Oriental Land Co Ltd

I am Wataru Takahashi. At the Board of Directors meeting following the Nomination Remuneration Committee meeting on April 1st, 2025, I took office as President and COO, succeeding Kenji Yoshida. I would like to take this opportunity to express my sincere appreciation for your support and understanding regarding our business. Oriental Land is celebrating its 65th anniversary this year. Starting out with a single theme park, Tokyo Disneyland, our business has evolved and developed into the current Tokyo Disney Resort. Going forward, the environment surrounding Oriental Land is expected to change in dramatic ways, as exemplified by the declining birth rate, aging population, and climate change. Amid such a challenging environment, I consider it to be my mission to ensure steady growth for our existing theme park, hotel business, and other business segments, and to furthermore make the cruise business, our new challenge, a success. Our wish is to continue to be a corporation that is desired not only by our guests and cast members, but by all our stakeholders. We hope you will join us in looking forward to the future growth and evolution of the OLC Group. Good afternoon, everyone. I am Tomoyuki Shimoda. Thank you very much for coming to our financial presentation today, despite your busy schedule. First, I would like to explain the financial results for the fiscal year ended March 2025. Please refer to page 4 of the materials provided. The financial results for the fiscal year under review are as shown here. Compared to the previous fiscal year, net sales and all levels of profit hit record highs as a result of increases in net sales per guest and net sales for the hotel business segment, among other factors. I would like to explain the reasons for the increases by segment. Please refer to page 5. Net sales for the theme park segment increased year-on-year by 38.3 billion yen to 552.1 billion yen. Attendance was roughly the same as in the previous fiscal year. For your reference, I'd like to provide you with an outline of attendance trends in the fourth quarter compared to the same period of the previous fiscal year. Attendance was around 3% higher during the three months compared to the fourth quarter of fiscal year 3-24. On a monthly basis, attendance was approximately 12% higher in January, approximately 2% lower in February and remained roughly the same in March. Net sales per guest achieved a record high of ¥17,833 as a result of the growth in revenue from attractions and shows, among other factors. Attractions and shows revenue increased year-on-year, owing to higher revenues from Disney Premier Access and Tokyo Disney Resort Vacation. Merchandise revenue decreased year-on-year due to the termination of sales of products related to Tokyo Disney Resort's 40th anniversary, although the sales of products related to Fantasy Springs pushed up the revenues. Food and beverages revenue increased year on year, driven by new outlets opening with the launch of Fantasy Springs. Please refer to page 6. Operating profit for the theme park segment increased year on year by 0.9 billion yen to 140.4 billion yen on the back of increased net sales, although depreciation and amortization and miscellaneous costs climbed. With regard to the merchandise and food beverages cost ratio, the food and beverages cost ratio rose year on year, primarily owing to a surge in raw material prices, as well as the ordering of some ingredients from external parties. The merchandise cost ratio increased year on year due to adjustments in the selling price in view of inventory levels. Personnel expenses increased year on year, primarily as a result of an increase in the number of hours worked by part-time cast members due to the opening of Fantasy Springs. Miscellaneous costs increased year on year, chiefly due to an increase in maintenance costs for addressing age-related deterioration and a rise in sales promotion costs for strengthening measures to attract guests. Depreciation and amortization expenses increased, mainly due to the acquisition of new assets related to the opening of Fantasy Springs. Please refer to page 7. Net sales for the hotel business segment increased year on year by ¥22 billion to ¥110.4 billion as a result of an increase in accommodation revenue on the back of the opening of Tokyo DisneySea Fantasy Springs Hotel and higher charges per room. The occupancy rates at Disney Hotel has decreased by 2.7 percentage points to 95.7% due to the renovation of Tokyo Disney Celebration Hotel. The average charge per room increased by ¥10,456 to ¥64,886. Operating profit increased by ¥5.6 billion to ¥30.4 billion, primarily owing to an increase in net sales. Please refer to page 8. Net sales for the other business segment increased year on year by 0.4 billion yen to 16.7 billion yen, owing to higher net sales from the monorail business, driven by a rise in the number of passengers and other factors, while operating profit decreased by 0.1 billion yen to 0.6 billion yen, primarily due to increases in personnel expenses and miscellaneous costs. Please refer to page 9. I would like to explain our results for fiscal year 3-25 in comparison with the forecast announced in October 2024. Attendance fell short of our October forecast, primarily due to a decline in travel demand on the back of a slowdown in post-pandemic revenge spending, the termination of the Tokyo Disney Resort 40th anniversary events, the bad weather and other factors. For your reference, I'd like to