Can the leisure and other markets absorb the impact of the Expo and large-scale redevelopment projects?

Revenue in FY2026-H1 rose sharply to ¥80,534 million, up 39.0% year on year. However, the comparison period included revenue recognition from Osaka-Kansai Expo-related and other large-scale projects, meaning that FY2027-H1 will be compared with a high base. Rather than judging the revenue decline solely on the basis of the reversal from the previous year, it is necessary to distinguish between a temporary decline as projects run their course and a slowdown in underlying demand.

By market, FY2027-Q1 revenue in the exhibitions and events market was ¥652 million, down 92.5% year on year, while revenue in the mixed-use commercial facilities market was ¥3,684 million, down 22.0%. In contrast, revenue in the leisure facilities market was ¥8,066 million, up 122.5%, and revenue in the other markets was ¥7,617 million, up 2.9%. As of Q1, the company appears to be absorbing some of the Expo-related reversal through hotels and theme parks, but because more project completions and progress will be reflected in H1, it will be important to see whether revenue growth in the leisure facilities market continues.

Gross profit margins also differ by market. In FY2027-Q1, the gross profit margin was 30.6% in exhibitions and events, 26.1% in department stores and mass retailers, 21.4% in other markets, and 17.3% in leisure facilities. Accordingly, a decline in one market cannot simply be offset by growth in another, as the contribution to gross profit varies depending on which markets gain or lose revenue. In H1, it will be necessary to examine gross profit margins and the mix of large-scale projects in addition to revenue by market.

The company describes the market environment as resilient, supported by robust inbound demand and urban redevelopment projects across Japan. However, the company has not provided advance quantitative disclosure of FY2027-H1 revenue by market, project completion schedules, or underlying performance excluding the previous year's Expo-related revenue. At the next results announcement, we will assess whether the decline in the exhibitions and events market was within expectations and whether revenue growth in leisure facilities, specialty stores and other markets is based on recurring orders rather than one-off projects.