Fujita Kanko : Financial Results for the Fiscal Year Ended December 31, 2022

FUJITA KANKO INC. Financial Results for the Fiscal Year Ended December 31, 2022

February 14, 2023

FUJITA KANKO INC. (Code number: 9722)

Statements of Income

Financial Results for the Fiscal Year Ended December 31, 2022

Achieved an operating profit surplus in 4Q (October to December), with the net sales increased by ¥15.3 billion and the loss contracted by ¥11.7 billion for the full year, resulting from capturing the rapid recovery in demand prompted by the full-scaleresumption of accepting inbound tourists and the start of the national travel assistance program, since October➤Net sales of WHG Business doubled year on year for the full year

➤Luxury & Banquet Business achieved an operating profit surplus in 4Q (October to December)

	3Q Cumulative		2022	2021	YoY
	4Q Actual	2019
	Actual	Actual
	actual		Actual*
	Oct. to Dec.
(Million yen)	Jan. to Sep.
Net sales	29,337	14,411	43,749	28,433	15,315	68,960
WHG Business	13,803	6,783	20,587	10,434	10,153	37,629
Luxury & Banquet Business	9,879	5,312	15,191	12,441	2,750	22,388
Resort Business	4,001	1,637	5,638	3,749	1,889	5,790
Other (including adjustments)	1,654	677	2,331	1,809	522	3,151
Operating profit (loss)	(4,376)	328	(4,048)	(15,822)	11,773	280
WHG Business	(3,131)	(86)	(3,218)	(12,095)	8,876	2,254
Luxury & Banquet Business	(688)	664	(23)	(1,867)	1,843	(65)
Resort Business	(363)	(76)	(439)	(1,126)	686	(939)
Other (including adjustments)	(194)	(172)	(366)	(733)	366	(969)
Ordinary profit (loss)	(4,195)	(265)	(4,461)	(16,542)	12,081	401
Extraordinary income	1,088	4	1,092	37,088	(35,995)	285
Extraordinary losses	46	2,947	2,994	3,388	(394)	1,207
Income taxes	(33)	(539)	(572)	4,482	(5,055)	(236)
Profit (loss) attributable to owners of	(3,120)	(2,668)	(5,789)	12,675	(18,465)	(285)
parent
					1
* Due to changes in some segments to which sales facilities belong in accordance with organizational changes, the segment information for FY2019 is stated based on the segments after the change.

Statements of Income (Net Sales & Operating Profit)

Financial Results for the Fiscal Year Ended December 31, 2022

Results in 1Q were affected by the spread of the Omicron variant, but EBITDA (operating profit + depreciation) returned to the black in 3Q, and the operating profit turned positive in 4Q

➤WHG Business is on track to recovery, with the net sales in 4Q (Oct. to Dec.) recovering to 70% of the 2019 level ➤In Luxury & Banquet Business and Resort Business, the 70th anniversary promotion of Hotel Chinzanso Tokyo, and

the value-added measures of Hakone Kowakien Ten-yu, our main facilities, contributed to recovery

Recovery rate of 4Q net sales by segment (compared with 2019)

WHG Business: 70%, Luxury & Banquet Business: 79%, Resort Business: 125%

Net Sales & Operating Profit

(Billion yen)

2019 2021

(0.6)	0.5		1.0
	(0.5)
						(2.6)
					(4.2)	(3.1)
				(5.7)
2019				2021
1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q

2022

Priority

preventive

measures lifted

(2.2) (1.5)

2022

1Q 2Q

Border control eased	20
18
National travel
assistance program	16
	started
		14
		12
		10
		8
		6
	1.2	4
0.3
	2
		0
(0.5)	0.3	(2)
		(4)
		(6)

3Q 4Q

WHG Business

Luxury & Banquet Business

Resort Business

Other

Operating Profit (Loss)	EBITDA	2
(Operating profit + Depreciation）

Statement of Income

(Cost and Operating Profit Increase/Decrease Factors)

Financial Results for the Fiscal Year Ended December 31, 2022

➤Minimizing cost increases has lead to the expanded net sales and maximized profit

Fixed operating costs

Operating profit (loss)

Year on year increase/decrease factors

Land rent (0.8) billion Utility expenses +0.8 billion

Fixed personnel costs +0.6 billion

2019 2021 2022

(Billion yen)

60

40

20

0

2019 2021

0.2

(15.8)

2022

(4.0)

Recovery in

demand at

existing

business

locations, etc.

Fixed personnel costs Outsourcing costs Other fixed operating costs

Break-even net sales	(Billion yen)
			60
			40
			20
			0
2019	2021	2022
Net sales	Break-even net sales

+8.6

	Provision of
	facilities to
Increase of	the	*Increase in
fixed operating	government
marginal profit
costs	+3.8
(0.7)

[Providing facilities (building rental) to the government] Total 2,294 rooms

i. Hotel Gracery Shinjuku (970 rooms): still being offered

1. Tokyo Bay Ariake Washington Hotel (830 rooms): until October
2. HOTEL TAVINOS Asakusa (278 rooms): until March

iv. Hotel Gracery Tamachi (216 rooms): until March

3

WHG Business Overview

Financial Results for the Fiscal Year Ended December 31, 2022

4Q (Oct. to Dec.)

Sales increased and losses shrank, resulting from capturing the recovery in demand prompted by the full-scale resumption of accepting inbound tourists and the start of the national travel assistance program

●Net sales in 4Q rose to 70% of 2019 level (1Q: 42%, 2Q: 49%, 3Q: 56%, 4Q: 69%)

• Sales for inbound tourists, mainly those from South Korea, grew particularly in Tokyo and Osaka

WHG Operational Indicators

Comparison with previous year and 2019

	Compared with previous	Compared with 2019
	year
Oct. to Dec.
	ADR	Occupancy	ADR	Occupancy
	Rate	Rate
Total	+52.7%	+29.6pt	(14.7)%	(6.5)pt
Tokyo	+71.0%	+37.8pt	(26.7)%	(5.3)pt
Other than	+38.9%	+20.9pt	+2.0%	(7.7)pt
Tokyo

Cumulative (Jan. to Dec.)

(Billion yen)	WHG Business				WHG Operational Indicators
			Comparison with previous year and 2019
	Net Sales and Operating Profit (Loss)
40			*Figures for the previous year include sales associated with Tokyo2020
30	37.6					Compared with previous	Compared with 2019
				year*
		Jan. to Dec.
20						ADR	Occupancy	ADR	Occupancy
					Rate	Rate
10			20.5		Total	+23.7%	+28.3pt	(29.7)%	(19.1)pt
		10.4			Tokyo	+17.8%	+33.5pt	(42.1)%	(17.2)pt
0
	2.2			(3.2)	Other than	+28.7%	+23.2pt	(13.8)%	(20.6)pt
(10)
				Tokyo
		(12.0)		Actual results for 2022: Excluding the following facilities for the following periods
(20)			Jan. to Mar.	HOTEL TAVINOS Asakusa and Hotel Gracery Tamachi (provided to government)
	2019	2021	2022		Canal City Fukuoka Washington Hotel (closed due to construction)
				Jan. to Oct.	Tokyo Bay Ariake Washington Hotel (provided to government)	4
	Net Sales	Operating Profit (Loss)	Jan. to Dec.	Hotel Gracery Shinjuku (provided to government)