A major Japanese railway company, Odakyu, eyes up to US$ 325 million in acquisitions through fiscal 2020
According to The Nikkei Asian Review today, Odakyu Electric Railway plans to spend as much as 40 billion yen (US$325 million) on acquisitions through the year ending March 2021, aiming to diversify earnings sources by strengthening businesses beyond core railway operations.
This marks the company's first-ever target for such spending. Odakyu operates hotels, including the Hyatt Regency Tokyo, and such restaurants as a soba noodle chain.
Real estate operations are also part of the mix. This past spring, the company acquired a planner and developer of hotel and commercial facilities. The newly targeted spending on acquisitions will likely include real estate along rail service routes. Offices and commercial facilities will be considered, as well as land for redevelopment.
Odakyu bought the headquarters building of Fuji Heavy Industries in Tokyo's Shinjuku area for about 30 billion yen in 2011 as part of efforts to strengthen real estate investment.
For the current year ending March 2016, operating profit is seen rising 2% on the year to 51 billion yen. The transport business, which includes railways, will account for 59% of the profit -- down 8 points from fiscal 2011 but still a majority.
With populations along railway routes expected to decline over the long term, the company does not expect much earnings growth in the rail business and so is working to cultivate other areas.
If you want to read this article in Japanese, please see the following link:
Subscribe to our English Newsletter