Japan Airport Terminal : April 1, 2023 to March 31, 2024 (FY23) Earnings Presentation Transcript (May 15, 2024)

Japan Airport Terminal Co., Ltd.

Financial Results Briefing for the Fiscal Year Ended March 2024

May 15, 2024

Event Summary

[Company Name]	Japan Airport Terminal Co., Ltd.
[Company ID]	9706-QCODE
[Event Language]	JPN
[Event Type]	Earnings Announcement
[Event Name]	Financial Results Briefing for the Fiscal Year Ended March 2024
[Fiscal Period]	FY2024 Annual
[Date]	May 15, 2024
[Number of Pages]	21
[Time]	14:00 - 14:27
	(Total: 27 minutes, Presentation: 27 minutes)
[Venue]	Webcast
[Venue Size]
[Participants]
[Number of Speakers]	5
	Isao Takashiro	Chairman and CEO
	Nobuaki Yokota	President and COO
	Hiroshi Onishi	Executive Vice President
	Kazuhito Tanaka	Executive Vice President
	Masatoshi Akahori	President and CEO

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Japan	050.5212.7790	North America	1.800.674.8375
Tollfree	0120.966.744	Email Support	[e-mail]

1

Presentation

Moderator: Now that the time has come, we will now hold the Japan Airport Terminal Co., Ltd. financial results briefing for the fiscal year ended March 2024.

Thank you all very much for taking time out of your busy schedules to attend today's meeting. First of all, I would like to introduce today's attendees. Mr. Isao Takashiro, Chairman and CEO.

Takashiro: My name is Takashiro. Best regards.

Moderator: Mr. Nobuaki Yokota, President and COO.

Yokota: My name is Yokota. Thank you for your cooperation.

Moderator: Mr. Hiroshi Onishi, Executive Vice President.

Onishi: My name is Onishi. Thank you for your cooperation.

Moderator: Mr. Kazuhito Tanaka, Executive Vice President.

Tanaka: My name is Tanaka. Thank you for your cooperation.

Moderator: Mr. Masatoshi Akahori, President and CEO, Tokyo International Air Terminal Corporation.

Akahori: My name is Akahori. Thank you for your cooperation.

Moderator: That is all those present.

We will continue with today's materials.

Presentation materials and other documents are available on the Company website. Those watching the live webcast will be able to download materials from the web screen you are viewing, the explainer, slash, and materials tabs. Please take advantage of it.

Next, I will explain the contents of today's proceedings.

First, President Yokota will give an approximately 30-minute presentation along with the presentation materials. We will then call you to answer any questions you may have. Please note that we cannot accept questions via the web.

Let us now begin our presentation. President Yokota, thank you for your time.

Yokota: My name is Yokota, President and Representative Director. We truly appreciate your continued understanding and support of our business operations.

Today, on the occasion of the presentation of our financial results for the fiscal year ended March 31, 2024, I will give a summary of our consolidated financial results for the previous fiscal year, our consolidated earnings forecast for the current fiscal year, the progress of our medium-term management plan, and our sustainability initiatives.

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Please see page two. First, I would like to explain the situation in the previous fiscal year.

In terms of the business environment, restrictions on behavior related to new coronavirus infections have been fully lifted, and society, as a whole, has become more normalized. In this context, the number of foreign visitors to Japan continues to increase significantly, and concerns about overtourism are becoming apparent in some areas.

On the other hand, in addition to rising prices due to surging resource prices and a weak JPY, wages are rising due to labor shortages, and the inflationary trend is taking hold.

Passenger volume at Haneda Airport was almost in line with the revised forecast.

Domestic routes recovered to approximately 90% of the pre-corona level, mainly due to a steady recovery in passenger demand.

On the other hand, the number of international flights exceeded the number before the corona disaster and reached a record high due to strong inbound demand.

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3

See page three.

As shown in the red box in the document, consolidated results for the fiscal year ended March 31, 2024 are as follows: net sales of JPY217.5 billion, operating income of JPY29.5 billion, ordinary income of JPY27.2 billion, and net income of JPY19.2 billion.

Sales were higher than the previous year in all segments due to an increase in merchandise sales and facility user fee revenues, driven by a recovery in passenger volume and strong inbound demand. Not only did we return to profitability for the first time in four fiscal years, but operating income and ordinary income have just reached record highs.

