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Message To Investors

To our Shareholders and Investors:

In the fiscal year ended March 31, 2018, the economic environment was plagued by ongoing uncertainties ahead due to factors that have included effects of political developments overseas, yet gradual economic recovery held course amid underlying strengths in corporate earnings. Moreover, the logistics industry continues to face a severe business environment partially due to tightening of the domestic labor market, which is in addition to an upward trend with respect to small parcel volume partially due to expansion of the e-commerce market brought about by rapidly changing styles of consumption.

Under such circumstances, the Yamato Group strived to enhance its management foundations in order to continue achieving sustainable growth and thereby enable the Group to keep providing high-quality services by drawing up its “KAIKAKU 2019 for NEXT100” medium-term management plan, which while “reforming working styles” is centered on management, focuses on reforms in the three areas of “structural reform in the Delivery Business,” “reform of revenue and business structure geared to achieving discrete growth,” and “reform of Group management structure geared to achieving sustainable growth.”

In the Delivery Business, we promoted our “structural reforms in the Delivery Business” initiatives which involve “improving and developing the employee working environment,” “placing controls on total TA-Q-BIN volume,” “optimizing the entire TA-Q-BIN delivery network,” “boosting efficiency by enhancing the ‘last mile’ network,” and “revising TA-Q-BIN basic fees and respective service standards.” This also involved gaining understanding and cooperation from many of our clients, particularly in terms of having made progress in negotiating review of our rates with respect to our corporate clients, and adjusting shipping schedules per requests made to some of our large-lot corporate clients. As a result, since the third quarter, our financial performance has remained on path to recovery due to TA-Q-BIN delivery volume taking a downward turn and the TA-Q-BIN unit price beginning to rise due to our adequate pricing initiatives, despite increasing expenses incurred largely from promoting our focus on “reforming working styles.”

In the non-delivery businesses, results were firm since we took steps to expand our existing service offerings by enlisting the strengths of Group companies, while also drawing on Group-wide ties as we aggressively promoted solution sales geared toward addressing customers’ business challenges.

Our consolidated financial results for the fiscal year ended March 31, 2018 were as follows.

(Millions of yen)

Item Fiscal 2017 Fiscal 2018 Change Growth (%)
Operating revenue 1,466,852 1,538,813 71,961 4.9
Operating profit 34,885 35,685 800 2.3
Ordinary profit 34,884 36,085 1,201 3.4
Profit attributable to owners of parent 18,053 18,231 178 1.0

As mentioned above, operating revenue amounted to 1,538,813 million yen, up 71,961 million yen from the year-ago period. This is largely attributable to an increase in the TA-Q-BIN unit price due to our adequate pricing initiatives, and despite a decrease in TA-Q-BIN delivery volume amid promotion of structural reforms in the Delivery Business. Operating expenses amounted to 1,503,127 million yen, up 71,161 million yen from the year-ago period. This is largely attributable to an increase in labor costs, including those of outsourcing workforce, in conjunction with higher delivery volume until the first half of the fiscal year and initiatives to reduce employee workloads, and also attributable to increases in commission expenses and other subcontracting expenses and personnel expenses amid progress made in employee recruitment. As a result, operating profit amounted to 35,685 million yen, up 800 million yen from the year-ago period partially due to effects of a decrease in amounts recorded as payments for specially acknowledged working hours recognized in the fiscal year ended March 31, 2017.

Initiatives for the entire Yamato Group

  • 1. 
    The Yamato Group has been taking steps on a Group-wide basis to develop an upbeat working environment, which is more “employee-friendly” and “rewarding,” centered on the “Office for Reforming Working Styles” established in Yamato Transport Co., Ltd., and its “Working Styles Innovation Committees” in its respective Group companies, as a means of placing utmost priority on “reforming working styles” in order to practice “inclusive management,” a Yamato Group founding principle. Moreover, we have been pursuing our “Value Networking” design, on the basis of creating business models for generating a high level of added value through the combined efforts of our respective businesses, while at the same time contributing to growth strategies and international competitive strengths of the Japanese economy. Meanwhile, we are also taking steps to forge a robust corporate culture that acts as a foundation for business creation and development.
  • 2. 
    We continued to drive initiatives geared toward forging a more robust corporate culture. To that end, we worked on enhancing the efficiency and dependability of operations, in part by improving our transport systems and by using our information technology network to enable visual monitoring of operating volumes. Moreover, we actively engaged in CSR-related activities linked to Yamato Group business endeavors, such as through environmental and safety measures, and efforts to prosper communities.
  • 3. 
    To further evolve our “Value Networking” design, we have been crafting business models that deliver a high level of added value by leveraging the Yamato Group’s business network. Also, to address varied customer needs in Japan and overseas, we will make more effective use of our innovative network platform consisting of the “Haneda Chronogate,” “Atsugi Gateway,” “Chubu Gateway” and “Okinawa International Logistics Hub” facilities, as well as “Kansai Gateway” facility, which started its operation in November 2017, in addition to our existing “last mile” network.
  • 4. 
    In our business looking toward overseas markets, we have been working to forge collaboration among five regions, Japan, East Asia, South East Asia, Europe and the Americas, while strengthening our capabilities in each geographic region to respond to the growth of cross-border logistics. In the fiscal year ended March 31, 2018, we signed a comprehensive partnership agreement with the leading specialist for express parcel delivery in France. The agreement was entered into for the purpose of expanding our cross-border small parcel chilled and frozen transport business between Japan and France, and contains a cross license agreement for sharing both companies’ know-how with respect to small parcel chilled and frozen transport. Furthermore, we have been promoting efforts to build cross-border networks that provide substantial added value primarily focusing on our cold chain network with initiatives involving seven Yamato Group companies acquiring certification under international standards pertaining to chilled and frozen goods delivery services, including Vietnam where the Group started handling of Cool TA-Q-BIN services in September 2017.
  • 5. 
    With the aim of improving customer convenience particularly in the e-commerce market, we have been working to establish an environment that ensures customers ease in picking up their parcels. Moreover, to that end we have been actively promoting efforts to build an open-type network of parcel lockers primarily in train stations, convenience stores and other such locations. Also, we continued to conduct practical trial runs of our “RoboNeko Yamato” project which involves providing on-demand delivery services that make use of automated driving technologies and worked on other efforts for the development of next-generation logistics services, and we have been picking up the pace with respect to utilizing cutting-edge technologies geared to streamlining transportation, in part by adopting trailers with a new specification never before used in Japan. Moreover, in October 2017, we installed Japan’s first automated fit-to-size packing system at our Atsugi Gateway facility, and have otherwise been taking steps that involve digitization and automation of our overall logistics operations in order to address challenges presented by society such as the labor shortage as it intensifies going forward, and in order to better serve the rapidly expanding e-commerce market.

We look forward to the continued support and encouragement of our shareholders and investors as we move to mobilize the collective powers of the Yamato Group and enhance our corporate value.

April 2018

Masaki Yamauchi

Masaki Yamauchi


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