Yamato : Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2024

Translation

November 1, 2023

Consolidated Financial Results

for the Second Quarter of the Fiscal Year Ending March 31, 2024

Company name:	Yamato Holdings Co., Ltd.
Listing:	Tokyo Stock Exchange
Stock code:	9064
URL:	https://www.yamato-hd.co.jp/
Representative:	Yutaka Nagao, President
Contact:	Toshizo Kurisu, Executive Officer and Vice President, Responsible for Finance
	Tel: [phone] (from overseas)

Scheduled date of the submission of quarterly securities report:	November 8, 2023
Scheduled date of the commencement of dividend payment:	December 8, 2023
Preparation of supplementary materials on quarterly financial results:	Yes
Holding of quarterly financial results meeting:	Yes

(Amounts less than 1 million yen are discarded)

1. Consolidated financial results for the second quarter of fiscal year ending March 31, 2024 (cumulative: from April 1, 2023 to September 30, 2023)

(1)	Consolidated operating results
											(Percentages represent year-on-year changes)
		Operating revenue		Operating profit			Ordinary profit		Profit attributable to
						owners of parent
For the second
quarter of the fiscal	Millions of yen		%	Millions of yen		%	Millions of yen	%		Millions of yen		%
year ending/ended
	March 31, 2024	866,582		(1.9)		12,358		(31.5)	12,641	(30.8)		5,384		(48.0)
	March 31, 2023	883,755		2.1		18,048		(43.0)	18,275	(50.5)		10,358		(29.2)
(Note) Comprehensive income:	For the second quarter of the fiscal year ending March 31, 2024:	10,342 million yen ((15.0)%)
			For the second quarter of the fiscal year ended March 31, 2023:	12,170 million yen ((41.3)%)
			Basic earnings per share	Diluted earnings
			per share
For the second quarter of the				Yen				Yen
fiscal year ending/ended
	March 31, 2024					15.07				-
	March 31, 2023					28.57				-
(2)	Consolidated financial position
				Total assets		Net assets		Equity-to-asset ratio
As of				Millions of yen		Millions of yen		%
	September 30, 2023			1,117,973			589,556		52.2
	March 31, 2023				1,107,587			616,430		55.1
(Reference) Equity:	As of September 30, 2023:	583,267 million yen	As of March 31, 2023:	610,380 million yen

2. Dividends

						Annual dividends
		First quarter	Second quarter		Third quarter	Fiscal year-end	Total
Fiscal year ending/ended		Yen	Yen		Yen	Yen	Yen
March 31, 2023		-	23.00			-	23.00		46.00
March 31, 2024		-	23.00
March 31, 2024 (Forecast)						-	23.00		46.00

(Note) Revisions to the forecasts most recently announced: None

3. Consolidated earnings forecasts for fiscal year 2024 (from April 1, 2023 to March 31, 2024)

								(Percentages represent year-on-year changes)
									Profit attributable to	Basic
	Operating revenue	Operating profit		Ordinary profit		earnings
			owners of parent
										per share
	Millions of yen	%	Millions of yen		%	Millions of yen		%	Millions of yen		%	Yen
Full year	1,785,000	(0.9)	65,000		8.2	65,000		11.9	52,000		13.3	148.21

(Note) Changes from most recently announced forecast: Yes

• Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None
2. Application of specific accounting for preparing the quarterly consolidated financial statements: Yes

(Note) For details, please see "2. Consolidated Financial Statements and Significant Notes Thereto, (4) Notes to consolidated financial statements (Application of specific accounting for preparing the quarterly consolidated financial statements)" of the attached materials to the quarterly financial results report on page 14.

1. Changes in accounting policies, changes in accounting estimates, and restatement a. Changes due to revision to accounting standards, etc.: None

b. Changes other than a:	None
c. Changes in accounting estimates:	None
d. Restatement:	None

1. Number of issued shares (common shares)
   a. Number of issued shares as of the end of the period (including treasury shares)

As of September 30, 2023:	379,824,892 shares
As of March 31, 2023:	379,824,892 shares

1. Number of treasury shares as of the end of the period

As of September 30, 2023:	28,598,758 shares
As of March 31, 2023:	17,552,067 shares

1. Average number of shares during the period (cumulative from the beginning of the fiscal year)

For the six months ended September 30, 2023:	357,157,582shares
For the six months ended September 30, 2022:	362,616,940 shares

*Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit firm.

