ORIENTAL LAND CO.,LTD. Q4 FY2025 earnings call

2025 March Fiscal Year Operational Performance

• The company delivered record-high revenue and all profit metrics for the 2025 March fiscal year, with growth driven by higher revenue per guest and expansion of the hotel business, marking a strong recovery from the COVID-19 pandemic. The 2022-2024 mid-term management plan targets were fully achieved: guest satisfaction remained at high levels, with lower guest negative sentiment around crowding than pre-pandemic after implementing capacity leveling and new premium experience options; the company achieved record-high operating profit and operating cash flow, restored dividends to pre-pandemic levels, and saw rising employee engagement scores after compensation improvements and productivity initiatives.

2035 Long-Term Management Strategy Vision

• The company aims to become an organization employees are proud to work for, balancing contribution to human happiness and contribution to sustainable social development. It set a financial target of over 1 trillion yen in revenue by 2035, and 300 billion yen in operating cash flow by 2029, with a target of reaching higher ROE levels than the 2024 mid-term plan period.

Core Growth Strategy by Segment

• Theme Park: The company will position the business as the global leading happiness creation destination. It will continue active growth investment for large-scale area redevelopments, including the already announced redevelopment of Tomorrowland (adding a Wreck-It Ralph themed attraction and redeveloping the iconic Space Mountain and surrounding area), with dynamic redevelopment of existing park land to deliver new one-of-a-kind guest experiences. Growth initiatives include expanding domestic fan bases, increasing marketing to capture growth in international inbound visitors, expanding summer seasonal events and guest comfort initiatives to boost off-peak summer attendance, expanding the scope of Disney Premier Access and growing Vacation Package sales to continue lifting per-guest spending, and developing new revenue sources independent of attendance for both visiting and non-visiting guests to build a new revenue model. The company will also implement structured cost control to minimize cost growth amid external inflation.
• Hotel: The company will maintain high occupancy by expanding unique Disney-themed guest experiences and synergies with the theme parks, continue revenue management to maximize profits, increase marketing to international guests, and actively explore adding new Disney hotels near Tokyo Disney Resort to meet unmet demand.
• Cruise Business: The new cruise business, entering service by 2029 full-year operation, will leverage the company’s existing strong guest base to deliver unique Disney family entertainment cruise experiences to a broad range of target segments. The company targets an operating margin in the high 20% range several years after launch (after depreciation), outperforming the theme park business, with potential for a second ship after the first is successfully launched. The business also reduces company reliance on the Maihama area and lifts group-wide profitability.

Enabling Initiatives

• Enterprise Value Enhancement Activities: The company updated ESG material priorities and launched a circular resort initiative to reduce environmental impact to near zero. The corporate venture capital (CVC) program will refocus investments on OMO (Online Merges with Offline) and tourism/human capital development sectors to capture new growth opportunities.
• Human Resources Policy: The company will focus on improving employee growth foundations, organizational strength, and job security to maintain quality and quantity of talent amid Japan’s declining labor force, strengthening long-term business competitiveness.
• Financial Policy: The company will maintain an optimal capital structure, maintaining credit rating appropriate self-capital ratio levels, incrementally raise the payout ratio to 30% by 2035 while continuing stable dividends and implementing share repurchases, and maintain 300 billion yen in flexible capital to support opportunistic growth and value enhancement initiatives. Priority for cash allocation remains growth investment.
• The company announced a special 65th anniversary shareholder giveaway of one 1-day park pass for shareholders holding 100+ shares as of September 2025.

1. Theme Park Segment: Revenue reached 552.1 billion yen, an increase of 38.3 billion yen from the prior year, accounting for 81.3% of total company revenue. Operating profit hit 140.4 billion yen, an increase of 0.9 billion yen year-over-year. Attendance was largely flat year-over-year, while revenue per guest hit a record high of 17,833 yen, driven by higher attraction and show revenue from increased sales of Disney Premier Access and Tokyo Disney Resort Vacation Packages. Food and beverage revenue increased due to new stores opened with the launch of Fantasy Springs, while merchandise revenue fell after the end of Tokyo Disney Resort 40th Anniversary event-related products, offsetting growth in Fantasy Springs merchandise. Costs rose due to higher depreciation from new Fantasy Springs assets, increased labor costs from wage adjustments and higher staffing for the new area, higher原材料 costs, increased maintenance expenses for aging infrastructure, and higher marketing costs. 2. Hotel Segment: Revenue reached 110.4 billion yen, an increase of 22.0 billion yen year-over-year, accounting for 16.3% of total company revenue. Operating profit hit 30.4 billion yen, an increase of 5.6 billion yen year-over-year. The segment’s growth was driven by the opening of the Tokyo DisneySea Fantasy Springs Hotel and higher average room rates. Average room rate increased 1,456 yen to 64,886 yen, while occupancy fell 2.7 percentage points to 95.7% due to scheduled renovations at Tokyo Disney Celebration Hotel. 3. Other Segment: Revenue reached 16.7 billion yen, an increase of 0.4 billion yen year-over-year, accounting for 2.5% of total company revenue. Operating profit fell 0.1 billion yen to 0.6 billion yen, as higher revenue from increased monorail ridership was offset by higher labor and general expenses.

• For the 2026 March fiscal year (the first year of the long-term strategy), management frames the year as a base-building period for long-term growth, and is prioritizing investing in medium and long-term growth initiatives over short-term profit. Management expects overall revenue growth, but lower full-year profit due to planned investment in growth-focused costs.
  • Theme Park: Revenue is expected to increase 7.9 billion yen to 560.1 billion yen; operating profit is expected to decrease 16.4 billion yen to 123.9 billion yen. Attendance is projected to increase 440,000 to 28,000,000 guests, driven by full-year operation of Fantasy Springs and growth in international guests, while per-guest revenue is expected to decrease 41 yen to 17,792 yen. 115 billion yen of the projected 15.5 billion yen increase in general expenses is either one-time or medium/long-term growth-focused costs including R&D, marketing, and guest experience investment.
  • Hotel: Revenue is expected to increase 6.8 billion yen to 117.2 billion yen; operating profit is expected to increase 5.3 billion yen to 35.8 billion yen, driven by full-year operation of the Fantasy Springs Hotel and higher average room rates.
  • Other: Revenue is expected to decrease 0.8 billion yen to 15.9 billion yen, with an expected operating loss of 0.2 billion yen (an 0.8 billion yen decrease) driven by renovation works at the Ikspiari retail complex.
• The annual dividend per share is forecast to hold steady at 14 yen, maintaining the current payout level while prioritizing allocation to growth investments as the company incrementally raises the payout ratio to the 30% 2035 target.

• The Japanese domestic market is expected to see long-term population decline, which creates structural headwinds for attendance growth, requiring proactive expansion of international guest capture and new revenue sources outside of core attendance-based revenue.
• External inflation is pushing up costs including原材料, labor, maintenance, and system-related expenses, which requires ongoing cost control and restructuring to maintain profitability. The company may face unanticipated cost overruns on large-scale development projects and new business initiatives such as the cruise business.
• Changing guest expectations for entertainment require ongoing large-scale investment to maintain park attractiveness, and failure to deliver compelling new experiences could lead to eroding market position and lower attendance.

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