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Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY COMPANY RAILWAY CENTRAL JAPAN CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 For the Year Ended March 31, 2016 ANNUAL REPORT 2016 ANNUAL REPORT CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 Profile Operating Revenues Composition Contents Central Japan Railway Company (JR Central, also known as JR Messages from Management Corporate Data *Environmental, Social, and Governance. Tokai) commenced operations in April 1987 upon the privatization Consolidated Companies appropriately considering/ Greetings 6 Profile/Organization Chart 45 responding to ESG issues and the and breakup of the Japanese National Railways (JNR). The core existence of shareholders who make of JR Central's operations is the Tokaido Shinkansen, the main Other Interview with the President 8 Operating Areas 46 investments in response to such efforts by the companies are thought to lead transportation artery linking Japan’s principal metropolitan areas 7.1% Key Measures and History 4 7 to the solution/improvement of global environmental issues and social issues of Tokyo, Nagoya, and Osaka, and a network of conventional lines Real Estate Management Strategy and even to the sound development/ in the Tokai Region centered on the Nagoya and Shizuoka areas. Summary of Performance 48 2.2% expansion of capital markets, thus JR Central and its consolidated subsidiaries also promote affiliated Transportation Key Measures and Capital Investment 10 contributing to the establishment of a Merchandise Financial Highlights sustainable society. businesses that are expected to generate synergic effects with the and Other Ensuring Safe and Reliable Transportation 14 (Consolidated/Non-consolidated) 50 Source:Japan Exchange Group, Inc. railway business. 13.3% JR Central is also steadily moving forward with efforts aimed at the Enhancing Transportation Service 18 Other Related Materials 51 % [Remarks regarding forecasts, etc.] early completion of the Chuo Shinkansen using the Superconducting 77.4 Future plans, forecast figures, etc. in Promoting the Chuo Shinkansen Project Financial Section 52 Maglev System in order to continually carry out its mission. Using Superconducting Maglev System 22 this report are an outlook based on the Appendices information that is currently available for JR Central and may contain risks and Refining the Superconducting Maglev Management Philosophy uncertainty. Examples of potential risks System Technology and Reducing Costs 24 Financial and Transportation Data 82 and uncertainty include economic trends, I. Contribute to society through sound management business environment developments, Enhancing Sales and Marketing 26 Operating Environment 84 consumption trends, competition situation II. Provide modern, valued, friendly, and reliable services Non-consolidated for JR Central and subsidiaries, and III. Establish a cheerful, fresh, and active corporate culture Technological Development International Comparison of changes in relevant laws and legal Railway Operators 84 provisions. This report is compiled based and Enhancement of Technical Capability 28 on information available as of the end of Affiliated Businesses General Principles of Safety Miscellaneous Financial Data Comparison of May 2016 in principle. 0.6% Overseas Deployment of High-Speed 1. Safety is the most important mission in the transportation business 4.0% Railway System 29 Three JR Companies(consolidated) 86 •In this report, figures of financial 2. Safety is ensured based on compliance with rules and strict Conventional Developing Affiliated Businesses 30 Stock Information 87 information are truncated, while statistical execution of work and is built through continuous practice Lines data and all percentages are rounded. 3. Enforcement of confirmation and thorough communication are the % ESG* Information most important aspects in ensuring safety 7.6 Tokaido Shinkansen 4. To ensure safety, we must cooperate together beyond our official Engagement in Global Environment responsibility Preservation 32 5. When in doubt, we must thoroughly consider and take the measure that seems the safest 87.8% Human Resources Development 36 Cooperation with Local Communities 37 Corporate Governance 38 Note 1: Consolidated operating revenues composition is based on Board of Directors, Audit and Supervisory revenues from external customers Note 2: The total of items in the breakdown may not be 100% Board Members, and Corporate Officers 44 due to rounding. CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 1 CENTRAL JAPAN RAILWAY COMPANY Market Area Characteristics and Transportation Capacity Annual Report 2016 Representing a powerful presence in the inter-city transportation market, one that is unrivaled all over the world Tokaido Shinkansen JR