| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1853.3B | ¥1799.2B | +3.0% |
| Operating Income / Operating Profit | ¥361.0B | ¥351.6B | +2.7% |
| Ordinary Income | ¥435.4B | ¥399.9B | +8.9% |
| Net Income / Net Profit | ¥81.2B | ¥42.2B | +92.4% |
| ROE | 2.1% | 1.2% | - |
For the fiscal year ended March 2026, Revenue was ¥1,853.3B (YoY +¥54.1B +3.0%), Operating Income was ¥361.0B (YoY +¥9.4B +2.7%), Ordinary Income was ¥435.4B (YoY +¥35.5B +8.9%), and Net Income attributable to owners of the parent was ¥81.2B (YoY +¥39.0B +92.4%). Declines in the Motion Picture & Video-related business were offset by strong performance in Theatrical Operations (+33.0%), Construction & Interior (+35.5%), and Events (+15.3%), resulting in company-wide revenue and profit growth. Operating margin held steady at 19.5%, sustaining a high-profit structure with a gross margin of 43.4%. Ordinary Income benefited from equity-method investment income of ¥42.9B and dividend/interest income totaling ¥22.8B, producing an uplift of ¥74.4B from the operating level, and Net Income was significantly increased by Non-operating gains of ¥80.9B (including ¥74.1B gain on sales of fixed assets). Because the one-time gains account for roughly 30% of Net Income, attention is required regarding reproducibility in the next fiscal year.
[Revenue] Revenue was ¥1,853.3B (YoY +3.0%), with large increases in Theatrical Operations and Construction & Interior offsetting a decrease in Motion Picture & Video-related (-4.2%). By segment: Theatrical Operations recorded ¥255.1B (+33.0%), supported by recovery in theater attendance and strengthened programming. Construction & Interior was ¥134.3B (+35.5%) with progress on large orders and margin improvement. Events was ¥136.0B (+15.3%) where expansion of event planning and IP-linked initiatives was effective. Tourism & Real Estate maintained stable growth at ¥80.6B (+5.1%). The core Motion Picture & Video-related business was ¥1,305.5B (-4.2%), impacted by title cycles in streaming and licensing revenue, but the segment—representing 68.3% of company revenue—maintained a high gross margin of 24.9%. Cost of sales ratio improved to 56.6% from 58.2% last year, lifting gross margin to 43.4% (prior year 41.8%), up 1.6pt.
[Profitability] Operating Income was ¥361.0B (YoY +2.7%), with an Operating Margin of 19.5% (same as prior year). SG&A was ¥443.6B (prior year ¥401.4B), up 10.5%; advertising expense ¥43.9B (+1.9%), lease expense ¥42.8B (+26.7%), and retirement benefit expense ¥1.8B (-23.8%) among changes, but these were absorbed by expanded gross profit. By segment, Motion Picture & Video-related Operating Income was ¥324.5B (-3.6%), generating about 90% of consolidated operating profit and maintaining high profitability. Theatrical Operations ¥24.0B (+207.3%), Construction & Interior ¥13.9B (+180.2%), Events ¥16.2B (+27.3%), and Tourism & Real Estate ¥27.6B (+8.5%) all posted substantial profit increases, demonstrating portfolio diversification effects. Ordinary Income was ¥435.4B (YoY +8.9%), with non-operating income of ¥77.8B (dividends received ¥12.5B, equity-method investment income ¥42.9B, etc.) lifting profit by ¥74.4B above the operating level. Profit before tax was ¥511.3B, with Special Gains of ¥80.9B (gain on sales of fixed assets ¥74.1B, gain on sale of investment securities ¥5.9B) added. After deducting corporate taxes of ¥137.5B (effective tax rate 26.9%), and subtracting Net Income attributable to non-controlling interests of ¥140.6B, Net Income attributable to owners of the parent was ¥81.2B (YoY +92.4%). The gain on sale of fixed assets—an extraordinary item—accounts for approximately 32.5% of Net Income and is expected to drop out next year; therefore, evaluating recurring earning power at the operating and ordinary income levels is appropriate. In conclusion, the company achieved revenue and profit growth.
