| Metric | Current Period | Prior-Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | - | - | - |
| Operating Income / Operating Profit | ¥678.9B | ¥646.8B | +5.0% |
| Ordinary Income | ¥701.4B | ¥644.5B | +8.8% |
| Net Income / Net Profit | ¥395.4B | ¥390.5B | +1.3% |
| ROE | 7.4% | 7.9% | - |
For the fiscal year ended February 2026, Toho reported Revenue of ¥3606.6B (YoY +15.2%), Operating Income of ¥678.9B (YoY +¥32.1B +5.0%), Ordinary Income of ¥701.4B (YoY +¥56.9B +8.8%), and Net Income attributable to owners of the parent of ¥517.7B (YoY +¥84.1B +19.4%), achieving both revenue and profit growth. A major box-office hit in the Film Business drove double-digit revenue growth, and Operating Income exceeded the prior year due to higher sales. Special gains of ¥91.1B (mainly ¥89.1B gain on sales of investment securities) boosted Net Income, but the operating margin declined to 18.8% from 20.7% a year earlier (down 1.9pt), and higher SG&A (¥798.8B → ¥917.0B) pressured profitability. Equity-method losses of ¥21.1B also capped the upside to Ordinary Income.
[Revenue] Revenue of ¥3606.6B (sum of segment external sales) increased 15.2% YoY, a double-digit rise. The Film Business recorded ¥1826.2B (+30.6%) and accounted for 50.6% of revenue, driven by strong performance of major box-office titles and expanded overseas distribution. The IP & Animation Business posted ¥752.6B (+8.5%) with steady TV animation licensing and merchandising income. The Real Estate Business was ¥791.8B (-0.6%), largely flat, and the Theater (Stage) Business was ¥223.1B (-2.5%), slightly down. Revenue concentration in the Film Business increased, raising dependence on box-office outcomes.
[Profitability] Operating Income of ¥678.9B grew 5.0% YoY but lagged revenue growth. Operating margin was 18.8%, down 1.9pt from 20.7% in the prior year, and gross margin fell to 44.3% (prior year 46.2%), a 1.9pt contraction. SG&A rose to ¥917.0B (+14.8% YoY), notably advertising expenses ¥110.0B (prior year ¥104.2B) and retirement benefit costs ¥13.3B (prior year ¥9.0B). By segment, Film delivered Operating Income of ¥373.0B (+30.3%), a significant increase; Real Estate achieved ¥190.3B (+13.1%) with stable growth; however, IP & Animation recorded ¥173.0B (-22.2%, down ¥62.4B YoY) due to front-loaded production costs and timing mismatches in monetization. Ordinary Income of ¥701.4B (+8.8%) benefited from non-operating income of ¥45.3B (dividends received ¥20.2B, interest income ¥6.1B), but equity-method losses of ¥21.1B subtracted ¥23.9B net. Special gains, primarily ¥89.1B on sale of investment securities, contributed ¥57.6B net to pre-tax income, resulting in Pre-tax Income of ¥759.0B (+14.9%) and Net Income of ¥517.7B (+19.4%). Excluding one-off items, operating earnings improved due to the Film Business, but rising SG&A and IP & Animation profit decline muted operating leverage.
The Film Business: Revenue ¥1826.2B (+30.6%), Operating Income ¥373.0B (+30.3%, margin 20.4%), with significant revenue and profit growth. Success of major box-office titles and expanded overseas distribution contributed, and margin remained in the 20% range comparable to the prior year.
IP & Animation Business: Revenue ¥752.6B (+8.5%), Operating Income ¥173.0B (-22.2%, margin 23.0%) — revenue up but profits down. Margin declined 6.3pt from 29.3% a year earlier, with front-loaded production investments and delayed title monetization weighing on profitability.
Theater (Stage) Business: Revenue ¥223.1B (-2.5%), Operating Income ¥34.6B (-16.1%, margin 15.5%) — lower revenue and earnings due to fewer performances, margin down 2.3pt from 17.8%.
Real Estate Business: Revenue ¥791.8B (-0.6%), Operating Income ¥190.3B (+13.1%, margin 24.0%) — revenue slightly down but profits up due to cost efficiencies and improved profitability in road maintenance operations, margin up 4.2pt from 19.8% prior year.
Corporate/Eliminations adjusted Operating Income totaled ¥678.9B, with corporate expenses not allocated to segments of ¥92.7B deducted.
[Profitability] Operating margin 18.8% decreased 1.9pt from 20.7% prior year, affected by a slight rise in SG&A ratio to 25.4% (prior year 25.5%) and a 1.9pt contraction in gross margin. ROE was 10.4% (prior year 9.3%, calculated on average equity at beginning and end of period), improved by gains on sale of investment securities, while ROA (on Ordinary Income basis) declined to 7.3% (prior year 10.2%). Total asset turnover improved to 0.53x (prior year 0.49x), but net income margin volatility drives ROE.
