Hiroshima Electric Railway Co.,Ltd.

Business Details

This segment comprises the Railway & Tramway (streetcars), Automobile Business (route buses, airport limousines, etc.), Marine Transportation (Miyajima Matsudai Kisen), Cableway (Hiroshima Kanko Kaihatsu), Air Transportation Agency, and hire car business. It supports public transportation infrastructure centered on Hiroshima City and captures revenue opportunities from growth in inbound and domestic travelers. In FY2026 (ending March 2026), operating revenue was ¥23,247 million, accounting for approximately 62% of the group total (¥37,470 million), making it the core segment, but a structural operating loss continues due to rising personnel expenses and depreciation.

Recent Overview

Revenue increased due to the opening of the Ekimae-Ohashi Route, fare revisions, and growth in inbound demand; the operating loss narrowed significantly

In August 2025, the new tramway line "Ekimae-Ohashi Route" opened, achieving direct access to the 2nd floor of the JR Hiroshima Station terminal building. This, combined with an increase in visitors to Hiroshima marking the 80th anniversary of the atomic bombing, a record-high number of visitors to Miyajima (driven by a substantial increase in inbound visitors), and the effect of the tram and bus fare revision implemented in February 2025, led operating revenue to increase by 10.7% (up ¥2,238 million) year-on-year to ¥23,247 million. The operating loss narrowed from ¥3,110 million in the prior period to ¥2,739 million. Substantive profit/loss including operating subsidies also improved from a loss of ¥918 million in the prior period to a loss of ¥341 million. Meanwhile, depreciation expanded to ¥2,713 million, up ¥582 million year-on-year, due to progress in capital expenditures.

Key Products

Growth Drivers

• Continued effect of increased ridership following the August 2025 opening of the "Ekimae-Ohashi Route" and its connection to JR Hiroshima Station
• Expansion of inbound demand (record-high number of visitors to Miyajima in FY2025) and increase in domestic travelers
• Improved per-unit revenue from the tram and bus fare revision implemented in February 2025
• Promotion of usage through improved convenience of the new fare ticket service "MOBIRY DAYS"
• Increased revenue from a higher per-unit contracted handling fee in the Air Transportation Agency business
• Revenue increase outlook for the next fiscal year associated with a change in the accounting classification of bus operating subsidies

Risks

• Deteriorating cost structure due to continued increases in personnel expenses and depreciation (FY2026 depreciation of ¥2,713 million, up ¥582 million year-on-year)
• Increased interest expense due to rising interest-bearing debt from capital expenditure progress and higher interest rates
• Chronic shortage of drivers and crew, along with rising recruitment and training costs
• Structural decline in commuter passenger demand due to the declining birthrate, aging population, and spread of telework
• Risk of increased costs from surging fuel and material prices
• Revenue structure dependent on operating subsidies (operating loss of ¥2,739 million without subsidies)