The core Motion Picture & Video-related segment (Revenue ¥1,305.5B, Operating Income ¥324.5B) generated roughly 90% of consolidated operating income, maintaining high profitability with a margin of 24.9%, but saw Revenue and Operating Income decline YoY by -4.2% and -3.6% respectively due to title cycle effects on streaming and licensing income. Theatrical Operations (Revenue ¥255.1B, Operating Income ¥24.0B) recorded strong YoY gains of +33.0%/+207.3%, improving margin to 9.4%, offsetting the closure of directly managed theaters through stronger programming at other venues and recovery in attendance. Events (Revenue ¥136.0B, Operating Income ¥16.2B) grew +15.3%/+27.3% with a margin of 11.9%, benefiting from expanded event planning and IP-linked initiatives. Construction & Interior (Revenue ¥134.3B, Operating Income ¥13.9B) surged +35.5%/+180.2% to a 10.3% margin, supported by margin improvement on large projects. Tourism & Real Estate (Revenue ¥80.6B, Operating Income ¥27.6B) grew +5.1%/+8.5% with a 34.2% margin—the highest among segments—backed by stable occupancy in commercial leasing and hotel operations. While the Motion Picture & Video-related segment concentration remains high at 68.3% of revenue, rapid growth in other segments is manifesting diversification effects.
[Profitability] Operating Margin 19.5%, Operating Revenue to Ordinary Income ratio 23.5%, Net Income margin 4.4% (attributable to owners of the parent), indicating continued high profitability at the operating level. ROE was 2.1% (based on Equity ¥2,289.4B), low primarily due to low total asset turnover of 0.371x (Total Assets ¥4,991.3B); ample cash & investment securities and substantial real estate assets dilute asset efficiency. Gross margin of 43.4% improved by +1.6pt YoY, supported by a higher mix of high value-added businesses. Operating margin was maintained while absorbing the rise in SG&A ratio to 23.9% (prior year 22.3%) through gross margin improvement. [Cash Quality] Operating Cash Flow was ¥267.2B, 3.3x consolidated Net Income of ¥81.2B, and Operating CF/EBITDA ratio was 0.59x, low; non-cash gains such as gain on sale of fixed assets were excluded, tax payments ¥64.1B, interest payments ¥12.1B, decrease in advances received ¥14.1B, and extended DSO of 84 days pressured cash conversion. Accrual ratio was -0.7%, favorable, but there is ample room to improve OCF generation. [Investment Efficiency] Total asset turnover 0.371x indicates abundant asset capacity but low efficiency; capital expenditures were ¥430.6B, 4.77x depreciation ¥90.4B, reflecting a major investment phase to expand future earnings capacity. ROA (on Ordinary Income basis) was 9.0%, reflecting contributions from non-operating income. [Financial Soundness] Equity Ratio 77.3% (Net Assets ¥3,857.2B / Total Assets ¥4,991.3B), Current Ratio 325.3% (Current Assets ¥1,954.3B / Current Liabilities ¥600.7B), Debt/EBITDA 0.45x (Interest-bearing debt ¥204.2B / EBITDA ¥451.4B), indicating an extremely conservative balance sheet. Cash and deposits ¥1,266.1B plus investment securities ¥1,502.2B together account for 55.5% of total assets, leaving substantial financial capacity.