[Cash Quality] Operating Cash Flow was ¥653.3B, 1.26x Net Income attributable to owners of the parent (¥517.7B), indicating good quality. EBITDA was ¥792.6B (Operating Income + Depreciation ¥138.7B), and OCF/EBITDA ratio was 82.4%, somewhat low, suggesting working capital changes and non-cash adjustments impacted cash generation. Days Sales Outstanding were 60 days (prior year 65), inventory turnover days 21 days (prior year 46), showing improved working capital efficiency.
[Investment Efficiency] Capital expenditures were ¥154.4B, 1.11x depreciation ¥138.7B, indicating continued growth investment. Free Cash Flow was ¥404.3B (OCF − Investing CF ¥249.0B), covering dividends ¥156.6B and share buybacks ¥149.7B (total ¥306.3B) by 1.3x, leaving ample shareholder return capacity.
[Financial Soundness] Equity Ratio 75.8% (prior year 75.8%). Interest-bearing debt totaled ¥13.3B (short-term borrowings ¥0.45B + long-term borrowings ¥12.8B), Debt/Equity 0.03x, Debt/EBITDA 0.02x — effectively debt-free. Current ratio 246%, quick ratio 224%, indicating strong short-term liquidity. Cash and deposits ¥509.7B + Short-term investment securities ¥614.4B = ¥1124.1B, sufficiently covering current liabilities ¥952.5B. Investment securities ¥1642.0B (23.4% of total assets) carry market risk but currently hold unrealized gains enhancing flexibility for capital policy.
Operating CF was ¥653.3B (prior year ¥516.2B, +26.6%), representing OCF subtotal ¥873.8B less corporate taxes paid ¥245.2B and working capital changes. Increases in trade receivables ¥33.4B and decreases in trade payables ¥26.1B used cash, while inventories were nearly flat (increase ¥1.2B). Adjustments adding back non-cash items included equity-method losses +¥21.1B, goodwill amortization ¥10.5B, impairment losses ¥5.2B. Investing CF was -¥249.0B, driven by purchases of short-term investment securities -¥728.3B and sales of securities +¥105.6B net, acquisition of tangible and intangible fixed assets -¥154.4B, and acquisition of subsidiary shares -¥106.9B. Financing CF was -¥313.3B, including share repurchases -¥149.7B, dividend payments -¥156.6B, net increase in short-term borrowings +¥200.0B, and long-term borrowings repayments -¥3.1B. FCF was ¥404.3B, covering dividends + buybacks ¥306.3B by 1.3x, leaving approximately ¥98B of surplus cash after returns. Cash and equivalents at end of period were ¥866.8B (opening ¥766.1B, +¥100.7B), including new consolidation effect +¥8.3B and FX gains +¥1.4B, overall indicating ample liquidity.
Ordinary Income ¥701.4B exceeded Operating Income ¥678.9B by ¥22.5B, with non-operating income ¥45.3B (dividends received ¥20.2B, interest income ¥6.1B, foreign exchange gains ¥1.3B, etc.) offset by non-operating expenses ¥22.8B (including equity-method losses ¥21.1B). Dividends and interest income are recurring from held securities and surplus asset management, but equity-method losses ¥21.1B, while improved from ¥42.1B prior year, remain a negative and introduce instability. Special gains ¥91.1B (mainly ¥89.1B gain on sale of investment securities) are one-off and have limited sustainability; special losses ¥33.5B (impairment losses ¥5.2B, valuation losses on securities ¥0.6B, etc.) netted to a ¥57.6B positive contribution to pre-tax income. Comprehensive income ¥687.0B exceeded Net Income ¥517.7B by ¥169.3B, mainly due to other securities valuation gains ¥145.3B, retirement benefit adjustments ¥12.5B, and foreign currency translation adjustments ¥1.0B, indicating market improvements lifted equity. Operating cash flow quality is solid: OCF ¥653.3B is 1.26x Net Income and 82.4% of EBITDA ¥792.6B, though mid-period changes in receivables and payables modestly restrained cash conversion. Accruals (Net Income − OCF) were -¥135.6B (negative), indicating non-cash adjustments exceeded profits and CF quality is robust.
For the fiscal year ending February 2027, management forecasts Operating Income ¥620.0B (YoY -8.7%), Ordinary Income ¥670.0B (-4.5%), and Net Income ¥410.0B (-20.8%), indicating an expected decline in profits. Revenue is undisclosed, but the projected drop in Operating Income factors in a rebound effect from major hit titles and front-loaded costs in IP & Animation. Compared to the current period, Operating Income is projected down ¥58.9B, Ordinary Income down ¥31.4B, and Net Income down ¥107.7B; the decline is mainly due to the disappearance of special gains and conservative estimates for the film lineup. Full-year EPS forecast 48.85 yen (current period actual 61.20 yen) is -20.1% and assumes post-split share count (1 share → 5 shares, effective March 1, 2026). Dividend guidance is 11 yen per share (post-split), equivalent to an annualized 55 yen, implying a payout ratio of roughly 90% (based on forecast Net Income ¥410B and issued shares 880 million, estimated), which is high but considered sustainable given potential mid-year upside. Progress rates are Operating Income 109.5% (actual ¥678.9B / forecast ¥620.0B) and Ordinary Income 104.7%, indicating actual results exceeded the company’s conservative full-year guidance.