Compared to the revised forecast, sales and income both exceeded the forecast due to continued strong sales at duty-free stores. In light of this situation, we have increased the year-end dividend by JPY12 from the forecast made last October and added a commemorative dividend of JPY5 per share for the 70th anniversary of the Company's founding, resulting in a dividend of JPY42 per share. This will result in an annual dividend of JPY67 per share and a payout ratio of 32%.

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4

See page four. Next, I will explain our forecast for the current fiscal year.

In the business environment, we expect the inflationary trend to continue as the synergy between wages and prices strengthens and the JPY tends to weaken. In addition, the shortage of supply capacity in the construction and logistics industries due to the revision of laws and regulations has affected all sectors of the industry. Inbound demand continues to be strong, but the uncertainty of the Chinese economy and instability in the global situation are causes for concern.

As for passenger volume at Haneda Airport, demand for domestic flights will further recover. We expect the number of passengers to recover to 95% of the pre-corona level. However, in the current April, it is below the previous year's level and a bit below the budgeted value as well.

On the other hand, international flights continue to grow strongly and are expected to increase to the level of 84% of the expected passenger volume after the expansion of arrival and departure slots. For international flights, both YoY and budgeted figures for the month of April were higher than the previous year.

In response to the medium-term management plan, we have lowered our passenger forecasts for both domestic and international flights for the current fiscal year.

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5

See page five. This section shows a breakdown of international passenger volume by direction.

The number of passengers after the expansion of the arrival and departure slots in March 2020 is set at 100%, and the number of passengers by area is shown as a percentage by year.

In FY2023, both the number of flights and the number of passengers exceeded those before the corona disaster, and since there was an increase in the number of flights in the summer schedule from March of this year, we expect further growth in the future.

In FY2024, we expect a gradual increase in passenger volume to China, where recovery has been slow, while some European flights will still be affected by the avoidance of flights over Russia.

In order to cope with the increase in the number of passengers, we will expand the operation of the international facilities in terminal two and begin swing operations from the summer timetable, switching between domestic and international flights at some spots depending on the time of day.

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6

See page six.

As shown in the red box, we expect net sales of JPY253.8 billion, operating income of JPY27.1 billion, ordinary income of JPY24.3 billion, and net income of JPY15.5 billion for the current fiscal year. Sales are expected to increase in all segments due to passenger volume growth.

On the other hand, the increase in expenses, due to the expansion of terminal operations and other factors, is expected to exceed the increase in sales, resulting in a decrease in profit. However, compared to the assumptions made in the medium-term management plan for the current fiscal year, passenger volume has been lowered, but profits will be higher.

The Company plans to pay a dividend of JPY62 per share, the same amount as the previous fiscal year, excluding the commemorative dividend of JPY5 per share.

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7

See page seven. Here is the performance forecast by segment.

First, in the facility management and operation business, although revenue is expected to increase due to an increase in facility usage fees resulting from an increase in the number of passengers, income is expected to decrease due to an increase in terminal maintenance and management costs.

Expenses are expected to increase, especially in Q4, due to construction to be completed at the end of the fiscal year.

In the goods sales business, inbound demand will continue to be strong, and both sales and profits are expected to increase.

For duty-free stores at Haneda Airport, we expect a slight decrease in the unit purchase price, but an improvement in the purchase rate, and an increase in sales over and above the growth in the number of passengers.

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8

See page eight. Here I will explain the status of staffing.

Although the corona disaster has reduced its workforce by approximately 40%, it has also drastically reviewed its operations and restructured its service delivery process to improve the efficiency of its workforce.

Subsequently, the rapid increase in the number of international passengers led to personnel shortages in various fields, and we stepped up our recruitment efforts. However, since it inevitably takes a certain amount of time to hire permanent employees, we first increased the number of non-permanent employees to secure the necessary number of personnel.

In addition, we are working to improve compensation by implementing base increases and raising hourly wage rates, and we are also striving to build a system that encourages the growth of each and every worker by establishing a specialist system and expanding our education and training programs.

The number of employees for the entire group is expected to be almost fully filled by the end of the current fiscal year, which is approximately 10% less than the size before the corona disaster.

We will continue to invest in human capital and work to improve labor productivity, as well as hire more permanent employees, with the goal of filling our workforce in terms of both quality and quantity.

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