Oriental Land Co Ltd

Hello everyone, this is Shimoda. Thank you very much for taking time out of your busy schedules to attend our company financial presentation today. We sincerely appreciate your time. First, I will explain the financial results summary. Please turn to page 4 of the materials in front of you. I will now explain the financial results summary for the second quarter of the fiscal year ending March 2026. In the first half of the fiscal year, driven by strong performance at Fantasy Springs and special events, consolidated net sales, operating profit and operating cash flow all exceeded both the previous year's figures and our performance forecasts. Consolidated net sales and operating cash flow reached record highs, and we recognize that we have achieved strong results, even under challenging conditions such as severe heat. We will explain the situation compared to the previous year, and compared to the earnings forecast, along with the factors contributing to the increase or decrease. Please refer to page 5. First, I will explain the year-on-year comparison for the first half-year results. As shown here, net sales and operating profit increased year on year due to factors such as an increase in net sales per guest and higher hotel revenue. Please take a look at page 6. I will explain the results by segment and the factors contributing to the increase or decrease. net sales for the theme park segment increased by 12.9 billion yen to 251.7 billion yen attendance figures were on a par with the same period of the previous fiscal year this was due to the strong performance of fantasy springs and special events in the first half of the current fiscal year which offset a decrease due to the absence of a surge in demand for Space Mountain ahead of its closure seen in the same period of the previous fiscal year. As a reference, I will explain the trend in attendance compared to the same period last year. Over the three-month period, it was approximately 1% higher. Month by month, July was approximately 9% lower, August was approximately 15% higher. September was approximately 2% lower. Please refer to page 7. Following last year's severe heat, we have made extensive preparations this season to stimulate summer demand. Our strategy focused on narrowing our target guests, introducing content and initiatives that resonate with them, and establishing guest-friendly systems while promoting the park's appeal. This led to the launch of the special event Summer Cool-Off at Tokyo Disney Resort. As a result, particularly during the summer vacation period, summer cool-off at Tokyo Disney Resort helped motivate guests to visit the parks. Given the high level of interest among the target demographics in experiencing the events, we believe it effectively generated buzz and demand, boosting overall attendance. In addition, the number of guests to the park was raised as a result of the release of more nighttime ticket options and the number of slots available for sale, while promoting the rich park experience in the evenings and beyond. Please refer to page 8. We are actively implementing various measures to enhance comfort. As you can see, we have installed tarps, get-soaked zones and cooling blowers. In the next fiscal year and beyond, we will continue to enhance the value of the summer theme park experiences and actively promote effective measures to attract guests in order to create special park experiences that can only be experienced in summer. Please refer to page 9. Net sales per guest reached a record high as each revenue category increased. Attractions and shows revenue increased due to higher revenue from Disney Premier Access and a rise in the sales of higher priced tickets due to variable pricing. Merchandise revenue increased due to factors such as a rise in sales of products related to Duffy and Friends' 20th anniversary, which offset the decrease due to the settling of initial demand for products related to Fantasy Springs. Food and beverages revenue increased due to the full fiscal year operation of restaurants within Fantasy Springs and the reopening of restaurants that were closed during the same period last year. Please see page 10. Operating profit of the theme park segment decreased by 0.2 billion yen to 49.7 billion yen. The merchandise and food beverages cost ratio decreased overall. Although the food and beverages cost ratio increased due to a rise in the manufacturing expense ratio, the merchandise cost ratio decreased because the sales price adjustments implemented in the same period of the previous fiscal year were not carried out in the current year. Personnel expenses increased due to factors such as a rise in compensation and an increase in headcount. Miscellaneous costs increased due to factors such as higher IT-related expenses from replacing IT equipment and increased maintenance costs from investment transfer costs. Depreciation and amortization expenses increased due to the full fiscal year operation of Fantasy Springs and other factors. Please see page 11. The hotel business segment saw net sales increase by 5.8 billion yen to 56.1 billion yen, driven by higher accommodation revenue from Tokyo DisneySea Fantasy Springs Hotel and increased room rates. For the first half of the fiscal year, the occupancy rate at Disney hotels decreased by 1 percentage point to 92.3% due to a decline in