To Our Shareholders
To Our Shareholders
The following is a brief report on the performance of Seino Holdings Co., Ltd. for the fiscal year ended March 31, 2020, our 99th term (from April 1, 2019 to March 31, 2020).
Although Japan's economy in fiscal year under review has been on a moderate recovery trend due to improvements seen in employment and income environments, there are concerns about the effects of successive typhoons and other natural disasters, the consumption tax hike, and the trade friction between the U.S. and China. In addition, due to the spread of the novel coronavirus disease (COVID-19), the economy remained on a recession trend.
In the transportation industry, which is Seino Group's mainstay business, domestic freight volume is still on a declining trend, although efforts to collect appropriate fares continued. The business environment with management issues continued, with increasing outsourcing costs due to tight labor demand and difficulty in hiring.
Facing such circumstances, the Seino Group steadily implemented the various measures of the final fiscal year of the “Value-Up Challenge 2020: Take Off Toward Growth” medium-term management plan and pushed forward as a united group to improve our corporate value such as by expanding the provision of time value to our customers.
As a result, operating revenue for the fiscal year ended March 31, 2020 was ¥627,126 million (up 1.4% year on year), and although the effects of proper fare collection continued in our mainstay transportation business, due to the impact of the decrease in handled cargo volume, especially in the second half of the period, operating profit was ¥29,439 million (down 5.7% year on year), ordinary profit was ¥31,247 million (down 7.1% year on year), and partly due to the recording of extraordinary gains on sales of fixed assets associated with real estate transfers, profit attributable to owners of parent was ¥25,677 million (up 21.0% year on year).
Transportation Services Business
In the Transportation Services Business, based on our medium‒term management plan, we set “providing value to customers” as our strategic vision, and in order to solve customers' problems, we provided time value and shipping work support using web services, and made proposals for the overall optimization utilizing logistics functions.
At Seino Transportation Co., Ltd., the core company of the Transportation Services Business group, we collected appropriate fares for “continuous” “value provision”, and also focused on securing the volume of freight handled through capturing and keeping new freight consignors by providing a stable transportation network by diagramming route flights, and by leading to improvement of business efficiency and increased customer convenience by proposing electronic data exchange that digitizes transaction business from orders to payments.
On the other hand, we worked to increase the size and save labor of vehicles by expanding modal shifts to switch part of long-distance routes to transportation by railways and ferries and by starting operation of articulated trucks, and large hybrid trucks equipped with AI. By promoting transportation reform as measures for labor shortages, we also worked on ESG, which leads to a reduced environmental burden.
Furthermore, in order to secure personnel in the declining working population, we are working to enhance the benefits package such as by the introduction of a license acquisition subsidy system and a stock benefit trust (J-ESOP) for employees, while also shortening working hours through labor reform and reducing the operational burden, such as by the introduction of a long-term vacation system that includes annual paid vacation in Golden Week holidays, Bon vacation and the year-end and New Year holidays.
In terms of business expansion, Seino Transportation Co., Ltd. newly established the Narita branch (Narita city, Chiba prefecture), expanded the Osaka Nishi branch (Minato ward, Osaka city), newly established the STC Gyotoku (61 employee dormitories: Ichikawa city, Chiba prefecture), and Seino Super Express Co., Ltd. is expanding and relocating the Yashiro freight center (Kato City, Hyogo Prefecture). As a result of the above, operating revenue for this segment was ¥466,473 million, up 0.9% year on year, and operating profit was ¥23,339 million, down 4.6% year on year.
Vehicle Sales Business
In the business of passenger car sales during the fiscal year under review, we aimed to further improve customer satisfaction by renewing stores and improving the service system to become number “one” in the region. In addition, the number of new car sales increased year on year through various efforts including campaigns centered on support cars, early replacement proposals by utilizing residual value installment sales, and sales efforts taking advantage of the effects of new vehicle model launches. However, in used vehicle sales, due in part to the impact of the reduction in trade-in vehicles, the number of vehicles sold were lower than that of the previous fiscal year. In the service division, we strove to secure revenues by promoting vehicle inspections and vehicle maintenance and garage services, as well as the sales of products that lead to repeat visits such as maintenance packages and automotive coatings.
