Seibu Holdings Inc

TSE:9024

Earnings Call Transcript 2021-Q3

[Yoshihide Nakagawa, executive]

I will now explain using the presentation titled Overview of financial results for the nine months ended December 31, 2020.

Please turn to Page 3. These are the financial results of the third quarter of the fiscal year ending March 2021. Due to the decline in demand caused by the spread of COVID-19 and the subsequent changes in people's lifestyles, operating revenue declined 41.6% year-on-year to become JPY 252.4 billion.

As for profits, the operating loss was JPY 37 billion, and the quarterly net loss attributable to owner of parent was JPY 48.1 billion despite measures including the reduction of fixed expenses.

As for our extraordinary P&L, we booked JPY 9.3 billion of extraordinary income, which includes the employment adjustment subsidy we received from the government.

Meanwhile, we booked the JPY 14.4 billion of fixed expenses, et cetera, incurred during the suspension of operations of our facilities based on the government's request in order to stop the spread of COVID-19 as extraordinary expenses, even though these were the types of costs that we would usually have booked as operating expenses.

The fixed expenses booked as extraordinary losses increased JPY 1.4 billion from the second quarter. This is related to the suspension of operations of hotels overseas.

For an analysis of changes in the operating revenue and profit of each segment, please refer to Pages 4 and 5.

Please turn to Page 7. Pages 7 and 8 describe the business status of each segment in the first half of the year. We have outlined the situation of the business for up to the third quarter as well as for January onwards.

As for the period of January onwards, when the state of emergency was declared again, we have brought forward the times of the last trains of each day, shortened the hours of operations of retail facilities as well as conducting temporary suspensions and consolidation of operations in our hotels based on demand trends.

Please turn to Page 9. Now on to our initiatives such as the securing of working capital. In order to strengthen the financial foundation of the group, Seibu Railway and Prince Hotels issued a total of JPY 80 billion of preferred shares last November. We have booked this JPY 80 billion of preferred shares as noncontrolling interest in net assets in the balance sheet as of the end of the third quarter.

Please turn to Page 10. In conducting our business operations during the COVID-19 pandemic, the Seibu Group is placing the highest priority on securing the safety and security of our customers and employees. We are implementing countermeasures to prevent the spread of infections in each business segment as well as pursuing the recovery of profits through the opening of new facilities and providing new services in response to changes in customer needs. Please see the details on Pages 10 to 12.

Furthermore, as shown on Pages 13 to 14, we are continuing to proceed with the key initiatives such as digital transformation, sustainability actions and collaborations both within the group as well as with external parties.

Please turn to Page 30. Now on to the full year earnings forecast. There has been a resurgence of the COVID-19 pandemic recently as well as the government, once again declaring a state of emergency, and the business environment is worse than we anticipated. Meanwhile, as announced in the second quarter results, we outperformed our first half forecast announced on September 24.

Moreover, the recovery in demand in the beginning of the third quarter was stronger than we expected. Based on the above, we have not changed our full year forecast for the time being. For your reference, we have shown the current trends regarding our railway and hotel operations on Page 31.

Please turn to Page 32. As for the progress so far in management reforms, the first point is the progress this fiscal year in reducing our fixed expenses. We have made some immediate responses such as suspending the operations of facilities based on demand as well as cutting down on spending that is not necessary and urgent. We have reduced fixed expenses such as personnel expenses by JPY 35 billion in the first 3 quarters compared to what we were expecting before COVID-19. We will continue to reduce fixed expenses in the fourth quarter.

As for the second point, which is the management reforms going forward, we are in the process of preparing a new medium-term management plan for the next fiscal year onwards and are currently reflecting the management reform initiatives announced in September, focusing on the 3 themes highlighted on this slide. We are planning to announce the new medium-term management plan in May together with the full year results.

This concludes my explanation. Thank you.