Nippon Express : Business Report for the 116th Interim Term

Securities Code No. 9062

For the 116th Interim Term From April 1, 2021 to September 30, 2021

Top Message

During the six months ended September 30, 2021, the global economy experienced signs of economic recovery in major economies including Japan due to the resumption of economic activities as the rollout of vaccinations progressed in major advanced countries as well as financial support measures. However, the constraints on economic activities due to the spread of COVID-19 in many emerging countries continued to have a strong impact and the outlook for the global economy remained uncertain.

Under these economic conditions, the logistics industry saw an ongoing recovery in cargo movement due to the resumption of production and sales activities in major economies. However, overall cargo movements in Japan remained lackluster due to factors such as sluggish consumer spending and stagnation in the automobile industry caused by semiconductor shortages.

International trade is growing, led by the US and China, but we need to monitor the trend due to factors

I would like to take this opportunity to thank our shareholders for their continued support and understanding. I, hereby, present the Business Report for the 116th Interim Term.

President and Chief Executive Officer

Mitsuru Saito

such as the shortage of transportation space caused by the reduction and suspension of flights, the shortage of shipping containers destined for the US and Europe from Asia, and the higher price of freight.

In this business environment, the entire Nippon Express Group maintains our vision, and is working as one to achieve the various indicators set as interim targets for 2021 outlined in "Nippon Express Group Business Plan 2023 - Dynamic Growth -," the five- year business plan launched on April 1, 2019. This is p a r t o f o u r e ff o r t s t o s t re n g t h e n t h e b u s i n e s s foundation and achieve our long - term vision of becoming a logistics company with a strong presence in the global market.

"Business growth strategy"

In our "growth strategy for core businesses," we have set Global Account Management at the core of our sales strategy and implemented initiatives to further strengthen the global sales system and organization. We have enhanced our approach on the customer

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(industry) axis through business development under the concept of market orientation, considering the "value sought by customers" and providing products and services that meet customer needs. We have also promoted the growth of core business through alignment with enhancements to the business axis and area axis approach. We have implemented initiatives for ongoing business enhancements, seeking ne w business gro w th in area s where expansion is expected, such as logistics for the pharmaceutical/medical industry, which addresses aging societies, as well as logistics for semiconductor industry, which is strengthening its foundation as a national business.

In our "strategy to enhance domestic business in Japan," we have been striving for operational and production efficiencies through the introduction of advanced technologies, aimed at improving and raising the level of operational efficiencies at 435 warehouse locations nationwide. In parallel with this, we also strengthened our CSR management and enhanced our sales force. In addition, we have worked to reduce outsourcing costs through ma ximum utiliz a tion o f Group w ork f orce and implement thorough cost controls.

"Efforts to implement our long-term vision"

In our efforts to "establish ESG-oriented business management to realize sustainable development and improve corporate value," we are preparing to transition to a pure holding company structure from J a n u a r y 4 , 2 0 2 2 t o s t r e n g t h e n c o r p o r a t e governance and to realize sustainable growth for the entire Group. Furthermore, in conjunction with the transition to a holding company structure, we decided to implement the group brand "NX" as part of our efforts to bolster our brand power. We will promote the development of global branding across all group companies shifting away from the Nippon Express Group to the NX Group.

We have promoted environmental management such as through the implementation of modal shift and the use of LED lighting as initiatives to address climate change and realize our long-term vision. We have worked towards reducing long working hours and the acquisition of annual paid leave, while also implementing workstyle reforms through various initiatives such as the promotion of remote work to

enable flexible workstyles and a casual dress code. These initiatives promote diversity and assist with our transformation into a company that makes employees feel satisfied and fulfilled.

As a result, our consolidated business results for the first six months of the 116th term were as follows:

Revenues of ¥1,104.2 billion Operating income of ¥36.3 billion Ordinary income of ¥40.6 billion

Profit attributable to owners of parent of ¥30.6 billion

Concerning the interim dividend payments for the 116th term, it was decided at the Board of Directors meeting held on November 12, 2021 to pay an interim dividend of ¥90 per common share with the starting day for payment being December 2, 2021.

In terms of the economic trend for the second half of the fiscal year, major countries including the US and China are expected to continue driving the recovery of the economy overseas, but it is ridden with downside risks of economy such as a resurgence in infections through variant viruses and rising geopolitical risks, and the economic outlook remains uncertain. We expect a recovery trend for the domestic economy with the dual aims of achieving both the prevention of infections and resumption in economic activity. However, there will be lingering concerns about a resurgence of COVID-19, and downside risks of economy is likely to persist.

In this business environment, the logistics industry as a whole is being called upon to transform into a value-creation industry that supports sustainable growth of society, ranging from the conversion of management strategies in preparation for the era after COVID-19 to implementation of workstyle reforms and further promotion of initiatives to secure and nurture human resources. This also requires measures to address digitization, the development of new logistics services that incorporate cutting-edge technologies and measures to reduce the environmental impact. The Nippon Express Group will strive for greater growth and further enhance our corporate value in order to meet the expectations of all shareholders. We would be grateful for your continued understanding and support.

December 2021

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At a Glance

Revenues

¥1,104.2 billion

Profit attributable to owners of parent

¥30.6 billion

Revenues (Unit: Billions of yen)

1H	FY
	2,080.3	2,079.1	1,680.0
			(Forecast)
	1,038.9	964.4	1,104.2
	2019	2020	2021

Profit attributable to owners of parent (Unit: Billions of yen)

1H	FY	56.1
		45.0
			(Forecast)
			30.6
	19.0	23.0
	17.4
	2019	2020	2021

Operating income

¥36.3 billion

Interim dividend

¥90.0

Operating income (Unit: Billions of yen)

1H	FY
		78.1
	59.2		57.0
		(Forecast)
	29.1		36.3
	20.8
	2019	2020	2021

Dividend per share (Unit: Yen)

Interim Year-end

	110.0	95.0
80.0	(Forecast)
75.0	75.0	90.0
2019	2020	2021

* The Company changed its fiscal year end from March 31 to December 31 from FY2021. Consequently, the consolidated financial results forecasts for the transition period

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ending December 31, 2021 shows 9 month figures covering the period from April 1, 2021 to December 31, 2021.

Logistics		Security Transport

Revenues			Revenues
Composition			¥967.1 billion
87.6
%
Japan	58.9%		Operating income
The Americas	5.0%		¥35.4 billion
Europe	7.2%
East Asia	9.1%
South Asia & Oceania	7.4%

Heavy Haulage & Construction

Revenues		Revenues
Composition		¥23.8 billion
2.2
%

Operating income

¥3.0 billion

Revenues		Revenues
Composition		¥34.2 billion
3.1
%
		Operating income
		¥0.1 billion

Logistics Support

Revenues		Revenues
Composition		¥162.8 billion
14.7
%

Operating income

¥4.0 billion

* Compositions in the above chart exclude adjustments.
* The Company changed its fiscal year end from March 31 to December 31 from FY2021. Previously, the consolidation of the first six month period in the previous fiscal year for consolidated subsidiaries that had a	4
fiscal year end of December 31 had been on the basis of the profit and loss for the period from January 1, 2020 to June 30, 2020. However, for the current fiscal year, the consolidation of profit and loss for the
first six month period is for the period from April 1, 2021 to September 30, 2021. Therefore, there is no description of the year-on-year change or the percentage of change.