Tobu Railway Co., Ltd. TSE:9001
Tobu Railway : Annual Report 2024
Source: MarketScreener
TOBU RAILWAY CO., LTD.
2024
ANNUAL REPORT
Management Philosophy and Policy
(1) Tobu Group Management Philosophy
The Tobu Group has set forth the concepts of "dedication," "enterprising spirit" and "affinity," as the corner stone for its management.
Dedication: | The Tobu Group will contribute to materializing an affluent society based on the profound awareness that all of |
its businesses are supported by society. |
Enterprising spirit: The Tobu Group will keep taking up challenges with a pioneering spirit to pave the way to a new era through
constant self-improvement without complacency. | |
Affinity: | The Tobu Group will contribute to the evolution of society by promoting its business as well as the welfare of |
its employees based on the concept of congeniality among people and harmony with the environment. |
(2) Tobu Group Management Policy
The Tobu Group will operate diversified and composite businesses on the basis of safety and security, including "transportation," "leisure," "real estate" and "retail distribution" as a corporate group contributing to the development of the areas along its railway lines through businesses that closely support customers' daily lives.
We will provide innovative and inventive services of high quality based on the customer's viewpoint, thereby aiming to create attractive destinations full of energy along the Tobu lines, providing the residents with a comfortable lifestyle.
Tobu Group will fulfill its corporate social responsibility through achieving sustainable growth along with local communities, as a corporate group that supports customers' lives by promoting ecofriendly management while constantly generating profit from its business operations.
Contents | |
Management Philosophy and Policy | 1 |
Message from the President | 2 |
Medium-Term Business Plan | 4 |
Our Current Situation | 6 |
Review of Operations | 7 |
Financial Review (Consolidated) | 11 |
Approach to Sustainability and Sustainability Initiatives | 12 |
Corporate Governance | 21 |
Risks to which the Company's Business is Subject | 23 |
Five-Year Summary | 26 |
Consolidated Balance Sheet | 27 |
Consolidated Statements of Income and | |
Comprehensive Income | 29 |
Consolidated Statement of Changes in Equity | 30 |
Consolidated Statement of Cash Flows | 32 |
Corporate Directory | 33 |
Attention regarding forward-looking statements
The reader is advised that this report contains forward-looking statements, including statements relating to the Company's future policies and strategies, and estimates of future business development. As opposed to statements of historical fact, these constitute estimates or projections made by the Company's management on the basis of facts known to them as of the time of writing, and actual results may therefore differ substantially from such statements, due to a wide variety of possible risk factors. Page 14 contains a list of the principal categories of risk to which the Company's business operations are subject.
ANNUAL REPORT 2024
1
Message from the President
The Group formulated the medium-term business plan in fiscal 2022 as a measure to overcome the harsh business environment caused by the outbreak of COVID-19. We achieved all the indicators in the plan ahead of schedule by fiscal 2023 mainly by promoting businesses which set indicators (KPI) to evaluate cost control.
Inbound demand is recovering. Nevertheless, we cannot expect growth through business development on the same lines as before in the business environment in the future. That is because of the predicted decline in population in the Tokyo area from around 2030 in addition to the diversification of work styles and values and the increase in pace of changes and uncertainty due to advances in digital technologies.
Therefore, we have ended our medium-term business plan, whose final year was fiscal 2024, and reviewed our Long-Term Management Vision that is our vision of where we want to in 10 years for the sustainable growth of the Group. At the same time, we have formulated the Medium-Term Management Plan which outlines our initiatives over four years based on that vision.
We advocate in our Long-Term Management Vision for evolving society and areas along our railway lines by taking on challenges and engaging in cooperative creation. We will achieve that through the challenging pursuit of adapting to changing business environment and needs and co-
creation of value through collaboration and partnership with stakeholders both inside and outside the Group. Based on this vision, we will aim to maintain and expand group-wide profits.
We have established management strategies and policies for the next 10 years: increase in percentage of non- railway businesses in operating profit stage, strengthening profitability by capturing tourism demand and establishing sustainable business management structure. Under
these policies, we have set forth four priority strategies: establishment of businesses to drive growth, ongoing strengthening of business foundation (along railway), development of new businesses to expand domain, and reduction of environmental burden and strengthening of human capital. Based on these strategies, we will aim to promote the development of businesses.
We will position the tourism business, including our hotel and SKYTREE businesses for which market growth driven by inbound tourism is expected, and the development business (town development), for which there is room for development along railway, as our core businesses to contribute to growth for "establishment of businesses to drive growth." We will prioritize allocating management resources to those businesses to strengthen our medium- to long-term profitability.
