KADOKAWA (9468): FY2025 Results Summary — Operating Profit Halves as Publishing Reform Starts and a New Mid-Term Plan Is Set

This article is based on publicly available IR materials and is not a recommendation to buy or sell any specific securities.

KADOKAWA CORPORATION reported net sales of 282,908 million yen for the fiscal year ended March 31, 2026, up 1.8% year on year, while operating profit fell 51.3% to 8,102 million yen. Profit attributable to owners of parent declined 82.7% to 1,278 million yen. In the materials the company labels the fiscal year ended March 31, 2026 as “FY2025” and the fiscal year ending March 31, 2027 as “FY2026,” and the same labels are used in this article. For the fiscal year ending March 31, 2027 the company forecasts net sales of 300,300 million yen and operating profit of 10,100 million yen, and it has also set out a new Mid-term Management Plan covering FY2026 to FY2031.

Consolidated Results (Full-Year Actual)

Although net sales grew slightly, profit figures decreased significantly. The materials attribute this mainly to (1) downscaling of titles and the decline in profitability along with this in the publication business, (2) rising production costs and upfront investments in the animation business, and (3) changes in the cost structure, primarily driven by increases in fixed costs including labor costs. The impact of the cyberattacks that primarily affected Publication/IP Creation and Web Services (FY2024: net sales -8.3 billion yen, operating profit -4.7 billion yen) disappeared. The decline in ordinary profit was less significant than the fall in operating profit due to foreign exchange gains, while net profit showed a larger decrease due to the posting of extraordinary losses resulting from the amortization of goodwill related to a subsidiary and an increase in income taxes.

Item (Unit: Million JPY)	FY2025 (fiscal year ended March 31, 2026)	FY2024 (fiscal year ended March 31, 2025)	Year on year (changed amount)
Net sales	282,908	277,915	+1.8% (+4,993)
Operating profit	8,102	16,651	-51.3% (-8,548)
└ Operating margin	2.9%	6.0%	-3.1pt
Ordinary profit	11,701	17,742	-34.1% (-6,041)
Profit attributable to owners of parent	1,278	7,392	-82.7% (-6,114)
EBITDA (Operating profit + depreciation + amortization of goodwill)	17,600	24,907	-29.3% (-7,307)

In the fourth quarter (January to March 2026) alone, net sales rose 12.0% to 79,917 million yen and operating profit rose 112.2% to 1,724 million yen, with ordinary profit up 402.4% to 2,593 million yen, while profit attributable to owners of parent was -933 million yen (a change of -958 million yen). Against the company’s latest full-year forecast, net sales of 282,908 million yen exceeded the forecast of 278,200 million yen (+1.7%, +4,708), but operating profit of 8,102 million yen fell short of the 10,300 million yen forecast (-21.3%, -2,197) and profit attributable to owners of parent of 1,278 million yen fell short of the 4,900 million yen forecast (-73.9%, -3,621).

Segment Results

In Publication/IP Creation, the effects of the cyberattacks (FY2024: net sales -3.65 billion yen, operating profit -1.9 billion yen) disappeared and existing bases in North America and Asia performed strongly in international paper-based books, but the scale of titles decreased for domestic paper-based books and e-books, the sales recognition timing for e-books changed, and personnel expenses increased, so sales rose slightly while operating profit declined. In Animation/Film, there were large declines in sales and profit in Animation, where revenues mainly from major titles in FY2024 had made significant contributions. In Gaming, ELDEN RING NIGHTREIGN performed strongly and its DLC achieved a high attach rate, but sales and profit declined from the previous year, when the ELDEN RING DLC and the original ELDEN RING contributed significantly. Web Services, where the impact of the cyberattacks (FY2024: net sales -3.95 billion yen, operating profit -2.1 billion yen) disappeared, recorded significant jumps in sales and profit. In Education/EdTech, both sales and profit increased, reflecting the opening of new schools and expansion into new regions at Vantan and strong growth in student numbers for the N High School Group and ZEN University.