provide you with an outline of recent attendance trends compared to the full fiscal year attendance forecast of 28 million. Attendance fell short of our projection by approximately 4% during the fourth quarter. On a monthly basis, attendance was roughly as expected in January, but fell short of our projection by approximately 3% in February and by approximately 8% in March. Net sales per guest exceeded our forecast due to such factors as an increase in revenue from Disney Premier Access and higher merchandise revenue, etc. Net sales for the hotel business segment and other business segment were higher than our projection, owing to an increase in accommodation revenue, resulting from higher than expected average charge per room. Costs for the theme park segment were lower than we had projected, chiefly due to lower than expected miscellaneous cost. Please refer to page 10. Now I'd like to review our performance under the 2024 medium term plan. Please refer to page 11. Goals of the 2024 medium-term plan are shown here. Under this policy, we were able to make strong recovery from the pandemic as a result of making steady progress toward enhancing guests' experience value and restoring financial performance. Let me review on each goal closely. Please refer to page 12. In pursuit of our first goal of enhancing guest experience, we have steadily implemented a variety of measures in view of the changes in people's values due to the pandemic and our own fresh insight. We have explored unconventional approaches, such as implementing measures to increase annual attendance by evening out attendance across all days, months and seasons, while reducing the limit on daily attendance and providing more options by introducing Disney Premier Access, etc. As a result, we have succeeded in maintaining high guest satisfaction and mitigating the negative sense of crowdedness relative to the pre-pandemic level. Please refer to page 13. For our second goal of restoring financial performance, we have drawn on a range of measures and fresh ideas in our operations, which resulted in a strong recovery since fiscal year 322 and the record high operating profit and operating cash flow in fiscal year 325. Please refer to page 14. Under our human resources strategy, we have upheld our goal of seeking transformation into a sustainable HR structure while maximizing job satisfaction. In our effort to maximize job satisfaction, we introduced an engagement survey and set key goal indicators, KGIs, which enabled us to identify our strengths and issues and implement multifaceted initiatives based on the findings. Currently, our engagement survey scores have been on an upward trend. Also, while seeking to establish a sustainable HR structure through initiatives to save energy and enhance productivity, we have been making ongoing improvements in employee compensation to ensure a sense of security at work. Under our financial strategy, we have allocated cash with a priority on growth investments, while increasing dividends in phases in step with our recovery in financial performance, achieving our target of restoring the pre-pandemic level. We have pursued the 2024 medium-term plan, perceiving it as a period for recovery from the pandemic and taking on challenges. Building on what we have learned, we will endeavor to implement the 2035 Long-Term Management Strategy and give our all toward achieving our new goals. This will be all from me. Thank you very much. My name is Wataru Takahashi and I will be briefing you on our 2035 Long-Term Management Strategy and our forecasts for the fiscal year ending March 31st, 2026. Please turn to page three. First, let me explain our goal for 2035. Please take a look at page 4. Aiming to create a square where a never-ending hymn to humanity resounds. This is the sentiment that all executives and employees shared when we were putting together the land plan for Maihama. We have given deep thought to the group's business, history and corporate value in formulating our long-term management strategy. Tokyo Disney Resort has grown to welcome more than 800 million guests since its opening, overcoming a variety of difficulties such as the Great East Japan earthquake and outbreaks of infectious diseases. To create spaces and times where people, regardless of age, gender or nationality, can interact with each other and share joy, laughter and inspiration, and where their voices can resonate together. This is exactly what we mean by providing happiness. Now please turn to page 5. What you see here is the specific image of the OLC group that we are aiming for. We have formulated this vision in the hopes that we can become a company that our employees can truly be proud of, by balancing our contributions to people's happiness with our contributions to creating a sustainable society. As a pioneer in the creation of happiness, we will continue stepping up our efforts to expand our business and increase our corporate value without forgetting our unchanging ideals, which we have cherished. Please turn to page six. We aim to enhance our corporate value by evolving business structures for sustainable growth and the pursuit of optimal capital structure from now through 2035. Our financial targets are net sales of at least 1 trillion yen as of fiscal 2035 and operating cash flow at the 300 billion yen level as of fiscal 2029. We seek as soon as possible to achieve a higher ROE than that achieved under the 2024 medium-term plan. We will grow to a higher stage financially by vigorously