Building a Cost Structure That Can Win in the Market

「In general logistics, profitability at local subsidiaries is improving through the launch of new operations in Japan and cost-cutting measures in China. On the other hand, the loss of spot projects in Japan and higher startup costs for new warehouses overseas are weighing on results.」

「In the logistics business, although international freight volumes declined due to changes in the external environment, including the downturn in overseas economies, and some structural reforms were delayed, the company believes that steady progress is being made in improving profitability through improvements to unprofitable domestic operations and negotiations to secure appropriate unit prices.」

「In general logistics, transportation operations, mainly for automotive parts and consumer goods within China, remained sluggish due to weak domestic demand, but profitability improved at some local subsidiaries as a result of cost savings.」

「Revenue increased 7.7% from the previous consolidated fiscal year to ¥606.791 billion, while operating profit increased 24.8% to ¥43.945 billion.」

「Handling of chemical products increased. In on-site operations, domestic customer price revisions progressed, and on-site work in Japan and overseas increased. As a result, logistics revenue declined 5.7% year on year to ¥70.146 billion, while segment profit (operating profit) increased 1.1% to ¥2.48 billion.」

「As a result of these initiatives, the company was able to build an earnings structure that generates stable profits without materially impairing profitability, despite the impact of the global economic downturn caused by the COVID-19 pandemic.」

「As a result, logistics revenue increased 7.7% year on year to ¥228.541 billion, and segment profit (operating profit) increased 2.5% to ¥8.373 billion.」

「In the port and international business, domestic marine-container handling increased, along with related yard and storage operations. Although the Southeast Asian project completed in the previous fiscal year no longer contributed, export and import handling of marine cargo in Japan and overseas remained strong. In the general 3PL business, transportation and storage operations for automotive parts and consumer goods in China and Southeast Asia remained solid, although domestic handling volumes for consumer goods and other products declined. In on-site operations, domestic customer price revisions progressed, but work volumes declined, while advance costs related to equipment malfunctions overseas and equipment repair expenses increased. As a result, logistics revenue increased 8.6% year on year to ¥150.985 billion, while segment profit (operating profit) declined 20.4% to ¥4.882 billion.」

「As a result of these initiatives, the company exceeded its medium-term target of “maintaining an operating margin of at least 5% on a stable basis,” even amid the impact of the global economic downturn caused by the COVID-19 pandemic, and believes it is steadily delivering results toward building a robust earnings structure.」

「Revenue increased 6.7% year on year to ¥212.262 billion, and segment profit (operating profit) increased 27.6% to ¥8.168 billion.」

「In the port business, although the adoption of the revenue recognition accounting standard and other factors reduced revenue, profits increased as higher domestic handling of marine containers led to more ancillary yard operations and other work, while handling of exported steel products and imported raw materials also increased. In international logistics, export and import handling increased in Japan and overseas, while air-freight handling in Japan, Southeast Asia, and Hong Kong and chemical-product transportation in the Middle East remained strong. In the general transportation and 3PL businesses, handling volumes in warehouses and transportation in China did not increase as strongly as in Q1, but domestic transportation and storage of raw materials and products remained firm. In on-site operations, production and operating rates at some domestic and overseas customers showed signs of declining after the start of Q2, but overall activity did not fall below the previous period. As a result, logistics revenue increased 6.0% year on year to ¥139.075 billion, and segment profit (operating profit) increased 56.0% to ¥6.132 billion.」

「In the general transportation and 3PL businesses, revenue increased due to higher domestic transportation of chemical products and other products, revisions to transportation unit prices and contracts, and increased automotive-related and consumer-goods transportation in China. Revenue increased 4.5% year on year to ¥69.444 billion, and segment profit (operating profit) increased 42.5% to ¥2.992 billion.」

「The company will promote the creation of “costs that can win in the market” by thoroughly managing cost ratios by expense category across its domestic and overseas divisions and improving productivity through labor saving, mechanization, and other measures.」

「In the general transportation and 3PL businesses, cost savings from improved domestic delivery efficiency and the recovery of warehousing and transportation operations in China were seen, but revenue and profits declined due to lower domestic office relocation activity and reduced transportation of products and raw materials resulting from the COVID-19 pandemic, among other factors.」

「Cost of sales for the consolidated fiscal year was ¥508.172 billion, down ¥420.7 million from the previous consolidated fiscal year. The cost of sales ratio declined 0.3 percentage points to 89.2% of revenue. The operating margin rose 0.2 percentage points from 6.9% in the previous consolidated fiscal year to 7.1%.」

「In the 3PL business, despite declines in automotive-parts deliveries and consumer-goods logistics in China, revenue and profits increased due to higher domestic transportation volumes for chemical products and consumer goods accompanied by improved delivery unit prices, as well as increased handling of chemical products in Southeast Asia and other factors.」

「In the 3PL business, despite declines in automotive-parts and consumer-goods logistics in China, revenue and profits increased due to higher domestic transportation of chemical products and consumer goods, mainly in the Kanto region, as well as continued improvements in transportation and delivery unit prices. Revenue increased 1.0% year on year to ¥143.734 billion, and segment profit (operating profit) increased 17.3% to ¥5.463 billion.」

「In the 3PL business, increased handling of consumer goods and chemical products, together with continued efforts to improve transportation and delivery charges, generated synergies and contributed to higher earnings power. On-site operations were generally almost unchanged from the previous year, but the logistics business overall reported higher revenue and profits. Revenue increased 1.4% year on year to ¥71.912 billion, and segment profit (operating profit) increased 12.4% to ¥2.729 billion.」

「Operating profit increased ¥7.666 billion from the previous consolidated fiscal year to ¥39.247 billion, an increase of 24.3%, due to the effect of higher revenue and measures to reduce the cost ratio. The operating margin rose 1.0 percentage point from 5.9% in the previous consolidated fiscal year to 6.9%.」

「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.」

「In the logistics business of the consolidated group, the company is working to secure international freight and large-scale project transportation business and improve the profitability of existing operations, while absorbing higher labor and fuel costs through price pass-through and internal efforts.」

「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.」

「Against this economic backdrop, in its logistics business the group promoted the selection and concentration of operations at its domestic and overseas subsidiaries and improved the utilization rates of business assets. In its plant engineering business, it expanded its mobilization capacity and construction scope in Japan and overseas and worked to improve construction efficiency and cost ratios.」

「The company will promote the creation of “costs that can win in the market” by thoroughly managing cost ratios by expense category across its domestic and overseas divisions and by improving productivity through the development of new construction methods, labor-saving measures, and mechanization.」

「The company is actively working to enhance corporate value by building “costs that can compete in the market” and making “proposals that exceed customer expectations,” enabling it to provide high-quality global services.」