Leopalace21 (8848) Q2 2023 earnings summary

Executive summary

• H1 FY2023 net sales, operating profit and net income exceeded plan; operating profit and net income were the highest H1 results since the 2007–08 financial crisis.

• Average occupancy was 86.33%, 0.25 percentage points below plan, while average unit rent trended upward.

Financial highlights

• H1 net sales were ¥211.848 billion vs ¥202.460 billion YoY; gross profit was ¥35.768 billion vs ¥27.955 billion.

• H1 operating profit was ¥14.828 billion vs ¥6.962 billion; EBITDA was ¥17.301 billion vs ¥10.551 billion.

• H1 net income was ¥11.850 billion vs ¥3.691 billion; EPS was ¥36.47 vs ¥11.22.

• H1 SG&A was ¥20.940 billion, ¥3.359 billion below plan, mainly due to postponed mid-career hiring and expense controls.

Outlook and guidance

• FY2023 revised guidance: net sales ¥421.7 billion (+0.5%), operating profit ¥18.1 billion (+30.2%) and net income ¥12.0 billion (+62.2%) vs initial plan.

• FY2024 reference plan: net sales ¥432.2 billion, operating profit ¥23.8 billion, EBITDA ¥30.4 billion and net income ¥18.1 billion.

• FY2024 average occupancy is planned at 89.62%; the target is to return to FY2017 occupancy levels by FY2024.

• H2 profit plans are conservative, reflecting deferred maintenance, busy-season staffing and performance-linked bonus provisions.