H.I.S. Reports Results for the Full Year Ended October 2013
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H.I.S. Reports Results for the Full Year Ended October 2013 - JCN Newswire
H.I.S. Reports Results for the Full Year Ended October 2013

Tokyo, Dec 13, 2013 - (JCN Newswire) - H.I.S. Co., Ltd. (TSE1: 9603), a leading travel and airline ticket agency, has announced results for the full year ended October 31, 2013. The Group recorded consolidated net sales of 479,478 million yen (up 11.1% compared with the previous fiscal year); operating income of 11,843 million yen (up 4.7%); ordinary income of 15,203 million yen (up 12.8%); and net income of 8,903 million yen (down 4.6%).

During the fiscal year under review, Japan showed signs of gradual economic recovery as a result of a series of economic policies. Within the travel industry, there were positive factors such as recovery in consumer spending due to the economic improvement and growing travel opportunities for seniors. However, demand for overseas travel was greatly affected by diplomatic dispute and rapid exchange rate fluctuation. As a result, the travel market did not recover to the level of the previous fiscal year. According to the Japan National Tourist Organization (JNTO), the estimated number of Japanese departing Japan from November 2012 through October 2013 is forecast to have fallen by 6.0% compared with the previous year to 17,456,000 people.

The demand for domestic travel, on the other hand, trended upward with route expansion as LCC prevailing; market growth in Okinawa; and Mount Fuji's registration as a World's Cultural Heritage site. The demand for foreign travelers visiting Japan was significantly higher compared with the previous fiscal year, against easing of visa requirements in Southeast Asian countries and the weak yen trend. The estimated visitor number is expected to hit a record high 10 million people, an increase of 22.8% compared with a year earlier.

Under these business conditions, the Group strived to improve on its standards of "safety, security, service and quality," and has implemented original measures to expand its business in the travel business, the Group's main business segment, as well as other businesses.

- Travel Business

In the overseas travel departing Japan, the Group began offering original products, including charter cruise operations on luxury liner Costa Victoria, which takes place three times in spring and six times during summer and autumn, and a package deal incorporating chartered plans to enjoy popular destinations such as La Sagrada Familia in Barcelona, Spain. This new product line has been well received by our customers.

As part of our policy of new service, we are supporting our over 60s customers, not only by introducing discounts for senior citizens, but also by providing special assistance at Narita International Airport and Haneda Airport (the "airport assistant"). We also opened our service center at Kansai International Airport to provide support for departing passengers, and increased convenience for our customers.

As for sales channels, we plan to improve the effectiveness by concentrating on points of sale. We opened sales branches mainly in shopping centers in Japan, as well as our flagship branches at Shinjuku 3 Chome in Tokyo and Yokohama in Kanagawa. We also expanded our branch network by opening specialist outlets offering overseas weddings services in Kagoshima, Fukui and Okayama prefectures.

As for initiatives in the area of online sales, we have strengthened the stock of airline tickets so that we can set more reasonable prices at our "air ticket and hotel" website and increased the listed products. We have also worked to build the ticket booking website, displaying the total amount, and supported smartphones, to improve convenience for our customers. Our reservation website "Sumayado" covers over 9,000 hotels and ryokan, or Japanese-style inns, and we strove to improve recognition of the website and to increase the number of users. Turning to group travel, we have expanded our system for receiving orders, by setting up bases in Ibaraki and Tochigi prefectures as well as in Omotesando, and by establishing an incentive section, responsible for large scale contracts. As a result, our group travel activity was strong due to the increase in orders for large scale group travel, including corporate trips, events, and school trips. As for corporate travel, or corporate business trips, we have trained and dispatched sales staff throughout the world to expand corporate contracts globally.

In domestic travel business, for which we have launched sales at all branches in Japan since the previous fiscal year, we started offering local services only the Group can offer. In Okinawa, our focused destination, we provided an original shuttle service "The Yuntaku Shuttle" to the main Island as well as Ishigaki Island, and opened "Doraemon Wakuwaku Beach" on the main Island for family travel. In addition, we implemented an expansion of sales channels and introduced the domestic reservation system of All Nippon Airways to enable reservation and sales at all branches. Consequently, the domestic travel business remained strong.

Turning to the business overseas, we have aggressively implemented measures both in overseas outbound business, which deals with locally-departing flights, as well as the inbound travel business to Japanese and overseas customers.

