NIPPON EXPRESS CO., LTD. ANNUAL REPORT 2019 ANNUAL REPORT NIPPON EXPRESS CO., LTD. 1-9-3, Higashi-Shimbashi, Minato-ku, Tokyo 105-8322, Japan Phone: +81 (3) 6251-1111 URL: (Japanese) www.nittsu.co.jp (English) www.nipponexpress.com ANNUAL REPORT 2019 Year ended March 31, 2019 January 2020 NIPPON EXPRESS Group brings customers’ possibilities to reality. There are often many solutions, but only one way is the way. We use our determination to find the best way to overcome hurdles and take our customers across the finish line. On October 1, 2017, Nippon Express marked the 80th anniversary of its founding. We took this opportunity to establish a corporate message: We Find the Way. This message manifests our unchanging commitment to exercise innovative thinking to find and deliver the best way to serve our customers. The Nippon Express Group is a comprehensive logistics group that provides a wide range of logistics services around the world. Going forward, we will Nippon Express Group Corporate Philosophy continue striving to create new value through logistics, aiming to remain a Our Mission driving force for social development. Be a Driving Force for Social Development Contents Our Challenge Overview Operations Messages from Our Outside Directors 34 Create New Ideas and Value that Expand the Field of Logistics Nippon Express’s Strengths 2 Special Feature 1. Directors, Executive Officers, Audit & Origins and History 4 Looking back on Our Previous Supervisory Board Members 35 Corporate Strategies 12 Our Pride Management Strategy Special Feature 2. Financial Section Message from the President 6 Nippon Express Group Business Plan 2023 Management Discussion and Analysis 36 Inspire Trust Every Step of the Way ~“Dynamic Growth”~ 14 11-Year Summary 40 Special Feature 3. (1) Consolidated Financial Statements 42 Business Structure Reforms on April 15, 2019 16 (2) Other 82 Since our founding, the Nippon Express Group has employed our logistical strengths to Segment Overview 18 Report of Independent Auditors 83 connect people, businesses, and regions throughout the world. In so doing, Corporate Data we have continuously supported social development. Governance & Sustainability The Nippon Express Group’s Global Network 84 While our mission never changes, we continuously advance to ESG Management 25 Organization 85 meet the world’s changing needs. Corporate Governance 29 Company Information 86 Making no compromise in safety and maintaining a deep focus on environmental issues, Share Information 87 we continuously strive to deliver innovative solutions at the next frontier of logistics. We will forever take pride in our ability to inspire trust and answer the call of society. Caution Regarding Forward-Looking Statements This annual report contains information about forward-looking statements related to such matters as the Company’s plans, strategies and Every move we make is aimed at advancing society business results. These forward-looking statements represent judgments made by the Company based on information available at present and and bringing an enriched life to future generations. are inherently subject to a variety of risks and uncertainties. The Company’s actual activities and business results could differ significantly due to changes, including changes in the economic environment, business environment, demand and exchange rates. * Due to the application of the Revised Accounting Standard for Business Combinations (Accounting Standards Board of Japan Statement No. 21, issued September 13, 2013) and other accounting standards, the accounting item presented as “net income” prior to fiscal 2015 has been renamed “profit attributable to owners of parent” from fiscal 2015 onward. However, to aid readability, the term “net income” is used in this report, except in the Financial Section. 1 Nippon Express’s Strengths (As of March 31, 2019 Revenues (fiscal 2018) Operating Income (fiscal 2018) Offering All Transport Modes: Land, Ocean, and Air Customer requests can vary with regard to package specifica- Vehicles (non-consolidated) tions—such as size and weight or other physical considerations— 18,091 or degree of urgency. Because Nippon Express utilizes a ¥ 2,138,501 million ¥ 79,598 million (overseas) comprehensive range of transport modes spanning Land, Ocean, 3,136 and Air, including trucks, trains, ships, and airplanes, customers Loading and 16.1% (non-consolidated) 22.6% are able to choose the right option to meet their needs for construction vehicles 5,043 each occasion. 