Segment	Metric (Unit: Million JPY)	FY2025 (fiscal year ended March 31, 2026)	FY2024 (fiscal year ended March 31, 2025)	Year on year (changed amount)
Publication/IP Creation	Net sales	155,634	151,367	+2.8% (+4,266)
Publication/IP Creation	Operating profit	4,054	8,372	-51.6% (-4,317)
Animation/Film	Net sales	48,256	51,092	-5.6% (-2,836)
Animation/Film	Operating profit	-465	4,729	– (-5,195)
Gaming	Net sales	29,781	33,597	-11.4% (-3,816)
Gaming	Operating profit	7,541	9,538	-20.9% (-1,996)
Web services	Net sales	20,515	18,038	+13.7% (+2,476)
Web services	Operating profit	2,117	-998	– (+3,115)
Education/EdTech	Net sales	17,166	15,119	+13.5% (+2,046)
Education/EdTech	Operating profit	2,844	2,382	+19.4% (+462)
Others	Net sales	17,031	17,881	-4.7% (-849)
Others	Operating profit	-3,966	-4,204	– (+238)
Corporate/Eliminations	Net sales	-5,476	-9,181	– (+3,705)
Corporate/Eliminations	Operating profit	-4,024	-3,169	– (-854)

In the fourth quarter, Publication/IP Creation operating profit rose 70.7% to 3,431 million yen as the results of business structural reforms such as price revisions and the optimization of advertising expenses and sales measures materialized as expected, and Animation/Film operating profit turned to 438 million yen, helped by popular series such as 【Oshi no Ko】 and Medalist and new animated titles based on original works from KADOKAWA such as Sentenced to Be a Hero. Within Publication/IP Creation for the full year, the materials show international paper-based books up 19.5% year on year (composition ratio 14%), domestic paper-based books/information media up 0.3% (27%), e-books down 0.8% (39%), rights licensing sales down 10.0% (8%) and other subsidiaries etc. up 16.7% (11%).

FY2026 Forecast (Fiscal Year Ending March 31, 2027)

The company states that the results of the structural reforms in the publication business, which began in the fourth quarter of FY2025, will contribute to the FY2026 full-year results, and it plans to achieve both sales and profit growth on a consolidated basis. Ordinary profit is expected to show a smaller increase than operating profit, partly due to foreign exchange gains recognized in the fiscal year ended March 2026, while net profit is projected to increase significantly compared with the fiscal year ended March 2026, when income taxes increased.

Item (Unit: Million JPY)	FY2026 Forecast (fiscal year ending March 31, 2027)	FY2025 Results (fiscal year ended March 31, 2026)	Year on year (changed amount)	Year on year (%)
Net sales	300,300	282,908	+17,391	+6.1%
Operating profit	10,100	8,102	+1,997	+24.7%
Ordinary profit	12,000	11,701	+298	+2.6%
Profit attributable to owners of parent	5,800	1,278	+4,521	+353.7%
EBITDA (Operating profit + depreciation + amortization of goodwill)	20,100	17,600	+2,499	+14.2%

Segment	Metric (Unit: Million JPY)	FY2026 Forecast	FY2025 Results	Year on year (changed amount)	Year on year (%)
Publication/IP Creation	Net sales	159,300	155,634	+3,665	+2.4%
Publication/IP Creation	Operating profit	6,800	4,054	+2,745	+67.7%
Animation/Film	Net sales	58,600	48,256	+10,343	+21.4%
Animation/Film	Operating profit	500	-465	+965	–
Gaming	Net sales	31,200	29,781	+1,418	+4.8%
Gaming	Operating profit	4,500	7,541	-3,041	-40.3%
Web Services	Net sales	20,400	20,515	-115	-0.6%
Web Services	Operating profit	2,000	2,117	-117	-5.5%
Education/EdTech	Net sales	19,600	17,166	+2,433	+14.2%
Education/EdTech	Operating profit	3,200	2,844	+355	+12.5%
Others	Net sales	17,200	17,031	+168	+1.0%
Others	Operating profit	-2,800	-3,966	+1,166	–
Corporate/Eliminations	Net sales	-6,000	-5,476	-523	–
Corporate/Eliminations	Operating profit	-4,100	-4,024	-75	–