As for the overseas outbound business, we have operated multi branches in Southeast Asia - 9 branches in Bangkok, Thailand; 8 branches in and around Jakarta, Indonesia as of October, 2013 - with steady progress, and served a number of local customers. Additionally, we have expanded our base in Europe with the opening of 8 branches in countries such as Portugal and Ireland. Furthermore, we have aggressively entered and penetrated countries such as Nepal. Overall, we have the overseas sales networks in 51 countries, 111 cities and 158 branches as of October, 2013. In Cambodia and Laos, the Group launched an online reservation website for local customers abroad, and now operates online in 39 countries. As a result of these measures, our outbound business continues to expand mainly in Asia.

Our inbound travel business is also doing well. We are acting as wholesalers to other travel businesses (BtoB business), so that we can offer our customers the services and activities of overseas branches, and increase our sales activity. We bolstered our efforts to offer only one service to increase our customer satisfaction by providing the original "primary entry service" at Suvarnabhumi Airport, Bangkok and launching our private "LeaLea Airport Lounge" at Honolulu International Airport. In the H.I.S. VACATION business, which involves Internet-based direct sales of products including overseas hotel bookings and optional tours created or obtained by overseas branches to both Japanese and overseas travelers, the Group continues to connect with large hotel chains systematically, increase the list of hotels, and enhance the overseas hotel reservation website among others.

As a result of these measures, the travel business for the current fiscal year recorded net sales of 431,368 million yen, an increase of 5.9% compared with the previous fiscal year. However, the Group recorded an operating income of 7,952 million yen, a decrease of 30.2% compared with a year earlier. This is due to a drop in the number of travelers from the Group's flagship Asian countries amid diplomatic disputes and the rapidly changing currency landscape.

- Theme Park Business

HUIS TEN BOSCH Co. Ltd., which operates the theme park business, worked to improve customer satisfaction. The popular seasonal series such as "The Kingdom of Light" and "The Rose Festival" were held, and the series scaled up from the No. 1 in Japan to the World's No.1. We embarked on new projects as well. In summer, we opened "Water Adventure Kingdom," which took place from July through September, 2013, in which we installed large-scale outdoor pools as well as water slide, so that our customers could enjoy their summer. We also launched the "Mysterious Marchen Forest" zone at Adventure Park. The night events such as "New Summer Kingdom of Lights" and "Fireworks World Cup" were well received.

As a result, the number of visitors in the current fiscal year increased 29.1% year on year to 2,477,000. Net sales increased 28.8% to 20,548 million yen, and operating income increased 90.0% year on year to 5,015 million yen. The Group achieved good performance in the theme park business.

- Kyushu Sanko Group

KYUSHU INDUSTRIAL TRANSPORTATION Group, a holding company of KYUSHU INDUSTRIAL TRANSPORTATION HOLDINGS CO., LTD., recorded net sales of 25,280 million yen and operating income of 1,395 million yen. The Group launched Wi-Fi service on shuttle buses, its core business. The H.I.S. Group had turned KYUSHU INDUSTRIAL TRANSPORTATION HOLDINGS CO., LTD. into a consolidated subsidiary from the fourth quarter of the previous fiscal year.

- Hotel Business

In the hotel business, the Group recorded net sales of 4,478 million yen, an increase of 60.8% compared with the previous fiscal year, and an operating loss of 118 million yen, compared with an operating loss of 232 million yen a year earlier. In the Watermark Hotel Nagasaki, we have implemented special programs and improved visits to Japan, concentrating on the Asian market, with improved success. The Guam Reef & Olive Spa Resort, which was consolidated into the Group in the previous fiscal year, conducted a large-scale renewal construction, and had its grand opening with a refurbished look. The Group also made efforts to improve customer satisfaction and profitability in hotels in Australia and Sapporo, Japan.

- Transportation Business

ASIA ATLANTIC AIRLINES CO., LTD., an international charter carrier which was set up in December, 2012, began operation on a route from Suvarnabhumi Airport, Bangkok to Narita International Airport on August 20, 2013. The Ocean Rose vessel, which had operated between Nagasaki and Shanghai, suspended operation for a long term period, and it has been chartered to a foreign corporation in a three-year bareboat chartering agreement since February, 2013. As a result, the Group recorded net sales of 97 million yen, a decrease of 37.7% compared with the previous fiscal year, and an operating loss of 1,065 million yen compared with an operating loss of 1,142 million yen a year earlier.

