FY21.3 Financial Results Overview, Third Quarter February 9, 2021 Contents Third quarter financial results overview Ⅰ. 3 and full-year forecasts Ⅱ. Status of major segments 12 Ⅲ. Initiatives for the Next Fiscal Year 20 2 Ⅰ THIRD QUARTER FINANCIAL RESULTS OVERVIEW AND FULL-YEAR FORECASTS 3 Consolidated Financial Highlights for the Nine-Month Period Ended December 31, 2020 Operating revenue Substantial decline in revenue due to such factors as （\bil） the decrease in railway transportation revenues 9 months ended 9 months ended resulting from the influence of the spread of the YoY December 31, 2019 December 31, 2020 COVID-19 infection [¥(59.6) billion] and the influence of JR Kyushu Drug Eleven Co., Ltd. becoming an Operating revenue 319.6 202.4 (117.2) 63.3% equity-method affiliate [¥(26.6) billion]. Operating income 45.8 (18.6) (64.4) - Operating income Ordinary income 46.9 (16.1) (63.1) - Despite efforts to reduce costs, large decline in profits results from significant decrease in Extraordinary gains and (0.1) 2.5 2.6 - revenues. losses Extraordinary gains and losses Net income attributable 35.3 (11.6) (46.9) - to owners of the parent Recorded gain on sale of JR Kyushu Drug Eleven Co., EBITDA* 64.4 1.7 (62.7) 2.7% Ltd. shares (+¥9.1 billion), provision for loss on disaster [¥(2.1) billion] related to the restoration of *Note: EBITDA = operating income + depreciation expense (excluding depreciation of leased assets held for subleasing purposes). The same applies hereafter the Hitahikosan Line, and disaster-damage losses [¥(3.5) billion] due to heavy rains in July 2020. Change in operating revenue by segment Change in operating income by segment （¥bil） （¥bil） 3,500350 45.8 (50.6) 3,196319.6 (65.6) 50050 3,000300 1.0 25025 (13.3) (38.5) 2,500250 (8.3) 202.4 00 200 0.7 (9.6) 2,000 (4.4) (0.5) 7.6 1,500150 (250)(25) (18.6) 1,000100 (50) (FY21.3) Operating and and Hotels Estate Real Restaurant and Retail (FY20.3) Operating Transportation Construction Adjustment Other (500) revenue revenue (FY20.3) Operating Transportation Construction and Hotels Estate Real Restaurant and Retail (FY21.3) Operating Other income income 2021.3 （2020.3 運 建 不 流 そ 調 （ 2021.3 （2020.3 運 建 不 流 そ （ 輸 設 動 通 の 整 営 営 営 輸 設 動 通 の 営 業 サ 産 ・ 他 額 業 サ 産 ・ 他 ー ・ 外 業 業 収 収 利 ー ・ 外 利 期 益 ビ ホ 食 期 益 ビ ホ 食 ス テ 期 益 期 益 ） ） ） ス テ ） ル ル 4 FY2021/3 — Quarterly Results Operating revenues in each business continued to follow a recovery trend, and we implemented thorough cost management to control operating expenses. For the third quarter, we achieved profitability at the consolidated operating income level, and EBITDA showed steady improvement. Consolidated results Non-consolidated, railway business （¥bil） （¥bil） 100 Operating Operating revenue income 40 Operating Railway Operating 77.8 revenue transportation income 80 revenues 27.4 30 23.9 61.8 62.7 22.7 19.4 60 16.2 20 13.2 40 10 20 9.0 0 (4.8) 1.8 1.9 (15.7) (9.1) 0 (4.3) (3.5) (0.8) (10) (6.8) (11.1) (13.5) (20) (20) Real Estate and Hotels Segment Retail and Restaurant Segment Operating Operating Operating Operating （¥bil） （¥bil） revenue income revenue income 25 21.7 25 19.6 * The first quarter includes ¥12.4 billion in 15.7 operating