*Proper use of earnings forecasts and other noteworthy events

• Descriptions of the above financial projections and other data are based on information currently available to the Company and certain assumptions that the Company considers to be reasonable. Actual financial results may differ significantly from the projections for various reasons. For points to note when using such assumptions and financial projections, please see "1. Qualitative Information on Settlement of Accounts for the Six Months, (3) Explanation of consolidated earnings forecasts and other forward-looking statements" on page 8 of the attached materials to the quarterly financial results report.
• The Company plans to post supplementary materials on quarterly financial results on the Company's website promptly after the announcement of the quarterly financial results.

Attached Materials
Index
1. Qualitative Information on Settlement of Accounts for the Six Months	2
(1)	Summary of operating results	2
(2)	Explanation of financial position	7
(3)	Explanation of consolidated earnings forecasts and other forward-looking statements	8
2. Consolidated Financial Statements and Significant Notes Thereto	9
(1)	Consolidated balance sheet	9
(2)	Consolidated statement of income and consolidated statement of comprehensive income	11
	Consolidated statement of income (cumulative)	11
	Consolidated statement of comprehensive income (cumulative)	12
(3)	Consolidated statement of cash flows	13
(4)	Notes to consolidated financial statements	14
	(Notes to premise of going concern)	14
	(Notes on significant changes in the amount of shareholders' equity)	14
	(Changes to the scope of consolidation and/or the application of the equity method)	14
	(Application of specific accounting for preparing the quarterly consolidated financial statements)	14
	(Segment information, etc.)	15
3. Others	16
Operating revenue by segment	16

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1. Qualitative Information on Settlement of Accounts for the Six Months

1. Summary of operating results
   During the six months ended September 30, 2023, there are signs of inflation slowing down globally, due to factors including increased stability in the COVID-19 pandemic, as well as in natural resources and energy prices, which had been rising due to the instability in global affairs. Meanwhile in Japan, it remains hard to anticipate a full-fledged economic recovery, due to factors such as the current further weakening of the Japanese yen, despite the fact that companies are continuing to pass on the rise in costs to their prices, as well as the recovery in consumption of services and capital expenditures
   Moreover, COVID-19 has triggered a change in consumption behavior and lifestyles, as well as the expansion of e-commerce in various industries, driven by more people working from home, as well as medical treatment and education taking place online.
   Under these circumstances, the Yamato Group is promoting initiatives to provide comprehensive value to address the diversifying needs of customers and society, in order to achieve sustainable corporate value enhancement through "Helping to enrich our society" which is part of our Management Philosophy, under the Group management structure in which we brought together the management resources of each Group company.
   Our consolidated financial results for the six months ended September 30, 2023 are as follows:

				(Millions of yen)
Item	For the six months	For the six months	Change	Growth (%)
ended September 30, 2022	ended September 30, 2023
Operating revenue	883,755	866,582	(17,172)	(1.9)
Operating profit	18,048	12,358	(5,690)	(31.5)
Ordinary profit	18,275	12,641	(5,633)	(30.8)
Profit attributable to	10,358	5,384	(4,974)	(48.0)
owners of parent

For the six months ended September 30, 2023, operating revenue was 866,582 million yen, down 17,172 million yen from the same period of the previous year. This was attributable to factors such as our price optimization efforts, while parcel volume and demand for international transportation declined.

Operating expenses was 854,224 million yen, down 11,482 million yen from the same period of the previous year. This was attributable to factors such as our focus on optimizing operating expenses, in the face of the continuing increase in costs due to changes in the external environment such as natural resource prices, energy prices and hourly wages.

As a result, for the six months ended September 30, 2023, operating profit was 12,358 million yen, down 5,690 million yen from the same period of the previous year.

