West Japan Railway (9021) 1Q results: Passenger demand robust, but company still cautious on Middle East, risk of higher costs

Research evidence excerpt

J P M O R G A N

Asia Pacific Equity Research

05 August 2026

West Japan Railway (9021)

1Q results: Passenger demand robust, but company

still cautious on Middle East, risk of higher costs

Neutral: 1Q FY2026 operating profit fell by 11.7% YoY to ¥56.0 billion. Railway

revenue tracked above guidance in 1Q. The company nevertheless is maintaining

a cautious stance, keeping full-year guidance at ¥165.0 billion (-16.7% YoY; our

estimate ¥169.5 billion, Bloomberg consensus estimate ¥170.1 billion), because it

assumes that Middle East risks will emerge only from 2Q. Those risks are an ¥8.5

billion increase in costs assuming oil prices hold around March levels, and a ¥4.5

billion decline in revenue from weaker inbound and domestic passenger demand.

The company plans to consider allocating the railway revenue upside to cover

frontloaded spending, with future fare revisions in mind.

1Q results:By segment, operating profit for Mobility fell ¥3.3 billion YoY to

¥40.1 billion (FY2026 guidance: -¥30.4 billion to ¥100.5 billion), real estate

fell ¥2.3 billion to ¥12.0 billion (-¥800 million to ¥45.5 billion), and retail fell

¥1.3 billion to ¥3.7 billion (-¥3.3 billion to ¥13.0 billion). Transportation

operating profit fell on higher costs. Real estate profit fell despite upbeat

shopping center earnings, on a pullback from high-margin property sales and

sluggish hotel growth. Full-year guidance also calls for profits to decline,

mainly due to renovations at shopping centers and LUCUA. Retail profit fell

on the post-Expo effect. Full-year guidance also calls for a decline, on instation retail renovations at Shin-Osaka Station and the Expo effect.

Consolidated guidance factors in the pullback from the ¥19.7 billion Expo

boost. FY2026 dividend guidance is unchanged at ¥97.5 per share.

Railway business details: Railway revenue for the Shinkansen grew +8.7%

YoY in 1Q FY2025, +8.5% in 2Q, +7.2% in 3Q, +6.3% in 4Q, and +4.5% in

1Q FY2026, and full-year guidance is for +0.3%. Conventional railway

revenue grew 5.0% YoY in 1Q FY2025, 5.8% in 2Q, 3.8% in 3Q, and 2.6% in

4Q, and fell 0.4% in 1Q FY2026, while FY2026 guidance is for a 0.9% decline.

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