pursuing our long-term management strategy to further develop and evolve our group. Now on to page 7. Now let me give you an overview of our 2035 long-term management strategy. Our business strategies are to pursue growth through business and to undertake the OLC Group's unique activities that help enhance corporate value. With respect to growth through business, our policy is to strengthen and leverage the draw of Tokyo Disney Resort, taking into account opportunities and risks in the internal and external environments. we will create a virtuous cycle in which our theme park segment and hotel business segment further solidify their ability to attract customers, which in turn is used to grow our cruise business. As for the OLC Group's unique activities that help enhance corporate value, we deem these activities to be those that create social value and ultimately lead to the growth of the OLC Group by pursuing initiatives that cannot be achieved through business activities alone. In addition, we will redouble our efforts in the areas of human resources and finance that form the basis of our businesses to achieve our goal for 2035. Please see page 8. Now let me show you how we are growing through business. Turn to page 9. In preparation for the future contraction of the domestic market, we are looking to strengthen and leverage the ability of Tokyo Disney Resort to bring in customers. In addition to growth in our existing theme park segment and hotel business segment, the cruise business will be in full year operation as of fiscal 2029, which will accelerate our group's growth. Let's take a look at our segment's specific strategies. Please see page 11. I'll start with our theme park segment. Our vision of a theme park is the pinnacle of happiness creation that exceeds people's imagination. To this end, we start off providing attractive parks by continuing to invest aggressively in growth to create spaces and times where people from all walks of life can share joy, laughter, and inspiration. We then work to establish new revenue models. We have previously undertaken measures to increase attendance and net sales per guest. And of course, we will continue to focus on those measures. In addition though, we will create new outside the box sources of revenue. Now please go to page 12. The next topic is growth investment. As new forms of entertainment continue to emerge, people's expectations and the standards they demand are rising. We believe the value we provide should be refined and improved by meeting society's expectations. Our development policy through 2035 is therefore to provide moving experiences and surprises that cannot be found anywhere else in the world through development unique to Tokyo Disney Resort. we will engage in dynamic restructuring of our theme park sites with a view to area-wide redesign and other large-scale development, aggressive investment in attractions and entertainment and efforts to provide new experiences. Let's take a look at page 13. Here are some of the larger investments we are planning for future development. First is the redevelopment within the Tomorrowland area that has already been announced. We will develop a new attraction set in the world of Wreck-It Ralph and undertake the development of Space Mountain, a beloved attraction since its opening, along with its surrounding area. The Tomorrowland area will undergo a major transformation as we make steady progress in providing our guests with new experiential values. Let me give you some other examples of development concepts for area redesign that are currently under consideration. Please see page 14. This is a conceptual image of area redesign. One of the areas within Tokyo Disney Resort will be extensively revamped. We are constantly conducting research and development so that everyone can have a sense of anticipation for the future. Now please see page 15. This is another conceptual image of area redesign. As mentioned earlier, we will be considering dynamically restructuring our theme park sites and making an original Tokyo Disney Resort area as one option. Please keep an eye out for future announcements. Now let's go to page 16. We have worked out development plans for a span of about 10 years and we are continually reviewing these plans to ensure that the two parks can stimulate demand in a well-balanced manner. We will fulfill our mission as a pioneer in the creation of happiness by portraying dreams not bound by preconceptions and by maintaining our commitment to authenticity and to our strong, uncompromising beliefs. Turn to page 17, please. With regard to attendance, we will expand our fan base among domestic guests and strengthen the appeal for overseas guests. The specific measures we will be taking are shown here. Based on our vision of spaces and times where people from all walks of life can share joy, laughter and inspiration, we will be expanding our fan base in preparation for a shrinking domestic market. In addition, we will be stepping up our efforts to attract overseas guests in light of the opportunities presented by the rising number of foreign visitors to Japan. We will increase the number of overseas guests by engaging in activities to attract guests tailored to the characteristics of specific areas and by seeking closer collaboration with online travel agencies, OTAs. Now let's go to page 18. Let me give you an update on the direction of our future efforts to attract guests in summer. The overall policy will be to stimulate demand by creating