revenue from JR Kyushu Drug Eleven 11.7 15 11.5 15 9.8 7.0 4.8 3.9 5 2.6 1.8 5 (1.5) (0.3) (1.0) (0.4) (0.1) (0.0) 0.2 (5) (5) 5 Results for the First Nine Months of FY21.3 (by segment) （\bil） 9 months ended 9 months ended YoY Major factors December 31, 2019 December 31, 2020 Operating revenue 319.6 202.4 (117.2) 63.3% Transportation 135.9 70.2 (65.6) 51.7% Decrease in passenger demand (railway, hydrofoil ferry, bus) due to influence of the COVID-19 infection Railway Business (non-consolidated) 129.4 66.3 (63.0) 51.3% Construction 57.2 58.2 1.0 101.8% Increase in Shinkansen-related construction Real Estate and Hotels 62.4 49.0 (13.3) 78.6% Real Estate Lease 41.4 36.4 (5.0) 87.8% Decrease in revenues from leases (mainly station buildings) due to influence of the COVID-19 infection Condominium Sales 7.8 7.3 (0.4) 93.6% Decrease in revenue from sales of condominiums Hotel Business 13.2 5.3 (7.8) 40.7% Decrease in number of guests due to influence of the COVID-19 infection Retail and Restaurant 79.7 41.1 (38.5) 51.7% Decrease due to transfer of a portion of holdings of shares of JR Kyushu Drug Eleven and to the influence of the COVID-19 infection Other 52.6 44.3 (8.3) 84.1% Decrease due to decline in construction material revenues and to the transfer of the leasing and installment financing businesses Operating income 45.8 (18.6) (64.4) - Transportation 25.8 (24.8) (50.6) - Railway Business (non-consolidated) 25.9 (23.8) (49.8) - Construction 1.8 2.6 0.7 140.3% Real Estate and Hotels 15.0 5.4 (9.6) 36.0% Real Estate Lease 13.3 8.8 (4.5) 66.0% Condominium Sales 0.4 0.0 (0.3) 21.2% Hotel Business 1.2 (3.4) (4.7) - Retail and Restaurant 2.4 (1.9) (4.4) - Other 1.3 0.8 (0.5) 63.8% EBITDA 64.4 1.7 (62.7) 2.7% Transportation 32.6 (16.5) (49.2) - Railway Business (non-consolidated) 32.0 (16.3) (48.3) - Construction 2.7 3.4 0.6 125.2% Real Estate and Hotels 23.4 14.5 (8.8) 62.1% Real Estate Lease 20.2 16.1 (4.0) 79.8% Condominium Sales 0.4 0.1 (0.3) 22.3% Hotel Business 2.7 (1.7) (4.4) - Retail and Restaurant 3.6 (0.9) (4.5) - Other 2.9 2.2 (0.6) 77.9% 6 Results for the First Nine Months of FY21.3 (non-consolidated) (\bil) 9 months ended 9 months ended December 31, December 31, YoY Major Factors 2019 2020 Operating revenue 160.2 97.0 (63.2) 60.6% Railway transportation 116.2 56.6 (59.6) 48.7% Influence of the COVID-19 infection revenues Shinkansen 42.2 16.7 (25.5) 39.6% Conventional Lines 73.9 39.8 (34.0) 53.9% Other revenue 43.9 40.4 (3.5) 91.9% Decrease in revenue from sales of condominiums Operating expense 124.1 111.0 (13.1) 89.4% Personnel expense 36.8 29.5 (7.2) 80.4% Decrease in bonus payments Decrease due to the transfer of the hospital business Non-personnel 67.4 59.6 (7.8) 88.4% expense Energy cost 7.0 6.0 (1.0) 85.7% Decrease due suspension of train service Maintenance cost 20.6 17.4 (3.2) 84.5% Other 39.7 36.1 (3.5) 91.0% Decrease in cost of sales of condominiums Taxes 8.9 8.7 (0.1) 98.1% Depreciation cost 10.9 13.0 2.0 118.8% Operating income 36.0 (14.0) (50.0) - Non-operating income 6.1 9.5 3.3 153.5% Increase in gains on investment securities and expense Ordinary income 42.2 (4.4) (46.7) - Increase due to sale of a portion of holdings of the