We will improve profitability and productivity by actively utilizing digital technology while taking advantage of the Group's strengths in terms of our wide business area
in the Tokyo metropolitan area and the diverse array of businesses we are engaged in for "ongoing strengthening of business foundation (along railway)." Together with this, we will create group synergies and differentiate ourselves from other companies with the aim of achieving continuous development of our business base along the railway.
It is predicted that the population will decline even in the Tokyo area along railways in the medium- to long-term. Therefore, we will explore new business fields beyond the realm of our existing businesses and aim to establish revenue streams for the next 10 years for "development of new businesses to expand domain."
We see rising environmental awareness in recent times as a good opportunity for "reduction of environmental burden and strengthening of human capital." Accordingly, we will strengthen our efforts to decarbonize by establishing the International Eco resort Nikko to enhance branding and
our ability to attract customers while cooperating with the local community with the Group's assets in the Oku-Nikko
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TOBU RAILWAY CO., LTD.
Message from the President
Management
Policy
Major changes in external environment
- Review of Tobu Group Vision for 10 years from now
Long-term Management
Concept
Long-term
Management Vision
Management strategy
-Policy-
Priority strategy | Maintaining Financial |
(growth strategy) | Soundness |
Further enhancement | Management with awareness |
of shareholder returns | of capital efficiency |
New Long-Term Management Vision
"Evolving Society and Areas
along our Railway Lines by Taking on Challenges and Engaging in Cooperative Creation
Challenging pursuit of adapting to changing business environment and needs Co-creation of value through collaboration and partnership with stakeholders
Medium-Term | Achievement of |
Business Plan | |
sustainable growth | |
2024-2027 | |
Realization of "A human-friendly society where people and
communities continue to flourish together"
area. We will work toward the target we have established of reducing CO2 emissions in fiscal 2030 to 30% of the level in fiscal 2022 on a group-wide basis. Furthermore, we will strengthen human capital by acquiring human resources and creating an environment where they can play an active role to realize our Long-Term Management Vision.
Moreover, we have set the four years from fiscal 2024 to fiscal 2027 as the period of our Medium-Term Management Plan. We will proceed with efforts based on the priority strategies we have set forth in our Long-Term Management Vision. We will promote the development of businesses that contribute medium- to long-term revenue and profit growth to realize an expansion and an increase in the percentage of non-railway businesses in the operating profit stage. In addition, we will engage in businesses which capture the recovery of inbound demand on a group-wide basis to establish a revenue base. At the same time, we will set this as a period to sow the seeds to develop new businesses with an eye toward expanding our business domains.
The Group has achieved sustainable development together with society since our establishment in 1897. We established dedication, enterprising spirit and affinity as our
company motto in 1969. We have now set this motto as the Tobu Group Management Philosophy. The Tobu Group Management Policy aims to realize vibrant, easy-to-live and inviting areas along the Tobu railway lines with safety and peace of mind at the core. Based on this policy, the Group has worked on solving social issues through its business and has itself grown while playing a role in the sustainable development of society.
While leveraging the characteristics and management resources of our railway lines, we will continue to create new value in the future by solving social issues and realizing human friendliness in a society in which people and communities shine together as we aim to become a corporate group that is indispensable to society.
