ENVALITH
広島電鉄株式会社 logo

Hiroshima Electric Railway Co.,Ltd.

9033・Standard Market・Land Transportation

Official website
広島電鉄株式会社 logo
Hiroshima Electric Railway Co.,Ltd.9033

Business

Hiroshima Electric Railway Co., Ltd. is a leading comprehensive corporate group in Hiroshima, founded in 1910. Its core business is transportation, including trams, buses, the Miyajima route, and cableways, and it is organized into five segments: Real Estate Leasing and Sales, Construction, Distribution, and Leisure & Services. With 13 consolidated subsidiaries and 3 equity-method affiliates, the group supports public transportation infrastructure within Hiroshima City while also developing and leasing real estate along its rail and bus lines and securing construction orders through group construction companies, conducting diversified businesses closely tied to the regional economy. Its main customers are Hiroshima residents, tourists, and inbound travelers, with tourism demand around Miyajima and Hiroshima Station also serving as an important source of revenue.

Business Model

Transportation (operating revenue ¥23,247 million) accounts for approximately 62% of sales, but structurally records an operating loss, with the deficit continuing even after including operating subsidies. This is offset by Real Estate (operating income ¥2,172 million, margin over 34%) and Construction (operating income ¥235 million). By combining the stable income from real estate leasing with the fluctuating income from condominium sales, the group aims to stabilize overall earnings. Fund efficiency is enhanced through centralized management of group funds via a CMS (Cash Management System).

Company Strengths

The company operates trams (route length 35.8km), buses (route length 1,186km), the Miyajima route, and cableways in an integrated manner, effectively holding a monopoly over public transportation within Hiroshima City. In August 2025, the "Ekimae Ohashi Route" was launched, connecting to the 2nd floor of the JR Hiroshima Station terminal building, and in March 2026, the "Loop Line" was also launched. The expansion of the route network has further increased the difficulty of substitution.

In FY2026 (ending March 2026), the Real Estate business recorded operating revenue of ¥6,292 million and operating income of ¥2,172 million, representing a profit margin of approximately 34%. Full-year recognition of land rent from "AEON TOWN Rakurakuen" and the handover of the condominium "The Hiroshima Front" contributed to a 37.2% year-on-year increase in profit. Effective utilization of company-owned land through CRE strategy and active investment in income-generating real estate are the sources of the high profit margin.

In July 2024, the company introduced the new fare payment service "MOBIRY DAYS," aiming to promote usage through improved convenience. In July 2026, it plans to begin accepting transportation IC electronic money such as ICOCA and WAON. The development of the digital ticketing platform has contributed to expanding the user base, with the number of commuter pass passengers increasing 36.54% year on year.

ENVALITH's Perspective

The operating loss for FY2026 (ending March 2026) was ¥290 million, a significant improvement from the ¥1,419 million loss recorded in the previous fiscal year. The company's forecast for FY2027 (ending March 2026) calls for operating profit of ¥810 million, which would mark the first time the core business turns profitable. The main upward drivers are the continued effect of the opening of the Ekimae Ohashi route, a reclassification of bus operation subsidies (from extraordinary income to operating revenue), and the consolidation contribution from A&C. However, this is set against a backdrop of continued increases in personnel expenses, depreciation, and interest expense, and the feasibility of the forecast warrants close scrutiny.

Profit attributable to owners of parent for FY2026 (ending March 2026) was ¥1,158 million, down 16.0% year on year. Large extraordinary gains (construction cost contributions received of ¥3,847 million and operation subsidies of ¥2,397 million) and extraordinary losses (reduction entry loss on fixed assets of ¥3,837 million, impairment loss of ¥649 million, and valuation loss on investment securities of ¥162 million) were recorded, and at the ordinary loss stage the company remained in the red with a loss of ¥129 million. Since the level of net profit depends heavily on the scale of subsidies and reduction-entry accounting, care is needed when assessing underlying earnings capacity.

Cash flow from operating activities for FY2026 (ending March 2026) fell sharply to ¥1,714 million from ¥5,077 million in the previous fiscal year, mainly due to payment of accounts payable related to contracted redevelopment work at the Hiroshima Station South Plaza. Short-term borrowings increased from ¥14,041 million to ¥15,476 million, and long-term borrowings rose from ¥12,737 million to ¥15,102 million, expanding interest-bearing debt. Amid a continued rising interest rate environment as an external factor, interest expense increased from ¥259 million in the previous fiscal year to ¥332 million, and attention should be paid to the risk of rising financial costs in the following fiscal year and beyond.

Growth Strategy

Continued benefits from the Ekimae-Ohashi Route opening, consolidation of A&C, and stronger real estate investment are driving a transformation of the revenue structure

In August 2025, the company opened a new tramway route, the "Ekimae-Ohashi Route," enabling service directly into the 2nd floor of the JR Hiroshima Station terminal building. Combined with an increase in visitors to Hiroshima related to the 80th anniversary of the atomic bombing, ridership in the Railway & Tramway business increased. The company expects the benefits of the opening to continue contributing to revenue growth in the next fiscal year.

In February 2026, the company fully acquired A&C Co., Ltd., which operates food and beverage, lodging, and construction businesses in the Miyajimaguchi and Miyahama areas (goodwill of ¥52 million recorded). Based on a hypothetical estimate, the impact is projected at net sales of ¥2,441 million and operating profit of ¥116 million. Full-scale contribution to the Leisure & Services segment is expected from the next fiscal period onward.

Operating profit in the Real Estate business reached ¥2,172 million, up 37.2% year on year, driven by full-year recognition of land lease revenue from "AEON TOWN Rakurakuen" and the handover of the condominium "The Hiroshima Front." As a group strategy, the company has clearly stated its intention to strengthen investment outside the Transportation business, and continues to actively invest in income-generating real estate.

The company is promoting usage through improved convenience of its new ticketing service, "MOBIRY DAYS," while the February 2025 revision of tram and bus fares has contributed to higher revenue per unit. In the next fiscal period, a reclassification of the bus operation subsidy (from extraordinary income to operating revenue) is also expected to be an additional factor increasing revenue in the Transportation business.

The bowling business will cease operations in May 2026, eliminating an unprofitable segment. The company aims to improve overall segment profitability through increased visitor numbers driven by expanded unlimited-play menus and capital investment at its golf driving range, as well as the consolidated contribution from A&C Co., Ltd.'s lodging and food and beverage businesses.

Last updated: July 19, 2026