Hulic Q2 FY2026: Revenue Soars 38% on Asset Sales, Operating Profit Climbs 7%

Hulic’s consolidated revenue for the first half of FY2026 reached ¥416.6 billion, a 38.8% increase from the previous year. Operating profit grew 7.0% to ¥80.3 billion, recurring profit rose 6.4% to ¥70.9 billion, and net income attributable to parent shareholders advanced 11.3% to ¥49.98 billion.

The revenue surge was primarily fueled by brisk sales of real estate held for sale, with a larger volume of property handovers compared to the prior year. Stable income from office building leasing also contributed, as properties completed or acquired in the previous fiscal year and the current interim period generated full-period rental income.

Operating profit growth trailed revenue growth due to a higher cost-of-sales ratio for property sales and an increase in goodwill amortization. Notably, the Other segment booked an additional ¥5.13 billion goodwill impairment related to Risō Education Group, widening the operating loss. The hotel and inn business benefited from rising room rates driven by inbound demand and contributions from newly opened facilities, posting both higher revenue and profit. The insurance business was solid, with operating profit up 18.8%.

Full-year forecasts were unchanged: operating profit of ¥210 billion (up 12.4%), recurring profit of ¥185 billion (up 6.9%), and net profit of ¥121 billion (up 5.8%). Revenue guidance is not disclosed due to uncertainty in property sales timing.

Real Estate
Real estate revenue rose 35.8% to ¥349.63 billion, and operating profit increased 9.4% to ¥87.25 billion. The rental portfolio, centered on roughly 250 properties near train stations in Tokyo’s 23 wards with about 1.26 million square meters of leasable area, delivered steady rental income. Contributions from recently completed projects like “Quartz Shinsaibashi” provided a full-period boost. Sales of investment properties were strong, with large-scale handovers including “Hulic Minato Mirai” and “Hulic Fuchu Tower.” New acquisitions, such as “East Net Building,” support the asset-recycling model. Multiple redevelopment projects in central Tokyo, including the “Jiyugaoka 1-chome 29 District Redevelopment” and the tentative “Ginza 8-chome Development,” are advancing to expand future rental income.

Insurance
Insurance revenue grew 4.6% to ¥2.06 billion, and operating profit rose 18.8% to ¥662 million. Subsidiary Hulic Insurance Service expanded corporate transactions by acquiring non-life insurance agency rights, strengthening its earnings base despite a challenging industry environment.

Hotels and Inns
Revenue from hotels and inns increased 13.0% to ¥31.58 billion, and operating profit edged up 1.8% to ¥2.7 billion. The “THE GATE HOTEL” and “Fufu” brands captured strong inbound tourism demand, lifting average room rates. Newly opened facilities added to the top line. Higher personnel and opening costs kept profit growth modest, though profitability is improving.

Other
Revenue in the Other segment more than doubled to ¥39.39 billion, but the operating loss widened from ¥50 million to ¥2.46 billion. Inclusion of newly consolidated subsidiaries Koken Kogyo and Cook Deli added revenue, but a ¥5.13 billion additional goodwill impairment charge tied to Risō Education Group’s share price decline caused the loss. Excluding this one-time item, the segment would have posted an operating profit of ¥2.67 billion.

Total assets at the interim period-end stood at ¥3,592.51 billion, up ¥86.44 billion from the prior fiscal year-end. Cash and deposits rose by ¥25.11 billion, and investment securities increased by ¥31.28 billion, reflecting continued property investments. Land declined by ¥15.88 billion due to reclassification to properties for sale and disposals, while construction in progress grew ¥25.25 billion, mirroring redevelopment progress.

Total liabilities increased ¥45.27 billion to ¥2,612.16 billion. Interest-bearing debt (borrowings and bonds) amounted to ¥1,665.24 billion, of which ¥50.06 billion represented SPC non-recourse loans. Low-cost, stable funding from financial institutions ensures resilience against rising interest rates.

Net assets rose ¥41.17 billion to ¥980.35 billion, supported by retained earnings growth, a weaker yen boosting foreign currency translation adjustments, and higher unrealized gains on securities. The equity ratio improved to 26.3% from 26.0%.

Cash flow from operating activities was a ¥155.75 billion inflow, a sharp increase of ¥108.56 billion year on year, driven by collection of property sales proceeds and a reduction in inventories. Investing activities recorded a ¥200.17 billion outflow, mainly for property acquisitions and development. Financing activities provided a ¥69.51 billion inflow to fund investments.

The interim dividend was raised to ¥33.50 per share (up ¥5 from the prior interim), with a full-year plan of ¥67.00 (up ¥5), marking a continued strengthening of shareholder returns.

Hulic left its full-year FY2026 consolidated forecasts unchanged: operating profit of ¥210 billion (up 12.4% year on year), recurring profit of ¥185 billion (up 6.9%), and net profit of ¥121 billion (up 5.8%). The company does not disclose a revenue forecast due to the difficulty of predicting real estate sales timing amid economic and market uncertainties.

Progress against the full-year operating profit target stood at about 38% at the halfway point, slightly below the pace of prior years, but large-scale property sales scheduled for the second half make the full-year plan achievable. Steady growth in rental income and the pipeline of development project completions are expected to expand the medium-term earnings base.

Hulic faces several risks. Real estate sales are susceptible to economic conditions and property market fluctuations, which is why the company does not disclose a full-year revenue target. Rising interest rates could gradually increase interest payments on its substantial ¥1.66 trillion debt, pressuring earnings. Intensifying competition for prime properties may raise acquisition costs and compress yields. In the hotel business, a slowdown in inbound demand or increased competition could cause room rates and occupancy to fall short of expectations. Additionally, if subsidiaries acquired through M&A, such as Risō Education Group, underperform, further goodwill impairments may occur.

To manage these risks, the company plans to invest in liquid and inflation-resistant assets, steadily execute its development pipeline, and maintain a disciplined financial profile.