Yutaka Tsuzuki
President and Representative Director
ANNUAL REPORT 2024
3
Medium-Term Business Plan
Positioning of Medium-Term Business Plan and Priority Strategies
Positioning of Medium-Term Business Plan (FY2024 FY2027)
- Promote development of businesses that will contribute to medium-tolong-term revenue and profit growth, including the Ikebukuro Station West Exit redevelopment plan
- Develop group-wide businesses that capture inbound demand, establish a revenue base, and develop new businesses
Priority strategies
-
Establishment of businesses to drive growth
Develop growth businesses to strengthen profitability in the medium to long term with the tourism business, including hotels and SKYTREE for which market growth driven by inbound tourism is expected, and development business (town development) as the core businesses -
Ongoing strengthening of business foundation (along railway)
Improve profitability and productivity by actively utilizing digital technology to create Group synergy and differentiate from other companies, thereby achieving sustainable development along the railway -
Development of new businesses to expand domain
Explore business fields beyond the realm of existing businesses and strive to establish new revenue streams for the next 10 years
Investment amounts contributing to priority
strategies during period of Medium-Term Business Plan*
Non railway businesses Approx.¥180.0 billion
(Approx. ¥115.0 billion for development, ¥62.0 billion for tourism, and ¥4.0 billion for digital technology)
Railway businesses Approx.¥90.0 billion
(Approx. ¥10.0 billion for digital technology and
¥80.0 billion for strengthening the business foundation)
Approx. ¥270.0 billion (Approx. 60% of total amount)
* Capital expenditures + purchase of land and buildings for sale in lots
Management indicators and assumptions to be mindful of
Focus on improving profit levels by realizing growth strategy and controlling assets and liabilities with awareness of capital cost while promoting shareholder return balanced with growth investment and financial soundness
Management indicators
Profitability
Financial soundness
Description | FY2027 assumption | |
Seek to expand non-railway business profits by such means | Operating profit ¥74.0 billion | |
as capturing growth markets centered on tourism based on | ||
changes in business environment | ||
Promote investment in further growth while controlling interest- | Interest bearing debt/EBITDA multiple 6X level | |
bearing debt in anticipation of large-scale investments in the | ||
redevelopment of Ikebukuro Station West Exit. | ||
Management indicators
Shareholder return
Management with
awareness of capital
cost
Description | Assumptions during period |
Enhance shareholder return by flexibly combining dividends | |
and share buybacks while taking into account the balance | Total return ratio At least 30% |
between growth investment and financial soundness as well | |
as future performance trends. | |
In the final year of the plan, we will raise the level of operating | |
profit to that of FY2023, which was a record high, and | ROE Approx. 8％ |
control assets and liabilities with an awareness of capital | |
cost by allocating funds from asset sales (including cross | |
shareholdings) to growth investment and shareholder returns. | |
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TOBU RAILWAY CO., LTD.
Medium-Term Business Plan
- Establishment of Businesses to Drive Growth
Maximization of captured tourism demand in hotel business
Inbound demand
Recovery of outing demand
Capture tourism demand by developing new hotels and expand revenue
Maintain operating margin of 10%
Promote investment of at least ¥45.0 billion over four years
to open new hotels starting in 2028
Initiatives in development of Ikebukuro Station West Exit area
- Establishment of atrium space as a traffic node to guide people from station to town
- Creation of plaza space above the Tobu Tojo Line tracks as center for art and culture activities
- Conversion of Ikebukuro Station from current 3-platform/3-track to 3-platform/4-track layout and establishment of high- quality station space
Atrium space
Ikebukuro Station on Tobu Tojo Line
Illustration of building inside our project area | Atrium space |
- Development of new businesses to expand domain
Development of digital identity platform business utilizing biometrics
Pursuit of new businesses without regard to existing framework or area
Create new businesses and establish future revenue streams
Creation of model cases utilizing business domains and assets across multiple industries
Receive ¥ usage fees
Utilization of highly accurate and secure biometric authentication
Tobu/Hitachi
Free to users
Provide new authentication/ payment system as platform
Merchant | Provide services utilizing platform features | Users |
Aim to expand introduction nationwide and increase fee revenue
ANNUAL REPORT 2024
5
Our Current Situation
The Tobu Group consists of TOBU RAILWAY CO., LTD. and its subsidiaries and affiliates. | ||
The core business of the parent company founded in 1897 is operating a network of | ||
private railway lines that extends across Tokyo, Chiba, Saitama, Tochigi, and Gunma | Transportation | |
prefectures of the Kanto region. | ||
The main lines, which originate in Asakusa, eastern Tokyo, extend to Saitama, Tochigi, | Leisure | Other |
Gunma, and Chiba prefectures, including the trunk lines (the TOBU SKYTREE Line (Isesaki | TOBU | |
Line), Nikko Line, and the TOBU URBAN PARK Line (Noda Line)) and branch lines. They | Group | |
can be broadly divided into the TOBU SKYTREE Line (the southern portion of the Isesaki | Real | Retail |
Line) and the TOBU URBAN PARK Line (Noda Line), which primarily serve commuters | ||
Estate | Distribution |
and students, and the Nikko Line and northern portion of the Isesaki Line that primarily serve tourists and businesses. The Tojo Line mainly carries commuters and students. Development in areas along the line has been proceeding smoothly.
In addition to the main railway business, the Tobu Group engages in the development businesses outlined in the following paragraphs.
In our leasing business, particularly in areas alongside our railway lines, the Group is leasing a large number of sites for such purposes as stores, office buildings, houses, and warehouses. In particular, in TOKYO SKYTREE TOWN this includes the commercial facility TOKYO Solamachi® and the office facility TOKYO SKYTREE EAST TOWER®.