In the six months ended September 30, 2023, the Yamato Group made a resolution in the Board of Directors' meeting held on July 27 to enter into a strategic business alliance with World Holdings Co., Ltd., and transferred 51% of the shares of our consolidated subsidiary Yamato Staff Supply Co. Ltd., to World Staffing Co., Ltd., which is a consolidated subsidiary of World Holdings Co., Ltd. Following this share transfer, the ratio of voting rights of Yamato Staff Supply Co. Ltd. owned by Yamato Holdings Co., Ltd. became 49%, making Yamato Staff Supply Co. Ltd. an entity accounted for using the equity method of Yamato Holdings Co., Ltd. from the second quarter of the current consolidated fiscal year.

Moreover, as a result of the above, the 14,055 employees of Yamato Staff Supply Co. Ltd., which were included in the "Other" segment as of the end of the previous consolidated fiscal year, have been excluded starting from the second quarter of the current consolidated fiscal year.

Initiatives for the entire Yamato Group

The Yamato Group is working on initiatives to realize sustainable corporate value enhancement through "Helping to enrich our society", which is in our management philosophy, and to enhance the comprehensive value provision to address the diversifying needs of customers and society. In order to address the rise in costs resulting from changes in the external environment, we are optimizing our pricing, as well as responding to cost increases at our business partners in a timely and appropriate manner, thereby maintaining and strengthening

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the transportation and delivery network as well as establishing an environment to continue providing higher quality services to our customers.

• Structural reforms of our network operations

We are working to establish and expand a designated network optimized for the diversifying needs for logistics, including the EC demand as well as the shift in BtoB logistics towards small-lot and high frequency deliveries. We are also promoting initiatives to reinforce our existing network, such as consolidating and enlarging the TA-Q-BIN Sales offices, in contrast with our previous strategy of opening many small offices, in order to be able to make adjustments more flexibly in accordance with fluctuations in parcel volume, as well as redefining the functions of our Terminals, and making transportation and delivery, sorting and administration more efficient.

In the six months ended September 30, 2023, based on the Basic Agreement signed with Japan Post Group, we are using the management resources of both Groups to establish transportation services that improve the convenience for customers and grow our businesses, while addressing the "2024 Problem" faced by the logistics industry, as well as carbon neutrality.

• Enhancing value provision to corporate clients

Amid the increasing risk factors such as global politics and economics as well as supply chains forming "blocks", together with environmental issues, the Yamato Group has positioned the solutions business, which aims to solve clients' management issues across the entire supply chain, as a new growth area. In this context, the Yamato Group continues to establish and expand dedicated networks by integrating sales and operations, while utilizing the Group's management resources to the fullest, in order to expand the value we provide to the entire supply chain, from Japan to the world.

In addition, the Yamato Group is promoting green logistics, such as the introduction of EVs and temperature-controlled deliveries without using dry ice, in order to achieve our goal of net zero greenhouse gas (GHG) emissions (own emissions) by 2050. In the six months ended September 30, 2023, we continued developing the GHG emissions visualization tool that is in conjunction with the international standard ISO 14083:2023, with the aim of optimizing inventory owned by clients and their production activities, and building a supply chain with less environmental impact, while at the same time working to reduce our own emissions.

• Promoting strategies for achieving sustainable enhancement of corporate value

The Yamato Group is working to promote digital and HR strategies, as well as enhancing sustainable management and governance, which will serve as the platform to expand the value provided to the supply chain on an "End to End" basis, while realizing the sustainable enhancement of corporate value.

As for our digital strategy, we are establishing a structure that integrates "Business and Digital", while expanding the value provided to clients and improving operational efficiency, by utilizing our digital information platform "Yamato Digital Platform", which can grasp all sorts of information on a real-time basis, and connect it to both internal and external systems. In the six months ended September 30, 2023, we began developing an organizational structure to collect and analyze customers' voices, as well as promote the improvement and design of services, using digital technologies, with the aim of further enhancing the value customers feel when they experience our services.

