Chichibu Railway Co., Ltd.

Business Details

A railway business segment operated solely by Chichibu Railway Co., Ltd. It conducts passenger transport (commuter pass and non-commuter pass) and freight transport. Non-commuter pass passenger revenue expanded due to the effect of the passenger fare revision implemented in the prior period and strong tourism demand. Although freight volume decreased, freight revenue increased due to the fare revision. This is the core business accounting for approximately 65% of the Group's consolidated operating revenue, and the company continues to make ongoing safety equipment investments, including interlocking system renewal work, centralized train control system renewal work, and Class 4 railroad crossing safety measures work.

Recent Overview

Operating profit improved significantly from ¥17 million to ¥213 million due to the fare revision effect and strong tourism demand.

In the Railway Business for FY2026 (ending March 2026), the full-year contribution of the passenger fare revision implemented in the prior period expanded total passenger revenue to ¥2,063 million (up 10.7% year on year). Non-commuter pass passengers increased in both number and revenue due to proactive sales measures such as the operation of SL trains departing from Gyodashi Station, special trains, and the sale of various commemorative tickets. In freight, although transport volume decreased 5.1% year on year, revenue increased due to the freight fare revision. On the operating expense side, repair costs decreased as some repair work was deferred to subsequent periods, while personnel expenses and other costs increased. As a result, operating profit improved significantly to ¥213 million from ¥17 million in the prior period.

Key Products

Growth Drivers

• Full-year contribution of passenger and non-commuter pass revenue from the passenger fare revision implemented in the prior period (October 2024)
• Capturing non-commuter pass passenger demand through proactive sales measures such as SL train operations, special trains, and the sale of various commemorative tickets
• Capturing tourism demand through visitor attraction activities in collaboration with municipalities, businesses, and other companies along the railway line
• Maintaining and increasing freight revenue through freight fare revisions (offsetting the decline in transport volume with price revisions)
• Boosting passenger demand through convenience-enhancing measures such as the introduction of transportation IC card systems

Risks

• Long-term downward pressure on the number of commuter pass passengers due to a declining population along the railway line (down 1.8% year on year in the current period as well)
• Continued decline in freight transport volume (down 5.1% year on year in the current period)
• Rising operating expenses such as personnel expenses and electricity costs (due to surging prices in general)
• Increased capital expenditure (¥991 million in the current period) and increased depreciation expenses associated with railway safety measures (interlocking system renewal, centralized train control system renewal, Class 4 railroad crossing safety measures, etc.) and investment related to transportation IC card systems
• Increased costs from the following period onward due to the implementation of aging equipment renewals that were postponed during the COVID-19 pandemic (operating profit is forecast to decrease 51.8% in FY2027, ending March 2027)
• Risk of fluctuation in tourism and leisure demand due to weather and natural environmental factors such as declining water levels in the Arakawa River