In addition, spaces inside our station buildings are leased or utilized for business purposes, and stations and railway cars are used for advertising.
In our subdivision business, we are engaged in the sale and development of homes and land, and the independent and joint construction and sale of condominium units.
In the leisure business, the parent company directly manages the Courtyard by Marriott Tokyo Ginza Hotel and the Tobu Hotel Levant Tokyo in the center of Tokyo, and in developing its leisure business, the Company works in close corporation with each of its member companies.
(Group Companies)
The transportation business consists of fixed-route and long-distance bus services, taxi services, freight trucking, and other services.
In addition to TOKYO SKYTREE™, we operate the Tobu Zoological Park and TOBU WORLD SQUARE. Group companies manage enterprises in such fields as travel, city and resort hotels, inns, skiing facilities, golf courses, sports clubs, ropeways, and sightseeing vessels.
We are involved in real estate leasing, real estate brokerage, and the car parking lot and bicycle parking lot businesses. There are Tobu department stores in Ikebukuro, Funabashi, Utsunomiya, Ohtawara and Tochigi, and we own TOBU STORE
CO., LTD., which operates a chain of supermarkets.
Other businesses include construction, building and facility management, construction materials supply, and heating supply systems.
Basic Indicators
Number of Group Companies | Number of Employees | Revenue from Operations |
Administration | ||||||||||
Other | Transportation | 1.3% | ||||||||
20.8% | 40.3% | Other | ||||||||
16.0% | ||||||||||
Retail | Retail | Total | ||||||||
Distribution | 72 | Distribution | ||||||||
11.1% | 11.6% | 18,384 | ||||||||
Group Companies | ||||||||||
employees | ||||||||||
Transportation | ||||||
49.7% | Other | Transportation | ||||
12.9% | 29.2% | |||||
Retail | ||||||
Distribution | Total | |||||
23.2% | 713,575 | |||||
Leisure | ||||||
millions of yen | ||||||
25.9% | ||||||
Real Estate
4.2%
Leisure | Real Estate | |
23.6% | 1.8% | |
Leisure | Real Estate | ||
19.6% | 8.8% | ||
*Figures above are before elimination of inter-company transactions.
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TOBU RAILWAY CO., LTD.
Review of Operations
Transportation
Sales by Sector (¥ million)
215,427 | 173,264 | 189,189 | 208,335 | |
159,122 | ||||
2020 | 2021 | 2022 | 2023 | 2024 |
SALES RATIO
BY SEGMENT
29.2%
In our railway operations, our top priority is ensuring safety, peace of mind, and comfortable living, and we are promoting various initiatives so that more customers will choose our railway lines.
In terms of sales, for the first time in 33 years, we introduced a new SPACIA X limited express train in July 2023. It has been well received. Therefore, we increased the number of trains in operation from March 2024 to increase opportunities to ride it and to attract more customers to the
New limited express train SPACIA X connecting Asakusa to Nikko-Kinugawa
SPACIA X cockpit suite with the concept of a traveling suite
Nikko-Kinugawa area.
In terms of safety, we are earnestly taking various measures to ensure the safety of transportation. We are promoting elevation projects near Tokyo Skytree Station, Takenotsuka Station, Kasukabe Station and other areas. In addition to improving safety and accessibility, we are looking to improve the appeal of the area overall by also upgrading the commercial facilities. Moreover, we have started using new buildings at Nodashi Station between Shimizu-koen and Umesato and at Nanasato Station due to the station being elevated above the tracks.
At the same time, in order to build a system capable of securing stable profits even in a harsh business environment, we steadily implemented the previously formulated business structure reforms and reduced fixed costs.
In the bus and taxi business, the TOBU BUS Group conducted a self-driving bus demonstration experiment in the Kashiwanoha, Wako and Oku-Nikko areas. We are hoping to contribute to solving transportation issues by realizing unmanned self-driving in the future.
As a result of the above, the number of both commuter passengers and non-commuter passengers increased due to the recovery in use by commuting workers and students and in use for leisure in our railway business. Furthermore, with the introduction of the railway station barrier-free fare system and the start of operation of SPACIA X, overall, revenue from operations in the transportation business came to ¥208,335 million (up 10.1% year on year) and operating profit came to ¥29,870 million (up 54.1% year on year).
Transportation (31 firms)
Railway: The Company; Jomo Electric Railway Co., Ltd.*
Bus and taxi: ASAHI Motor Corporation*, TOBU BUS CO., LTD*
Freight: | TOBU TRANSPORTATION CO., LTD.*, |
TOBU DELIVERY CO., LTD.* |
25 other firms
Notes: *Consolidated Subsidiary
TOBU RAILWAY CO., LTD. is counted multiple times in the above segment breakdown.