reservations made through vacation packages, while the average charge per room increased by 5,350 yen to 66,806 yen. Operating profit increased by 5.1 billion yen to 17.5 billion yen. driven by factors including higher net sales. Please see page 12. The net sales of the other business segment were 8.2 billion yen, driven by growth in the expiry business and other factors. operating profit increased by 0.1 billion yen to 0.6 billion yen due to higher net sales and reduced miscellaneous costs. Please refer to page 13. Next, I will compare the first half-year results with our forecast. The comparison with the earnings forecast is as shown. Net sales were largely as projected. Operating profit exceeded the forecast due to factors such as lower than expected miscellaneous costs. I will explain the results by segment and the factors contributing to the changes. Please turn to page 14. Net sales for the theme park segment exceeded projections by 0.9 billion yen. Attendance remained largely as projected, mainly due to the strong performance of Fantasy Springs and special events in the first half of the current year, despite the negative impact of the absence of a surge in demand for Space Mountain ahead of its closure seen in fiscal year 325. As a reference, I will explain the trend in attendance compared to our forecast. Over the three-month second quarter period, attendance was approximately 2% below our forecast. By month, July was about 11% below. August was about 10% above. September was about 4% below. Overall net sales per guest slightly exceeded our forecast, driven by higher-than-expected merchandise revenue from strong demand for regular products and higher-than-expected food and beverages revenue on the back of increased demand for special event-related menu items and other items. Please see page 15. Operating profit for the theme park segment exceeded that of the forecast by 5.1 billion yen, mainly due to lower-than-expected miscellaneous costs and a lower-than-expected merchandise and food beverages cost ratio. The merchandise and food beverages ratio was lower than expected as a result of decrease in obsolescence write downs and the decline in the merchandise cost ratio due to a change in the merchandise sales mix. Miscellaneous costs were lower than expected primarily due to a deferral of sales promotion costs and a decrease in IT related expenses resulting from changes in plans. Personnel expenses and depreciation and amortization expenses were almost as projected. Please refer to page 16. In the hotel business segment, net sales were almost in line with our forecast. Operating profit was 0.6 billion yen higher, mainly due to lower miscellaneous costs. In the other business segment, net sales and operating profit were respectively 0.5 billion yen higher than projected. That concludes my remarks. Thank you. Hello everyone. This is Takahashi. I will now explain the outlook for the fiscal year ending March 2026. Please turn to page 18 of the materials in front of you. Although profits exceeded our forecast in the first half of the year, we have decided to leave the forecast for the fiscal year ending March 31, 2026, unchanged at this time because the third quarter onward is the volume zone for theme park attendance, and one of the factors for the increase in profits in the first half was the timing of miscellaneous costs. we have stretched targets for the second half of the year, and we will continue to introduce various measures through the third quarter when high demand is expected, as well as through the fourth quarter. From January 14th to March 2nd, we will roll out Disney Palpalooza Mini's Thunderland, which was very well received in 2024 with a new nighttime immersive program added. In addition, we will introduce new entertainment at Tokyo DisneySea and develop ticket types that meet various guest needs. While steadily implementing the measures we are preparing, we will strive to achieve the goals we set at the beginning of the fiscal year. Please see page 19. Next, I will explain the organizational restructuring. Please turn to page 20. As announced recently, we have decided to implement a major reorganization effective November 1st. We have been advancing the 2035 Long-Term Management Strategy announced in April 2025. By changing to a more agile and specialized organizational structure, we will strengthen and enhance the efficiency of each function. For example, the organization is currently divided by business operation, such as the operations division, which oversees attractions and park operations, the food division, and the merchandise division. Going forward, we will integrate these functions and reorganize them into the Food and Merchandise Development Division and the Operation Division. We expect that this will strengthen collaboration even more than before and enable us to provide new experience value to our guests. We also believe that consolidating highly similar functions will lead to greater efficiency in the future. We are also making various other revisions, including the reorganization of the Corporate Strategy Planning Division and the establishment of the new Corporate Communication Department, and we are determined to accelerate the pace of our efforts to realize the 2035 Long-Term Management Strategy. I would like to ask all of you for your continued support and encouragement for our group.