Seibu Holdings Inc

TSE:9024

Earnings Call Transcript 2020-Q1

[Yoshihide Nakagawa, executive]

I will now give you an overview of the financial results for the 3 months ended June 30, 2019, using the overview of the financial results presentation.

Please turn to Page 2. These are the financial results for the first quarter of the fiscal year ending March 2020. Operating revenue was JPY 144.8 billion, increasing 6 periods in a row. The JPY 8.5 billion growth year-on-year was mainly driven by the increase in private construction works for residential buildings and renovation projects in the construction business, RevPAR growth in the hotel business, sales of the condominium ENVIE-NÉ HOYA and rising attendance at the Seibu Lions baseball games. Thanks to the top line growth, operating profit grew JPY 1.3 billion, ordinary profit grew JPY 1 billion and profit attributable to owners of parent grew JPY 1.3 billion year-on-year.

I will now go over the status of each segment. Please turn to Page 3. This slide shows the operating revenue by segment. Revenue for the Urban Transportation and Regional segment grew JPY 0.7 billion. This was driven by an increase in the number of events held at the MetLife Dome, the opening of Moominvalley Park, the growth in non-commuter revenue from factors, including leisure travel demand during the long holiday and the increase in number of projects at Seibu Electrical Construction carried over from the previous fiscal year.

In the Hotel and Leisure segment, revenue increased JPY 2.0 billion. This was driven by RevPAR growth and the increase in food and beverage customers in the hotel business from factors including the holiday demand, the revenue contribution from AB Hotels Limited in London, which StayWell acquired in the previous fiscal year as well as the new hotel openings.

Real Estate group revenue grew JPY 1.4 billion. This was due to sales of the condominium ENVIE-NÉ HOYA and the opening of DaiyaGate Ikebukuro. Revenue for the Construction segment grew JPY 4.5 billion; Hawaii segment by JPY 0.5 billion; and other segments by JPY 1.0 billion for the reasons shown on the slide.

Please turn to Page 4. The table at the top is a breakdown of our operating profit by segment.

In the Urban Transportation and Regional segment, the increase in labor costs, energy and general and administrative expenses was more than offset by top line growth and profit grew JPY 100 million. The Hotel and Leisure segment also benefited from top line growth, but profit declined JPY 100 million due to the increase in selling, general and administrative expenses, such as new business related expenses as well as other factors.

The other parts of our business also saw profit growth, driven by revenue growth.

Please turn to Page 8. From this period, we have added some details of our Railway business, regarding the main expense items and their increase or decrease. The figures are at the bottom right, on Page 8.

Please turn to Page 9. These are the results of our Railway business. Commuter revenue declined by 0.2% year-on-year. This was mainly due to the 10-day long Golden Week holiday, reducing the number of weekdays during the period.

Meanwhile, non-commuter revenue grew 2.7% year-on-year. This was due to the shift from commuter revenue explained earlier as well as the increase in the number of concerts held at the MetLife Dome, the opening of Moominvalley Park and leisure demand during the long holiday.

Please turn to Page 11. These are the key indicators of our hotel operations. The overall RevPAR was JPY 12,500, up 7.0% year-on-year. ADR was JPY 15,864, up 4.0%, and occupancy was 78.8%, up 2.2 points. We continued our efforts in relation to revenue management, with a stronger focus on lead time as well as the strategic shift in targeted regions.

Together with the capturing of demand during the long holiday, these factors led to RevPAR growth.

Please turn to Page 13. These are the inbound trends. The number of non-Japanese guests declined 1.3% year-on-year, and the decline was largest for guests from Taiwan and South Korea. The main reasons for this include our focus on capturing domestic demand during the long holiday. And in terms of South Korea, there was an impact from the slowdown of the economy as well as South Korean tourists diversifying their destinations to China and other Asian countries. Meanwhile, room revenue from non-Japanese guests grew 3.7%. Although the rate of growth slowed down, we continue to see positive growth year-on-year, thanks to the increasing guests from North America and other factors.

Please turn to Page 14. This slide shows the inbound room revenue for the major countries and regions. Although the growth rate of our overall room revenue slowed down due to our focus on domestic demand during the long holiday, you will notice the continued growth of revenue from high ADR regions such as North America, Europe and Australia.

Please turn to Page 15. This is the status of MICE or Meetings, Incentives, Conventions and Exhibitions. We are steadily capturing demand for corporate meetings and seminars. MICE revenues are continuing to grow, and the first quarter results were in line with our expectations.

Please see Page 25. We have made no changes to our forecast for the second quarter as well as for the full year.

This concludes my presentation on the results for the first quarter. Thank you for your attention.