Central boasts an overwhelming market share within its operating areas Market Share*1 (against Airlines) (Example) Railway Airlines JR Central JR West Tokaido Shinkansen (Reference*3) Tokyo % Nagoya Osaka Okayama Hiroshima Hakata Operating Tokyo area*2 - 100 Kilometers Nagoya area (73 thousand passengers/day) New York ~ Tokyo ~ Nagoya Washington D.C. 85% 15% (LGA-IAD) Operating area Tokyo area - 366.0km 369km Osaka area (136 thousand passengers/day) Los Angeles ~ San Tokyo ~ Shin-Osaka Francisco (LAX-SFO) Tokyo area - Okayama 69% 31% (9 thousand passengers/day) 552.6km 542km Tokyo area - Hiroshima 67% 33% New York ~ Chicago Tokyo (15 thousand passengers/day) Tokyo ~ Hakata Nagoya (LGA-ORD) Hiroshima Okayama Osaka Tokyo area - Fukuoka 10% 90% Fukuoka (29 thousand passengers/day) 1,174.9km 1,180km *1. Market share is calculated by JR Central based on the inter-prefectural data of the inter-Regional Passenger Mobility Survey, published by the Ministry of Land, infrastructure, Transport and Tourism for FY2014. *2. Tokyo area: Tokyo, Kanagawa, Chiba, Saitama, Ibaraki/Nagoya area: Aichi, Mie, Gifu/Osaka area: Osaka, Kyoto, Hyogo, Nara *3. Based on the U.S. Department of Transportation website Japan’s population and economic activity are An inter-city transportation capacity that is An overwhelming capacity for transporting passengers along its main route, from concentrated in the area covering the Tokyo Metropolitan unrivaled all over the world Tokyo to Osaka area, the Nagoya region, and the Osaka region Percentages of our market area in Japan as a whole Comparison with overseas transportation services Changes in daily transportation capacity (comparison between the Tokaido Shinkansen and airline JR Central’s Market Area transportation services operating between the Tokyo Metropolitan area and the Osaka region) Others (Thousand passengers/day) (Thousand seats/day) Tokaido Shinkansen Airlines 23.7% 76.3% Tokaido 445 400 Area Shinkansen *1 Approximately seats [As of October 2015] [Tokyo ~ Shin-Osaka] 350,000 *1 300 60.1% 39.9% Eurostar 28 Population [London ~ Paris/Brussels] [As of January 1, 2015] 200 *2 Acela Express 9 About 12times 64.5% 35.5% that of airlines [Boston ~ Prefectural GDP Washington D.C.] (Nominal GDP) 100 [FY2013] (Reference) *3 Airlines 11 Approximately 0 50 100 *2 (%) [New York ~ Chicago] 30,000seats 0 [Source] [Source] ’07.3 ’08.3 ’09.3 ’10.3 ’11.3 ’12.3 ’13.3 ’14.3 ’15.3 ’16.3 JR Central’s market area is calculated taking the following prefectures into account *1. Calculated by JR Central based on figures provided on the Eurotunnel Tokyo, Kanagawa, Chiba, Saitama, Ibaraki, Shizuoka, Yamanashi, Nagano, Aichi, Mie, website (2015.1-2015.12) Gifu, Shiga, Osaka, Kyoto, Hyogo, Nara *2. Calculated by JR Central based on figures provided by the National *1. Tokaido Shinkansen: The number of passenger seating provided (including extra train services) on through-service “Nozomi” and “Hikari” lines operating between Tokyo Station Population: Ministry of Internal Affairs and Communications “Population, Demographics Fact Sheet: FY 2015 (Amtrak) and Shin-Osaka Station in each respective fiscal year and Number of Households Derived from Basic Resident Registration” *3. Calculated by JR Central based on figures provided on the U.S. *2. Airlines: Calculated by JR Central based on information pertaining to specified Japanese air carriers (Ministry of Land, Infrastructure, Transport and Tourism) for FY2006 to FY2015 Total production by prefecture: Cabinet Office “Report on Prefectural Accounts” Department of Transportation website (2014.12-2015.11) 2 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 CENTRAL JAPAN RAILWAY COMPANY Annual Report 2016 3 CENTRAL JAPAN RAILWAY COMPANY Enhancing Our Competitive Strength Annual Report 2016 Transportation Service Thoroughgoing preparations against future aging degradation of the Tokaido Shinkansen and large-scale disasters We succeeded in lifting the maximum speed of our services from 220km/h, to 270km/h, and then to 285km/h. We successively increased the number of services Japan’s major transportation artery needs to be duplicated for our fastest speed train, the “Nozomi”, through increased investment in rolling FY2017 FY2019 stock and ground facilities. We established an operational system running up to •Completion of N700S •All rolling stock to be N700A type 10 up and down “Nozomi” services each hour. We continued to introduce new validation test vehicles (plan) rolling stock capable of traveling at The area covering the three major cities (Tokyo, Nagoya, and Osaka) will rolling stock incorporating the latest technology. a maximum speed of 285km/h (plan) effectively form one massive mega-city with the drastic reduction in travel times brought on by the introduction of the Superconducting Maglev
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