TOKYO - H.I.S. Co., Ltd. (TSE1: 9603), a leading travel and airline ticket agency, has announced results for the first half ended April 30, 2015. The H.I.S. Group recorded net sales of 260,798 million yen, an increase of 3.2% from the previous fiscal year, operating income of 10,029 million yen, an increase of 19.7% from the previous fiscal year, ordinary income of 11,254 million yen, an increase of 16.7% from the previous fiscal year, and net income of 5,102 million yen, an increase of 17.0% from a year earlier.
During the first half of the fiscal year, the travel market saw its demand for overseas travel affected by political instability in Europe and Middle East as well as the weak yen trend. On the other hand, demand for domestic travel remained firm backed by an increase in demand for leisure travel, following the opening of the Hokuriku Shinkansen. Turning to foreign travelers visiting Japan, the market saw rapidly rising shopping demand from China and Southeast Asian countries, driven by the weak yen. The number of foreign travelers visiting Japan during the first half of the fiscal year hit a record and showed strong growth.
Under these business environments, the Group placed priority on providing customers with safe and secure travel and strived to further improve quality by leveraging its domestic and international network to provide information and services to customers. Furthermore, the Group will continue to take on a variety of challenges for the creation of new value, and commit itself to speedily deploying businesses with an eye on the future.
- Travel Business
As of the end of April 2015, the Group has a network of sales with 302 domestic branches and 187 overseas branches in 128 cities across 61 countries, an increase of 13 branches from the previous fiscal year, and continues expanding towards the goal of 1,000 branches worldwide.
In overseas travel departing Japan, the Group opened its original specialty outlet for Hawaii in Shinjuku 3-chome. As well as launching "LeaLea Points" which you can earn and redeem points for shopping and dining in affiliated shops in Hawaii, the Group strengthened its initiatives in Hawaii with increased usability by enabling simultaneous search for "air ticket and hotel" and package tours on its Hawaii reservation website. Moreover, the Group worked to focus on the expansion of its business class packages and high value added products in order to meet a widening customer base and their needs.
As for initiatives in the area of online sales, the Group endeavors to further improve quality by integrating customer information on each service website and sharing it between branches and online channels.
Corporate or group travel saw strong demand, driven by an increase in orders for large scale group travel, including various events and corporate incentive travels. The Group also expanded "Travel Concierge Desk" services, available for Card Members only.
In the domestic travel business, we are promoting "landing-based tourism business" which allows us to make use of seasonal local information to promptly provide goods and services. We also extended our lineup of products and services for the Hokuriku region of an increasing demand, as well as popular Okinawa islands. Our business remained strong. With regards to bus tours, the Group enhanced initiatives for safely and security by equipping its owned fleet with drive recorders. Ski related offerings attracted customers with success.
In our inbound travel business, the number of travelers from China during the Lunar New Year holiday significantly increased. The number of travelers from the Asian region has seen an increase as well. We opened "Osaka Tourist Information Center", Japan's largest tourist information center with the widest floor space designed for visitors to Japan, in Shinsaibashi, Osaka prefecture, and also launched tourist information centers in Ginza and Shinjuku in Tokyo, through which further enhancing our support system, including tourist information and optional tour offerings. In April 2015, "H.I.S. ANA Navigation JAPAN Co.,Ltd." (HAnavi), a joint venture with ANA Sales Co.,Ltd., launched its services. HAnavi was established in November 2014 for the purpose of creating inbound travel demand and vitalizing Japanese local communities.
Turning to overseas outbound business, the Group increased the number of overseas locations by launching tour desks in Slovenia in eastern Europe and Cusco, the gateway to Machu Picchu in South America, as well as continuously promoting operations in multi branches in Southeast Asia for local sales activities. The Group currently has 24 branches in Thailand and 14 branches in Indonesia.
Furthermore, the Group aimed to raise brand recognition by aggressively deploying promotional activities, including exhibiting at travel fairs in such region as Bangkok and Jakarta. In an effort to promote inbound travel, the Group's online reservation website "hisgo", operating in 39 countries, enhanced collaboration with other reservation websites including "Japan Hot Now!", an inbound travel portal site, and the aforementioned "HAnavi".
As a result of these measures, net sales for the first half increased 2.4% year on year to 229,622 million yen, and operating income rose by 35.3% year on year to 5,381 million yen.
