Cost Structure Reform through Cost Management by Expense Category and Productivity Improvement

「To achieve its medium-term targets, the Company will further accelerate efforts to strengthen its existing earnings base by targeting cargo categories in which it has competitive advantages, centered on chemical products, improve operational efficiency and optimize personnel allocation through the use of DX, and optimize costs through organizational restructuring, thereby strengthening its competitiveness in Japan and overseas.」

「At customer sites, we are improving earnings through the launch of new operations for domestic and overseas customers and the withdrawal from loss-making operations overseas, among other measures.」

「In on-site operations, profitability improved as a result of starting new operations for customers in Japan and overseas and withdrawing from loss-making operations overseas.」

「The Company will further strengthen its competitiveness by promoting digitalization and labor-saving measures, advancing cost-structure reforms centered on operational efficiency, optimal allocation of personnel, and cost reduction, and increasing the value added of its services.」

「In on-site operations, results benefited from progress in unit-price revisions with domestic customers, increased shipping and packaging work, and new operations in the Middle East. As a result, revenue for the logistics business as a whole was ¥146.485 billion, up 3.6% year on year, while segment profit (operating profit) was ¥4.031 billion, down 7.9%.」

「In on-site operations, results remained firm due to progress in unit-price revisions with domestic customers and increased on-site operations in South America, as well as the lapse of costs incurred last fiscal year to address equipment malfunctions in the Middle East, despite some additional costs recorded in the Middle East. As a result, revenue for the logistics business as a whole was ¥141.333 billion, down 6.4% year on year, while segment profit (operating profit) was ¥4.376 billion, down 10.3%.」

「In the logistics business, the Company reviewed its cost structure and negotiated to obtain appropriate unit prices, while improving its business foundation by consolidating low-profitability sites and withdrawing from certain operations, resulting in an improvement in the operating margin. In the plant engineering business, as it expanded globally, the business headquarters took the lead in thoroughly managing progress on large-scale projects, improving profitability across the business.」

「In equipment and materials rentals, profit increased as handling volumes rose with the growth in domestic SDM and inspection work, and as costs were contained. As a result, revenue for Other businesses as a whole was ¥12.018 billion, up 1.0% year on year, while segment profit (operating profit) was ¥835 million, up 72.8%.」

「Profit increased in equipment and materials rentals for the related construction projects as a result of cost containment.」

「In the general transportation and 3PL businesses, transportation and storage operations for automotive parts in China and Southeast Asia remained firm, but were affected by high fuel prices that had continued since the beginning of the year and the lapse of tax and other relief measures implemented in China in the previous fiscal year. In on-site operations, some customers' production and operating rates remained weak, and costs including labor expenses increased, but overall results exceeded those of the previous fiscal year. Revenue was ¥212.262 billion, up 6.7% year on year, while segment profit (operating profit) was ¥8.168 billion, up 27.6%.」

「In the general transportation and 3PL businesses, increased domestic transportation of chemical products and other products, revisions to transport unit prices and contracts, and increased automotive-related and consumer-goods transportation in China contributed to results. In on-site operations, profitability improved as domestic customers' production and operating rates generally recovered and work costs incurred in the Middle East in the previous fiscal year were contained.」

「In the logistics business, the Company reviewed its cost structure and negotiated to obtain appropriate unit prices, while improving its business foundation by consolidating low-profitability sites and withdrawing from certain operations, resulting in a substantial improvement in the operating margin. In the plant engineering business, as it expanded globally, the business headquarters took the lead in closely managing costs and risks for large-scale projects, improving profitability across the business.」

「In the general transportation and 3PL businesses, despite cost reductions from improved domestic delivery efficiency and a recovery in warehousing and transport operations in China, lower domestic office-relocation activity and reduced transportation of products and raw materials due to the COVID-19 pandemic resulted in lower revenue and profit. Revenue was ¥131.184 billion, down 8.7% year on year, while segment profit (operating profit) was ¥3.930 billion, down 28.1%.」

「The Group improved its overall cost ratio through higher profitability of existing operations in the logistics business and process-efficiency improvements in the plant engineering business. The cost-of-sales ratio declined 0.3 percentage points to 89.2%.」

