Seibu Holdings Inc. (9024) Earnings Call Transcript & Summary

I would now like to go over the results for the first quarter of the year ending March 2021 using the presentation. Please turn to Page 3. This slide highlights the results for the first quarter of the year ending March 2021. Operating revenue was JPY 66.3 billion, down 54% year-on-year. This was due to the extremely tough business environment with the spread of COVID-19, the significant decline in demand and the temporary suspension of operations in several of our business segments. Operating profit was minus JPY 17.6 billion, and profit attributable to owners of parent was minus JPY 28.7 billion, despite efforts such as lowering our fixed expenses. Out of the expenses that we usually book as operating expenses, we booked JPY 10.7 billion as extraordinary loss. This includes the fixed expenses for the period during which we temporarily suspended operations due to the request by the government in order to prevent the further spread of COVID-19 as well as other factors. Please turn to Page 4. This slide summarizes the impact of COVID-19 on our business. As you can see in the upper left table, the negative impact from COVID-19, which we have calculated by comparing the actual results with what we had anticipated before COVID-19, was JPY 77.4 billion in total operating revenue and JPY 53.5 billion in total operating profit. The details are as outlined in the table. At the bottom of the slide, we show the monthly trends in Railway Transportation revenue and Hotel RevPAR. Railway Transportation revenue was down JPY 11.3 billion, compared to the first quarter of last year, and RevPAR was down 94.8%. On the upper right, we have broken down by segment the fixed expenses that we booked as extraordinary loss. You can see that the majority was from the Hotel and Leisure segment. Please turn to Page 5. This is the operating revenue by segment. Revenue declined in each segment due to the impact from COVID-19. In the Real Estate segment, there were factors other than COVID-19, such as the revenue decline from the same period last year when we had the delivery of the condo, ENVIE-NE HOYA, and the revenue growth, thanks to higher rental revenue from DaiyaGate Ikebukuro. As explained in the footnote at the bottom, we have changed our business segmentation for financial reporting starting from the current fiscal period and have adjusted the figures for the first quarter of last year to match the new segmentation. Please see Pages 32 to 34 for details on how the segmentation has been changed. Please turn to Page 6. The top table is our operating profit by segment. Operating profit declined in all segments. In the notes section on the right, we have outlined some positive factors resulting from the reduction of expenses. The reduction in personnel expenses, et cetera, shown in the Urban Transportation and Regional and the Hotel and Leisure sections are the actual reductions in expenses, excluding the amounts that we transferred from fixed expenses to extraordinary loss, shown in the lines below. Please turn to Page 8. On pages 8 and 9, we have summarized some of the operational highlights of each segment during this first quarter. We also have data regarding the operations of each of our hotels in Japan on Pages 36 and 37. We temporarily suspended our operations or shortened working hours in each segment, mainly during the period during which the state of emergency was enforced. Please turn to Page 10. This slide explains our efforts to secure working capital. Aside from securing funding in excess of JPY 220 billion by June end, we lowered our fixed expenses, including personnel expenses, utilities expenses and made use of employment subsidies in relation to the temporary suspension of operations. The majority of the employment subsidies will be booked after the second quarter. Please turn to Page 11. With COVID-19, we are operating our businesses while placing the highest priority on the safety and security of our customers as well as our employees. We have reopened facilities in each of our businesses after implementing measures to prevent infections and the spread of the virus. We have also begun offering new types of services to cater to the changing needs of our customers. Please turn to Page 25. I will now go over the extraordinary losses. As explained earlier, we booked JPY 10.7 billion of fixed expenses during the period of temporary suspension of operations, as well as other items, as loss caused by temporary closure. We also booked approximately JPY 2.5 billion of impairment loss. This was mainly due to the write-off of the amusement facilities in the leisure park at Toshimaen, which we decided to close at the end of August. Please turn to Page 28. This is our forecast for the year ending March 2021. The COVID-19 situation continues to change day by day. For example, with the number of new infections starting to rise again recently. We have, therefore, kept our forecast undecided since it is difficult to make rational estimations of the impact of COVID-19 on our business. We will promptly announce our forecast when we become able to do so. As for the recent situation, there have been some improvements in the railway and hotel businesses, but figures continue to be significantly below where they were last year. With concerns of another increase in infections, the outlook remains unclear. In order to overcome this hardship, we have decided to focus until the COVID-19 situation is resolved on business operations that are crucial, which are outlined in the business priorities for fiscal year 2020. We will thereby secure the necessary working capital and run our businesses so that we can provide smiles and good spirits to our customers and to the wider society. And while prioritizing business operations that are crucial to us, we will continue to promote the focus initiatives that we had anticipated in the new medium-term management plan to the extent possible as well as reform our business structure in preparation for new values that people will have when COVID-19 is resolved. That is all from me. Thank you.