Kintetsu Group Holdings Co.,Ltd.

In the event of a Nankai Trough earthquake or increasingly severe wind and flood damage, there is a risk of damage to railway facilities and large-scale damage to hotels, department stores, and other facilities. Because the Group's management resources are concentrated along the Kintetsu rail lines in Osaka Prefecture, Nara Prefecture, Mie Prefecture, and other areas, this could have a serious impact on the performance of the Group as a whole. In response, the Group is promoting seismic reinforcement of stations and elevated bridges, measures against bridge scouring, flood countermeasures, and periodic review of business continuity plans.

If a large-scale accident, fire, or terrorist attack occurs in the Railway Business, Bus Business, or other operations, enormous costs may be required for recovery and damages, and prolonged business interruption could seriously affect performance. Given the nature of the business, which transports large numbers of passengers as a public transportation provider, ensuring safety is the top priority. The Group continuously implements safety measures, including the promotion of transportation safety management, employee education and training, and the installation, renewal, and enhancement of operational safety equipment.

If unauthorized access, leakage, or tampering occurs with respect to personal information or confidential information held through commuter passes, card memberships, hotels, department stores, the Travel Business, and other operations, this could adversely affect performance through damages costs and loss of credibility. There is also a risk of prolonged service outages due to increasingly sophisticated cyberattacks or system failures. The Group is strengthening group-wide countermeasures based on the "Kintetsu Group Information Security Basic Policy" and the "Group Security Countermeasure Standards," and is advancing the recruitment and development of digital talent.

As of the end of fiscal 2025, consolidated interest-bearing debt outstanding was ¥1,265,539 million, and interest expenses for the same fiscal year were ¥14,593 million. If market interest rates rise or credit ratings are downgraded, the resulting increase in funding costs could adversely affect performance. The Group is prioritizing the reduction of financial risk by accelerating the reduction of interest-bearing debt, while working to improve indicators such as the equity ratio and the net interest-bearing debt/EBITDA ratio.

As of the end of March 2026, acquisition-related fixed assets recorded on the consolidated financial statements amounted to ¥259,441 million (including customer-related assets of ¥40,094 million, trademark rights of ¥32,272 million, and goodwill of ¥49,440 million). If the performance of acquired companies falls short of expectations or changes in the business environment prevent the expected results from being achieved, impairment losses on fixed assets, including goodwill, may occur, affecting performance. The Group strives to conduct thorough board deliberation and due diligence tailored to each transaction, and to improve asset efficiency and maximize profits at acquired companies.

The working and student population along the Kintetsu rail lines is declining due to the falling birthrate, an aging population, and migration to urban centers, and this trend is expected to continue. This situation is expected to reduce demand for Railway Business revenue, Distribution business revenue, and Real Estate business revenue, adversely affecting earnings. The Group is actively promoting measures such as community development along its rail lines, industrial promotion, and the use of tourism resources to expand the resident and visiting populations, as well as developing real estate businesses in competitive areas.

The Group is heavily weighted toward BtoC, footfall-dependent businesses centered on the Kinki and Tokai regions, and during the COVID-19 pandemic, earnings deteriorated significantly due to a sharp decline in passenger and visitor flows. This low resilience to sudden changes in the external environment poses a risk that concentration in specific business domains could lead to a significant deterioration in earnings. The Group is addressing this by making the International Logistics business a core business through the full consolidation of Kintetsu World Express, Inc. as a wholly owned subsidiary, and by building a balanced business portfolio and expanding overseas operations through M&A.

Acute risks include train service disruptions and cancellations of travel and leisure activities due to major typhoons and heavy rainfall; chronic risks include increased electricity and energy costs due to extreme heat; and transition risks include the potential need for large-scale capital investment due to the introduction of carbon taxes and tightening regulations. In the Railway Business, the effects of "introduction of carbon taxes, etc.," "rising energy costs," and "increasingly severe disasters" are expected to be particularly significant. The Group conducts scenario analysis in line with the TCFD framework, and is promoting a higher CO2 emissions reduction target for fiscal 2030 as well as expanded energy conservation and procurement of renewable energy.

At the Group, where labor-intensive businesses such as the Railway Business are prevalent, amid a declining working-age population due to the falling birthrate and aging population and increasing labor market fluidity, failure to secure sufficient human resources could result in lost business opportunities, reduced competitiveness, and difficulty in providing transportation services as social infrastructure. In addition to expanding recruitment categories and areas, improving workplace environments, and streamlining and systematizing operations, the Group established the human resources specialist company "Kintetsu HR Partners Co., Ltd." in October 2024 to strengthen the Group-wide human resource utilization framework.

Since the Transportation, Real Estate, Distribution, and Hotel & Leisure businesses primarily serve general consumers, performance could deteriorate due to economic downturns, sluggish personal consumption, abnormal weather, or a decline in inbound visitors to Japan. In the International Logistics business as well, various factors such as geopolitical risk, pandemics, and natural disasters could affect performance. The Group is addressing this through structural reforms to lower the break-even point and by strengthening the resilience of its business portfolio through the development and reinforcement of BtoB businesses.