In terms of our HR strategy, we are establishing the optimal talent portfolio to create new value-add, as well as accommodating a diverse variety of employees and boosting their motivation, based on our "Human Resources Management Policy" that links the growth of employees to the growth of the Group. As for strengthening our sustainable management, we are promoting initiatives to address the materiality specified based on our two visions, towards mid to long-term corporate value enhancement and realizing a sustainable society, of "Connect. Deliver the Future via Green Logistics" and "Through Co-Creation and Fair Business Activities, Help Create a Society That 'Leaves No One Behind'".

In terms of the environment, we are continuing to promote measures such as "introducing 20,000 EVs", "introducing 810 solar power generation equipment" and "improving the usage rate of renewable energy- based electricity", in order to achieve the target of "48% reduction in GHG in 2030, compared to fiscal year ended March 2021" and "net zero GHG emissions (own emissions) by 2050". In the six months ended September 30, 2023, we began the introduction of approximately 900 2-ton EV trucks nationwide. Moreover, we are promoting measures to realize sustainable logistics, including initiatives to optimize EV

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operations, utilize electricity derived from renewable sources, and the development of an energy management system.

In terms of the society, we are continuing to work on initiatives to realize an enriched society valuing the diversity of our talent, and creating a work environment that brings out the best of our employees, while addressing various social issues, and helping to build local communities through co-creation.

As for enhancing our governance, we will continue to reinforce our corporate governance, by measures such as separating the oversight and execution in our management, as well as maintaining and strengthening management transparency. We are also engaging in business structural reforms through a governance structure focusing on the speed of decision-making.

Business strategies of each segment

• Retail Business Unit
• The Retail Business Unit provides high-qualitysmall-lot parcel delivery services such as TA-Q-BIN, while serving as the starting point of business for the entire Group, and has been working to provide value that addresses the needs of our customers by utilizing our strength of having points of contact with customers that is originates through the provision of TA-Q-BIN services, with our front-line employees monitoring and capturing changes in our customers in their lifestyles and business environments, and working with the sales people in charge of corporate clients and proposing solutions that utilize the Group's management resources. The Retail Business Unit has also been working to provide services that make sending and receiving more convenient, particularly the "Kuroneko Members" service, which has more than 50 million registered members, and the "Yamato Business Members" service, which is used by more than 1.6 million corporate clients, and also through efforts to upgrade various services other than those involving transportation that are beneficial in terms of people's lives and business.

• The Retail Business Unit is working to reinforce the TA-Q-BIN network, with the aim of enhancing productivity of the overall network operations. In the six months ended September 30, 2023, we continued to conduct trials to consolidate and enlarge TA-Q-BIN sales offices mainly in the urban areas, in contrast with our previous strategy of opening many small offices, as well as establish a network designated to temperature-controlled deliveries, while establishing a system to flexibly adjust the delivery area and routes based on fluctuations in the workload.

• Operating revenue of the Retail Business Unit from external clients amounted to 430,789 million yen, down 1.6% year-on-year, as a result of the rise in the unit price of parcels, while there was a decline in volume. Operating profit increased 6,861 million yen year-on-year, due to factors including progress made in optimizing operating costs.
• Corporate Business Unit

• The Corporate Business Unit is integrating sales and operations and promoting the establishment and expansion of the designated network, with the aim of enhancing value provision to the entire supply chain that connects Japan to the world, while taking a step further than improving the quality and efficiency of logistics operations, to strengthen account management, which involves making improvement proposals based on management issues faced by clients, and engaging in effective project development as well as management and operations.