「In the port business, container handling volumes for major shipping lines, particularly on China routes, and on-site raw-material handling declined. However, increased storage and cargo-handling operations at port-side warehouses, together with improved work efficiency and pricing, resulted in higher profit.」

「In on-site operations, although raw-material handling and transportation work declined due to typhoon impacts, higher on-site production of infrastructure-related equipment and materials, together with improved work-unit pricing, resulted in higher revenue and profit for the logistics business as a whole. Revenue was ¥143.734 billion, up 1.0% year on year, while segment profit (operating profit) was ¥5.463 billion, up 17.3%.」

「Cost of sales was ¥512.380 billion, an increase of ¥32.190 billion from the previous consolidated fiscal year. The cost-of-sales ratio declined 0.8 percentage points to 89.5%. The Group improved its overall cost ratio by increasing the profitability of existing operations in the logistics business and improving process efficiency in the plant engineering business.」

「Meanwhile, in the plant engineering business, the company is working to secure order volumes through active sales efforts while expanding construction volumes, primarily for SDM (large-scale scheduled maintenance projects) and manufacturing infrastructure development projects. It is also working to improve cost ratios through process efficiency and strengthen its mobilization capacity.」

「Meanwhile, in the plant engineering business, the Company is working to expand construction volumes, mainly for SDM (large-scale scheduled repair work) and manufacturing infrastructure improvement projects, while improving the cost ratio through more efficient processes and strengthening its workforce mobilization capacity.」

「Meanwhile, in the plant engineering business, the Company is working to expand construction volumes, mainly for SDM (large-scale scheduled repair work) and manufacturing infrastructure improvement projects, while improving the cost ratio through more efficient processes and strengthening its workforce mobilization capacity.」

「In the logistics business, despite the impact of higher fuel costs and other factors, the company promoted measures to improve cost ratios, including higher warehouse utilization. In the plant engineering business, it improved the efficiency of personnel and equipment allocation, including at partner companies, and promoted the effective use of strategic equipment, thereby improving the cost ratio for the group as a whole.」

「In equipment construction, the company expanded orders for manufacturing infrastructure development and efficiency-improvement projects in Japan, securing construction volumes broadly in line with the previous period, while improving profitability by optimizing personnel shifts and equipment allocation and thoroughly managing costs. In maintenance operations, volumes declined because domestic SDM (large-scale scheduled maintenance projects) had been a major year in the previous period. However, SDM in Southeast Asia and maintenance operations in the Middle East increased, as did civil engineering work for large-scale equipment installation projects in Japan, resulting in higher revenue and profits for the plant engineering business overall. Revenue increased 1.0% year on year to ¥173.243 billion, and segment profit (operating profit) increased 6.8% to ¥15.534 billion.」

「In equipment construction, construction volumes declined from the previous fiscal year due to the interim period between large overseas projects and delays in the start of some projects. However, profitability improved as the company expanded orders for robust manufacturing infrastructure development and efficiency-improvement projects at domestic manufacturing facilities, while its ongoing efforts to improve construction methods, optimize personnel shifts and equipment allocation, and thoroughly manage costs proved effective.」

「In maintenance operations, this fiscal year is a minor year for SDM (large-scale scheduled maintenance projects) at petroleum and petrochemical facilities. On the revenue side, orders increased for manufacturing infrastructure development and efficiency-improvement projects at domestic manufacturing facilities, and on-site maintenance work in South America also increased. On the cost side, the company worked to improve construction methods, increase personnel mobility, and thoroughly manage costs. As a result, the plant engineering business reported lower revenue but higher profits overall. Revenue declined 0.7% year on year to ¥56.356 billion, while segment profit (operating profit) increased 4.5% to ¥5.14 billion.」

「In the logistics business, the company further promoted measures to improve the profitability of warehouse operations. In the plant engineering business, it improved the cost ratio for the group as a whole by increasing the mobility and efficiency of personnel and equipment, including those of partner companies, in response to strong SDM construction volumes.」

「Specifically, the company will analyze appropriate market-based pricing, manage costs by expense category, identify issues, and build on initiatives to further improve productivity, while working to reduce cost ratios and indirect expenses to strengthen cost competitiveness.」