Annual Report 2018
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ANNUAL REPORT 2018 For the year ended March 31, 2018 OUTLINE Our Origin We Will Continue to Embrace the Cha llenge… ©KOTSU SHIMBUNSHA 1987 Restructuring of Japanese National Railways Expanding the Business Field The division and privatization of Japanese National Railways (JNR) aimed to rehabilitate Since its establishment, the JR East Group has upgraded the services it provides customers and revitalize railways. This reorganization and rehabilitated and revitalized railways by leveraging railway infrastructure, technology, and only produced benefits because employees expertise. The Group has expanded and improved the Shinkansen network and other railway adopted a new attitude that was based on a networks. Further, while increasing railway traffic volume through service quality enhancement, commitment to being autonomous, customer the Group has significantly broadened its business field by developing the life-style service focused, and regionally rooted. business, the IT & Suica business, and overseas businesses. East Japan Railway Company We Will Continue billion to Embrace the Cha llenge… ¥2,950.2 Realizing Sustainable Growth as a Group * Fiscal 1988 figures are nonconsolidated. Further, other billion operations include bus services. billion Transportation (“Railway” in fiscal 1988) Other Operations (in fiscal 1988) Retail & Services Real Estate & Hotels Others ¥1,565.7 ¥481.3 billion ¥307.3 Operating Revenues 1988* 2018 Operating Income 1988* 2018 Annual Report 2018 1 OUTLINE Our Direction Evolving Railways and Pursuing New Possibilities Transportation Retail & The Transportation segment includes Services passenger transportation operations, which are centered on railway opera- The Retail & Services segment consists tions, as well as travel agency services, of the part of JR East’s life-style service cleaning services, station operations, business that includes retail sales and facilities maintenance operations, restaurant operations, wholesale railcar manufacturing operations, and business, a truck transportation busi- railcar maintenance operations. ness, and advertising and publicity. Main consolidated subsidiaries: Main consolidated subsidiaries: Tokyo Monorail, JR Bus Kanto, JR East Retail Net, JR East Environment Access, Nippon Restaurant Enterprise, and JR East Facility Management, East Japan Marketing & Japan Transport Engineering Company, Communications and JR East Rail Car Technology & Maintenance Real Estate & Others Hotels The Others segment conducts the IT & Suica business, which includes The Real Estate & Hotels segment credit card business, information consists of the part of JR East’s processing, and certain other life-style service business that businesses. includes shopping center operations, leasing of office buildings and other Main consolidated subsidiaries: properties, and hotel operations. Viewcard, JR East Information Systems, and JR East Mechatronics Main consolidated subsidiaries: LUMINE, atre, JR East Urban Development, JR East Building, Nippon Hotel, and Sendai Terminal Building 2 East Japan Railway Company Shin-Hakodate-Hokuto Evolving Railways Shin-Aomori Hachinohe and Pursuing New Possibilities Akita Morioka Average Number of Passengers per Day Approx. million 17. 5 Shinjo Total Population of Japan Yamagata Sendai million 126.7Niigata Source: Population Estimates, Statistics Bureau, Ministry of Top 5 Stations Internal Affairs and Communications Fukushima with Large Daily Passenger Use* 1 Shinjuku Koriyama 1,557,236 2 Ikebukuro Joetsu-Myoko Echigo-Yuzawa 1,133,032 Tokyo Toyama Nagano 3 Utsunomiya 905,098 Kanazawa Takasaki Mito 4 Yokohama Karuizawa 840,384 Omiya 5 Shinagawa Shinkansen (JR East) Narita Airport Tokyo Conventional Lines (Kanto Area Network) 757,132 Hachioji Conventional Lines (Other Network) Chiba BRT (Bus Rapid Transit) Lines Yokohama * The number of station users represents twice Shinkansen (Other JR Companies) the number of passengers embarking. Shinkansen (Under Construction) (As of June 2018) Annual Report 2018 3 Contents About this Report Annual Report 2018 condenses information so that shareholders and other investors can quickly become acquainted with the Company’s businesses and growth strategies. For those wishing further information about the following four sections, please see reports on the Company’s website below. Outline 6 Strategy Our Origin To Our Stakeholders ................................................................ 6 Our Direction Interview with the President ..................................................... 8 JR East Group Management Vision “Move UP” 2027 ........... 18 Life-Style Service Business Growth Vision (NEXT10) ............ 