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Message To Investors

To our Shareholders and Investors:

During the six months ended September 30, 2017, 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 mail order market brought about by rapidly changing styles of consumption.

Under such circumstances, the Yamato Group has drawn up its “KAIKAKU 2019 for NEXT100” medium-term management plan, which covers three years beginning with the fiscal year ending March 31, 2018. The plan’s aim is to enhance the management foundations of the Yamato Group in order to continue achieving sustainable growth and thereby enable the Group to keep providing high-quality services. Specifically, while placing a management focus on “reforming working styles,” the Group intends to carry out reform 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 have been promoting 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.” With respect to our objective of “placing controls on total TA-Q-BIN volume” in particular, we have issued requests to our large-lot corporate clients that include asking that they adjust their shipping schedules during busy seasons and cut down on re-deliveries so that we can avoid the prospect of surges in parcel volume that would cause greater employee workloads. At the same time, we are also negotiating review of our rates. However, under the existing circumstances, our financial performance has been severely affected by a continuing situation where profits have been pressured by rising labor costs, including those of outsourcing workforce, in conjunction with increases in TA-Q-BIN delivery volume.

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 six months ended September 30, 2017 are as follows.

(Millions of yen)

Item For the six months
ended September 30, 2016
For the six months
ended September 30, 2017
Change Growth (%)
Operating revenue 706,689 729,802 23,112 3.3
Operating profit 20,943 (12,887) (33,831) -
Ordinary profit 20,916 (12,600) (33,516) -
Profit attributable to owners of parent 11,554 (12,087) (23,642) -

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, and “Kansai Gateway,” which will go into operation in this Autumn, 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 this fiscal year, 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 actively promoting efforts to build cross-border networks that provide substantial added-value with initiatives involving six Yamato Group companies acquiring certification under international standards pertaining to chilled and frozen goods delivery services. Furthermore, during the six months ended September 30, 2017, we took further steps to expand our cold chain business. For instance, in September we began handling Cool TA-Q-BIN services in Vietnam, and we have also been promoting initiatives to ensure safety of food products across food chains encompassing logistics, with our Haneda Chronogate facility having been the first entity in the world to have been granted certification in the logistics category under the FSSC 22000 scheme, which is fully recognized by the Global Food Safety Initiative (GFSI).
  • 5. 
    With the aim of improving customer convenience particularly in the mail order 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. Furthermore, during the six months ended September 30, 2017, 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.

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.

October 2017

Masaki Yamauchi

Masaki Yamauchi

President

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