Earnings Call: Q2 2027

Oct 29, 2026

Summary

H1 sales, operating profit and operating cash flow set records, with attendance and guest spending driving results. Full-year forecasts were raised, while a JPY 18 annual dividend and major park and cruise initiatives were announced.

Hello, everyone. This is Tomoyuki Shimoda. Thank you very much for taking time out of your busy schedules to attend our company's financial presentation today. First, I will explain the financial results overview. Please turn to page four. This slide shows the performance trend for the first half year. During the first half, driven by the strong performance of the Tokyo DisneySea 25th Anniversary Sparkling Jubilee, among other factors, consolidated net sales, operating profit, and operating cash flow all reached record highs. Even under challenging conditions marked by persistent rain, we believe we were able to achieve strong results. Please see page five. Year-on-year comparison of first half results is as shown here. Driven primarily by an increase in attendance and net sales per guest, both net sales and operating profit increased. Please refer to page six. I will now explain the results by segment and the factors behind the changes. Net sales for the theme park segment increased by JPY 29.5 billion to JPY 281.3 billion. Attendance increased, driven by the strong performance of the Tokyo DisneySea 25th anniversary events and other factors. Net sales per guest reached a record high in the first half of the fiscal year. Attractions and shows revenue remained largely unchanged. Merchandise revenue increased year-on-year, driven by strong sales of merchandise related to Tokyo DisneySea 25th anniversary. Food and beverage revenue also increased, thanks to strong sales of menu items and food souvenirs related to Tokyo DisneySea 25th anniversary. As a reference, we will explain the trends in attendance and net sales per guest compared to the same period of the previous fiscal year. Attendance for the second quarter was approximately 7% higher. By month, attendance was up approximately 16% in July, up 6% in August, and up 1% in September. Net sales per guest were approximately 3% higher during the second quarter. Please refer to page seven. Operating profit for the theme park segment increased by JPY 10.9 billion to JPY 60.7 billion. The merchandise and food and beverages cost ratio decreased overall, as the food and beverages cost ratio declined due to price adjustments and changes in the sales mix. Personnel expenses rose due to the recognition of performance bonuses, an increase in headcount, and compensation revisions. Miscellaneous costs increased due to higher expenses related to the Tokyo DisneySea 25th anniversary events and higher energy costs. Please refer to page eight. In the hotel business segment, driven primarily by an increase in average room rate, net sales increased by JPY 2.9 billion to JPY 59.0 billion. The occupancy rate at Disney Hotels for the first half of this fiscal year rose by 2.5 percentage points to 94.8%, and the average room rate increased by JPY 1,526 to JPY 68,332. Despite an increase in net sales, operating profit decreased by JPY 0.4 billion to JPY 17.0 billion due to increases in personnel expenses and miscellaneous costs. Please refer to page nine. Net sales for the Other Business segment totaled JPY 8.3 billion, mainly due to increase in Ikspiari business. Operating profit amounted to JPY 0.6 billion due to increase in personnel expenses and other factors. Please refer to page 10. The comparison with the initial forecast is as shown. Driven by factors such as higher-than-projected net sales per guest and attendance, net sales and all profit figures exceeded initial forecasts. Please refer to page 11. Let me explain the results by segment and the factors contributing to the changes. Net sales for the theme park segment exceeded the forecast by JPY 20.5 billion. Although attendance in the second quarter was affected by rainy weather, it exceeded expectations due to factors such as the Tokyo DisneySea 25th Anniversary Sparkling Jubilee event. Net sales per guest were higher overall, driven by higher-than-projected merchandise and food and beverages revenues on the back of the strong performance of Tokyo DisneySea 25th Anniversary Sparkling Jubilee-related products, menu items, and food souvenirs. As a reference, I will explain the trends in attendance and net sales per guest compared to our initial forecast. Attendance for the second quarter was approximately 5% higher than forecast. On a monthly basis, attendance was approximately 18% higher in July. In August and September, attendance was roughly on par with the forecast. Net sales per guest were