special parks that can only be experienced in summer. In terms of in-park experiences, we will expand our special events and content scale and implement measures aimed at enhancing the unique summer experience and improving comfort. In addition, we will actively promote the appeal of summer theme parks. While creating attractive park environments, we will thoroughly promote their attractions to attract more guests during the summer season. Please turn to page 19. To increase net sales per guest, we will adapt to diverse needs and upgrade existing services. As for our ticket pricing strategy, we will maintain our existing price revision policies while adding new ones that take into account the amplified impact of the external environment on our business. We will also strive to further grow the services we have traditionally fostered. For Disney Premier Access, we will increase the number of users to enhance the experience value for a wide range of guests. We will respond to diverse needs by expanding our range of services such as systems that allow guests to purchase before their visit and considering appropriate prices based on these services. For Tokyo Disney Resort vacation packages, we will provide more of the specialness, comfort and peace of mind that comes with knowing experiences are guaranteed. we will continue to increase the number of sales by taking target-specific measures such as raising awareness and offering plans with new content as the hook. Let's move on to page 20. The Disney Premier Access and Tokyo Disney Vacation package have grown significantly to contribute to revenue as well as guest satisfaction. For future growth of theme park segment, we believe that it is necessary to create new revenue sources rather than continuing existing approaches. To achieve that, we will create new resources of revenue regardless of whether guests visit or not by boldly developing and unprecedented means and services, etc. This will establish a revenue model that is not constrained by the framework of attendance and the net sales per guest. We will advance research and development going forward, and we would like to announce once the details of the contents are clarified, so please look forward to it. Please turn to page 21. Each cost is expected to increase, taking into account the external environment. We will maintain and improve our profitability by pursuing cost control in each area and minimizing increases. Our policies for each cost category are shown here. With respect to miscellaneous costs in particular, we plan to optimize the necessary costs by improving the quality of individual activities, as well as reviewing our budget management system. Our aim is a cost structure that can withstand changes in the external environment. Now onto page 23. Next, let me touch on the hotel business segment. We currently have six Disney hotels with approximately 3,500 guest rooms. We will maximize revenue at our existing Disney hotels by creating synergies with our theme parks and expanding the unique Disney hotel experience, all the while maintaining high occupancy rates and continuing to pursue revenue management. To take advantage of the opportunities offered by the increase in overseas guests, we will actively undertake efforts to raise awareness and boost sales of vacation packages for overseas guests. In addition, we recognize that there is further demand for Disney hotels, which have maintained high occupancy rates. We will therefore consider adding new Disney hotels near Tokyo Disney Resort for future growth. Now let's go to page 25. Next, I will discuss our cruise business. In July 2024, we announced our entry into the cruise business, a new challenge for our group. By leveraging the strong customer base established at Tokyo Disney Resort, we will provide experiences not just to specific target customers, but instead to a wide range of customers, including families and young adults. We believe that we can make this family entertainment cruise business a success because we are a group with a proud track record of evolving and growing Tokyo Disney Resort for more than 40 years, and we will offer an unprecedented experience to the Japanese market. Let's go to page 26. Our cruise ship will offer a wealth of fascinating content that cannot be experienced in a single boarding. By offering unforgettable travel memories on a cruise full of Disney magic, we create a sense of excitement that makes people want to board the ship again and again, and we will increase the number of repeat guests and achieve sustained growth, just as we have with our theme parks. On to page 27. We believe that the cruise business has strengths not found in our existing businesses, and this will not only boost the profitability of the group as a whole, but also reduce the risks associated with operating solely in the MyHama area. That is why we determined it significant and necessary to enter the cruise business now. Please turn to page 28. The information on investment and return on investment presented in July 2024 has been updated as shown here. We have not changed the total investment amount, but we are assuming that the total investment for the ship and some systems will be 290 billion yen, with a contingency reserve of 40 billion yen. Profitability is calculated based on market research, and we will closely examine the upside of net sales going forward. The operating margin is expected to be higher than that for the theme park segment, with a target in the upper 20% range within