Kintetsu World Express : CEO Message updated

November 8, 2018

　Dear Shareholders,

　The results for the first half of the fiscal year 2019 ended as consolidated net sales 11.0% YOY to 291,321 million JPY, operating income is up 28.8% YOY to 8,859 million JPY, ordinary income is up 52.0% YOY to 10,504 million JPY, and net income attributable to owners of the parent rose 102.9% YOY to 5,014 million JPY, which exceeded both the previous term's results and the initial plan for the quarter. This is as a result of a group-wide effort to Expand Freight Volume, with an ongoing high demand of air and sea freight.

　We are making steady progress to reach the handling volume of 700,000 tons of air freight and 700,000 TEUs of sea freight, as set forth in our slogan. This is the minimum quantity we need to secure to compete with major forwarders in the world. 600,000 tons and 700,000 TEUs are in scope within this fiscal year-700,000 tons will be our target in the next Medium-Term Management Plan, starting FY2019. As we have extended our business network throughout the world to provide service to large global exporters/importers, the volume of traffic outside Japan has increased. With this current status, I think that we can soon be considered a global player.

　After implementing various measures and priorities to add profitable growth, we are happy to say that APL Logistics (APLL) is experiencing favorable performance. I am confident that the collaborative integration with APLL will further enhance the Group's growth potential. From October 2018, the sea waybill we utilize adopted a unified set of Transport Documents ('Unified Transport Documents') with APLL's logo. This will tighten and optimize our cross-sell system for sea freight within the Group, and accelerate the expansion of freight volume.

　For the second half of the fiscal year, we expect a steady increase in both air and sea freight volumes, but we may face more uncertainty, such as with freight cost increases and the recent US-China trade tensions. In light of the results for the first six months and a recent upward trend in direct costs including freight costs, we have also revised the consolidated earnings forecasts for the year ending March 31, 2019. Net sales 600,000 million JPY (8.5% increase YoY), operating income 19,200 million JPY (no change, 9.4% increase YoY), ordinary income 20,700 million JPY (19.3% increase YoY), and the annual net income attributable to owners of the parent company 10,500 million JPY (49.9% increase YoY). Under such circumstances, the Group will keep focus on key measures to reach the goal of our Medium-Term Management Plan ending in this fiscal year, and step forward to the 'Next Phase' in the next term.

　We are sincerely committed to reinforce our competitiveness and provide excellent service to our customers in global market, value creation for businesses, and further investment in human resources and corporate governance. I look forward to your continued support as we move to the 'Next Phase'.

November 8, 2018
Nobutoshi Torii, President & CEO