May 8, 2015

SG Holdings projecting Y940 billion in sales in FY2015

Shunichi Nakajima (right), director, and Shinji Sekine, executive director

SG Holdings Co., Ltd. forecasts that its sales for fiscal 2015 ending March next year (March 21, 2015-March 20, 2016) will total Y940 billion, down by a little less than 10% of its sales in the previous year. The Sri Lanka-headquartered international logistics firm Expolanka Holdings that was acquired by SG Holdings boosted its half-year sales in fiscal 2014 that ended in March this year to about Y20 billion. Expolanka will contribute to the business results of SG Holdings for the whole of fiscal 2015, so it will cause a further increase of about Y20 billion in the latter's revenues. Even in its main business of delivery services, the unit price of package delivery turned around until the previous fiscal year, recovering to a level that is little less than 10% higher than the rock-bottom level recorded two years ago. SG Holdings envisions that it will be able to maintain the unit price in fiscal 2015, thereby supporting its business results.

Shunichi Nakajima, director (head of finance and accounting), and Shinji Sekine, executive director (head of corporate planning) of SG Holdings held a press briefing last May 7.

For the full year under fiscal 2015 ending March 2016, the final fiscal year under its current medium-term management plan, SG Holdings expects to post Y940 billion in operating revenues, up 9.6% from the previous year, Y50 billion in operating profit, up 9.7%, Y48 billion in ordinary profit, up 9.3%, and Y29 billion in net profit, up 16.9%.

Nakajima stressed the importance of group cooperation, citing such projects as the group-wide project GOAL (Go Advanced Logistics) that raised the group's business results and intertwined IT and clearing functions into logistics in fiscal 2014 that ended in March this year. In the delivery business, the company's main thrust, SG Holdings developed differentiating products such as the so-called Smart Delivery for enhancing warehousing operations, and expanded its revenues/profits through cost control. Meanwhile, in the logistics segment, Nakajima raised the promotion of network reinforcement, centering on the ASEAN, in partnership with Expolanka as its main initiative for fiscal 2015. SG Lawson, its joint venture company with Lawson Inc. that was established in June, will also contribute to the company's revenues/profits. As for the real estate business, the start of operation of SGAM Corp., its logistics-affiliated open-ended and unlisted investment trust, in March this year will also lead to increased revenues for the company.

According to its business results for fiscal 2014 ending March this year, SG Holdings recorded a 2.7% year-on-year surge in operating revenues to Y857.4 billion, 5.1% jump in operating profit to Y45.5 billion, 7.7% increase in ordinary profit to Y43.9 billion and 49% growth in net profit to Y24.8 billion. Its revenues ballooned thanks to the acquisition of Expolanka, among other things. Cost control measures such as the shift of personnel overhead costs into variable costs, and the expansion of internal logistics boosted the company's profits from the operating gain/loss stage. Its annual dividend stood at Y26.

SG Holdings enjoyed a wide-margin jump in net profit thanks to such factors as the imputation of Y10.8 billion in special losses, including the lump contribution following the settlement of the corporate pension fund, in the previous fiscal term. By division, its main delivery business recorded a 0.4% surge in operating revenues to Y712.5 billion and a 7.6% rise in operating profit to Y39.1 billion. The logistics division posted a 47.5% increase in operating revenues to Y80.9 billion, but suffered from a 2.2% drop in operating profit to Y336 million.

Meanwhile, the real estate business sustained a 62.9% decline in operating revenues to Y4.5 billion and an 11.2% dip in operating profit to Y2.8 billion. The company's other businesses registered a 1.6% rise in operating revenues to Y59.3 billion and 16.1% jump in operating profit to Y5 billion.

With regard to the volume of major products handled in its delivery business, the express home delivery service handled 1,196 million pieces, down 1.9% from the previous year, the express air service handled 8.52 million pieces, down 6.2%, the express cool service handled 29.97 million pieces, up 3%, and the mail service handled 280.07 million mails, down 18.7%. The decline in handling volume caused by the increase in consumption tax stood out in fiscal 2014.

On the other hand, the unit price of home delivery service that continued to gradually decline has recovered to Y503, representing an increase of a little above 10% compared to the rock-bottom level recorded in fiscal 2012 that ended in March 2013. Sekine claimed that, "Our drive to raise the unit price toward the collection of the appropriate fees has come full circle." For fiscal 2015, SG Holdings projects that the volume handled by its home delivery services will expand by 1.2-3%, while the unit price will level off.

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