CENTRAL JAPAN RAILWAY COMPANY CENTRAL JAPAN RAILWAY COMPANY Annual Report 2019 For the Year Ended March 31, 2019 Annual Report 2019 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2019 Management Philosophy Contents Contribute to the development of Japan’s main CENTRAL JAPAN RAILWAY COMPANY ESG* Information Management Philosophy 32 Engagement in Global Environment transportation artery and social infrastructure Operating Revenues Composition Preservation 1 Contents 36 Human Resources Development 2 Market Area Characteristics and 38 Cooperation with Local Communities / Japan’s Main Transportation Artery Social Infrastructure Transportation Capacity International Exchanges / Restoration of Culture & Art and Lifelong Learning 4 Enhancing Our Competitive Strength JR Central’s mission is to undertake high-speed, large- On a broader perspective, JR Central also undertakes 40 Corporate Governance capacity passenger transport between Tokyo, Nagoya, and the mission of supporting the social infrastructure. That 46 Directors, Audit and Supervisory Osaka. “Japan’s main transportation artery” refers to this is, along with the management of Japan’s main artery, we Board Members, and Executive passenger transport. Since the artery runs through this area take a locally oriented approach in operating a network Officers of Japan, which plays an important role as the center of the of conventional lines in the Tokai Region, centered on Messages from the Management Corporate Data country’s economy and culture, it is possible that stagnancy the Nagoya and Shizuoka areas, and manage affiliated 6 Greetings 47 Profile / Organization Chart in the main transportation artery will cause Japan’s economic business focused on the local communities, thereby 8 Interview with the President 48 Operating Area and societal movements in general to also stagnate. JR supporting the people in these areas. We will remain 49 History Central must continue to carry out its mission of managing committed to operating conventional lines while managing 50 Summary of Performance Japan’s main transportation artery today and in the future and further enhancing affiliated businesses. 52 Financial Highlights(Consolidated, through operation of the Tokaido Shinkansen and the Chuo Non-consolidated) Shinkansen. 53 Other Related Materials 54 Financial Section Operating Revenues Composition Key Measures and Management Strategies Appendices 10 Key Measures and Capital Investment 82 Financial and Transportation Data The transportation business accounts for approximately 80% of consolidated operating revenues and earnings from the Tokaido 14 Ensuring Safe and Reliable 84 Financial Data Comparison of Three Shinkansen account for roughly 90% of non-consolidated operating revenues. Transportation JR Companies (Consolidated) 18 Enhancing Transportation Services 85 Stock Information Transportation Tokaido Shinkansen 22 Promoting the Chuo Shinkansen 1,449.1 1,291.8 Project Using the Superconducting billion yen billion yen Maglev System 24 Refining the Superconducting Maglev Technology and Reducing Costs Other Other 26 Enhancing Sales and Marketing 77 % 88 % 125.9billion yen 68.2billion yen 28 Technological Development and 7% 5% Enhancement of Technical Capability Real Estate Conventional 29 Overseas Deployment of High-Speed Lines Railway Systems billion yen 49.6 billion yen Consolidated 104.8 Non-consolidated % 30 Developing Affiliated Businesses 3 7% Merchandise and Other 1,878.1 1,464.8 * Environmental, Social, and Governance. [Remarks regarding forecasts, etc.] Companies appropriately considering/responding to ESG 253.3billion yen billion yen billion yen Future plans, forecast figures, etc. in this report are an outlook based on the information that is currently available issues and the existence of shareholders who make 13% for JR Central and may contain risks and uncertainty. Examples of potential risks and uncertainty include FY2018 FY2018 investments in response to such efforts by the companies economic trends, business environment developments, consumption trends, competition situation for JR Central are thought to lead to the solution/improvement of global and subsidiaries, and changes in relevant laws and legal provisions. This report is compiled based on information environmental issues and social issues and even to the available as of the end of May 2019 in principle. sound development/expansion of capital markets, thus • In this report, figures of financial information are truncated, while statistical data and all percentages are rounded. contributing to the establishment of a sustainable society. • FY2018 signifies the fiscal year ended March 31, 2019. Note 1: Consolidated operating revenues composition Source: Japan Exchange Group, Inc. is based on revenues from external