating restrained investment pace. [Financial Soundness] Equity Ratio improved 2.7pt to 47.2% from 44.5% the prior year. Interest-bearing debt was ¥571.6B (short-term borrowings ¥37.0B + long-term borrowings ¥534.6B), and Debt/EBITDA ratio was high at 5.18x. Interest coverage measured as Operating Cash Flow / Interest Paid was 14.7x, indicating sufficient capacity to service interest. Current Ratio was 135% (Current Assets ¥451.1B / Current Liabilities ¥334.1B), showing healthy short-term liquidity.
Operating Cash Flow improved substantially to ¥133.6B (prior year ¥-5.9B), with a subtotal of ¥134.0B and minimal working capital change of -¥0.4B. Increases in accounts receivable (-¥20.2B) and inventories (-¥16.4B) were cash outflows, partly offset by an increase in accounts payable of ¥16.6B. Corporate tax payments were -¥3.5B, down from -¥12.5B prior year, reducing tax cash outflow. Investing Cash Flow was -¥41.4B, primarily due to capital expenditures of -¥20.2B, intangible asset acquisitions of -¥0.9B, and acquisition of investment securities of -¥12.5B. Proceeds included ¥1.8B from sales of securities and ¥0.4B from recovery of long-term loans. Free Cash Flow was ample at ¥92.2B (Operating Cash Flow ¥133.6B + Investing Cash Flow -¥41.4B), sufficient to cover dividend payments of ¥4.1B and share buybacks of ¥0.1B. Financing Cash Flow was -¥54.4B, with proceeds from long-term borrowings of ¥50.0B offset by repayments of -¥57.2B and net decrease in short-term borrowings of -¥34.0B, which were the main cash outflows. Cash and cash equivalents at period-end were ¥186.9B, up ¥37.8B from ¥149.1B at the beginning of the period, with accumulation of Free Cash Flow strengthening liquidity.
Of Ordinary Income of ¥63.5B, Operating Income accounted for ¥61.7B, indicating core business profitability as the foundation. Within non-operating income of ¥15.0B, dividend income of ¥9.8B was the main component, showing stable cash inflows from investment securities. Non-operating expenses of ¥13.2B were centered on interest expense of ¥9.2B, reflecting interest burden on interest-bearing debt. Extraordinary gains of ¥7.9B include compensation income of ¥43.2B which has been treated as a temporary item due to compressed booking, while gains on sales of investment securities of ¥0.6B were limited. Extraordinary losses of ¥4.9B include impairment losses of ¥5.1B, valuation losses on investment securities of ¥3.8B, and disaster losses of ¥1.1B, which are non-recurring. The difference between Comprehensive Income of ¥155.4B and Net Income of ¥52.4B is ¥103.0B, mainly due to Other Valuation Differences on Marketable Securities of ¥101.2B. With Operating Cash Flow reaching 2.55x Net Income and minimal working capital variation from the Operating Cash Flow subtotal, the quality of earnings is assessed as high.
Full Year guidance calls for Revenue of ¥1,000.0B (YoY +1.8%), Operating Income of ¥37.0B (YoY -40.1%), Ordinary Income of ¥35.0B (YoY -44.8%), and Net income attributable to owners of parent of ¥11.0B (YoY -79.0%). Versus actual results, Revenue achieved 98.2% of guidance (nearly met), Operating Income was 166.8% of guidance, Ordinary Income was 181.4% of guidance, and Net Income was 476.4% of guidance, representing significant outperformance. The company’s conservative guidance likely reflected expectations of the lapse of prior-year extraordinary gains and anticipated declines in Real Estate income; however, recovery in Motion Picture and Theatrical businesses and cost efficiencies substantially exceeded expectations. The company had forecast no dividend, but in practice paid a year-end dividend of ¥40 per share (Ordinary Dividend ¥30 + Special Dividend ¥10), clarifying its shareholder-return stance.
The year-end dividend was ¥40 per share (Ordinary Dividend ¥30, Special Dividend ¥10), resulting in an annual dividend of ¥40. As there was no dividend in the prior year, this represents a resumption of dividends. Payout Ratio was conservative at 10.5% (Total Dividends ¥4.14B / Net income attributable to owners of parent ¥52.4B × based on shares outstanding) . With Free Cash Flow of ¥92.2B versus total dividends of ¥4.14B, dividend coverage by Free Cash Flow was 22.3x, indicating ample room. Share buybacks were limited at ¥0.1B, and Total Return Ratio remained at 10.8%. The company maintained a low payout ratio of 10.5% while adding a special dividend to return profits to shareholders. If ROE improves and profits stabilize going forward, there is scope to raise the payout ratio.
High leverage risk: Interest-bearing debt of ¥571.6B versus EBITDA (Operating Income + Depreciation) of ¥110.4B yields a Debt/EBITDA ratio of 5.18x, a high level. In a rising interest rate environment, interest expense burden could increase and compress profits. Although Interest Coverage measured as Operating Cash Flow / Interest Paid is 14.7x currently sufficient, financial flexibility may deteriorate if Operating Cash Flow fluctuates.
Segment concentration risk: The Motion Picture-Related Business accounts for 54.0% of revenue and the Theatrical Business 27.9%, indicating high dependence on box office and content. Presence or absence of hit titles and fluctuations in utilization rates directly affect performance, making the quality and timing of title lineup critical risk factors. Although the Real Estate Business has a high margin of 31.3%, rental levels and vacancy rate volatility present risks.
Working capital risk: Work in progress of ¥97.3B (4.2% of total assets) has accumulated, and accounts receivable of ¥119.7B are trending upward. If collection periods for motion picture and theatrical production lengthen, cash flow deterioration or inventory valuation loss risk may arise. Year-on-year increases in Accounts Receivable (+¥20.2B) and Inventories (+¥16.4B) highlight the need to improve working capital management efficiency.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.3% | 8.1% (3.6%–16.0%) | -1.8pt |
| Net Margin | 3.3% | 5.8% (1.2%–11.6%) | -2.6pt |
Profitability is below industry median, indicating room for improvement in both Operating Margin and Net Margin.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 17.0% | 10.1% (1.7%–20.2%) | +6.9pt |
Revenue growth rate exceeds the industry median by 6.9pt, placing the company favorably on growth.
※ Source: Company compilation
Recovery in Motion Picture and Theatrical businesses and high profitability of Real Estate improved Operating Margin by 4.3pt YoY, and SG&A efficiency revealed operating leverage. Operating Cash Flow / Net Income ratio of 2.55x supports high quality of earnings, and robust Free Cash Flow of ¥92.2B secures strong cash generation. However, Operating Margin of 6.3% is 1.8pt below industry median of 8.1%, indicating further improvement in profitability is required.
High leverage with Debt/EBITDA of 5.18x may constrain financial flexibility in a rising interest rate environment. With Payout Ratio at 10.5% and Total Return Ratio at 10.8%, shareholder returns are conservative; progress in profit stability and leverage reduction will be key to dividend expansion. Valuation gains on investment securities of ¥101.2B boosted Comprehensive Income and improved Equity Ratio to 47.2%, but capital remains sensitive to market volatility.
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 information compiled by the company based on public financial statements. Investment decisions should be made at your own responsibility and, if necessary, after consulting a professional advisor.