| Enhance Corporate Value by Continuing to Create "New Value" Linked to Happiness |
Q. What are your mission and policies since taking office as President in April 2009?
A. My mission is to ensure stable and continuous long-term growth that maintains a good balance between Tokyo Disney Resort from a perspective 10 and 20 years into the future and the establishment of new pillars of business to continue on from the resort. We plan to announce our next medium-term plan in May 2010, based on our long-term vision for the next 10 years.
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Greetings to our stockholders and investors. I am Kyoichiro Uenishi, the new President and COO of Oriental Land Co., Ltd. I will carry out my duties with steadfast determination as I build the foundation for growth 10 and 20 years into the future, upholding the OLC Group and Tokyo Disney Resort built by my predecessor, Yoshiro Fukushima, while appropriately assessing what we must and must not change.
The mission of the OLC Group is to provide "dreams, moving experiences, enjoyment and contentment" through its business operations. Bringing happiness to our guests leads to the happiness of all officers and employees, and I feel fortunate to be involved with such a company.
Times change, but people have a basic, unalterable desire to experience happiness. In order to be a company that continues to provide "dreams, moving experiences, enjoyment and contentment," first and foremost I will aim for the stable and continuous growth of Tokyo Disney Resort over the long term. From that rock-solid foundation, we will clarify the strengths we have cultivated through our businesses to develop new businesses based on the belief that we can fully utilize those strengths.
For this reason we must continue to create "new value." By preserving what we must not change while pursuing a stakeholder orientation and avoiding preconceptions, we will discover "new value" that can only emerge in times of change.
As for my policies, I will continue the fundamental policies of our current medium-term plan "Innovate OLC 2010." Based on our long-term vision for the next 10 years, we are currently formulating our next medium-term plan for the period to the fiscal year ending March 2014, which we plan to announce in May 2010. At that time, I plan to present concrete policies for our new management structure. |
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Q. Revenues and operating income reached record highs in the fiscal year ended March 2009, the second year of the four-year medium-term plan. What were the reasons behind this strong performance? |
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A. I believe the reason was steady implementation of the policies of the medium-term plan. The results of this year were a major achievement that will be linked to increasing the scale of theme park attendance and other benefits in the future. |
The first result was from our efforts to enhance quality in both its tangible and intangible aspects as we "further strengthen the core business for earnings growth," a pillar of the medium-term plan "Innovate OLC 2010."
On the tangibles side, we held the first of our resortwide anniversary events, which had previously been held separately at Tokyo Disneyland and Tokyo DisneySea. In addition to conducting a variety of events at the two theme parks, we worked to enhance experience value available nowhere else by opening Tokyo Disneyland Hotel in July and Cirque du Soleil Theatre Tokyo in October.
On the intangibles side, we implemented various measures for employees to enhance hospitality, including a new educational program for all resort employees to "return to the basics" and a program to actively incorporate employees’ ideas.
As a result, our internal survey has shown that we are raising guest satisfaction and desire to revisit. I believe that various measures we carried out in the previous fiscal year are linked to expanding the foundation of Tokyo Disney Resort fans and increasing the scale of our ability to attract guests.
Also, in addition to reliably attracting guests from the large-volume family segment, the ratio of guests aged 40 and above is increasing. By broadening our guest segments, we aim to remain a business that can endure changes in business conditions such as economic fluctuations and the declining birth rate and aging society.
In this way, we will steadily "establish the foundation for new growth" while we "further strengthen the core business." In addition to reducing interest-bearing debt and reinforcing our financial structure, we steadily improved or withdrew from businesses in which we have been recording an operating loss, which we believe will lead to strong performance. |
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Q. What are the reasons for your forecast year-on-year decrease of ¥6.0 billion in consolidated operating income for the fiscal year ending March 2010? |
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A. We forecast the decrease as a result of decreases in theme park attendance and revenues per guest because it will be the year following Tokyo Disney Resort 25th Anniversary. On the other hand, free cash flow is forecast to increase ¥11.7 billion compared with the previous fiscal year to ¥39.4 billion. |
In the fiscal year ending March 2010, we will systematically enhance experience value available nowhere else, including introducing new attractions at the two theme parks in the same year for the first time. However, we forecast a decrease in operating income due to decreases in theme park attendance and revenues per guest because it will be the year following Tokyo Disney Resort 25th Anniversary. On the other hand, net income is forecast to reach a record high due to a decrease in extraordinary loss compared with the previous fiscal year and other factors.