5.7% In addition, we offer strict temperature-controlled transportation (overseas) 1,371 1.6% % for pharmaceutical products and fresh foods, vibration-proofed 2.2 Revenues by Operating income by 4.7% services for precision instruments, and humidity-controlled ship- 3.4% 58.8% 70.3% Warehousing space (non-consolidated) 2 reportable segment reportable segment 3 million m 4.3% 3.8% ping for fine arts. Moreover, even for deliveries requiring such 2.9% special conditions, the customer is able to choose the optimal Overseas 5.7% million m2 5.4% transport method. warehousing space 3.06 % 5.4 Thanks to this broad range of options, we can satisfy many Freight forwarding (ocean cargo) 4.6% customers around the world. volume*1 680,000 TEU*2 Japan The Americas Europe East Asia South Asia & Oceania Security Transportation (air cargo) Heavy Haulage & Construction Logistics Support NIPPON EXPRESS Group Corporate Message 900,000 tons * Figures presented exclude adjustments. *1 Volume for full calendar year (January to December) *2 TEU: Twenty-foot Equivalent Unit, equal to the volume of one twenty-foot shipping container. One of the World’s Largest Networks Finding the Way Nippon Express will transport cargo to any destination world- Subsidiaries As stated above, we can deliver anything, anywhere via a multi- wide. Our overseas network began with the 1962 founding of 299 tude of transport methods and utilizing our network spanning our first foreign subsidiary in New York. We have continued to Japan and the rest of the world. From among these options, we Affiliates NIPPON EXPRESS Group brings customers’ possibilities to reality. There are often steadily build up our network over the 60 or so years since then. 68 identify the best way and dedicate ourselves to seeing the delivery many solutions, but only one way is the way. We use our determination to nd the In places where we have no business base, our trusted local through to success. It is this single-minded dedication that makes best way to overcome hurdles and take our customers across the nish line. partners ensure the delivery of our customers’ cargo. Overseas network 46 countries customers continue to choose us. We will transport your cargo anywhere you ask us to. To live Owing to the experience and know-how we have accumulated up to the trust placed in us, we will continue to expand our net- 302 cities over our long history of more than 80 years as well as the philos- work going forward. ophy embodied in our corporate message of “We Find the Way,” Our unied strength makes us unique, driving everything we we are confident in and proud of our ability to identify the best locations do on the frontline and in the background to deliver 705 way and see it through to success. unparalleled logistics services. The word “we” speaks to a complex system of individuals with specialized skills that This steely determination and confidence has been passed Employees (consolidated) work together to become an unstoppable force. 71,525 down since our founding and will continue to be passed down to future generations as we strive to maintain our position as a wel- Employees (non-consolidated) Every client, project, and task is different, and sometimes we 32,280 comed presence in society going forward. have to innovate to achieve our goals. Our work demands exploration and thinking outside the box. It’s how we nd the best way. The verb “find” in its present form tells a story of a company willing to dig deeper for the best results. Sure, there are many solutions, but there’s only one best way. We don’t nd a way or some way; we nd the best way, and we do it with passion and perseverance. Our efforts build connections to and between individuals and businesses. 2 3 Corporate Message Established Origins and History “We Find the Way” A new corporate message was established in Transported relief supplies as commemoration of the Company’s 80th anniversary. Provided services a designated public institution Nippon Express marked its 50th It embodies the strong desire and confidence of for the Tokyo following the Great Hanshin- anniversary overseas Nippon Express to make customers’ dreams a reality. Awaji Earthquake Summer Olympics Awarded both the Logistics Tokyo C-NEX opened Mobilized a total of 3,200 trucks and Designated as the official Environment Award and the The Company’s largest distribution center, Tokyo 225 cargo ships to transport relief carrier for the Olympic Logistics Enlightenment C-NEX offers easy access to the city center and is supplies. Logistics becomes recog- Head office functions relocat- Games. In addition to the Awareness Award located within 30 minutes of a railway container nized as a lifeline that is as important ed to a new building built in transport of competition hub, an airport, and a port, making it an ideal loca- as waterworks and gas. Made a modal shift from trucks to railway Nippon Express’s equipment, luggage, and the Shiodome area, Tokyo tion as a distribution base. for the transportation of automotive parts. predecessor company Riku-un pigeons for release at the The new head office was built in the Received the Logistics Environment Award Moto Kaisha established opening ceremony, the Shiodome area, the birthplace of First expatriate repre- Company was asked to set for both CO2 reduction and shortened lead Sousuke Sasaki, the manager of Japan’s railways, also considered the sentative dispatched up practice courses for time.