2013 Annual Report
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Annual Report 2013 Year ended March 31, 2013 Profile Taking the Next Step. Working together with communities. Management Vision: The JR-West Group will strive to contribute to the invigoration of the West Japan area through its business activities, and to that end we will strive to be a corporate group that excels in safety management and earns the trust of customers, communities, and society. Yonago Kanazawa West Japan Hiroshima Fukuchiyama Hakata Okayama Kobe Kyoto Osaka Kumamoto Wakayama Kagoshima Contents Our History 2 Introduction West Japan Railway Company (JR-West) is one of the six 2 Overview ....................................................................................... passenger railway transport companies created in 1987, when 4 Consolidated Financial Highlights .................................... Japanese National Railways was split up and privatized. In our 6 Business Strategy and Operating Results railway operations, our core business activity, our railway The President’s Message ........................................................ 6 network extends over a total of 5,015.7km. Making the most of 10 Medium-Term Management Plan...................................... the various forms of railway asset value represented by our Operating Results by Business Segment ....................... 14 stations and railway network, we are also engaged in retail, 24 ESG Section real estate, hotel, and other businesses. CSR Overview.............................................................................. 24 Safety Measures.......................................................................... 26 Business Company Main Regions of Operation 28 Customer Satisfaction ............................................................. Hokkaido Railway Company Hokkaido Coexistence with Local Communities ............................ 30 Environment ................................................................................ 32 East Japan Railway Company Tohoku, Kanto Corporate Governance ........................................................... 34 40 Central Japan Railway Company Tokai Board of Directors and Corporate Auditors ................. Passenger 41 Executive Officers...................................................................... West Japan Railway Company Hokuriku, Kinki, Organizational Structure ....................................................... 42 Chugoku 43 Financial Section Shikoku Railway Company Shikoku 44 Management’s Discussion and Analysis of Operations .......... Kyushu Railway Company Kyushu Operational and Other Risk Information ........................... 46 Financial Statements................................................................ 54 Freight Japan Freight Railway Company Nationwide Analysis of JR-West Operations .......................................... 84 Investor Information ................................................................ 87 Consolidated Subsidiaries..................................................... 88 Corporate Data ........................................................................... 90 Cautionary Statement With Respect To Forward-Looking Statements This annual report contains forward-looking statements that are based on JR-West’s from expectations include, but are not limited to: current expectations, assumptions, estimates, and projections about its business, industry, • expenses, liability, loss of revenue, or adverse publicity associated with property or and capital markets around the world. casualty losses; These forward-looking statements are subject to various risks and uncertainties. • economic downturn, deflation, and population decreases; Generally, these forward-looking statements can be identified by the use of forward- • adverse changes in laws, regulations, and government policies in Japan; looking terminology such as “may,” “will,” “expect,” “anticipate,” “plan,” or similar words. • service improvements, price reductions, and other strategies undertaken by competitors These statements discuss future expectations, identify strategies, contain projections such as other passenger railway and airline companies; of results of operations or of JR-West’s financial condition, or state other forward-looking • earthquake and other natural disaster risks; and information. • failure of computer telecommunications systems disrupting railway or other operations. Known or unknown risks, uncertainties, and other factors could cause the actual All forward-looking statements in this annual report are made as of September 2013 based results to differ materially from those contained in any forward-looking statements. on information available to JR-West as of September 2013, and JR-West does not undertake