Oriental Land Co., Ltd. Presented by. Kyoichiro Uenishi Representative Director, President and COO. Wataru Takahashi Officer

Transcription

1 Oriental Land Co., Ltd. Presented by Kyoichiro Uenishi Representative Director, President and COO Wataru Takahashi Officer 1

2 I would like to provide an overview of the consolidated results for the fiscal year ended March 31, 2012 as well as the forecast for the fiscal year ending March 31,

3 1. Results for the Fiscal Year Ended 3/12 / Fiscal Year Ended 3/11 Net sales increased by 3.8 billion to billion, operating income grew by 13.2 billion to 66.9 billion, ordinary income climbed by 13.3 billion to 66.2 billion, and net income rose by 9.2 billion to 32.1 billion, despite the impact of the disaster. 3

4 Changes in Consolidated Quarterly Operating Income Although we posted an operating loss of 3.0 billion for the first quarter due to the impact of the disaster, we recovered quickly to achieve operating income reaching 23.4 billion, 36.4 billion, and 10.0 billion in the second, third, and fourth quarters, respectively. 4

5 Theme Park Segment (1) Net sales increased by 7.4 billion to billion. Although theme park attendance decreased significantly in the first quarter due to the impact of the disaster, attendance reached record highs in all of the three subsequent quarters. Factors contributing to this performance included the success of the Tokyo DisneySea 10th Anniversary events and the fact that we were able to welcome many guests who had postponed visits intended for the period the theme parks were closed until some time after the reopening. As a result, theme park attendance reached million, roughly on a par with the figure for the previous fiscal year. As the graph on the lower right shows, net sales per guest amounted to a record high of 10,336 as a result of an increase in merchandise revenue driven by strong sales of products related to the Tokyo DisneySea 10th Anniversary, as well as a rise in ticket receipts due to ticket price revisions. 5

6 Theme Park Segment (2) Operating income climbed by 10.2 billion to 56.4 billion. This is the result of a significant decline in costs in addition to an increase in net sales. In addition to a decrease in the variable cost ratio including the cost of merchandise ratio and cost of food/beverages ratio, fixed expenses also dropped considerably. I would like to explain this in some detail. Please see the Breakdown of Decrease in Fixed Costs on the right. Cost reductions specific to the fiscal year under review included a decline in costs related to facility renovation resulting from the practice of conducting routine maintenance together with facilities inspection undertaken during theme park closure as well as an exemption from fixed asset tax. In addition, at a time when we had been unable to foresee the impact of the disaster, we reviewed our events and sales promotion activities as part of our temporary post-disaster cost reduction efforts. As a result, fixed costs decreased by approximately 5.5 billion. Although there was an increase in costs of approximately 1.0 billion for the period of theme park closure in the previous fiscal year, the reduction of fixed costs resulted in a significant increase in operating income. 6

7 Hotel Business Segment While net sales decreased due to the impact of suspension of operation, operating income reached a record high of 9.5 billion due to a decrease in fixed expenses. Other Business Segment The segment achieved profitability as a result of an increase in operating income in the theatrical t business. 7

8 Consolidated Net Income Extraordinary loss for the fiscal year under review decreased by 3.8 billion to 10.9 billion. The breakdown of the extraordinary loss includes an impairment loss of 6.3 billion in the theatrical business and 3.6 billion due to the disaster. Although extraordinary loss was posted, net income grew significantly to 32.1 billion, up 9.2 billion due in part to increases in operating and ordinary income. 8

9 2. Results for the Fiscal Year Ended 3/12 / Forecast as of 2/12 Net sales and operating income were, respectively, 5.3 billion and 5.1 billion higher than the forecast, driven mainly by the Theme Park Segment. 9

10 Theme Park Segment Operating income increased as a result of a decline in the cost of merchandise ratio and cost of food/beverages ratio as well as an increase in theme park attendance and net sales per guest. Fixed costs turned out to be as forecast in February

11 3. Changes in Results As you can see in the graph, changes in consolidated net sales and operating margin, on the left, operating margin for the fiscal year under review stood at 18.6%, increasing year on year for the fourth consecutive term. Next, please look at the graph on the right, Changes in consolidated operating income and net income. Operating income for the fiscal year under review reached 66.9 billion, creating a new record high figure for the fourth consecutive year as a result of increased operating margin. 11

12 4. Summary Consolidated results for the fiscal year ended 3/12 / fiscal year ended 3/11 While the first quarter ended with an operating loss due to the impact of the disaster, operating income reached record highs in all of the three subsequent quarters, resulting in the fiscal year recording the highest ever operating income. Factors contributing to the performance included an increase in operating margin due to temporary post-disaster cost reductions, as well as an increase in net sales driven by the highest ever figures for theme park attendance and net sales per guest in and after the second quarter. Consolidated results for the fiscal year ended 3/12 / forecast as of 2/12 A significant increase in operating income was achieved as a result of an increase in net sales in the Theme Park Segment, thanks to the success of the Tokyo DisneySea 10th Anniversary events, as well as the control of fixed costs in the segment that was implemented as planned 12