This period’s dividends were interim ¥42.5 + year-end ¥67.5, total ¥110 per share (pre-split basis), with total dividend payments of ¥156.6B. Dividend payout ratio was 30.3% (total dividends ¥156.6B / Net Income attributable to owners of the parent ¥517.7B; on a basic EPS basis payout ratio is 179.7% which diverges, but the total dividend basis reflects actual cash). Share buybacks totaled ¥149.7B; combined with dividends the total shareholder returns amounted to ¥306.3B, yielding a Total Return Ratio of 59.2% (¥306.3B / ¥517.7B), and 75.8% relative to FCF ¥404.3B, indicating sustainability. Prior year dividend was ¥35 per share (pre-split) totaling ¥144.6B; the current period increased dividends by ¥12.0B. Next fiscal-year dividend guidance is 11 yen per share (post-split, annualized equivalent 55 yen), keeping payout ratio about 30% relative to forecast Net Income ¥410B, maintaining prior-year levels. Share repurchases are executed flexibly; current-period buybacks ¥149.7B were below prior year ¥200.6B, likely reflecting adjustments based on share price and capital efficiency. Cash and deposits ¥509.7B + short-term investment securities ¥614.4B = ¥1124.1B, exceeding current liabilities ¥952.5B, supporting continued dividends and buybacks.
Revenue concentration in the Film Business (50.6%) and dependence on box-office outcomes: The Film Business accounted for ¥1826.2B (50.6% of total revenue) and Operating Income ¥373.0B (48.4% of adjusted segment profit), making performance highly sensitive to the success of major titles. While the current period benefited from strong flagship titles, the next fiscal-year guidance is conservative (Operating Income -8.7%), reflecting lineup uncertainty. Revenue volatility due to concentration of production/distribution titles and overseas box-office FX and market risks are concerns.
Decline in profitability of the IP & Animation Business (margin -6.3pt): Operating margin in IP & Animation was 23.0% (prior year 29.3%), down 6.3pt, and Operating Income fell to ¥173.0B (-22.2%, -¥62.4B). Front-loaded production costs and delayed monetization are primary causes, and prolonged cost recovery or intensifying competition could delay margin recovery. While the segment is positioned for growth, in the short term it depressed overall company margins by 1.9pt and scrutiny of investment efficiency is required.
Continued equity-method losses (¥-21.1B) and market volatility of investment securities: Equity-method losses were ¥21.1B (improved from ¥42.1B) but still a negative contributor to Ordinary Income. Investment securities total ¥1642.0B (23.4% of total assets), exposing comprehensive income and equity to market fluctuations. Although this period recorded other securities valuation gains of ¥145.3B, sharp market reversals could produce valuation losses or impairments, damaging earnings and shareholders’ equity. Asset retirement obligations ¥84.7B (5.0% of liabilities) also represent potential future cash outflows to monitor.
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Strong financial base and high shareholder return capacity: Equity Ratio 75.8%, effectively debt-free (Debt/EBITDA 0.02x), current ratio 246% — financial position is very healthy. FCF ¥404.3B covers dividends + buybacks ¥306.3B by 1.3x. Cash and deposits + short-term investment securities ¥1124.1B sufficiently cover current liabilities ¥952.5B, and the company’s conservative forecast payout ratio of ~30% leaves ample room for additional dividends. Total Return Ratio 59.2% is at a sustainable level, and if earnings expand, there is scope to raise return rates. Investment securities ¥1642.0B provide flexibility for strategic capital allocation (utilizing sale gains, M&A funding, etc.) and options to improve asset efficiency.
Slowing operating leverage and need for IP & Animation margin recovery: Operating margin fell to 18.8% (YoY -1.9pt) as SG&A growth (+14.8%) roughly matched revenue growth (+15.2%), dulling operating leverage. IP & Animation margin declined from 29.3% to 23.0% (-6.3pt), pressuring corporate margins. Next-year guidance is conservative (Operating Income -8.7%), and recovery hinges on monetization of IP & Animation investments and film lineup outcomes. Monitoring quarterly box-office performance, IP & Animation order intake and title-level P/L, and SG&A ratio trends will be key. The Real Estate Business margin improvement (19.8% → 24.0%) provides stable income and portfolio balance that can contribute to medium-term margin expansion.
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