Impact of economic fluctuations, deteriorating cargo volumes and intensifying competition

「During the cumulative first-quarter consolidated period, Japan’s economy continued a gradual recovery as capital investment showed signs of improvement and personal consumption gradually picked up, although uncertainty remained over the impact of the situation in the Middle East. Overseas, the U.S. economy continued to expand moderately, while China’s economy slowed moderately, affected by stagnation in the real estate market and other factors.」

「The domestic economy is expected to continue recovering gradually as employment and income conditions improve, but surging prices, including fuel oil prices, resulting from heightened tensions in the Middle East could weigh on the economy.」

「The outlook for the impact of the situation in the Middle East remains uncertain at this time, and therefore it has not been reflected in our future earnings outlook.」

「During the interim consolidated accounting period, the domestic economy gradually showed signs of recovery, as personal consumption began to recover and capital investment and production improved gradually, although the impact of US trade policy was evident. Overseas, the US economy expanded on the back of solid employment and consumption, while the Chinese economy remained stalled as the real estate market continued to stagnate.」

「No new business or other risks arose during the six months ended 30 June. There were also no material changes to the business and other risks described in the securities report for the previous fiscal year.」

「There were no newly arising business or other risks during the cumulative consolidated period for the third quarter. Nor were there any material changes to the business or other risks described in the securities report for the previous fiscal year.」

「There were no newly arising business or other risks during the cumulative consolidated period for the second quarter. Nor were there any material changes to the business or other risks described in the securities report for the previous fiscal year.」

「No new business or other risks arose during the three months ended 30 June. There were also no material changes to the business and other risks described in the securities report for the previous fiscal year.」

「The environment surrounding the group remains uncertain. Social activity is expected to become more active and the economy to recover as restrictions on activities related to COVID-19 are lifted, but concerns are growing over an economic slowdown as prolonged high prices may reduce demand.」

「During the first nine months of the current fiscal year, the domestic economy showed signs of a recovery in personal consumption and capital investment, but remained uncertain owing to the impact of rising prices, including those resulting from soaring raw material and resource prices. Overseas, personal consumption and exports increased in the United States, but the risk of a downside to the economy rose as monetary policy was tightened to curb inflation. In China, the economy showed a slowing trend, including a decline in exports, as the renewed spread of COVID-19 constrained economic activity.」

「In Japan, the economy remained uncertain, affected by soaring resource prices and rising prices associated with the rapid depreciation of the yen, despite signs of a recovery in personal consumption and capital investment. Overseas, personal consumption in the United States remained generally firm, but economic growth stagnated owing to the impact of rapid interest rate hikes to curb inflation. In China, there were signs of a recovery, including increased exports, but the economy showed a slowing trend as economic activity was constrained by the renewed spread of COVID-19 and the real estate market remained stagnant.」

「During the first quarter of the current fiscal year, the domestic economy showed signs of a recovery in personal consumption and capital investment, but production stalled amid continuing difficult conditions, including higher resource prices and supply constraints for raw materials and components. Overseas, personal consumption and capital investment supported the US economy, although concerns arose over an economic slowdown resulting from interest rate hikes to curb inflation. In China, stagnation intensified as the renewed spread of COVID-19 constrained economic activity in some regions.」

「Although the outlook remains extremely uncertain, particularly regarding the impact of the global spread of COVID-19 and the Ukraine crisis on domestic and international social and economic conditions, various changes in recent years are expected to continue, including higher costs resulting from labour shortages, the expansion of digital transformation initiatives, and growing awareness of ESG.」

「There were no newly arising business or other risks during the cumulative consolidated period for the third quarter. Nor were there any material changes to the business or other risks described in the securities report for the previous fiscal year.」

「No new business or other risks arose during the six months ended 30 September. There were also no material changes to the business and other risks described in the securities report for the previous fiscal year.」

「No new business or other risks arose during the three months ended 30 June. There were also no material changes to the business and other risks described in the securities report for the previous fiscal year.」

「In the logistics and shipping businesses, fluctuations in domestic and overseas economic conditions and changes in the social environment may affect the Group's financial condition and operating results through weaker cargo volumes, intensifying competition and a deterioration in the supply-demand balance for vessels. In the real estate business, changes in market conditions caused by an oversupply of office buildings and fluctuations in supply and demand may also affect the Group's financial condition and operating results.」

「Operating revenue was ¥14.1979 billion, down 1.1% year on year. Although the expansion of e-commerce-related transportation and other factors increased revenue, stagnant cargo volumes and other factors resulting from the impact of COVID-19 reduced revenue. Operating income was ¥794.4 million, down 6.2% year on year, owing to the decline in revenue caused by the infection and increased depreciation of warehouses and other facilities that began operations in the previous consolidated fiscal year and the first nine months of the current fiscal year.」

「Operating revenue was ¥9.2945 billion, down 2.4% year on year. Although the expansion of e-commerce-related transportation and other factors increased revenue, stagnant cargo volumes and other factors resulting from the impact of COVID-19 reduced revenue. Operating income was ¥444 million, down 20.0% year on year, owing to the decline in revenue caused by the infection and increased depreciation of warehouses and other facilities that began operations in the previous consolidated fiscal year and the first half of the current fiscal year.」