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14 1. Forecast for the Fiscal Year Ending 3/13 / Actual Results for the Fiscal Year Ended 3/12 While net sales are forecast to increase by 9.3 billion to billion, operating income is expected to decrease by 1.7 billion to 65.1 billion, and ordinary income is projected to decline by 1.8 billion to 64.3 billion. Meanwhile, net income is projected to grow significantly ifi to billion, up 7.8 billion, due to a fall in extraordinary loss. 14

15 Theme Park Segment (1) Net sales are forecast to reach billion, up 10.0 billion. Theme park attendance is projected to increase by 0.95 million to million. This is mainly due to an increase in attendance in the first quarter due to the restoration of normal operations, reflecting the fact that theme parks were temporarily closed in the same period of the previous fiscal year. In and after the second quarter, however, plans have been laid out in consideration of the fact that the current year follows on the heels of the Tokyo DisneySea 10th Anniversary and that attendance in the same period of the previous fiscal year was favorably affected by guests who had postponed their visits due to theme park closure after the disaster or other reasons. Net sales per guest is expected to decrease by 66 to 10,270 as a result of a decline in merchandise revenue due to terminating sales of products related to the Tokyo DisneySea 10th Anniversary, although ticket receipts are projected to increase owing to the effect of ticket price revisions in the previous fiscal year. This forecast of net sales is consistent with our ongoing pursuit of our management methodology of maximizing free cash flow by reducing costs and investments based on solid sales plans. 15

16 Theme Park Segment (2) Operating income is forecast to decrease by 0.4 billion to 56.0 billion. This is owing to a rise in costs that is expected to offset the effect of an increase in net sales. A major contributor to the cost increase is a rise in the variable cost ratio. In addition to an increase in the cost of merchandise ratio and cost of food/beverage ratio, the ratio of variable charges is also expected to grow due to rising energy costs and other factors. Personnel expenses and fixed and miscellaneous costs are also projected to rise by approximately 2.0 billion and 5.5 billion, respectively. This means that costs will return to the normal level as a result of an increase in costs for the period of theme park closure in the previous fiscal year and costs for enhancing guest satisfaction, which is crucial to theme park operation over the long term. As a result, cost is expected to increase year on year. 16

17 Changes in Theme Park Attendance and Theme Park Fixed and Miscellaneous Costs The line graph represents theme park attendance and the bar graph shows fixed and miscellaneous costs. Please focus your attention on the fiscal year ended March 2010 and the fiscal year ending March Theme park attendance is projected to rise by 0.5 million from million in the fiscal year ended March 2010 to million in the fiscal year ending March Meanwhile, as the dotted line shows, fixed and miscellaneous costs for the fiscal year ending March 2013 is expected to be at the same level as the fiscal year ended March 2010, meaning that we will be controlling our costs. As such, although costs are expected to rise in comparison with the previous fiscal year, it can be said that our cost plan will ensure enhanced efficiency when compared with past results. 17

18 Hotel Business Segment Operating income is forecast to be 9.5 billion, the same level as the previous fiscal year, due to an increase in fixed costs including facility renovation costs incurred by Disney Ambassador Hotel, although a rise in net sales is expected due to the restoration of normal operations. Other Business Segment Operating income is forecast to decrease due to temporary costs incurred in the Ikspiari and monorail businesses. 18

19 2. Changes in Results Please refer to the graph on the left, Changes in consolidated operating income and net income. Net income for the current fiscal year ending March 2013 is expected to reach 40.0 billion, the highest ever achieved. As you can see by the graph on the right, Changes in earnings per share, earnings per share are also expected to rise significantly to a record high

20 3. Summary Forecast for the fiscal year ending 3/13 / Results for the fiscal year ended 3/12 The forecast for the fiscal year ending March 31, 2013 will be achieved through the ongoing pursuit of our management methodology to maximize free cash flow by reducing costs and investments based on solid sales plans. Although higher costs will be incurred in an effort to enhance guest satisfaction, which is crucial to theme park operation over the long term, it can be said that our cost plan will ensure enhanced efficiency when compared with past results. Net income is forecast to increase significantly, with earnings per share expected to reach a record high. 20

21 I would like to give an overview of our outlook for the future based on the progress achieved so far under the 2013 Medium-Term Plan. 21