• In the urban areas where EC demand is concentrated, the Unit has been building an EC logistics network with more simplified operations covering sorting, transportation and last-mile deliveries, as well as using our partnerships with major e-commerce companies to implement initiatives to further improve convenience and expand sales for services that completely or partially replace operational functions from order receiving to shipping and delivery, with the aim of optimizing logistics for e-commerce vendors with stores in online shopping malls.
• • 4 -

• In cross border EC for which growth is accelerating, we are working on initiatives to enhance value provided on an "End to End" basis over the supply chain, such as connecting the IT system for import customs clearance with the domestic delivery network, in order to shorten the lead-time to delivery. In the six months ended September 30, 2023, we began operating a new scheme using the 3-temperature zone logistics network (regular temperature, chilled and frozen), with the aim of expanding the "meal services business" of a restaurant chain operator with which we signed the Lead Logistics Partner agreement. By utilizing this scheme, in which we have secured a shipment and delivery structure that can adapt flexibly to demand, as well as stable transportation capacity, we will optimize the entire supply chain, which will lead to lower GHG emissions, as well as contribute to productivity improvement of customers of the meal services by adjusting the delivery times.

• Operating revenue from customers was 407,446 million yen, down 2.1% year-on-year, mainly as a result of the decline in international transportation volume. Operating profit declined 12,658 million yen year-on- year, due to factors including the increase in expenses to consign deliveries to the Retail Unit.

(Reference)

(Million parcels / units)

	For the six months	For the six months
Category	ended September 30,	ended September 30,	Change	Growth (%)
	2022	2023
TA-Q-BIN/TA-Q-BIN Compact/EAZY	940	911	(28)	(3.0)
Nekopos	209	212	2	1.4
Kuroneko DM-Bin	400	372	(28)	(7.1)

• Other
• During the six months ended September 30, 2023, we continued to promote efforts to expand sales for transportation by transport box taking advantage of the network consisting of multiple corporate groups and for vehicle maintenance services.

• Operating revenue from customers was 28,346 million yen, down 4.7% year-on-year. Operating profit was 6,811 million yen, down 3.8% year-on-year.

Initiatives such as safety and regional co-creation

• The Yamato Group places utmost priority on protecting human life and conducts a range of safety measures. Accordingly, its transport safety management practices in that regard involve drawing up its Safety Management Regulations, building up its transport safety management systems, and formulating annual plans, all centered on respective Group companies whose main operations involve transport. During the six months ended September 30, 2023, we continued to conduct the "Traffic Safety Class for Children" at kindergartens and elementary schools. Moreover, the entire Yamato Group carried out the
  "Zero Traffic Accidents Campaign" and "Campaign to Prevent Work-related Accidents" in order to improve safety awareness.

• Aiming to create more sustainable social value, the Yamato Group promotes initiatives for sharing value with society based on the concept of "Creating Shared Value (CSV)." We continue to operate the Neko Support Station as a local community facility that supports the healthy and sustainable development of the local community, and the safe and comfortable lives of people in the area. We also provide housekeeping support services, monitoring services that use "HelloLight" IoT light bulbs, consultation services for everyday life, and hold events that enable interaction among community members. Moreover, in the six months ended September 30, 2023, Yamato Transport signed a basic agreement regarding the partnership with a retailer that operates drug stores in Hokkaido. In order to address social issues faced by Hokkaido, such as population decline, the aging society and declining birthrate, as well as the difficulty of maintaining logistics networks due to the vast area and snowfall, and to realize a sustainable regional economy, Yamato Group is working to enhance shopping support using the TA-Q-BIN sales offices and mobile
• • 5 -

vending vehicles, make it possible to receive parcels at drug stores, have items purchased in stores delivered to people's homes, as well as provide efficient and stable deliveries of merchandise to retailers.

• Aspiring to be a company that continually evolves in step with society, and led by the Yamato Welfare Foundation, the Yamato Group conducts various activities to help realize a society in which disabled people can experience the joy of working autonomously. Specifically, we engage in ongoing programs that support economic independence of people with disabilities, such that include actively employing people with disabilities at the Swan Bakery which makes and sells bread, and operating job-finding support facilities where they take part in training to acquire skills and knowledge necessary for employment.

