We are striving to raise corporate value and reach new heights as a company that contributes to revitalizing areas
(As of March 31, 2023)
Outline of Results of Operations for the Fiscal Year under Review
In fiscal 2022, ended March 31, 2023, the Japanese economy showed signs of a moderate recovery following various measures implemented by the government for co-existing with COVID-19. Nevertheless, volatility and risks in financial capital markets, economic downturns in other countries, and rising prices of commodities caused by the prolonged conflict in Ukraine will need to be closely monitored going forward.
Against this backdrop, conditions were mixed in Japan’s real estate industry. In the office building leasing market, vacancy rates increased as occupants tended to reduce their office spaces amid changing workplace practices, particularly the shift to telecommuting. In the real estate investment market, however, strong interest in Japanese real estate among investors remained stable despite expectations for financing conditions to be impacted by interest rates hikes going forward.
In this operating environment, the Company’s consolidated revenue and income declined, for the most part, compared with the previous fiscal year. Operating revenue totaled ¥44,522 million, down ¥13,295 million (23.0%). Operating income was ¥10,784 million, a decrease of ¥1,830 million (14.5%), and ordinary income came to ¥9,647 million, down ¥1,925 million (16.6%). On the other hand, net income attributable to owners of parent increased by ¥432 million (5.0%) to ¥9,137 million.
Forecast of Consolidated Financial Results
The Japanese economy is expected to pick up due to various measures implemented by the government. Nevertheless, the negative impact of global inflation and monetary tightening on economic conditions around the world will need to be closely monitored going forward. Management will also need to continue paying close attention to various factors affecting the Group’s operating environment, including interest rate fluctuations and the impact of telecommuting and other changing workplace practices on the office building leasing market.
In view of these circumstances, the Group will strive to increase its corporate value under its medium-term management plan, Challenge & Progress, which was announced on April 30, 2020. Specifically, it will continue revitalizing Tokyo’s Nihonbashi Kabutocho and Kayabacho districts, proceed with redevelopment projects in the city of Sapporo, and take steps to realize external growth in its Building Business and Asset Management Business segments.
In its forecast of consolidated financial results for fiscal 2023, ending March 31, 2024, the Company expects operating revenue to total ¥44,100 million, a decrease of ¥422 million (0.9%) compared with the result in fiscal 2022. Operating income is forecast to grow by ¥1,515 million (14.1%) to ¥12,300 million, and ordinary income is forecast to increase by ¥1,052 million (10.9%) to ¥10,700 million. Net income attributable to owners of parent is forecast to decrease by ¥937 million (10.3%) to ¥8,200 million.
Basic Profit Appropriation Policy and Dividends for Fiscal 2022 and Fiscal 2023
The Company will return profits to shareholders based on the assumption that its businesses, particularly the redevelopment and building leasing businesses, will operate stably over the long term, and sufficient internal reserves for raising shareholder value will be secured. As a basic policy, the Company will aim for a consolidated total shareholder return ratio of 70% from fiscal 2020 to 2023, taking into account returns on business investments while focusing on capital cost and capital efficiency.
The Company had announced its plan to pay a fiscal year-end dividend of ¥50 per share for fiscal 2022; however, management has decided to increase this amount by ¥4 to ¥54 per share after taking into consideration the revision of its forecast of fiscal 2022 consolidated financial results, explained above, and other factors. Accordingly, the annual dividend for fiscal 2022 will be ¥104 per share, ¥4 above the previous plan. This amount is ¥9 higher than the annual dividend of ¥95 per share paid in the previous fiscal year, and will mark the sixth consecutive year of increased dividends since fiscal 2016.
More details are available in the press release, “Notice on Revision of Dividend Forecast,” published on April 28, 2023.
Having taken its forecast of financial results into account, the Company plans to pay an annual dividend of ¥116 per share (including an interim dividend of ¥58 per share) in the current fiscal year ending March 31, 2024.
As the Company moves forward, we ask for the ongoing understanding and support of its shareholders and investors.
June 23, 2023
Representative Executive Officer, President and CEO