Operating Cash Flow was ¥267.2B (prior year ¥336.5B, YoY -20.6%), resulting from Operating CF subtotal ¥577.0B less increases in inventories ¥251.2B, increases in trade receivables ¥18.5B, decreases in trade payables ¥2.6B, and corporate tax payments ¥64.1B. Operating CF / Net Income ratio is 3.3x (based on consolidated Net Income ¥81.2B), which is adequate by definition, but OCF/EBITDA ratio of 0.59x (EBITDA ¥451.4B) is low; adjustments include exclusion of non-cash gains such as gain on sale of fixed assets ¥74.1B, inclusion of interest and dividend receipts ¥7.4B, interest payments ¥12.1B, and decrease in advances received ¥14.1B. Inventories—mainly work-in-progress—fluctuated significantly during the period and the project's timing of monetization pressures cash conversion. Investing Cash Flow was -¥46.6B (prior year -¥174.7B); although there were large capital expenditures of ¥430.6B, net reduction in time deposits of ¥395.1B (deposits ¥399.0B, withdrawals ¥395.1B) and sale of investment securities ¥7.7B partly offset this. Free Cash Flow was ¥220.6B (Operating CF ¥267.2B + Investing CF -¥46.6B), sufficient to cover dividend payments ¥37.0B and Financing CF -¥18.9B, resulting in an increase in cash and deposits of ¥211.7B. Financing CF was -¥18.9B, as repayments of long-term borrowings ¥145.2B and short-term borrowings ¥46.8B exceeded new long-term borrowings ¥194.7B; dividends to non-controlling interests ¥47.3B were also paid. Overall, cash realization of profits is acceptable, but next year the disappearance of one-time gains, stabilization of tax burden, and improvement in working capital efficiency will be key to improving cash conversion rates.
Recurring earnings center on Operating Income ¥361.0B and equity-method investment income ¥42.9B; non-operating income ¥77.8B (4.2% of Revenue) does not indicate excessive dependence, but stability of dividend income ¥12.5B and interest income ¥10.3B depends on market conditions and investee performance. One-time items—Special Gains ¥80.9B (gain on sales of fixed assets ¥74.1B, gain on sale of investment securities ¥5.9B, etc.)—account for about 32.5% of Net Income, and their drop-out next year is expected to normalize bottom-line profit. Operating CF / Net Income ratio of 3.3x and accrual ratio -0.7% indicate high quality by definition, but OCF/EBITDA ratio 0.59x shows weak cash conversion; exclusion of non-cash gains, tax and interest outflows, decrease in advances received, and extended DSO of 84 days are factors. The divergence between Ordinary Income ¥435.4B and consolidated Net Income ¥233.2B (including non-controlling interests) is due to added Special Gains and deduction of corporate taxes ¥137.5B; sustainability is limited. Operating-level profitability and ordinary-level equity/dividend income are stable, and the quality of recurring profits excluding one-time gains is high.
Full year guidance (Revenue ¥1,890.0B, Operating Income ¥287.0B, Ordinary Income ¥334.0B, Net Income attributable to owners of the parent ¥126.0B) compared to results: Revenue ¥1,853.3B (achievement 98.1%), Operating Income ¥361.0B (125.8%), Ordinary Income ¥435.4B (130.4%), Net Income ¥81.2B (64.4%; however the company plan may have been stated on a basis including non-controlling interests, and on a parent-attributable basis results exceed plan by 185.0%). Revenue was slightly below plan by ¥36.7B, but Operating Income exceeded plan by +¥74.0B and Ordinary Income by +¥101.4B. Drivers were the Special Gains ¥80.9B, margin improvements in Theatrical Operations and Construction & Interior, and upside in equity-method investment income. Progress rates were 125–130% at the operating and ordinary income levels, well above normal, reflecting profitability improvement beyond conservative assumptions. The dividend payout guidance of annual ¥6 was significantly exceeded with actual dividends of ¥36 (including special dividend ¥24, included in the ¥30 year-end dividend), reflecting a return of one-time gains. Guidance for next year is undisclosed, but conservative assumptions incorporating the drop-out of one-time gains, title cycle effects in Motion Picture & Video-related, and increased depreciation burden from capital expenditures are expected.
