Flat passenger demand leaves personnel and repair costs weighing on transport-sector profit

Consolidated operating revenue in Q1 was ¥5.862 billion, up ¥80 million from ¥5.782 billion in the same period last year. Operating profit, however, fell ¥130 million from ¥973 million to ¥843 million. The operating margin declined by approximately 2.5 percentage points, from approximately 16.8% to approximately 14.4%. Revenue was maintained, but the increase did not translate into higher profit.

Of the ¥130 million year-on-year decline in operating profit, the transport business accounted for ¥137 million. Real estate declined by ¥2 million and retail by ¥1 million, while other businesses improved by ¥9 million and adjustments improved by ¥2 million. Transport revenue increased by ¥65 million and real estate revenue by ¥65 million, while retail declined by ¥4 million, other businesses by ¥19 million and adjustments by ¥27 million, indicating that the allocation of revenue growth did not match the allocation of profit.

The company cited higher personnel costs and higher repair costs resulting from inflation as factors behind the decline in transport-sector profit. Railway passenger revenue increased only 0.2% year on year and passenger numbers 0.1%, making it difficult to say that demand growth alone absorbed the cost increases. Higher personnel costs were also reported in the taxi business. The bus business increased revenue and profit through chartered transportation services, but the transport business as a whole saw profit decline.

The full-year operating profit forecast is ¥2.410 billion, and Q1 actual results represented 35.0% progress, while operating revenue represented 25.1% progress. In the H1 results, we will examine whether the increases in personnel and repair costs incurred in Q1 continued or were within a plan weighted toward the second half, together with the increase by expense category. In particular, the operating margin of the transport business, railway passenger revenue and passenger numbers, and growth in chartered transportation services will help assess the achievability of the full-year operating profit forecast of ¥2.410 billion.