ANNUAL REPORT 2024
7
Review of Operations
Leisure
Sales by Sector (¥ million)
188,354 | 184,761 | |||
39,055 | 108,311 | |||
72,072 | ||||
2020 | 2021 | 2022 | 2023 | 2024 |
SALES RATIO
BY SEGMENT
25.9%
Example of a renovated guest room (Courtyard by Marriott Tokyo Ginza Hotel)
Nikko KANAYA Hotel (annex) reopened after its renovation as ANNEX ROYAL HOUSE
In the SKYTREE business, we are looked to attract customers by holding various events and strengthening PR activities for inbound tourists at TOKYO SKYTREE®. We also renovated and then reopened SYTREE SHOP on the 5F.
In the hotels business, we worked to increase occupancy rates and room rates in our hotels in Tokyo by capturing domestic travel demand and inbound demand. Furthermore, we renovated the Courtyard by Marriot Tokyo Ginza Hotel and Nikko KANAYA Hotel and worked to capture even more inbound demand.
In the travel business, TOBU TOP TOURS CO., LTD. worked to capture travel business mainly focused on educational trips and other forms of group travel in line with the recovery in travel demand. Together with this, the company promoted the solutions business using digital technology and took charge of providing support for local tourism business to local governments. In this way, it strived to sought to increase revenue by expanding business beyond travel sales.
As a result of the above, revenue and sales increased in the SKYTREE and hotel businesses. Nevertheless, we suffered a decrease in contract revenue in the travel business. Accordingly, overall, revenue from operations in the leisure business came to ¥184,761 million (down 1.9% year on year) and operating profit came to ¥19,440 million (down 0.2% year on year).
Leisure (26 firms)
Amusement parks and tourism: Tobu Leisure Planning Co., Ltd.*
Sports: | Tobu Kogyo Co., Ltd.* |
Travel: | TOBU TOP TOURS CO., Ltd.* |
Hotels: | The Company; Tobu Hotel Management Co., LTD.* |
SKYTREE business: TOBU TOWER SKYTREE Co., Ltd.* 20 other firms
Notes: *Consolidated Subsidiary
TOBU RAILWAY CO., LTD. is counted multiple times in the above segment breakdown.
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TOBU RAILWAY CO., LTD.
Review of Operations
Real Estate
Sales by Sector (¥ million)
67,912 | 54,228 | 62,203 | 60,915 | 62,975 |
2020 | 2021 | 2022 | 2023 | 2024 |
SALES RATIO
BY SEGMENT
8.8%
EQUiA YATSUKA newly opened using space under the elevated railway
©TOKYO-SKYTREETOWN
In the TOKYO SKYTREE TOWN business, we held various events throughout the year such as a Taiwan festival and winter illuminations at TOKYO SKYTREE TOWN®. Those efforts allowed us to capture domestic and overseas tourism demand. That meant we achieved record high annual sales. In the real estate leasing business, we increased
revenue and improved convenience for our customers by opening EQUiA Yatsuka and EQUiA Koshigaya and renovating and then reopening VARIE 1 at Soka VARIE. In addition, we opened Minori Terrace Soka in Soka. This is a complex facility which combines a park and farm with rental housing and stores renovated from employee housing in Soka. This meant we promoted urban development which connects people and communities.
In the real estate subdivision business, we sold the Solaie Shin-Kamagaya (Kamagaya) and Solaie Wakaba Station Villa (Sakado) condominiums to increase the value and resident population of along the railway.
As a result of the above, overall, revenue from
operations in the real estate business came to ¥62,975 million (up 3.4% year on year) and operating profit came to ¥16,232 million (up 18.7% year on year) by increasing revenue in the SKYTREE business and by setting prices to match demand in the real estate subdivision business.
Real estate (4 firms)
Real estate leasing: | The Company; TOBU REAL ESTATE CO., LTD.* |
Real estate subdivision: The Company | |
SKYTREE TOWN: | The Company; TOBU TOWN SOLAMACHI CO., |
LTD.* | |
1 other firm |
Seasonal event held at TOKYO SKYTREE TOWN® (Taiwan Festival in TOKYO SKYTREE TOWN® 2023)
Notes: *Consolidated Subsidiary
TOBU RAILWAY CO., LTD. is counted multiple times in the above segment breakdown.
ANNUAL REPORT 2024
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