approximately 5% higher for the second quarter. Please see page 12. Operating profit for the theme park segment exceeded the initial forecast by JPY 16.7 billion due to reductions in miscellaneous costs and the merchandise and food and beverages cost ratio. The merchandise and food and beverages cost ratio decreased overall, as the food and beverages cost ratio declined due to changes in the sales mix and other factors. Personnel expenses increased due to factors such as the recognition of performance bonuses. Miscellaneous costs decreased, primarily due to a reduction in research and development expenses and a decline in entertainment-related costs. As of now, cost reductions total approximately JPY 1.0 billion, while cost increases total approximately JPY 0.5 billion. Although we expect some of the costs to be deferred to the third quarter and beyond, we will continue to exercise cost control to limit the extent of cost increases. Please refer to page 13. The results for the hotel business segment and other business segment are as shown. That concludes my remarks. Thank you very much. This is Wataru Takahashi. I will now explain the upward revision to our full-year earnings forecast. Please refer to page 15. In addition to the strong results for the first half of this fiscal year, we expect both net sales and operating profit to exceed projections in the second half as well. We have therefore decided to revise our full-year forecast upward. Although we anticipate higher costs within the theme park segment during the second half, we expect both net sales and operating profit to exceed our initial projections due to an increase in net sales per guest and a rise in the average room rate at Disney Hotels within the hotel business segment. Please refer to page 16. In the second half of the year, we will implement various initiatives not only in the third quarter, when high demand is expected, but also in the fourth quarter. In addition to having launched a new entertainment offering, we will continue striving to enhance the guest experience by reopening a popular attraction and hosting a special event to further boost the park's appeal. Please see page 17. As you can see, we have revised our full-year forecast upward. Due to factors such as an increase in net sales per guest and higher attendance, we expect both consolidated net sales and all profit figures to exceed our initial forecast and reach record highs. Please refer to page 18. I will now explain the forecasts by segment and the factors driving the changes. Net sales for the theme park segment are expected to exceed the previous forecast by JPY 30.7 billion, reaching JPY 622.9 billion. Attendance is expected to be slightly higher than the previous forecast, reaching 28.5 million, driven by the Tokyo DisneySea 25th Anniversary Sparkling Jubilee events. Net sales per guest are expected to exceed the initial forecast. Attractions and shows revenue is expected to slightly outperform the previous forecast, driven by factors such as growth in Disney Premier Access. Merchandise and food and beverage revenues are expected to exceed the initial forecast, driven by strong sales of Tokyo DisneySea 25th Anniversary Sparkling Jubilee merchandise, as well as menu items and food souvenirs. Please see page 19. Operating profit for the theme park segment is expected to exceed the initial forecast by JPY 20.0 billion, reaching JPY 148.7 billion, driven by factors such as increased net sales despite rising personnel expenses. Personnel expenses will be higher than initially expected due to factors such as the recognition of performance bonuses. Merchandise and food and beverages cost ratio and miscellaneous costs are expected to be lower than our initial forecast. Please refer to page 20. In the hotel business, net sales are expected to exceed the initial forecast by JPY 7.5 billion, reaching JPY 123.2 billion, driven mainly by an increase in average room rates. Operating profit is expected to exceed the initial forecast by JPY 4.5 billion, reaching JPY 35.2 billion. Please refer to page 21. For the Other Business segment, net sales are expected to exceed the initial forecast by JPY 0.7 billion, reaching JPY 17.0 billion, and operating profit is expected to surpass the initial forecast by JPY 0.4 billion, reaching JPY 1.2 billion. Please turn to page 22. I would like to explain our dividend policy. Based on the results for the first half of the fiscal year ending March 2027 and the full-year forecast, we have increased the interim and year-end dividends by JPY 1 each from our initial forecast, resulting in an annual dividend of JPY 18. Our group recognizes returning profits to our shareholders as one of our key management