customers Note 2: The total of items in the breakdown may not be 100% due to rounding. CENTRAL JAPAN RAILWAY COMPANY Annual Report 2019 1 Market Area Characteristics and CENTRAL JAPAN RAILWAY COMPANY Transportation Capacity Annual Report 2019 Representing a powerful presence in the inter-city An overwhelming capacity for transporting Japan’s population and economic activity are passengers along its main route, from Tokyo to concentrated in the area covering the Tokyo transportation market, one that is unrivaled all over Osaka Metropolitan area, the Nagoya region, and the Osaka region the world. Changes in daily transportation capacity (comparison between the Tokaido Shinkansen and airline transportation Percentages of our market area in Japan as a whole services operating between the Tokyo Metropolitan area Tokaido Shinkansen and the Osaka region) JR Central’s Market Area Tokaido Shinkansen Airlines Others (Ten Thousand seats/day) 40 Approximately *1 23.7% seats 370,000 Area [As of October 201 8] 60.6% Population [As of January 1, 2018] 30 Tokyo 65.5% Nagoya About Hiroshima Okayama Shin-Osaka Prefectural GDP 12times (Nominal GDP) Hakata that of airlines [FY2015] 0 50 100 (%) Operating area 20 km [Source] 366.0 JR Central’s market area is calculated taking the following prefectures into account Tokyo, Kanagawa, Chiba, Saitama, Ibaraki, Shizuoka, Yamanashi, Nagano, Aichi, 552.6km Mie, Gifu, Shiga, Osaka, Kyoto, Hyogo, Nara Population: Ministry of Internal Affairs and Communications “Population, Demographics and Number of Households Derived from Basic Resident 1,174.9km Registration” Total production by prefecture: Cabinet Office “Report on Prefectural Accounts” 10 An inter-city transportation capacity that is JR Central boasts an overwhelming market share within its operating areas unrivaled all over the world Comparison with overseas transportation services Approximately 30,000seats*2 Market Share*1 (against Airlines) 0 (Thousand passengers/day) Railway Airlines (Example) ’07.3 ’08.3 ’09.3 ’10.3 ’11.3 ’12.3 ’13.3 ’14.3 ‘15.3 ’16.3 ’17.3 ’18.3 ’19.3 JR-Central JR West Shinkansen *1 Tokaido Shinkansen: The number of passenger seating provided (including extra train 477 Operating (Reference*3) services) on through-service “Nozomi” and “Hikari” lines operating between Tokyo Tokaido Tokyo Nagoya Osaka Okayama Hiroshima Hakata Station and Shin-Osaka Station in each respective fiscal year. 100% Kilometers *2 Airlines: Calculated by JR Central based on information pertaining to specified Shinkansen Tokyo area*2 - Japanese air carriers (Ministry of Land, Infrastructure, Transport and Tourism) for [Tokyo ~ Shin-Osaka] New York ~ *2 FY2006 to FY2018. Nagoya area Tokyo ~ Nagoya Washington D.C. (81 thousand passengers/day) *1 (LGA-IAD) Eurostar 30 85% 15% [London ~ km km Paris/Brussels] Tokyo area - 366.0 369 *2 Osaka area Los Angeles ~ San *2 (150 thousand passengers/day) Tokyo ~ Shin-Osaka Francisco (LAX-SFO) Acela Express 9 [Boston ~ Washington D.C.] % % 552.6km 542km Tokyo area - Okayama 70 30 *3 (9 thousand passengers/day) New York ~ Chicago Tokyo ~ Hakata (Reference) 11 % % (LGA-ORD) Tokyo area - Hiroshima 68 32 Airlines (16 thousand passengers/day) [New York ~ Chicago] 1,174.9km 1,180km 10% 90% Tokyo area - Fukuoka (30 thousand passengers/day) [Source] *1 Calculated by JR Central based on figures provided on the Eurotunnel website (2018.1-2018.12) *1 Market share is calculated by JR Central based on the Inter-prefectural data of the inter-Regional Passenger Mobility Survey, *2 Calculated by JR Central based on figures provided by the National Fact Sheet: published by the Ministry of Land, infrastructure, Transport and Tourism for FY2017. FY2018 (Amtrak) *2 Tokyo area: Tokyo, Kanagawa, Chiba, Saitama, Ibaraki / Nagoya area: Aichi, gifu, Mie / Osaka area: Osaka, Kyoto, Hyogo, Nara *3 Calculated by JR Central based on figures provided on the U.S. Department of *3 Based on the U.S. Department of Transportation website Transportation website (2018.1-2018.12) 2 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2019 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2019 3 CENTRAL JAPAN RAILWAY COMPANY Enhancing Japan’s main transportation artery Annual Report 2019 The Chuo Shinkansen Project Under the condition that we bear all the construction cost, we are promoting the Chuo Shinkansen Project using the Superconducting Maglev system based on the Nationwide Shinkansen Railway Development Act to continually carry out our mission of operation of high-speed railway linking the Tokyo Metropolitan area, Chukyo region, and Kinki FY2020 region, and to ensure the future foundation of the company. • July 2020 Put N700S into Transportation Service FY2019 commercial service We succeeded in lifting the maximum speed of our services • Standardize