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. Trends in net sales, operating profit and operating cash flow for the third quarter are as shown, with this quarter achieving record highs. We leverage special events such as Christmas along with Fantasy Springs to achieve high net sales per guest. Please turn to page 5. The results for the first nine months are as shown. Compared to the same period of the previous fiscal year, net sales and profits increased due to factors such as higher net sales per guest and growth in the hotel business segment. Please turn to 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 16.9 billion yen to 427.9 billion yen. Attendance was nearly the same as the same period of the previous fiscal year. Although the same period of fiscal year 325 benefited from pre-closure demand for Space Mountain, etc., this period saw strong performances of Fantasy Springs and special events. As a reference, I will explain the trend in attendance compared to the same period of the previous fiscal year. For the three-month period of this quarter, the attendance numbers were largely similar. By month, October was approximately 4% lower. November was approximately 1% higher, and December was approximately 3% higher. Net sales per guest reached record highs across all revenue categories. Attractions and shows revenue rose, driven by increases in Disney Premier Access and sales of higher-priced tickets due to variable pricing. Merchandise revenue grew due to increases of products related to Duffy and Friends' 20th anniversary and special events. Food and beverages revenue increased due to the reopening of restaurants closed during the same period of the previous fiscal year. Please refer to page 7. Operating profit for the theme park segment increased by 0.3 billion yen to 109.9 billion yen. Regarding the merchandise and food beverages cost ratio, the food beverages cost ratio increased due to factors such as higher manufacturing expense ratios associated with the reopening of the central kitchen. However, the merchandise cost ratio decreased primarily due to improved material yield resulting from changes in sales mix. Overall, the cost ratio decreased. Personnel expenses increased due to factors such as a rise in compensation and an increase in headcount. Miscellaneous costs increased due to higher maintenance costs at Fantasy Springs and increased IT-related expenses resulting from the replacement of IT equipment. Depreciation and amortization expenses increased due to the full-year operation of Fantasy Springs and other factors. Please refer to page 8. The hotel business segment saw net sales increase by 7.8 billion yen to 89.5 billion yen, driven by factors including higher room rates and the full-year operation of Tokyo DisneySea Fantasy Springs Hotel. For the first nine months, the occupancy rate at Disney hotels decreased by 1.4 percentage points to 94% due to a decline in reservations made through vacation packages. The average charge per room increased by 5,727 yen to 69,839 yen. Operating profit increased by 6.2 billion yen to 29.8 billion yen, driven by factors including higher net sales. Please turn to page 9. The other business segment saw net sales increased by 0.2 billion yen to 12.7 billion yen, driven primarily by the XBRD business, while operating profit decreased by 0.1 billion yen to 1.1 billion yen. Please refer to page 10. Both net sales and operating profit exceeded our earnings forecast due to factors such as higher than expected net sales per guest and lower than expected miscellaneous costs. Although attendance was negatively impacted by the absence of a surge in demand for Space Mountain, etc., ahead of their closure, seen during the same period of the previous fiscal year, it remained largely comparable to our projection, thanks to the strong performance of Fantasy Springs and special events. As a reference, we will explain the trend in attendance figures compared to the earnings forecast. For the three-month period of this quarter, attendance was largely comparable. Month by month, October was about 1% lower, November was about 2% lower, and December was about 2% higher. Net sales per guest exceeded the forecast overall, driven by higher than expected merchandise revenue from strong demand for regular products and higher than expected food and beverages revenue, supported by an increase in the proportion of high-priced restaurants used. Operating profits surpassed our forecast, driven by lower than expected miscellaneous costs and higher than expected net sales. Please turn to page 11. Next I will explain the outlook for fiscal year ending March 2026. Please turn to page 12. Although operating profit for the first nine months exceeded our projection, we are maintaining our earnings forecast for fiscal year 3-26 at this time, considering factors such as timing differences in cost recognition and weather risks. Minis Thunderland at Disney Palpalooza and the new entertainment show Dance the Globe at Tokyo DisneySea began on January 14th and have been well received by guests. Through the steady implementation of initiatives and ongoing cost control, we will continue striving to improve our business performance. Please see page 13. Next, I will explain the future outlook. Please turn to page 14. While the fiscal year 2026 budget is currently under review, we intend to formulate it with full consideration of the operational environment at Tokyo Disney Resort for the next fiscal year. Therefore, we will share factors currently visible that could impact performance. First is the Tokyo DisneySea 25th anniversary event, which will be held year-round starting in April 2026. We will offer entertainment programs and special contents to enhance the guest experience. Additionally, we will carry out renovation work on guest rooms at some Disney hotels. For example, Tokyo DisneySea Hotel Mira Costa will undergo its first major renovation in 10 years. With the goal of maintaining a high level of experience value going forward, we will continue to improve the environment for the future. Furthermore, while we anticipate a continued cost increase trend due to rising prices and ongoing investments in human capital, we will strive to limit the increase through enhanced cost control. Please turn to page 15. The new attraction set in the world of Wreck-It Ralph is now scheduled to open in spring 2027. In the same year, with the opening of the new Space Mountain attraction and the complete redesign of the surrounding area, the entire Tomorrowland area at Tokyo Disneyland will offer a whole new experience. Please stay tuned. Please turn to page 16. We have consistently explored various options to meet diverse needs. While we cannot share details at this time, we are exploring various directions including ticket pricing strategies and enhancements to the Disney Premier Access Service and we are steadily making progress. Regarding our pricing philosophy, continuously enhancing experience value is paramount. The value we provide is a unique experience and lifelong memories. And based on our guest price sensitivity surveys, we believe there is room to raise prices. Our commitment to reflecting value in pricing remains unchanged. We will continue to actively pursue this approach. We will aim for flexible pricing over the medium to long term, refining our methods and timing. Regarding Disney Premier Access, while considering expanding eligible facilities and determining appropriate pricing, we plan to implement a service that allows purchases prior to a park visit in 2027. Guests will be able to enjoy our parks in a more planned manner. We kindly ask for your patience until its introduction. Moving forward, we will continue to build on our attractive parks, prioritizing various initiatives, expanding guest options to create parks that cater to diverse guest needs. That concludes my remarks. Thank you.