30 WEB JR East Group Management Vision “Move UP” 2027 http://www.jreast.co.jp/e/investor/ moveup/index.html Life-Style Service Business PDF Growth Vision (NEXT10) http://www.jreast.co.jp/e/investor/ pdf/next10.pdf 4 East Japan Railway Company For Travellers to Japan Website App Social Media Facebook/Twitter/YouTube/LINE Home Page JR-EAST Train Info http://www.jreast.co.jp/socialmedia/ http://www.jreast.co.jp/e/ http://www.jreast-app.jp/en/ (Available only in Japanese) 32 Governance 38 Year in Review Board of Directors and Corporate Auditors ............................ 32 Financial Highlights ................................................................. 38 Corporate Governance ............................................................ 34 At a Glance .............................................................................. 40 Message from an Outside Director ......................................... 36 Fiscal 2018 Initiatives by Segment .......................................... 42 Compliance .............................................................................. 37 Fiscal 2018 Initiatives Based on Six Basic Policies ................ 44 JR East: International and Domestic Perspectives ................ 46 Management’s Discussion and Analysis of Financial Condition and Results of Operations ...................... 49 Operational and Other Risk Information ................................. 54 Consolidated Financial Statements ........................................ 58 Notes to Consolidated Financial Statements ......................... 63 Independent Auditor’s Report ................................................. 80 Corporate Data ........................................................................ 81 Corporate Governance Guidelines Historical Data PDF http://www.jreast.co.jp/e/data/pdf/20151125_guidelines.pdf EXL http://www.jreast.co.jp/e/investor/historicaldata/index.html Sustainability Report Fact Sheets PDF http://www.jreast.co.jp/e/ PDF http://www.jreast.co.jp/e/ environment/index.html investor/factsheet/index.html JR East Group Sustainability Report 2018 FTSE International Ltd. allows the use of the FTSE4Good mark for JR East Group Sustainability Report 2018 companies that satisfy certain standards. JR East Group Sustainability Report 2018 Published in September 2018 (Last published in September 2018 / Next publication planned for September 2019) East Japan Railway Company Committee on Ecology 2-2 Yoyogi 2-chome, Shibuya-ku, Tokyo 151-8578, Japan E-mail: [email protected] http://www.jreast.co.jp/e/environment/ Annual Report 2018 5 STRATEGY To Our Stakeholders We would like to thank our shareholders and other investors sincerely for their support. TETSURO TOMITA YUJI FUKASAWA Chairman President and CEO 6 East Japan Railway Company In the year ended March 31, 2018, the Specifically, we will strengthen connections Japanese economy improved in such areas between our railway services and the ser- as employment and income conditions and vices of other transportation providers to continued to recover gradually. Under these create a transportation network that offers conditions, the East Japan Railway Company customers seamless mobility. Also, we will and its consolidated subsidiaries and equity- tackle town development projects to create method affiliates (JR East) steadily executed lifestyles that enhance the lives and work of various initiatives centered on railway opera- customers. Another major goal is to use the tions, the life-style service business, and the payment and authentication functions of IT & Suica business. Suica for one-stop provision of a diverse menu of everyday services. As a result of these initiatives, during the Group Philosophy fiscal year under review operating revenues In addition, we will reform work, enhance increased 2.4% year on year, to ¥2,950.2 We will earn the trust of productivity, and increase profitability by billion, with operating income rising 3.2%, to moving forward with measures for techno- ¥481.3 billion. These increases were largely our customers as a whole group logical innovation and diversity. In conjunc- due to growth in JR East’s transportation tion with these efforts, we will focus on revenues. In addition, as a result of a by aiming for ultimate safety Groupwide personnel development through decrease in interest expense and other the establishment of an overseas operations factors, profit attributable to owners of parent levels as our top priority. business model that extends the scope of increased 4.0%, to ¥289.0 billion. employees’ work. We will strengthen our network Since its establishment, the JR East Group By continuing the above initiatives, the JR has been rehabilitating and revitalizing rail- capabilities focusing on East Group intends to sustain growth and ways. Thanks to the support of stakeholders, exceed the expectations of its shareholders