22 Overall Structure of the 2013 Medium-Term Plan We are now in our second year of the period covered by the 2013 Medium-Term Plan. First of all, I would like to give a rough outline of the plan. The basic aim is to strive for sustainable growth of our core business, generate a steady stream of free cash flow, and allocate that free cash flow to preparations for new growth and stockholder returns. 22

23 Medium-Term Plan Target Under the 2013 Medium-Term Plan, we have set a numerical target for total free cash flow over a period of three years. We are steadily on the path towards reaching the target, with free cash flow for the fiscal year ended March 31, 2012 amounting to 48.7 billion and that for the fiscal year ending March 31, 2013 projected to reach 37.7 billion. In light of our steady achievement so far, we have revised the numerical target upwards from the billion level to the billion level. We will continue to generate a steady stream of free cash flow by sticking to the Medium- Term Plan even as we respond to changes in the business environment. 23

24 1. Sustainable Growth of the Core Business Now, in line with the themes listed here, I would like to discuss the specific progress made towards our goal of achieving the sustainable growth of our core business. 24

25 Enhanced Value of Tokyo Disney Resort Measures to enhance the value of Tokyo Disney Resort have been implemented in a steady fashion, although we had to make some slight changes to our schedule due to the earthquake disaster. I would now like to touch on the new attractions scheduled to be introduced. On July 9, 2012, a 3D ride-type attraction, Toy Story Mania! will open at Tokyo DisneySea. On August 24, 2012, Goofy s Paint n Play House, an attraction suitable for all ages, including young children, will open at Tokyo Disneyland. Furthermore, 30th Anniversary events for Tokyo Disney Resort will start on April 15, To coincide with these, a new daytime parade, Happiness Is Here, will also start at Tokyo Disneyland. In addition, Tokyo Disneyland s Star Tours will undergo a total renewal and be reopened in the spring of We will strive to systematically enhance the value of Tokyo Disney Resort by always looking a few years ahead and effectively combining the launch of anniversary year events, which are crucial in attracting guests, with the introduction of new products. 25

26 Theme park attendance has been on a steady rise due in part to the improvement in value of the theme parks. Attendance experienced a temporary drop owing to the closure of the theme parks as a consequence of the disaster. However, it has now fully recovered, as indicated by the fact that attendance in the fiscal year ending March 31, 2013 is projected to reach million, the second highest figure ever recorded. We aim to continue our efforts to improve the base level of theme park attendance over several years. 26

27 Creation and Expansion of Earnings Opportunities I would now like to explain our efforts regarding the creation and expansion of earnings opportunities. As part of our process management of guest experiences, we are striving to reduce the waiting time for guests at theme parks, while charging extra fees for some contents to enhance profitability. One specific example is the Vacation Packages, which are high-value-added packaged products that combine hotel accommodations with theme park content such as FastPass tickets. Users have reported high satisfaction with these packages and a strong desire to repurchase. As a result of endeavoring to expand theme park content and sales channels, revenue has been rising year by year as you can see in the graph on the right. The figure reached about 12.0 billion in the fiscal year ended March 31, 2012, despite the impact of the disaster, representing a year-on-year increase of about 20%. We aim to enhance guest satisfaction and further increase profitability by continuing to expand our service offerings. 27

28 We are strengthening efforts to allocate our resources to the development and investments that will enhance the profitability of Tokyo Disney Resort as a whole, such as the creation of new content and efficient utilization of existing facilities. Duffy, a character rolled out at Tokyo DisneySea, is one specific example of our efforts. To horizontally expand the world of Duffy, we released ShellieMay, Duffy s friend, in January 2010; opened a greeting facility in July 2011; and are currently holding a new special event, Mickey & Duffy s Spring Voyage, at Tokyo DisneySea from April to June, As such, by expanding the world built around this character, we will further extend the range of guests enjoyment. As you can see in the graph on the right, even under the recent deflationary environment, OLC has managed to increase net sales per guest. Net sales per guest stood at 10,336 in the previous fiscal year, the highest ever achieved. And it is hovering at this high level: projections for this fiscal year see it reaching 10,270, the second highest figure ever recorded. We will continue to create new value in this way, aiming to further improve net sales per guest. 28

29 Promotion to Attract Guests to Both Theme Parks Please see the right section of the slide for the situation vis-à-vis market development in the fiscal year ended March 31, As part of our measures to expand the fan base of Tokyo Disney Resort, we held Tokyo DisneySea 10th Anniversary events and introduced new products such as Fantasmic! As I explained earlier, revenue for Vacation Packages increased year on year by about 20%. The number of overseas guests has decreased due to the impact of the disaster, among other factors. As part of our measures to enhance our capacity to attract repeat guests, we held seasonal events for Easter, Halloween, and Christmas while maintaining a high level of guest satisfaction. To achieve market development, we will continue to expand the fan base of Tokyo Disney Resort and enhance our capacity to attract repeat guests. 29

