Apr 1, 2016

Nippon Express formulates new mid-term management plan

Kenji Watanabe, President & CEO of Nippon Express

Nippon Express (Nittsu) has drawn up the "Nittsu Group Management Plan 2018 - New World Nittsu", a three-year mid-term management plan with FY2017 starting from next April as the first year. In the plan the company sets a goal of chalking up in the year ending in March 2019 sales of Y2,150 billion, up 7.5% compared with FY2015 ending in March 2016 (estimated), operating profits of Y75 billion, up 38.9%, and net profits of Y45 billion, up 32.0%, and 2.8% (0.3 percentage points) more of ROA, paying more attention to profitability. The company positions the three years as the culmination of the management measures and policies from the preceding and second preceding mid-term plans with which it has been reinforcing the Nittsu group's total strength and management practices and cultures, and will take aim at enhancing profitability based on the efforts it has made thus far. The planned investment in the term amounts to Y200 billion.

A press briefing was held on March 31 in the presence of Nittsu's executives including Kenji Watanabe, president. Watanabe summarized the initiatives during the previous two mid-term plans, saying, "It's my view that we have made a certain level of progress as a renewal". He also stated that the company "could create a business structure which can generate decent profits", and accentuated that he would make an effort to conclude with the existing management strategy by realizing the expansion of profits, looking ahead to the next step.

The company will restructure its reporting segment into four ones of logistics, guarded haulage, heavy cargo/construction material transport, logistic support. The logistics is comprised of sections of Japan (including Nittsu NEC Logistics), Americas, Europe, East Asia, South Asia and Oceania. The logistic support consists of Nittsu Shoji, Nittsu Research Institute and Consulting (NRIC), Nippon Express Capital, Nittsu Real Estate, and so forth. The numerical targets set by each segment are as shown in the tables.

The company will pursue factors for revenue growth overseas, centering on South Asia as a key area, and focus its management resources on Asia in a bid to garner cargo to/from there. As for Americas, Europe and East Asia, it aims to conduct sales activities while bearing profitability in mind. Regarding profits, the company is to build up profitability especially within Japan. The company eliminated the barriers that had separated the land, ocean and air cargo sections and integrated them into one organization. As cost-conscious atmosphere has been arising within the company, it will take a policy of deepening the restructuring in order to give momentum to profit improvement.

In the new mid-term plan, the strategies for function and area are formulated separately. Regarding function, the company will go further ahead with thorough buildup of the sales capabilities, strengthening and sophistication of the core business, fortification of group management, buttressing of management foundation, and group CSR management.

As regards area strategies, the company will attach an importance to "making growth and profitability compatible", and accelerate the business activities according to each area's characteristics, the boosting of the existing business and the buildup of new business axes by advancing the business structure's innovation. The company is also to maximize effects from the M&A that it has carried out in recent years. Akira Ohinata, vice president, said at the briefing that, pointing out Nittsu Panasonic Logistics and Nitssu NEC Logistics as examples, it will commoditize services which has been in the past offered to its group companies in a bid to establish the foundation on which it will be able to globally provide those services to companies in the same industry as "industry platforms".

On the overseas front, the company places emphasis in the plan on its overwhelming status in Asia, and points out the global operation of heavy cargo/construction material transport business, the expansion of overseas moving business and the development of non-Japanese clients as strengthening initiatives of the global business in which it has an advantage. Also, while redoubling enhancement of the business related to auto, apparel, precision machinery, and medical and pharmaceutical industries on which emphasis has been traditionally put, the company will aim to proceed further with airplanes, railways, perishables and foods as new industrial fields in which profitability can be secured.

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