 Theme park attendance tends to decrease in the year following an anniversary event. However, the three-year moving average shows a gradual increase. Despite a temporary decrease on an annual basis, we believe that our measures for the 25th Anniversary were a major achievement that will be linked to increasing the scale of theme park attendance in the future, leading to a medium-tolong- term increase in attendance.
In addition, capital expenditures will decrease from the fiscal year ending March 2010 following the end of a period of large-scale investment in Tokyo Disneyland Hotel and Cirque du Soleil Theatre Tokyo. As a result, free cash flow is forecast to increase ¥11.7 billion compared with the previous fiscal year to ¥39.4 billion.
(See page 37 for the outlook for the fiscal year ending March 31, 2010.) |
| Q. Will OLC achieve the medium-term plan target of consolidated net income at the ¥27.0 billion level in the fiscal year ending March 2011? |
| A. We have revised the fiscal year for income target completion due to an increase in depreciation expenses. However, free cash flow is forecast to increase more than the plan. |
We revised the fiscal year for income target completion due to a forecast increase in depreciation expenses in the fiscal years ending March 2010 and March 2011 greater than in the plan. This is not the result of an increase in capital expenditures greater than in the plan, but rather a shorter depreciation period than originally assumed due to the effect of a tax code revision and changes to investment allocation. Although we considered various catch-up measures to achieve the target, the increase in depreciation expenses as the underlying cause is in a sense beyond our control. Chasing that target would be too much to take on, so we resolved to extend the fiscal year of completion. Although our forecast is to reach the target during our next medium-term plan, we are currently formulating a new management structure, and therefore will present details in May 2010.
On the other hand, free cash flow is forecast to increase greater than the medium-term plan to the ¥30 billion to 40 billion level. Our cash flow plan is progressing smoothly even though we have revised our earnings plan due to the increase in depreciation expenses. Following the policy of our medium-term plan, we will allocate this increased cash flow to direct stockholder returns and to reducing interest-bearing debt in order to secure a surplus for investment in the future. |
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Q. What will be the focus of the new medium-term plan that you are currently preparing? |
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A. I hope to make us into a corporate group that continues to create "new value" linked to providing happiness. |
As I stated earlier, my duty is to consistently and stably enhance corporate value over the long term. For that reason, the ongoing creation of "new value" is indispensable.
As for specific details, I am afraid you will have to wait until May 2010, but there are some points I can discuss now. At Tokyo Disney Resort, in addition to introducing new attractions at each of the theme parks, we plan to hold Tokyo DisneySea 10th Anniversary in the fiscal year ending March 2012 and Tokyo Disney Resort 30th Anniversary in the fiscal year ending March 2014. We will also continue to strengthen intangibles with the aim of improving hospitality through measures such as employee training programs and programs to incorporate employee ideas in operations. By seamlessly enhancing experience value available nowhere else, we plan to increase the scale of our ability to attract guests over the medium-to-long term.
On the other hand, regarding business to follow Tokyo Disney Resort, we are carefully considering a return to our origins in light of the worsening economic environment.
There are many at the OLC Group who give their all in order to provide happiness. We are currently formulating a new long-term vision and medium-term plan that will concentrate that strength in human resources. With all of us faithfully working together to carry them out, we will fulfill our responsibility to all our stakeholders. |
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Q. In closing, please explain your policies to enhance stockholder value, and say a few words to the stockholders and investors. |
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A. We will allocate free cash flow to direct stockholder returns. |
 The OLC Group has set returning profits to its stockholders as an important management policy, with a target consolidated payout ratio of 35 percent or higher in the current medium-term plan. In the fiscal year ended March 2009 we paid cash dividends of ¥70 per share, up ¥10 from the previous fiscal year. As a result, we have steadily increased cash dividends for eight consecutive years. In the fiscal year ending March 2010 we plan to pay ¥80 per share, a further increase of ¥10.
Regarding share repurchases, in May 2009 we retired in full the 4.2 million shares of the Company’s stock (4.42 percent of total shares outstanding, total cost ¥24.4 billion) that we repurchased in June 2008. In the future, we will consider share repurchases as the situation demands through comprehensive evaluation of market trends, the economic environment and other factors. In this way, we will allocate the high level of cash flow we generate to direct stockholder returns. We will aim for an ROE of 8 percent or higher as soon as possible through earnings growth and direct return of earnings
In 2010, Oriental Land will reach the milestone of its fiftieth anniversary. I ask our stockholders and investors for their continued support in looking forward to the growth of the OLC Group from a medium-to-long-term viewpoint. |
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