「Under these policies, during the first quarter of the current fiscal year, operating revenue was ¥4.7268 billion, broadly in line with the same period of the previous year and up 0.3% year on year. Although the impact of the infection caused revenue-reducing factors such as stagnant cargo volumes, revenue-increasing factors also included the expansion of e-commerce-related transportation. Operating income was ¥238.6 million, down 9.3% year on year. Although the figure was below the initial forecast, operating expenses increased owing to the impact of the infection, higher operating and personnel expenses, and increased depreciation of warehouses and other facilities that began operations in the previous fiscal year and the first quarter of the current fiscal year.」

「Toward the end of the fiscal year, economic activity was constrained by the global spread of COVID-19, and both the domestic and overseas economies slowed rapidly.」

「In the shipping business, operating revenue was ¥1.8849 billion, down 3.7% year on year. Although freight rate levels recovered, transportation volumes of forest products and containers bound for East Asia declined, and the yen appreciated.」

「② Shipping Business In the shipping business, operating revenue was ¥632.7 million, up 10.5% year on year, owing mainly to increased transportation volumes of containers and conventional cargo. However, the operating loss was ¥144 million, compared with an operating loss of ¥479 million in the same period of the previous year, because the spring ocean freight rate revisions had not yet been reflected during the first quarter of the current fiscal year.」

「In the shipping business, operating revenue was ¥2.5873 billion, down 2.1% from the previous fiscal year, as the decline in container cargo handled outweighed the increase in conventional cargo handled.」

「The global economy showed signs of a pause in the recovery in China, while economic recovery continued steadily in the United States and progressed gradually in Europe. Meanwhile, uncertainty about the outlook increased amid concerns about the impact of US-China trade friction.」

「Operating income was ¥3.943 billion, down 20.9% year on year, owing in part to lower transportation volumes in the shipping business and higher fuel costs resulting from the rise in crude oil prices.」

「Operating income was ¥1.903 billion, down 26.1% year on year, due in part to lower transportation volumes in the shipping business as a result of a cold spell in North America and the recognition of one-time taxes associated with the acquisition of rental properties in the real estate business.」

「The shipping business improved by ¥270 million from the previous fiscal year, but recorded an operating loss of ¥76 million owing to the insufficient recovery in container freight rates and higher fuel oil prices.」

「In the shipping business, operating revenue was ¥1.9589 billion, up 19.1% year on year, due in part to increased volumes of forest products and containers transported. However, the operating loss was ¥69 million, compared with an operating loss of ¥56 million in the same period of the previous year, owing to the insufficient recovery in freight rates and higher fuel oil prices.」

「In the shipping business, operating revenue was ¥1.315 billion, up 15.5% year on year, due in part to increased volumes of forest products and containers transported. However, the operating loss was ¥49 million, compared with operating income of ¥160 million in the same period of the previous year, owing to the delayed recovery in ocean freight rates and higher fuel oil prices.」

「In the shipping business, operating revenue was ¥628.5 million, down 7.1% year on year, and the operating loss was ¥90 million, compared with operating income of ¥374 million in the same period of the previous year. This reflected lower ocean freight rates (Note 1) and a decline in cargo handled, mainly container cargo bound for North America, compared with the same period of the previous year.」

「As a result, operating revenue was ¥165.256 billion, down 4.1% year on year, operating income was ¥9.189 billion, down 14.7%, and ordinary income was ¥11.327 billion, down 11.4%.」

「During the third quarter of the current consolidated cumulative period, the shipping business was affected by weak market conditions and a decline in cargo handled, while the logistics business was affected by the slowdown in the Chinese economy. In addition, both businesses were affected by the stronger yen. As a result, operating revenue was ¥119,738 million, down 8.4% year on year, operating income was ¥6,995 million, down 15.4%, and ordinary income was ¥9,072 million, down 11.8%.」

「During the second quarter of the current consolidated cumulative period, the shipping business was affected by weak market conditions and a decline in cargo handled, while the logistics business was affected by the slowdown in the Chinese economy. In addition, both businesses were affected by the stronger yen. As a result, operating revenue was ¥79,727 million, down 9.4% year on year.」

「Against this backdrop, in the first quarter of the current consolidated cumulative period, ocean freight rates declined in the shipping business due to deteriorating market conditions, transportation volumes were below the year-earlier period, and cargo handled in the logistics business declined, particularly in international transportation. As a result, operating revenue fell 4.4% year on year to ¥41,122 million.」

「In the logistics and shipping businesses, fluctuations in domestic and overseas economic conditions and changes in the social environment may affect the Group's financial condition and operating results through weaker cargo volumes, intensifying competition and a deterioration in the supply-demand balance for vessels. In the real estate business, changes in market conditions caused by an oversupply of office buildings and fluctuations in supply and demand may also affect the Group's financial condition and operating results.」