Fiscal year ended March 31, 2018 Earnings Announcement Sotetsu Holdings, Inc. April 26, 2018 http://www.sotetsu.co.jp/ir/index.html TSE securities code: 9003
Financial Highlights (Statement of Income) Consolidated statement of income FY3/2017 FY3/2018 Change Operating revenue 253,363 260,562 Operating income 30,510 31,266 Ordinary income 27,558 29,118 +7,198 Transportation: +345, Merchandising: -3,686 [+2.8%] Real estate: +8,130, Hotel: +2,078, Other: +531 +756 Transportation: -218, Merchandising: -44 [+2.5%] Real estate: +842, Hotel: +100, Other: +140 +1,559 Non-operating income: +41 [+5.7%] Non-operating expenses: -761 Profit attributable to owners of parent 17,061 18,227 +1,166 [+6.8%] Net income per share 174.10 yen 186.02 yen +11.92 yen The Company conducted a consolidation of shares at a ratio of one share for every five shares of common stock on October 1, 2017, and the effect of the consolidation of shares is taken into account for net income per share. Capital expenditure 20,678 33,183 Depreciation 16,011 16,210 +12,505 [+60.5%] +199 [+1.2%] Transportation: +984, Merchandising: +146 Real estate: +10,234, Hotel: +662, Other: +477 1
Segment Information (Transportation) Transportation FY3/2017 FY3/2018 Change Operating revenue 38,916 39,262 Operating income 8,392 8,173 +345 Increase in revenue due to a rise in the number of [+0.9%] passengers transported by train -218 Decrease in income due to increases in non-current [-2.6%] assets retirement expenses and depreciation Capital expenditure 8,559 9,543 Depreciation 6,134 6,455 Railway +984 [+11.5%] +320 [+5.2%] (Details of expenditure for FY3/2018) Construction of new railway vehicles (20000-series) for the through track of Sotetsu and Tokyu, as well as the extension work on Futamatagawa Station Renewal of railway vehicles and stations in the Design Brand-up Project Hoshikawa-Tenno-cho elevated tracks project No. of passengers (1,000) Non-commuter Commuter Total 80,107 149,969 230,077 80,438 151,299 231,738 +0.4% +0.9% +0.7% Commuter: Regular +1.1% Student +0.1% Passenger revenue (million yen) Non-commuter Commuter Total 15,674 15,477 31,151 15,760 15,636 31,396 +0.5% +1.0% +0.8% Commuter: Regular +1.1% Student +0.3% 2
Segment Information (Merchandising) Merchandising FY3/2017 FY3/2018 Change Operating revenue 109,266 105,580 Operating income 2,262 2,218-3,686 Decrease in revenue due to the transfer of the sand and [-3.4%] gravel business -44 [-1.9%] Capital expenditure 912 1,059 Depreciation 875 894 +146 [+16.1%] +19 [+2.3%] (Details of expenditure for FY3/2018) Establishment of Sotetsu Rosen Yayoidai Ekimae Store and sales floor renovation Supermarket sales growth (existing stores): +0.3% 3
Segment Information (Real Estate) Real estate FY3/2017 FY3/2018 Change Operating revenue 57,905 66,035 +8,130 [+14.0%] Operating income 14,989 15,832 +842 [+5.6%] Sales/Leasing breakdown Real estate sale Increase in revenue due to a rise in the number of condominiums sold and a rise Operating revenue 19,271 26,238 +6,967 in sales price per unit. Operating income 1,686 2,349 +663 Increase in income due to higher revenue Real estate lease Operating revenue 38,844 39,988 +1,144 Increase in revenue due to revenue from the sale of land for business Operating income 13,303 13,483 +179 Increase in income due to higher revenue Capital expenditure 6,437 16,672 Depreciation 6,798 6,854 +10,234 [+159.0%] +55 [+0.8%] (Details of expenditure for FY3/2018) Project for the redevelopment of the area around the south exit of Futamatagawa Station, project for renovation of the streets in front of Yayoidai Station Number of condominiums and houses sold FY3/2017 FY3/2018 Change Condominiums 275 348 +72 Houses 44 16-28 Total 319 364 +44 (Major properties delivered) The Parkhouse Nishi Shinjuku Tower 60 and FINE CITY Higashi-matsudo 4
