Hibino Corporation Q4 FY2025 earnings call

Overall Financial Performance

• Hibino delivered its second consecutive year of year-over-year revenue and profit growth, reaching an all-time high consolidated revenue of 59.473 billion yen, up 8.982 billion yen year-over-year. Gross profit hit 21.181 billion yen, up 3.621 billion yen year-over-year, with gross margin improving 0.8pp to 35.6%. Operating profit reached 4.171 billion yen, up 1.357 billion yen year-over-year, with operating margin improving 1.4pp to 7.0%. Net profit attributable to parent company shareholders was 1.722 billion yen, up 0.095 billion yen year-over-year.
• Two mega projects, Nagasaki Stadium City and Osaka-Kansai Expo, were major contributors to results, demonstrating the group's full integrated solution capabilities. All segments achieved year-over-year revenue growth, and the three core segments achieved second consecutive year of profit growth, with two segments reaching record-high profit.

10-Year Strategic Summary

• Over the past 10 years, consolidated revenue grew 3.1x from 19.22 billion yen to 59.47 billion yen, with a 13.4% CAGR. Operating profit grew 3.3x from 1.25 billion yen to 4.17 billion yen, with operating margin improving 0.5pp to 7.0%.
• Four core strategic drivers delivered growth:
  • M&A: 14 deals adding 27 companies to the group. M&A subsidiary revenue grew from 3.83 billion yen to 35.85 billion yen, now accounting for 60.3% of total group revenue. The company built robust post-merger integration (PMI) capabilities and disciplined exit processes.
  • New Business Development: Architectural acoustics grew from a new entry to a core profit pillar, with 17.8% of total revenue and 18.4% of total operating profit, and provided stability during the COVID-19 pandemic. The company continues to lay groundwork in other new adjacent sectors.
  • Global Expansion: Overseas revenue grew from 0.46 billion yen to 8.11 billion yen, increasing overseas revenue share from 1.5% to 13.6%, with operations expanding from 2 to 10 countries, focused on the Asia-Pacific region.
  • Group Synergy: Cross-company collaboration on large projects delivers end-to-end integrated solutions from planning to maintenance, leveraging the combined strengths of group subsidiaries to win and execute mega projects.

Capital & Shareholder Strategy

• Hibino calculated its cost of equity at 5-8%, with a 5-year average of ~7%. FY2025 ROE was 15.8%, well above the cost of equity. FY2025 PBR was 2.1x (consistently above 1x over the past 5 years) and PER was 13.8x, above the Tokyo Stock Exchange Standard market average of 12.8x.
• The company continues to implement its mid-term management plan Vision 2025, focused on improving ROE through sales growth and margin improvement, and building a more resilient diversified business portfolio. It also strengthens non-financial initiatives to lower cost of equity through improved transparency and stakeholder trust, targeting sustained improvement in enterprise value.
• Shareholder returns: Stable dividends are a core policy. A 10 yen increase in annual dividend is planned for FY2026, to 80 yen per share (40 yen interim, 40 yen end-of-period), up from 70 yen in FY2025 which included a special 10 yen commemorative dividend. The company also announced a new share repurchase program of up to 110 million yen for up to 50,000 shares, running from May 26 2025 to September 30 2025.

Recent Strategic Moves

• In April 2025, Hibino acquired a 75% stake in Singapore-based Spectrum Audio Visual, a leading commercial AV sales and construction firm that operates across Singapore, Malaysia, and Sri Lanka. The acquisition builds on the company's APAC expansion strategy, adds a top-tier qualified team for large government projects, a strong stable customer base across corporate, education, healthcare and hospitality sectors, and has delivered 65% revenue growth over the past 3 periods. Spectrum will serve as a core hub for Southeast Asian expansion.