to JR-West cannot promise that the expectations expressed in these forward-looking update or revise any of its forward-looking statements or reflect future events or circumstances. statements will turn out to be correct. JR-West’s actual results could be materially Future compensation and other expenses related to the Fukuchiyama Line accident different from and worse than expectations. that occurred on April 25, 2005 are difficult to estimate reasonably at this time, and so Important risks and factors that could cause actual results to be materially different have not been included in forecasts. West Japan at a Glance JR-West’s railway network covers 18 prefectures in the western half of the island of Honshu and the northern tip of the island of Kyushu, and comprises 20% of Japan’s land area. The area we serve is home to approximately 42.6 million people, about 34% of the country’s population, and has a nominal GDP of ¥159 trillion. It also sees visits by 922 million tourists annually. GDP Population Tourists ¥159 42.6 922 trillion million million JR-West at a Glance Transportation operations Other operations Railway and Real Estate and Bus and Ferry Services Retail Business Transportation Operations Non-Transportation Operations Sanyo Shinkansen Retail Business Operating Revenues by Business Segment (from Third Parties) (Consolidated) Kansai Urban Area (including the Urban Network) Real Estate Business Other Conventional Lines Other Businesses Fiscal 2013 Total ¥1,298.9 billion Bus and Ferry Services Annual Report 2013 1 West Japan World Ranking GDP Population larger than Brazil larger than Argentina The West Japan area has a GDP of approximately ¥159 trillion. The population of the West Japan area is 42.6 million. Compared to Compared to a GDP ranking of the world’s nations and regions, a population ranking of the world’s nations and regions, the population the GDP of West Japan is larger than that of even the nation of Brazil. of West Japan is larger than that of the nation of Argentina. GDP Ranking of the World’s Nations and Regions Population Ranking of the World’s Nations and Regions Ranking Country GDP(trillion yen) Country Population(million) 1 United States 1,283 France 63.2 2 Japan 456 United Kingdom 62.0 3 China 441 Italy 60.5 4 Germany 301 Spain 46.1 West Japan 5 France 240 Argentina 40.4 42.6 million 6 United Kingdom 196 Poland 38.2 7 Italy 190 West Japan Canada 34.1 8 Brazil 141 159 trillion Malaysia 28.3 9 Spain 131 Australia 22.4 10 Canada 120 Netherlands 16.6 Source: GDP: World Economic Outlook Database, October 2012, International Monetary Fund Source: World Population Prospects: The 2012 Revision, United Nations Shinkansen compared to Airlines Shinkansen is used by many In Japan, many businessmen and tourists use the Shinkansen. For the Kyoto-Osaka-Kobe Area to Fukuoka, for example, over 80% of people prefer to travel by Shinkansen rather than airline. Kyoto-Osaka-Kobe Area to Fukuoka Kyoto-Osaka-Kobe Area to Kumamoto Years ended March 31 Years ended March 31 JRAirlines (Number of passengers) JR’s Market Share (%) JRAirlines (Number of passengers) JR’s Market Share (%) 2009 81.3 2009 30.4 2010 82.4 2010 31.7 2011 85.3 2011 36.9 2012 88.0 2012 56.3 2013 117 83.8 2013 113 59.2 Note: Each graph bar represents the number of passengers using JR and the number of passengers using airlines; the bars indicate the total number of passengers using JR or using airlines compared to the base year index of 100 (the fiscal year ended March 1997). Kyoto-Osaka-Kobe area to Kumamoto: the base year index of 100 (the fiscal year ended March 2008) Source: Ministry of Land, Infrastructure and Transport West Japan: Tourist Destination 4 prefectures Number of inbound visitors to Japan expected to in the top 10 tourist destinations rankingdouble by 2016 (compared to 2012 figures) Among the 10 most popular tourist destinations in Japan The number of inbound visitors to Japan is expected to are four West Japan prefectures, including Osaka and Kyoto. continue rising. The 2016 total, in fact, is forecast to be approximately double the figure for 2012. Visiting Rate by Prefecture (CY2012 result) Quantity of responses: 28,875, Check all that apply Forecast of Inbound Visitors to Japan Ranking Prefectures Visit Rate (%) (Millions of People) 1 Tokyo 51.3 1.47* 0.97* 2 Osaka 24.0 2012 2.04* 1.91* 1.97* 3 Kyoto 17.3 4 Kanagawa 12.7 5 Chiba 9.8 6 Aichi 9.4 7 Fukuoka 9.4 2016 3.60 6.80 2.10 3.00 2.50 8 Hokkaido 7.8 South Korea China Taiwan Europe, Other 9 Yamanashi 5.6 U.S., Asian Other Countries 10 Hyogo 5.7 *Figures in 2012 are provisional. Blue shaded areas are JR-West’s operating area. Source: Japan Tourism Agency Source: Japan Tourism Agency, Japan National Tourism Organization JR-West compared to Eco-friendly System Private Lines Maintaining high passenger