In truck sales, we worked to expand sales in order to increase the number of customers and the number of owned vehicles, but as demand for light trucks ran out, the number of new vehicles sold in Japan in the current fiscal year was slightly lower than that of the previous fiscal year.
In office expansion efforts, Netz Toyota Gifu Co., Ltd. carried out a full renovation of the Shinsei branch (Motosu City, Gifu Prefecture), and Gifu Hino Motors Co., Ltd. carried out a full renovation of the Anpachi Office maintenance factory (Anpachi Town, Gifu Prefecture) and the Ogaki Branch (Ogaki City, Gifu Prefecture).
a result of the above, operating revenue for this segment was ¥104,664 million,
up 2.4% year on year, and operating profit was ¥4,353 million, down 10.3% year
Merchandise Sales Business
The Merchandise Sales Business engages in the sale of fuel, paper and paper products, and other products. Operating revenue for this segment was ¥32,867 million, down 1.9% year on year, partly due to the impact of a fall in sales unit prices for fuel sales. Operating profit was ¥870 million, up 5.0% year on year.
Leasing for Real Estate Services Business
In the Leasing for Real Estate Services Business, we are operating the former truck terminal and store sites, which had been replaced mainly due to the impact of urban development and increasingly cramped conditions, as rental apartments.
As a result of the above, operating revenue for this segment was ¥1,732 million (up 4.9% year on year), and operating profit was ¥1,382 million (up 3.6% year on year).
Our Other Business segment includes the information services business, the housing sales business, the construction contract business, the passenger transportation business, and the personnel services business. Operating revenue for this segment was ¥21,389 million (up 15.2% year on year), and operating profit was ¥688 million (down 23.7 % year on year).
For the future outlook for Japan's economy, we expect the situation to be increasingly severe while economic activity is stagnating due to the spread of COVID-19 and the timing of its convergence cannot be predicted.
In such an unpredictable situation, the Group will formulate the policy “Connecting our values - For the Prosperity of our Customers,” which is the basis of the new three-year medium-term management plan starting in 2020, In addition, we will support our customers to solve their problems by evolving from a secondary comprehensive logistics trading company to a value-creating comprehensive logistics trading company, accelerating open public platforms, and deploying value-creating SDGs.
In the transportation industry, which is Seino Group's mainstay business, although certain effects on efforts to collect appropriate fares continue, we expect a decline in domestic freight volume, shortage of labor such as for long-distance drivers, and an increase in outsourcing costs. Under such circumstances, in addition to expanding the logistics and transportation function by fusing the truck terminals and the distribution centers, we will strive to provide customer support by providing the factory function, and we will secure revenue and profits by providing services that improve the customer's entire value chain, such as IT services represented by EDI cooperation and shipping support Web services.
Moreover, in addition to promoting transportation reform such as modal shifts, etc., and freight handling separation, we will proactively implement initiatives that contribute to the recruitment and improved retention rate of employees by introducing unmanned automatic sorting machines that use QR codes, rebuilding and renovating deteriorating and cramped facilities.
In the passenger car sales business of the automobile sales business, recognizing strengthening the business base for the simultaneous sale of all Toyota dealerships as an urgent issue, we will implement optimal customer support utilizing the customer information management system (i-CROP) and store renewals. In truck sales as well, we will aim to improve profitability by developing SFA (sales support tools) for expanding the sales of small trucks, utilizing advanced maintenance equipment, and improving the stake in vehicle inspection by expanding the lanes. In addition, we will work to improve ES by introducing advanced maintenance equipment to secure mechanics.
In the Merchandise Sales Business, the Real Estate Business, and Other Business, we will expand the business domain and strengthen existing businesses.
While making steady efforts to tackle these business challenges and risks, etc., the Seino Group will work to achieve the new medium-term management plan, and be a corporate group that contributes to our customers’ prosperity and provides new value to achieve further growth.
To all shareholders, we sincerely ask for your ongoing encouragement and support into the future.
President and Chief Executive Officer