By segment, Publication/IP Creation is expected to improve as business structural reforms progress further in the domestic publication business, with solid growth also expected for international paper-based books. Animation/Film projects increased sales and profit from a highly anticipated lineup of animated titles, including Re:ZERO -Starting Life in Another World- Season 4, The Saga of Tanya the Evil2, PANDOROBO and Sekiro: No Defeat, although sharply rising production costs will place pressure on profit. Gaming profit is expected to decline from FY2025, when the ELDEN RING NIGHTREIGN main game and its DLC contributed to performance, while sales are projected to increase from multiple mobile game releases. Web Services expects sales and profit to decline due to the downsizing of the highly profitable Animelo Summer Live venue in the Live business, and Education/EdTech projects increases in both sales and profit, with total student numbers for Vantan, the N High School Group and ZEN University set to surpass 50,000 in FY2026.

Shareholder Returns

Under the Basic Finance Policy set out in the materials, the company aims for ROE of at least 12% and a total return ratio of at least 50% over the mid to long term. For the shareholder dividend it seeks to achieve a payout ratio of 30% or more and sets a lower limit of 30 yen per share for the annual dividend, while acquisition of treasury stock is to be implemented flexibly in consideration of investment capacity and stock price level. The company states that while ensuring stable shareholder returns by setting a minimum dividend amount, it will consider and implement share buybacks and dividend increases in a flexible manner depending on the recovery of profit levels. The balance sheet slide shows, under “Capital Allocation in the First Half of FY2025,” invested funds of 13.5 billion yen and a shareholder dividend of 4.4 billion yen (dividend per share: 30 yen), plus the repayment of 15 billion yen in bank loans due in July 2025. As of March 31, 2026, total assets were 394.9 billion yen, net assets 276.7 billion yen, cash and deposits 116.0 billion yen and interest-bearing debt 12.0 billion yen, giving an equity ratio of 62.0% and net cash of 104.0 billion yen, compared with an equity ratio of 60.9% and net cash of 118.2 billion yen as of March 31, 2025. The company notes that there are partial revisions to its basic financial policies starting in FY2026. A specific dividend forecast for FY2026 cannot be confirmed from the materials.

Mid-Term Management Plan

Reviewing the current Mid-term Management Plan, the company states that consolidated and overseas sales grew steadily but operating profit growth slowed due to stagnation in Publication/IP Creation and Animation/Film, and that based on current forecasts it is difficult to achieve the mid-term targets for FY2027 of net sales of 340.0 billion yen and operating profit of 34.0 billion yen. Overseas publication, Web Services and Education/EdTech grew faster than planned, while profits from domestic publication and the animation business declined unexpectedly, and in light of these changes in the environment the company decided to review the current plan and formulate a new Mid-term Management Plan.

The new Mid-term Management Plan covers FY2026 to FY2031 (6 years) and is divided into a Structural Reform period (FY2026-FY2027), a Profit Growth period (FY2028-FY2029) with an operating profit CAGR of 24%, and a Profit Expansion period (FY2030-FY2031) with an operating profit CAGR of 38%. The targets are net sales of 325 billion yen (overseas net sales 64 billion yen), operating profit of 13 billion yen, an operating margin of 4.0%, ROE of 2.4% and EPS of 40 yen for FY2027; net sales of 350 billion yen (overseas 79 billion yen), operating profit of 20 billion yen, an operating margin of 5.7%, ROE of 5.8% and EPS of 100 yen for FY2029; and net sales of 400 billion yen (overseas 100 billion yen), operating profit of 38 billion yen, an operating margin of 9.5%, ROE of 9.4% and EPS of 180 yen for FY2031. To enhance execution, the company will clarify management responsibilities and the execution structure and implement a special early retirement program covering, as of July 31, 2026, employees aged 45 or older who are currently employed by KADOKAWA, hold a specific job grade and have been with the company for five years or more; the number of employees to be invited to retire is not specified.

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.