policies. Therefore, we will continue to aim for stable dividends while taking the external environment into account. Please refer to page 23. Next, I will explain our outlook for the future. Please turn to page 24. I would like to explain the initiatives planned for our theme parks. In the fiscal year ending March 2028, we plan to open new attractions and shows at both parks. At Tokyo Disneyland, Sugar Rush: Sweet Rescue, a new indoor attraction, is scheduled to open on April 15, 2027. This will be the world's first attraction based on the Walt Disney Animation Studios film Wreck-It Ralph. At Tokyo DisneySea, a new show titled Bring the Rhythm! is scheduled to open in the fall of 2027 at the Broadway Music Theatre. The show features live vocals by singers, live performances by musicians, and more. By vigorously promoting growth investments in both parks, we will deliver excitement and wonder to even more guests and further enhance the essential value of our theme park segment, creating happiness. Please see page 25. We would like to provide information regarding our integrated report and sustainability report. Tomorrow, October 30th, we plan to publish the FY 2026 editions of our integrated report and sustainability report on our official website. The materials include our initiatives and results from the first year since the launch of our 2035 Long-term Management Strategy. Furthermore, as the FY 2026 marks the 30th anniversary of our company's listing on the stock market, we highlight the values we have upheld since our founding, as well as our approach to challenges and transformation, and the initiatives we are undertaking to realize our goal for 2035. We invite you to take a look. Please see page 26. Next, I'll explain our cruise business. Please turn to page 27. Cruise travel, which has traditionally been seen as a leisurely experience for seniors in Japan, is evolving into a family entertainment cruise where everyone, from children to the elderly, can take center stage. This challenge by the Oriental Land Group to cultivate a new culture takes a major step forward today as we work toward launching in the latter half of FY 2028. Recently, a press conference was held at the Tokyo International Cruise Terminal to announce the name of the Disney Cruise Line Japan ship scheduled to begin service in the second half of FY 2028. Today, we'd like to share with you the video presented when the ship's name was revealed. Now, please enjoy the video unveiling the name of Disney Cruise Line Japan's historic first ship. Please turn to page 28. Disney Imagination is a ship filled with the power of dreams and wishes, a force that has always been at the heart of Disney's storytelling. The name embodies our hope that guests across generations will enjoy their voyage while experiencing the imagination of Disney. A distinctive feature shared by all Disney cruise ships is that the stern not only bears the ship's name, but also features a character that embodies the ship's spirit. On our cruise ship, we've welcomed Ariel from the Walt Disney Animation Studios film, "The Little Mermaid," who acts based on creativity, originality, and a strong belief in pursuing her dreams. The ship's name, Disney Imagination, resonates with Ariel's spirit of adventure, boundless curiosity, and belief in possibility. Please see page 29. Disney Imagination offers guests a new way to enjoy cruising in Japan, where the ship itself becomes the destination. In 2025, the annual number of domestic cruise passengers was approximately 250,000. When comparing cruise participation rates per capita with the U.S., a leading cruise market, the rate in the U.S. stands at 5.9%, while Japan's is 0.2%. Based on these figures, we believe the Japanese cruise market has significant potential. By registering the ship under the Japanese flag, we will be able to offer short cruises tailored to the tourism and leisure preferences of Japanese travelers, allowing a wide range of guests to enjoy the experience. We plan to begin service in the second half of fiscal year 2028 and are currently making arrangements and preparations so that we can begin accepting reservations approximately six months prior to the launch date. A family entertainment cruise, a one-of-a-kind new experience in Japan where every guest takes center stage and enjoys the journey to the fullest. The executives and employees of the Oriental Land Group will unite as one, pooling our collective passion to tackle this historic challenge, Japan's first Disney cruise, with all our might, creating a new kind of happiness filled with unprecedented excitement and smiles. Please look forward to our journey. That concludes my remarks. Thank you very much.