Segment Information (Hotel) Hotel FY3/2017 FY3/2018 Change Operating revenue 38,839 40,917 Operating income 4,414 4,514 Capital expenditure 4,632 5,295 Depreciation 1,918 1,922 +2,078 [+5.4%] +100 [+2.3%] +662 [+14.3%] +3 [+0.2%] Increase in revenue due to the openings of new hotels (7 hotels including Sotetsu FRÉSA INN Kyoto Shijo-karasuma) and the full-year contribution of hotels opened in the previous fiscal year (Details of expenditure for FY3/2018) Establishment of new hotels such as Sotetsu FRÉSA INN Osaka Yodoyabashi and Sotetsu FRÉSA INN Ueno Okachimachi Room occupancy rate/ Average revenue per room FY3/2017 FY3/2018 Change Room occupancy rate (%) Sotetsu FRÉSA INN/SUNROUTE 86.1 87.8 +1.7pp Yokohama Bay Sheraton 87.2 84.3-2.9pp Average revenue per room (Yen) Sotetsu FRÉSA INN/SUNROUTE 10,052 9,937 Yokohama Bay Sheraton 18,190 19,897-115 [-1.1%] +1,707 [+9.4%] * The room occupancy rate and average revenue per room for Sotetsu FRÉSA INN/SUNROUTE are for directly operated hotels and hotels managed for other companies, and do not include franchised hotels. 5
Segment Information (Other) Other FY3/2017 FY3/2018 Change Operating revenue 21,416 21,947 Operating income 355 495 +531 Increase in revenue mainly due to a rise in revenue in the building maintenance [+2.5%] business +140 [+39.4%] Capital expenditure 135 613 Depreciation 409 205 +477 [+351.8%] -203 [-49.7%] 6
Financial Highlights (Balance Sheet) Consolidated balance sheet As of March 31, 2017 As of March 31, 2018 Change Amount % Current assets 73,808 85,082 +11,274 +15.3 Inventories: +10,826 Non-current assets 505,891 517,265 +11,374 +2.2 Property, plant and equipment: +15,084 Total assets 579,699 602,348 +22,648 +3.9 Current liabilities 143,423 123,632-19,791-13.8 Short-term loans payable: -18,021 Non-current liabilities 307,741 337,821 +30,080 +9.8 Long-term loans payable: +20,500 Bonds payable: +10,000 Total liabilities 451,165 461,454 +10,288 +2.3 Total net assets 128,534 140,894 +12,359 +9.6 Total liabilities and net assets 579,699 602,348 +22,648 +3.9 Equity 125,965 138,197 +12,232 +9.7 Equity ratio (%) 21.7 22.9 +1.2 Interest-bearing debt 309,799 310,278 +479 +0.2 7
Forecast for FY3/2019 (Statement of Income) Consolidated statement of income FY3/2018 FY3/2019 Forecast vs. (Forecast) Actual Operating revenue 260,562 265,200 Operating income 31,266 30,000 Ordinary income 29,118 27,800 Profit attributable to owners of parent 18,227 17,100 +4,637 Transportation: +37, Merchandising: -4,480 [+1.8%] Real estate: +3,564, Hotel: +4,182, Other: +752-1,266 Transportation: -173, Merchandising: -218 [-4.1%] Real estate: -732, Hotel: -414, Other: +304-1,318 Non-operating income: -231 [-4.5%] Non-operating expenses: -80-1,127 [-6.2%] Net income per share 186.02 yen 174.51 yen -11.51 yen The Company conducted a consolidation of shares at a ratio of one share for every five shares of common stock on October 1, 2017, and the effect of the consolidation of shares is taken into account for net income per share. Capital expenditure 33,183 35,471 Depreciation 16,210 17,784 +2,287 Transportation: +2,994, Merchandising: +1,368 [+6.9%] Real estate: -5,871, Hotel: +3,889, Other: -93 +1,573 [+9.7%] 8
Forecast for FY3/2019 (Transportation) Transportation FY3/2018 FY3/2019 Forecast vs. (Forecast) Actual Operating revenue 39,262 39,300 +37 [+0.1%] Operating income 8,173 8,000-173 [-2.1%] Decrease in income due to a rise in depreciation Capital expenditure 9,543 12,538 Depreciation 6,455 6,839 Railway +2,994 [+31.4%] +383 [+5.9%] (Details of expenditure for FY3/2019 forecasts) Extension work on Futamatagawa Station, construction of new railway vehicles for the through track of Sotetsu and JR, preparatory work for the establishment of platform doors Hoshikawa-Tenno-cho elevated tracks project, renewal of stations and railway vehicles in the Design Brand-up Project No. of passengers (1,000) Non-commuter Commuter Total 80,438 151,299 231,738 80,527 151,838 232,366 +0.1% +0.4% +0.3% Commuter: Regular +0.4% Student +0.2% Passenger revenue (million yen) Non-commuter Commuter Total 15,760 15,636 31,396 15,787 15,686 31,473 +0.2% +0.3% +0.2% Commuter: Regular +0.3% Student +0.6% 9
Forecast for FY3/2019 (Merchandising) Merchandising FY3/2018 FY3/2019 Forecast vs. (Forecast) Actual Operating revenue 105,580 101,100 Operating income 2,218 2,000-4,480 [-4.2%] -218 [-9.9%] Decrease in revenue due to the transfer of the sand and gravel business Increase in revenue in the supermarket business due to the opening of new stores, etc. Decrease in income due to the transfer of the sand and gravel business, an increase in expenses for the opening of new stores in the supermarket business and the suspension of business of Mitsukyo Store for renovation, etc. Capital expenditure 1,059 2,427 Depreciation 894 1,002 +1,368 [+129.2%] +107 [+12.0%] (Details of expenditure for FY3/2019 forecasts) Full renovation of Sotetsu Rosen Mitsukyo Store, the establishment of new stores, the introduction of a new POS resister system Supermarket sales growth (existing stores): +1.5% 10