1. Sales & Construction Business: Revenue of 30.51 billion yen, up 5.386 billion yen year-over-year, operating profit of 2.114 billion yen, up 0.92 billion yen year-over-year. Accounts for 51.3% of total revenue, an increase of 1.5pp from the prior year. Growth was driven by large-scale projects including Nagasaki Stadium City and Osaka-Kansai Expo, strong LED display system sales, and full-year contributions from newly consolidated subsidiaries.
2. Architectural Acoustics Construction Business: Revenue of 10.597 billion yen, up 1.33 billion yen year-over-year, operating profit of 1.03 billion yen, up 0.372 billion yen year-over-year. Accounts for 17.8% of total revenue, a decrease of 0.6pp from the prior year. Achieved record-high revenue and profit, supported by a concentration of large projects including media-related facilities, Osaka-Kansai Expo pavilions, and noise reduction projects, alongside cost reduction efforts and additional work orders.
3. Concert & Event Services Business: Revenue of 17.467 billion yen, up 1.367 billion yen year-over-year, operating profit of 2.468 billion yen, up 0.109 billion yen year-over-year. Accounts for 29.4% of total revenue, a decrease of 2.5pp from the prior year. Achieved record-high revenue and profit, driven by growth in large-scale concerts (especially K-Pop artist events) following the opening of 6 new arenas in the Kanto region, contributions from the Osaka-Kansai Expo, and newly acquired video production subsidiaries.
4. Other Businesses: New segment added following the consolidation of Office Co., Ltd. Accounts for 1.5% of total revenue, includes M&A advisory fees and costs.

• Consolidated FY2026 (ending March 2026) guidance calls for 66.0 billion yen in revenue (up 6.526 billion yen year-over-year), 4.2 billion yen in operating profit (up 28 million yen year-over-year), 4.0 billion yen in ordinary profit (up 75 million yen year-over-year), and 2.35 billion yen in net profit attributable to parent company shareholders (up 627 million yen year-over-year). All segments are projected to deliver year-over-year revenue growth.
  • Sales & Construction Business: 33.22 billion yen in revenue (up 2.709 billion yen year-over-year), 1.55 billion yen in operating profit (down 564 million yen year-over-year). Growth will come from full-year contributions from InSight Systems and newly consolidated Spectrum Audio Visual, but a projected decline in the number of the same high-margin mega projects that drove FY2025 results will lead to lower annual profit.
  • Architectural Acoustics Construction Business: 11.0 billion yen in revenue (up 402 million yen year-over-year), 1.05 billion yen in operating profit (up 19 million yen year-over-year). The company targets another record year of revenue and profit, supported by strong capital investment from media and manufacturing clients, large redevelopment projects in Tokyo, and growing long-term demand for noise reduction for data centers and logistics facilities.
  • Concert & Event Services Business: 20.0 billion yen in revenue (up 2.532 billion yen year-over-year), 3.1 billion yen in operating profit (up 631 million yen year-over-year). The company targets another record year of revenue and profit, supported by sustained growth in the concert market, large events including the Osaka-Kansai Expo and Japan Mobility Show, and full contributions from all newly consolidated CH Group subsidiaries. It is focused on growing high value-added business in immersive entertainment, virtual production, and sports.
• Annual dividend guidance is 80 yen per share, a 10 yen increase from FY2025.
• The company maintains its mid-term target of 1,000 billion yen in total revenue and 30% or higher overseas revenue share, with a long-term goal of establishing a 4-region global footprint covering Japan, Asia, North America, and Europe.

• The company recorded a 467 million yen negative year-over-year impact from foreign exchange in FY2025, as prior year foreign exchange gains swung to foreign exchange losses in the current period, reflecting currency volatility that impacts overseas operations and cross-border transactions.
• Global expansion has not been uniformly successful: the company wound down an unprofitable M&A subsidiary in North America after failing to achieve a path to profitability, and European operations remain in the preparation stage with no established revenue and profit base as of yet.
• Sales & Construction Business profit is projected to decline in FY2026 due to the expected reduction in high-margin large-scale projects after the concentration of mega projects in FY2025, highlighting the cyclicality of large project revenue and profit.

The provided transcript does not include transcribed content from the Question and Answer section of the earnings call.