the first several years. Solid success with the first vessel will prompt us to consider launching a second vessel. We will lead our group to further evolution and achieve growth through business. On to page 29. Next, I will explain the OLC Group's unique activities that help enhance corporate value. Let's go to page 30. The first of these is creating social value through ESG activities. ESG materiality areas have been reorganized in line with the group's approaches to pursuing initiatives and the status of these initiatives. In addition, we will be undertaking recycling-oriented resort initiatives to reduce the environmental impact of our business activities to as close to zero as possible as part of our commitment to help create a sustainable society by 2035. Specific details will be provided in future updates. Please turn to page 31. The second is creating social value through CVC activities. While we have previously invested in a wide range of areas, we have decided to concentrate our investments in online merge offline, OMO, and the human resources, learning and tourism industries. Going forward, we will continue creating social value by taking on the challenge of building businesses that can offer new opportunities for growth while exchanging human resources with venture companies. Now let's look at page 32. Now I would like to discuss our human resources and financial policies. Please turn to page 33. Our human resources policy for 2035 is to evolve into a group that continues to create new value. With the expected decline in Japan's workforce as a whole, it is extremely important to ensure the quality and quantity of our human resources, which are the source of our value. Issues to be addressed in fulfilling our human resources policy were identified based on the results of our engagement survey and other data, and priority areas were designated as human resource growth base, organizational strength, and sense of security at work. All employees will be responsible for creating value to achieve our goal for 2035 and bolster our business competitiveness. Moving on to page 34. Our financial policy is to pursue an optimal capital structure to enhance corporate value. More specifically, we will use financial leverage in a disciplined manner, enhance shareholder returns, reduce the cost of capital, and be aware of overhangs so that we can take the best possible steps to address them. In making disciplined use of financial leverage, we will make sure the shareholders' equity ratio remains above the minimum level required to maintain our current credit rating and will raise interest-bearing debt as needed to meet funding needs. With respect to shareholder returns, we will maintain steady dividend payout while striving for a dividend payout ratio of 30% level by 2035. In addition, we will be repurchasing our own shares We hope as a result to raise ROE further above the level achieved under the 2024 medium-term plan as soon as possible. Now let's go to page 35. Our five-year cash allocation is shown in this figure. First, we will continue as a growth company to prioritize the allocation of cash to growth investments. In addition, we will set aside 300 billion yen to flexibly respond to capital needs so that we can take the best possible measures to enhance corporate value, such as share buybacks and growth investments. Let's move on to page 36. This concludes my summary of our 2035 long-term management strategy. In the 65 years since our founding, the path that our group has taken has not been a smooth one, but we have shared our opinions and found solutions in our collective wisdom no matter the environment. The happiness that we have provided, while not essential for daily life per se, is nonetheless indispensable to people. We will continue to refine our offerings and services with confidence. We will keep up our inspections, assess matters with a fresh pair of eyes, and work side by side at all times to make improvements. We will strive to carry out our work with sincerity, seriousness, and enthusiasm. At the same time, transformations and innovations will become necessary as the environment surrounding our group changes we will mobilize the imagination and energy of all our employees to grow toward our goal without adopting a nearsighted perspective. Next, I'd like to discuss our forecast for the fiscal year ending March 2026. Please refer to page 4. First, I will explain where FY3-26 is positioned in our long-term management strategy as its first year. From a medium to long-term perspective, rather than a short-term one, we consider fiscal year 3-26 to be the year for laying the foundation for medium to long-term growth. To this end, we will be allocating our resources for our growth strategy. spending more to gain medium and long-term returns. Specifically, our areas of focus will be personal expenses for raising compensation to enhance job satisfaction, research and development expenses, and sales promotion costs aimed at strengthening our customer acquisition platform, and costs related to entertainment and IT for enhancing guest satisfaction. While making efforts to control and reduce costs, we will make bold investments for the future rather than pursuing profits with an eye on a single fiscal year. Please refer to page five. Our forecast for FY3-26 is as shown here. Despite an expected increase in net sales due to higher attendance, we project a decline in operating profit resulting primarily from an increase in costs. Let me explain our forecast