As a result of these measures, the Group achieved record results, with consolidated net sales of 479,478 million yen, an increase of 11.1% compared with the previous fiscal year; operating income of 11,843 million yen, an increase of 4.7%; and ordinary income of 15,203 million yen, an increase of 12.8%. The Group recorded net income of 8,903 million yen with an increase in tax expenses due to the near elimination of tax loss carryforwards.
I. Consolidated Financial Results for the Full Year Ended October 31, 2013

Consolidated Operating Results                       (millions of yen)
Full year ended October 31,       2013        %         2012        %
Net Sales                      479,478     11.1      431,483     13.3
Operating Income                11,843      4.7       11,316     20.3  
Ordinary Income                 15,203     12.8       13,479     22.5
Net Income                       8,903     (4.6)       9,331     12.4

Net Income/Share (y)            274.59                287.77
Fully Diluted
  Net Income/Share (y)              --                    --

Return on Equity (ROE)            12.1                  14.3 
Return on Assets (ROA)             7.8                   8.6
Ordinary Income to
  Operating Revenue Ratio          2.5                   2.6
Consolidated Financial Position
As of October 31,                          2013                  2012
Total Assets                            215,913               173,497 
Shareholders' Equity                     90,680                76,763
Shlders' Eqty Ratio (%)                    36.6                  39.0
Shlders' Eqty/share (y)                2,438.83              2,088.35
Consolidated Cash Flows
Full year ended October 31,                2013                  2012 
Cash Flow from Operating Activities      15,360                 9,577
Cash Flow from Investing Activities     (10,975)              (18,250)
Cash Flow from Financing Activities      16,817                  (295)
Cash and Cash Equivalents at Period End  61,426                35,821

II. Forecasts for the Next Fiscal Year
                                Interim       %       Full year     %

Net Sales                       250,000    11.3        539,000   12.4
Operating Income                  7,500    23.8         15,700   32.6
Ordinary Income                   8,500     8.3         17,200   13.1
Net Income                        4,000   (14.6)         9,000    1.1
Net Income / Share (y)           123.36                 277.56  
The global economic environment will likely remain uncertain. However, within the travel industry, travel demand is expected to remain firm for reasons including the launch of new services and route expansion as a result of increased slots; a cooling of diplomatic tensions; and greater travel opportunities for seniors. At the same time, we project that it will become more important to respond to market changes, such as fiercer competition within the industry, both in Japan and overseas, that includes airlines' moves to push for direct sales.

Under these business conditions, within the travel business, the Group's core segment, we will further strive to improve its safety, security, service and quality; explore a new non-package travel market; deftly respond to customer needs, including making a foray into the cruise business and aggressively using charter flights; develop original products and services for the global market; and rapidly implement measures in order to expand and broaden the travel business for both flights departing from Japan and locally overseas. Furthermore, the Group will promote expansion with a greater awareness of productivity and efficiency and further increase earnings, and this will involve various activities including sales operations that take into consideration sales channels, and conduct promotions to generate demand based on an awareness of the medium's characteristics.

HUIS TEN BOSCH Co., Ltd. will continue to hold the events which can be experienced only in HUIS TEN BOSCH, including "The Kingdom of Light, Chapter Two, Three New World of Light," which takes place from November 2, 2013 through March 30, 2014. In addition, HUIS TEN BOSCH Co., Ltd. plans to open a new theater "Muse Hall" on January 11, 2014. As measures taking place outside of the theme park, "Osaka Castle 3D Mapping Super Illumination" will take place from December 14, 2013 through February 26, 2014 onto the Osaka Castle Tower in the Nishinomaru Garden area.

As a result of the measures implemented, the Group expects to achieve better results for the next fiscal year. As for the forecasts for net income, the Group expects the tax expenses to increase due to the elimination of tax loss carryforwards.
III. Dividends
Year ended                  2014 (Forecast)         2013         2012
                                      36.00        34.00        34.00   
The Group plans to pay a year-end dividend of 34 yen per share. As for the dividend for the next fiscal year, the Group plans to pay an annual common dividend of 36 yen per share to ensure sustainable and stable profit sharing, while working to increase the dividend. However, the Group will remain flexible in responding to the situation, if performance worsens in uncertain market conditions.

About H.I.S. Co., Ltd.

H.I.S. Co., Ltd. was founded in 1980 and pioneered the Japanese discount airline ticket industry. Today the H.I.S. Group is comprised of 94 subsidiaries and 9 affiliated companies around the world, and has become a leader in the Japanese travel industry. For more information, please visit http://www.his.co.jp/english/ .


H.I.S. Co., Ltd.
Manabu Shimizu
Corporate Planning Division
Tel: +81-3-5908-2070
Email: shimizu.manabu@his-world.com

Dec 13, 2013
Source: H.I.S. Co., Ltd.

H.I.S. Co., Ltd. (TSE: 9603)

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Topic: Earnings
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