Annual dividend was ¥36 (interim dividend ¥6, year-end dividend ¥30, of which special dividend ¥24), with a Payout Ratio of 7.1% (based on Net Income attributable to owners of the parent ¥81.2B and total dividends ¥11.6B), remaining at a conservative level. Free Cash Flow ¥220.6B vs dividend payments ¥37.0B (including dividends to non-controlling interests ¥47.3B) yields an FCF coverage of 8.3x, very high, indicating strong sustainability of the ordinary dividend. Treasury stock holdings were 11.358M shares (15.4% of outstanding shares 73.845M), ensuring flexibility in capital policy. The year-end dividend ¥30 includes a special dividend of ¥24, demonstrating a willingness to return one-time gains such as gains on sale of fixed assets. Given the drop-out of one-time gains next year, reproducibility of special dividends is limited, but base dividend sustainability and scope for additional shareholder returns (such as share buybacks) are large, supported by stable Operating CF and cash deposits of ¥1,266.1B. Payout ratio here is evaluated excluding share buybacks.
Concentration risk in Motion Picture & Video-related business: Revenue composition 68.3% and operating income composition 90% indicate high dependency on the core business; presence or absence of hit titles, contract terms with streaming platforms, and fluctuations in theatrical market conditions directly affect performance. As shown by YoY -4.2% decline, title cycle volatility can materially change earnings; IP lifecycle management and pipeline diversification are key to sustainable growth.
Vulnerability in working capital management and cash conversion efficiency: DSO 84 days and lengthening receivables collection, increases in inventories (mainly WIP) of ¥251.2B during the period, and decrease in advances received ¥14.1B result in a low OCF/EBITDA ratio of 0.59x and weak cash conversion. The project timing-dependent structure pressures working capital; tightening credit management and enhancing revenue recognition operations are urgent.
Dependence on one-time gains and volatility in earnings quality: Special Gains ¥80.9B (including gain on sale of fixed assets ¥74.1B) account for about 32.5% of Net Income, posing a risk of significant decline in final profit next year when these gains drop out. Upside in effective tax rate (26.9%) can also affect results; stabilizing tax burden and maintaining earning power at the ordinary income level are essential to stabilize earnings quality.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 19.5% | 8.1% (3.6%–16.0%) | +11.4pt |
| Net Margin | 4.4% | 5.8% (1.2%–11.6%) | -1.5pt |
Operating Margin exceeds the industry median 8.1% by +11.4pt, highlighting high gross-margin structure from licensing revenues and real estate leasing. Net Margin is -1.5pt below the median 5.8%, affected by deduction of Net Income attributable to non-controlling interests ¥140.6B and corporate tax burden.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 3.0% | 10.1% (1.7%–20.2%) | -7.1pt |
Revenue growth lags industry median 10.1% by -7.1pt, as the decline in Motion Picture & Video-related compressed consolidated growth. Rapid rises in Theatrical Operations and Construction & Interior were insufficient to offset the core segment decline.
※ Source: Company compilation
Maintained top-tier profitability in the industry with Operating Margin 19.5% and Gross Margin 43.4%, and substantially exceeded company guidance by 25.8% on Operating Income and 30.4% on Ordinary Income. Rapid growth in Theatrical Operations, Construction & Interior, and Events manifested portfolio diversification effects, establishing a structure to offset declines in Motion Picture & Video-related. Financial position is extremely strong with Debt/EBITDA 0.45x, Current Ratio 325.3%, and Cash & deposits ¥1,266.1B plus investment securities ¥1,502.2B comprising 55.5% of total assets, providing significant capacity for additional investment and shareholder returns.
One-time gains (gain on sale of fixed assets ¥74.1B, etc.) account for about 32.5% of Net Income, and their drop-out next year is expected to normalize bottom-line profit. OCF/EBITDA ratio of 0.59x indicates low cash conversion; extended DSO of 84 days, inventory (WIP) increase ¥251.2B, and decrease in advances received ¥14.1B are pressuring working capital. Capital expenditures ¥430.6B are 4.77x depreciation and reflect a major investment phase; future progress in depreciation burden and asset turnover improvement will be key to improving ROE and cash generation.
This report is a financial analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions are your own responsibility; please consult a professional advisor as necessary.