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1. Explanation of financial position (Assets, liabilities and net assets)
   Total assets were 1,117,973 million yen as of September 30, 2023, up 10,386 million yen from the end of the previous fiscal year. The increase was largely attributable to the increase in cash and deposits of 4,940 million yen, while investment securities increased 6,348 million yen due to mark-to-market evaluation and other factors.
   Liabilities increased 37,261 million yen to 528,417 million yen from the end of the previous fiscal year. The increase was largely attributable to the 20,000 million yen increase in short-term borrowings, while bonds payable increased 20,000 million yen due to the issuance of green bonds.
   Total net assets were 589,556 million yen, down 26,874 million yen from the end of the previous fiscal year. The major factors included profit attributable to owners of the parent being 5,384 million yen, and conducting 8,343 million yen of dividends of surplus, as well as the acquisition of 28,851 million yen of our own shares.
   As a result, the equity ratio changed to 52.2% from 55.1% in the previous fiscal year.
   (Cash flows)
   Net cash provided by operating activities for the six months ended September 30, 2023 amounted to 24,000 million yen. Compared with the same period of the previous fiscal year, the amount of net cash provided decreased by 3,238 million yen. This is largely attributable to the profit before income taxes being 10,266 million yen, and income decreasing by 7,165 million yen, and the 1,524 million yen decrease in consumption taxes payable, while accrued expenses increased 6,227 million yen.
   Net cash used in investing activities was 19,161 million yen, a decrease in spending of 12,330 million yen compared with net cash provided in investing activities in the same period of the previous fiscal year. This is largely attributable to a 6,008 million yen decrease in purchase of property, plant and equipment, the 5,253 million yen decrease in other expenses, and the 1,265 million yen proceeds from the sale of the shares of a subsidiary with a subsequent change in the scope of consolidation in the six months ended September 30, 2023.
   Net cash from financing activities was 413 million yen, an increase of 17,663 million yen compared with net cash used in financial activities in the same period of the previous fiscal year. This was largely attributable to the 19,928 million yen increase from the issuance of bonds, the net increase of 15,600 million yen in short-term borrowings, as well as the 18,834 million yen spent to acquire our own shares in the six months ended September 30, 2023.
   As a result of the above, cash and cash equivalents were 189,452 million yen as of September 30, 2023, up 6,227 million yen from the end of the previous fiscal year.

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1. Explanation of consolidated earnings forecasts and other forward-looking statements
   In the business environment surrounding Yamato Group, there are signs of inflation slowing down globally, due to factors including increased stability in the COVID-19 pandemic, as well as in natural resources and energy prices, which had been rising due to the instability in global affairs. Meanwhile in Japan, it remains hard to anticipate a full-fledged economic recovery, due to factors such as the current further weakening of the Japanese yen, despite the fact that companies are continuing to pass on the rise in costs to their prices, as well as the recovery in consumption of services and capital expenditures
   Under these circumstances, the Yamato Group is promoting initiatives to provide comprehensive value to address the diversifying needs of customers and society, in order to achieve sustainable corporate value enhancement through "Helping to enrich our society" which is part of our Management Philosophy, under the
   Group management structure in which we brought together the management resources of each Group company.
   As for the full-year earnings forecast, operating revenue is expected to be lower than the previous forecast, due to the current demand trends as well as the performance in the first half of the fiscal year. Operating profit is expected to be lower than the previous forecast, although the Company will continue to focus on optimizing operating costs. Ordinary profit and profit attributable to owners of parent are expected to be below the previous forecast, due to the decrease in operating profit.
   Due to these and other factors, the Yamato Group has made changes to the consolidated earnings forecasts for the fiscal year ending March 31, 2024, since the announcement made on August 3, 2023. The change is as follows;
   Consolidated earnings forecasts for the full year of the fiscal year ending March 31, 2024

	Operating	Operating profit	Ordinary profit	Profit attributable to	Basic earnings
	revenue	owners of parent	per share
	Millions of yen	Millions of yen	Millions of yen	Millions of yen	Yen
Forecast as of August 3,	1,820,000	80,000	80,000	58,000	165.37
2023 (A)
New Forecast (B)	1,785,000	65,000	65,000	52,000	148.21
Forecast Change (B-A)	(35,000)	(15,000)	(15,000)	(6,000)	-
Forecast Change (%)	(1.9)	(18.8)	(18.8)	(10.3)	-

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