30 Attracting Overseas Guests In the fiscal year ended March 31, 2012, the number of overseas travelers to Japan decreased due to the disaster. Accordingly, the number of overseas guests visiting our theme parks declined. The Japanese government sets a high target for the number of overseas travelers to Japan, and various initiatives are being considered to increase inbound traveler numbers. We intend to take advantage of the government s initiatives to boost the number of overseas travelers to Japan and will respond appropriately to the expansion in the overseas guests market that is expected over the medium to long term. 30

31 Investments and Cost Efficiency I would now like to comment on our measures to enhance investment and cost efficiencies. The level of capital expenditures is declining as most of our large-scale forward-looking investment has been completed. Under the current Medium-Term Plan, we will control capital expenditures at an annual average of around the 30.0 billion level. Capital expenditures for the fiscal year ending March 31, 2013 are expected to increase to 39.1 billion. This is due to temporary factors such as the postponement of some investment from the previous term. We will continue to focus on controlling investment and aim to further improve investment efficiency. 31

32 As investment efficiency rises, depreciation and amortization expenses are expected to decrease in the medium to long term. We expect depreciation and amortization expenses in the fiscal year ending March 31, 2013 to be 36.8 billion. 32

33 I would now like to explain our measures to enhance cost efficiency. We will work to further improve cost efficiency by striving to control cost in accordance with net sales and cutting costs through measures that will not affect the value of guest experiences, among other efforts. The graph in the lower half of the slide shows the changes in fixed and miscellaneous costs in the Theme Park Segment. Up until the fiscal year ended March 31, 2009, as net sales climbed, fixed and miscellaneous costs tended to exceed initial projections. However, since the fiscal year ended March 31, 2010, we have been able to control costs within the initially projected ranges. As such, in recent years we have strengthened cost control throughout each fiscal year. 33

34 This graph shows the changes in operating margin since the year in which OLC was listed on the stock exchange. During the period in which we operated only one theme park, Tokyo Disneyland, depreciation and amortization expenses were at the 10.0 billion level while operating margin was approximately 20%. Since the fiscal year ended March 31, 2001, operating margin has been trending at around 10% due to the significant increase in depreciation and amortization expenses resulting from the large-scale forward-looking investment in the opening of Tokyo DisneySea, among others. However, as explained earlier, operating margin has been improving in the past few years due to a decrease in fixed expenses as a result of our various efforts to improve investment and cost efficiencies. We intend to continue making efforts to enhance investment and cost efficiencies and seek further improvement in operating margin. 34

35 Medium-Term Financial Target We intend to pursue growth in operating income in the fiscal year ending March 31, 2014, when we will celebrate Tokyo Disney Resort s 30th Anniversary although we are projecting a decline in operating income for the fiscal year ending March 31, 2013, as explained earlier. 35

36 2. Reinforcement of the Foundation for Long-Term Sustainable Growth Preparation for New Growth There has been no change to our existing policy with regard to the usage of free cash flow. Our top priority has been investment in new growth, for which we will establish a policy during the period covered by the current Medium-Term Plan. Furthermore, we are planning to allocate free cash flow from a long-term perspective, toward stockholder returns and reduction of interest-bearing debt in order to secure reserves to invest in new growth. 36

37 Cash Dividends With regard to cash dividends, we plan to pay 100 per share for the fiscal year ended March 31, 2012, the same amount as the previous fiscal year. For the fiscal year ending March 31, 2013, we plan to keep total dividends at 100 per share. We will continue to aim for a steady payout of cash dividends while also taking the external environment into consideration. Improvement of ROE Regarding our target of achieving an ROE of 8% or more, ROE for the fiscal year ended March 31, 2012 successfully reached 8.7%. We will continue our efforts to achieve an ROE of 8% or more. We will continue to provide steady stockholder returns. 37

38 Oriental Land Co., Ltd. Investor Relations Group, Finance/Accounting Department URL: This document includes statements about Oriental Land s plans, estimates, strategies and beliefs. The statements made that are not based on historical fact represent the assumptions and expectations of Oriental Land in light of the information available to it as of the date when this document was prepared, and should be considered as forward-looking. Oriental Land uses a variety of business measures to constantly strive to increase its net sales and management efficiency. However, Oriental Land recognizes that there are certain risks and uncertainties that should be considered which could cause actual performance results to differ from those discussed in the forward-looking statements. Potential risks could include, but are not limited to, weather, general economic conditions, and consumer preferences. Therefore, there is no firm assurance that the forward-looking statements in this document will prove to be accurate. Theme park attendance figures have been rounded. Financial figures have been truncated. All rights reserved. 38