Profit pressure from upfront costs associated with expanding new parking facilities and operating locations

「During the interim accounting period, gross profit increased year on year, but operating income, ordinary income and net income declined. Factors included higher initial costs such as brokerage fees and installation costs for new leased parking facilities; lost revenue during expansion and refurbishment work at a company-owned parking facility in Shinjuku-ku, Tokyo; gross profit from facilities opened during the current winter falling below expectations, particularly in northern Japan, because new openings were strong in that area (revenue from facilities opened in northern Japan during the current period increased 69% year on year, while costs increased 106%); lost revenue and higher snow-removal costs following heavy snowfall in Hokkaido, Aomori Prefecture and Niigata Prefecture from January to February 2026; and office expansion and refurbishment and salary increases carried out from March to April 2025 to recruit and retain talented personnel.」

「Initial costs, including brokerage fees and installation costs, for opening new leased parking facilities were higher than expected」

「During the current fiscal year, many new parking facilities, including large parking facilities attached to other properties, opened in the first half, resulting in the early recognition of opening costs and other cost of sales during the period. However, as these sites began contributing to profit in the second half, full-year operating income increased 3.0% compared with the previous fiscal year.」

「During the cumulative second quarter, revenue increased 9.6% year on year as many new parking facilities, including large parking facilities attached to other properties, opened. However, operating income declined 1.7% year on year due to the early recognition of opening costs, a temporary pause in parking demand following the completion of redevelopment in some areas, higher labour costs resulting from the increase in employees accompanying the expansion of operations, and other factors.」

「In the first quarter, revenue increased 9.3% year on year as many new parking facilities, including large parking facilities attached to other properties, opened. However, because opening costs were recognised ahead of revenue, operating income increased only slightly year on year.」

「In response to the spread of COVID-19, we selectively opened new parking sites and closed unprofitable sites, temporarily reducing the number of parking spaces under operation. It subsequently recovered as full-scale sales activities resumed, reaching a record high above the 32,006 parking spaces operated at the end of March 2020.」

「As measures, for leased parking sites we limited new openings to properties capable of securing profitability under these conditions, while improving profitability through cost reductions, including (1) closing unprofitable parking sites, (2) reducing fixed rents and (3) switching to a revenue-sharing arrangement.」

「Under these circumstances, we continued to work to reduce the cost of sales by closing unprofitable parking sites, switching to a revenue-sharing arrangement and changing rents, among other measures. We also limited new openings to properties capable of securing profitability under these conditions.」

「Under these circumstances, from early March we limited new development to properties expected to generate revenue, thereby curbing cash outflows such as rents and construction costs. For existing parking facilities, we prioritised profitability by shifting to a revenue-sharing model, reducing rents and terminating contracts for unprofitable facilities.」

「Meanwhile, cost of sales increased ahead of revenue as installation and construction costs and other expenses rose in line with the steady opening of new facilities.」

「Meanwhile, cost of sales increased ahead of revenue as installation and construction costs and other expenses rose in line with the steady opening of new facilities.」

「In the previous fiscal year, the impact of the higher rents arose only in the second half, whereas in the current fiscal year it affected the full year, resulting in a substantial increase in office rents compared with the previous fiscal year. In addition, the expansion of the workforce led to increases in salaries and recruitment and training expenses, but we view these positively as investment for the future.」

「Selling, general and administrative expenses increased due to the relocation and expansion of 5 sales offices from April to December 2017 (head office, Niigata Branch, Sapporo Sales Office, Shinjuku Sales Office, and Fukuoka Sales Office) and the opening of 2 new sales offices (Chiba Sales Office and Osaka Sales Office), including increases in office rent and other costs.」

「Although some new parking facilities were still in the process of being monetised, gross profit increased year on year. However, the increase in selling, general and administrative expenses associated with the relocation and expansion of 5 operating locations from April to December 2017 (head office, Niigata Branch, Sapporo Office, Shinjuku Office and Fukuoka Office), and the opening of 2 new operating locations (Chiba Office and Osaka Office), could not be offset. As a result, operating income and ordinary income both declined year on year.」