shares of JR Kyushu Drug Eleven（+9.0） Extraordinary gain 0.4 3.4 2.9 732.3% Increase in provision for loss on disaster related to restoration of Hitahikosan Line and losse （-2.1） Increase in disaster expenses associated with heavy rains in July 2020（-3.6） Net income 35.0 1.1 (33.9) 3.3% 7 Consolidated Financial Highlights for FY21.3 Operating revenue Results Forecasts YoY Operating revenue declined significantly owing FY20.3 FY21.3 in part to a decrease in railway transportation Operating revenue 432.6 291.7 (140.9) 67.4% revenues [¥(69.7) billion] and the influence of changing JR Kyushu Drug Eleven Co., Ltd. to an Operating income 49.4 (32.3) (81.7) - equity-method affiliate ([¥(39.7) billion]. Ordinary income 50.6 (31.4) (82.0) - Operating income Net income attributable to 31.4 (28.4) (59.8) - Despite planning for cost reductions of owners of the parent approximately ¥14.0 billion on a non- EBITDA 75.0 (4.2) (79.2) - consolidated basis and roughly ¥3.0 billion at Group companies, operating income decreased following the significant decline in operating revenue. Change in operating revenue by segment Change in operating income by segment （億円）（¥bil） （（億円）¥bil） 49.4 (60.7) 4,500450 432.6 (76.4) 50500 4,000400 25250 (5.7) (13.1) 3,500350 (51.9) 0 0 (2.5) (12.0) +17.3 291.7 (5.0) 3,000300 (10.8) (25)(250) (1.3) (32.3) 250 (50) (FY21.3) Operating (FY20.3) Operating Transportation Construction and Hotels Estate Real Restaurant and Retail Adjustment Adjustment 2,500 Other (500) (FY20.3) Operating Transportation Construction and Hotels Estate Real Restaurant and Retail Other (FY21.3) Operating revenue revenue income income 2020.3 2021.3 2021.3 （ 運 建 不 流 そ 調 （ （2020.3 運 建 不 流 そ （ 営 輸 設 動 通 の 整 営 営 輸 設 動 通 の 営 業 サ 産 ・ 他 額 業 業 サ 産 ・ 他 業 収 ー ・ 外 収 利 ー ・ 外 利 期 益 ビ ホ 食 期 益 益 ビ ホ 食 益 ス テ 期 期 ） ） ） ス テ ） ル ル 8 Consolidated Financial Forecasts (by segment) (\bil) Results Forecasts YoY Major factors FY20.3 FY21.3 Operating revenue 432.6 291.7 (140.9) 67.4% Transportation 173.7 97.3 (76.4) 56.0% Decrease in passenger demand (railway, hydrofoil ferry, bus) due to influence of the COVID-19 infection Railway Business (non-consolidated) 165.2 92.2 (73.0) 55.8% Construction 99.3 93.6 (5.7) 94.2% Decrease in railway construction orders from JR Kyushu Real Estate and Hotels 90.7 77.6 (13.1) 85.5% Real Estate Lease 55.2 49.5 (5.7) 89.6% Decrease in revenues from leases (mainly station buildings) due to influence of the COVID-19 infection Condominium Sales 18.9 21.5 2.5 113.6% Increase in revenue from sales of condominiums Hotel Business 16.6 6.6 (10.0) 39.7% Decrease in number of guests due to influence of the COVID-19 infection Retail and Restaurant 104.6 52.7 (51.9) 50.4% Decrease due to transfer of a portion of holdings of shares of JR Kyushu Drug Eleven and to the influence of the COVID-19 infection Other 72.1 61.3 (10.8) 84.9% Decrease due to the influence of the COVID-19 infection and to the transfer of the leasing and installment financing businesses Operating income 49.4 (32.3) (81.7) - Transportation 19.8 (40.9) (60.7) - Railway Business (non-consolidated) 20.0 (39.1) (59.1) - Construction 6.5 4.0 (2.5) 60.8% Real Estate and Hotels 19.1 7.1 (12.0) 37.1% Real