- Theme Park Business
HUIS TEN BOSCH Co., Ltd. continues to focus on events of "Only One" or "No. 1" value. In "The Kingdom of Light Series", one of the world's largest extravaganzas, over 11 million bulbs lighted up the theme park at night. In the "Tulip Festival", for which 700 varieties of tulips were planted, the most seen in Japan, were presented the world's first organic EL tulips, amounting to approximately 5,000, unfolding the shining to the music show. The Group has implemented a variety of memorable events, including "Masquerade large carnival 2015", which can be enjoyed throughout the theme park.
At newly launched LAGUNA TEN BOSCH, which succeeded businesses in August 2014, we have attracted many customers with various events, including 3D mapping "La Luz", which can be viewed from 360 degree angle, marking the first attempt in Japan, and water mapping show "AGUA" as well as mapping experience "Photo-tas (Photo+)". These events have received a good response. We continuously endeavor to improve customer satisfaction throughout the year.
As a result, net sales increased 18.0% year on year to 16,536 million yen, and operating income increased 3.3% year on year to 5,288 million yen.
- Hotel Business
In the Watermark Hotel Nagasaki, we not only increased the price per room but also offered a sweets buffet, which has been well received. As a result of the measures taken at each hotel to improve customer satisfaction and profitability, the Group recorded a good business performance. Net sales rose by 16.7% year on year to 3,254 million yen and operating income rose by 78.5% year on year to 344 million yen. In May 2015, a new Watermark Hotel & Spa BALI JIMBARAN began its operation in Bali, Indonesia.
- Transportation Business
ASIA ATLANTIC AIRLINES CO., LTD., an international charter carrier, began operating charter flights departing from Komatsu Airport and Shizuoka Airport to Southeast Asia (Suvarnabhumi Airport, Bangkok), in addition to flights departing and arriving at Narita International Airport.
As a result, net sales fell by 30.9% year on year to 1,336 million yen, and an operating loss was 604 million yen compared with an operating loss of 552 million yen a year earlier.
- Kyushu Sanko Group
KYUSHU INDUSTRIAL TRANSPORTATION Group worked to provide customer orientated services in its bus business by increasing the number of vehicles during commute time and installing new stops for better use of commuter buses. Due to the suspended services of Aso Ropeway and others caused by volcanic activities, net sales fell by 4.5% year on year to 12,247 million yen. Operating income rose by 8.6% year on year to 718 million yen, supported by a decline in diesel fuel costs. The Group is preparing for the redevelopment of Sakura-machi in Kumamoto prefecture, scheduled for construction in August 2015.
As a result of these measures, the Group recorded net sales of 260,798 million yen, an increase of 3.2% from the previous fiscal year, operating income of 10,029 million yen, an increase of 19.7% from the previous fiscal year, and ordinary income of 11,254 million yen, an increase of 16.7% from the previous fiscal year. The Group achieved record results for the fifth consecutive quarter for net sales and ordinary income, and record result for the fourth consecutive quarter for operating income. The Group also achieved record high net income of 5,102 million yen, an increase of 17.0% from the previous fiscal year, despite the loss on sale of shares.
Forecast for the Full Year
The global economic environment will likely remain uncertain but Japanese business confidence shows signs of gradual improvement and consumer spending is expected to show a steady undertone. Under these business environments, the Group forecasts that the travel market will remain firm, with anticipated demand for the upcoming holiday season in September. On the other hand, there could be fiercer competition surrounding the travel market, both domestic and international, with direct sales from suppliers, or a shift in the supply-demand balance due to a boost in inbound travel, so it is ever more important to keep a close eye on market trends.
In this environment, the Group strives to promote vertical integration business strategies with the anticipation for the synergy effects, and actively leverage charter flights. The Group will thus respond sensitively to its customers' needs, and create the original products and services in the global market. Furthermore, the Group will endeavor to promote expansion with a greater awareness of productivity and efficiency and further increase earnings.
At Huis Ten Bosch, we will offer a new style of stay at the launch of "Kingdom of Health and Beauty", and continue to aim to satisfy and impress our customers by implementing initiatives. In summer, "Strange Hotel" will open with a view to achieving world-class productivity. We will embark on the challenge to materialize "Tourism Business City".
Due to the recent drop in airline fuel prices, fuel surcharge revenues tapered compared with the previous fiscal year. This could affect the Group's net sales in the consolidated earnings forecasts, as fuel surcharge revenues are to be recorded in the net sales of the travel business. However, this has minimal impact on operating income, ordinary income, net income, and net income per share.
There has been no change to the consolidated earnings forecasts for the full year, announced on December 5, 2014 in the financial results document, as a result of the background mentioned above.
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 98 subsidiaries and 12 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.
Corporate Planning Division
Email: [email protected]