by segment and the main reasons for change. Please refer to page 6. Net sales for the theme park segment are projected to increase year-on-year by 7.9 billion yen to 560.1 billion yen. Attendance is expected to increase by 440,000 to 28 million, primarily driven by the full-year operation of Fantasy Springs, and an increase in the number of overseas guests, although a decrease in the number of long-term shareholder benefit passports distributed is expected to push down attendance. Please refer to page 7. Net sales per guest are projected to decrease by 41 yen to 17,792 yen. Attractions and shows revenue is expected to increase as a result of a rise in the proportion of high-priced tickets due to variable pricing, an increase due to a decrease in the number of long-term shareholder benefit passports distributed, despite a decrease in Tokyo Disney Resort vacation packages. Merchandise revenue is expected to decrease owing to a decline in the sales of products related to Fantasy Springs, although products related to the 20th anniversary of Duffy and Friends will push up the revenue. Food and beverages revenue is expected to remain roughly the same. Please refer to page 8. Operating profit for the theme park segment is projected to decrease year-on-year by 16.4 billion yen to 123.9 billion yen. The merchandise and food beverages cost ratio is expected to rise by 1 billion yen as a result of higher production personnel cost ratio resulted by an upward revision in employee compensation, driving food and beverages cost ratio up among other factors. Personnel expenses are projected to increase by approximately 7.5 billion yen, owing mainly to an upward revision in employee compensation and a rise in personnel expenses for full-time employees due to an increase in the number of such employees, although the performance bonus posted in the previous fiscal year will decrease. depreciation and amortization expenses are expected to increase by 0.2 billion yen primarily due to fantasy springs operating over the full fiscal year despite a decrease by depreciation by existing faculties i'd like to elaborate on the changes in miscellaneous costs please refer to page 9. This is a visual representation of how miscellaneous costs are expected to increase from the previous fiscal year. We project an increase of approximately 15.5 billion yen. Approximately 4 billion yen of the total increase is projected in view of the external factors. While the initial costs with the opening of Fantasy Springs will be decreasing, we expect cost increase, taking into account the increase in maintenance and IT-related costs. Over the medium and long term, we will aim to optimize these costs and minimize cost increase through fundamental cost control measures. Apart from these costs, approximately 11.5 billion yen will be additionally spent on one-time costs exclusive to FY3-26 and for medium to long-term growth. As I mentioned at the beginning, our plan is to intentionally incur additional costs to allocate resources for our growth strategy, thereby solidifying our medium to long-term growth trajectory toward accomplishing our financial targets upheld under our 2035 long-term management strategy. Please refer to page 10. In the hotel business segment, net sales are projected to grow by 6.8 billion yen to 117.2 billion yen, primarily owing to an increase due to the full-year operation of Tokyo DisneySea Fantasy Springs Hotel and a rise in the average charge per room. Operating profit is projected to increase year-on-year by 5.3 billion yen to 35.8 billion yen, primarily owing to lower personnel expenses resulting from the posting of performance bonus in the previous fiscal year, although miscellaneous costs and depreciation and amortization are expected to increase. Please refer to page 11. In the other business segment, net sales are projected to decrease year-on-year by 0.8 billion yen to 15.9 billion yen, and operating profit is expected to decline by 0.8 billion yen, resulting in a loss of 0.2 billion yen. These results are attributable to a decrease in real estate rental revenue due to the renewal work of Ixbiari, among other factors. Please refer to page 12. I would like to discuss our dividends. We project our annual dividend for fiscal year 3.26 to be 14 yen per share based on the forecast. As announced in the 2035 long-term management strategy, we will increase the 30% of payout ratio by 2035 with stable dividend policy going forward and allocating resources to growth investment. We have decided to maintain the dividend at the same level as the previous fiscal year, taking into account the forecast of FY3-26 and future financial policy. Please refer to page 13. Next, I'd like to discuss regarding the implementation of a special shareholder benefit. Please refer to page 14. The OLC Group is celebrating its 65th anniversary of the founding. As a token of appreciation for our shareholders and investors, we have decided to offer a special shareholder benefit, a complimentary one-day passport to all shareholders who hold 100 shares or more as of September 30, 2025. As announced in the 2035 Long-Term Management Strategy, we will continue strengthening shareholder returns by increasing dividend payout ratio, repurchasing Treasury stock, expanding shareholder benefits, and so forth. I kindly ask our shareholders and investors to continue watching over our growth in the medium and long term. We sincerely appreciate your ongoing guidance and support. This will be all from me. Thank you very much.