Forecast for FY3/2019 (Real Estate) Real estate FY3/2018 FY3/2019 (Forecast) Operating revenue 66,035 69,600 Operating income 15,832 15,100 Sales/Leasing breakdown Forecast vs. Actual +3,564 [+5.4%] -732 [-4.6%] Real estate sale Operating revenue 26,238 29,400 +3,161 Increase in revenue due to a rise in the number of condominiums sold Operating income 2,349 2,900 +550 Real estate lease Operating revenue 39,988 40,400 +411 Increase in revenue due to the opening of JOINUS TERRACE Futamatagawa, decrease in revenue due to the absence of the revenue from the sale of land for business in the previous fiscal year Operating income 13,483 12,200-1,283 Decrease in income due to the absence of the gain on sale of land for business in the previous fiscal year, decrease in income due to the suspension of business of Mitsukyo Sotetsu Life for renovation Capital expenditure 16,672 10,801 Depreciation 6,854 7,390-5,871 [-35.2%] +535 [+7.8%] (Details of expenditure for FY3/2019 forecasts) Construction work on new commercial facilities in the upper section of Futamatagawa Station, renewal work of Mitsukyo Sotetsu Life. Number of condominiums and houses sold FY3/2018 FY3/2019 (Forecast) Forecast vs. Actual Condominiums 348 366 +18 (Major properties) Gracia Tower Futamatagawa and Gracia Minamaki Mirai Houses 16 21 +5 Total 364 388 +24 11
Forecast for FY3/2019 (Hotel 1) Hotel FY3/2018 FY3/2019 (Forecast) Operating revenue 40,917 45,100 Operating income 4,514 4,100 Forecast vs. Actual +4,182 Increase in revenue due to the openings of new hotels and the full-year contribution of [+10.2%] hotels opened in the previous fiscal year -414 Decrease in income mainly due to an increase in expenses for preparations for new [-9.2%] hotels overseas Capital expenditure 5,295 9,184 Depreciation 1,922 2,401 +3,889 [+73.5%] +478 [+24.9%] (Details of expenditure for FY3/2019 forecasts) Establishment of Sotetsu FRÉSA INN Kobe Sannomiya and Sotetsu FRÉSA INN Osaka Shinsaibashi Room occupancy rate/ Average revenue per room Room occupancy rate (%) FY3/2018 FY3/2019 (Forecast) Forecast vs. Actual Sotetsu FRÉSA INN/SUNROUTE 87.8 87.6-0.2pp Yokohama Bay Sheraton 84.3 87.4 +3.1pp Average revenue per room (Yen) Sotetsu FRÉSA INN/SUNROUTE 9,937 9,972 Yokohama Bay Sheraton 19,897 21,373 +35 [+0.4%] +1,476 [+7.4%] * The room occupancy rate and average revenue per room for Sotetsu FRÉSA INN/SUNROUTE are for directly operated hotels and hotels managed for other companies, and do not include franchised hotels. 12
Forecast for FY3/2019 (Hotel 2) Hotels to open FRÉSA INN Name (* shows properties owned by the Sotetsu Group) Location Rooms Opening Date #25 Sotetsu FRÉSA INN Osaka Yodoyabashi* Chuo-ku, Osaka City 243 April 28, 2018 Preparing for opening (26) Preparing for opening (27) Sotetsu FRÉSA INN Osaka Shinsaibashi* (provisional name) Sotetsu FRÉSA INN Osaka Namba (provisional name) Chuo-ku, Osaka City 175 (planned) Winter 2018 Naniwa-ku, Osaka City 276 (planned) Summer 2019 Preparing for opening (28) Sotetsu FRÉSA INN Nagoya Station-front (provisional name) Nakamura-ku, Nagoya City 250 (planned) Spring 2020 Preparing for opening (29) Sotetsu FRÉSA INN Kobe Sannomiya* (provisional name) Chuo-ku, Kobe City 271 (planned) Autumn 2019 Preparing for opening (30) Sotetsu FRÉSA INN Yokohamaeki Higashiguchi (provisional name) Kanagawa-ku, Yokohama City 283 (planned) Summer 2020 <Simplified private room hotel> Preparing for opening (Not yet determined)* Nakagyo-ku, Kyoto City 147 (planned) Autumn 2018 13
Forecast for FY3/2019 (Other) Other FY3/2018 FY3/2019 (Forecast) Forecast vs. Actual Operating revenue 21,947 22,700 +752 [+3.4%] Increase in revenue in the renovation and water filter businesses Operating income 495 800 +304 Increase in income due to higher revenue and a decrease in expenses due to [+61.3%] the absence of expenses posted in the previous fiscal year. Capital expenditure 613 519 Depreciation 205 257-93 [-15.3%] +52 [+25.4%] 14
Forecasts for results of operations are based on information that was available when this presentation was released. Actual performance may differ from these forecasts for a number of reasons.