Current Situation and Management Policies of Nippon Express (1)
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Transcript of Current Situation and Management Policies of Nippon Express (1)
All Rights Reserved,copyright 2006 Nippon Express CO.,LTD1
1. Measures taken in the second half of FY March 2006 and onwards
- Promote measures that will serve as stepping stones for medium/long term business expansion -
・Aggressive investment in warehousing businessDeveloped and improved warehouses in Dusseldorf and Munich, Germany (December 2005) New distribution warehouse rolled out in Shanghai, China (January 2006) New SCM warehouse launched in Chiba, Japan (June 2006)
・ Business expansionsSet up Nippon Express Tijuana, Mexico (March 2006) Set up Nippon Express St. Petersburg, Russia (July 2006) Opened a representative office in Wroclaw, Poland (March 2006)
・Business expansions through alliances Establish MC NITTSU CHINA HOLDINGS CO., LTD. (holding company jointly established by Nippon Express and Mitsubishi Corporation) (September 2005) Launched regular truck transportation linking 80 cities in China (March 2006)Made investment in a new air freight company jointly set up by All Nippon Airways and Japan Post (April 2006)
1.Measures taken in the second half of FY March 2006 and onwards
□ Aggressive development of measures in global cargo business
All Rights Reserved,copyright 2006 Nippon Express CO.,LTD2
□ Deployment of small cargo business
・Improved qualityStarted “e-Issue Series”, a new invoice issuance system for Pelican Service (July 2005) Expanded designated delivery zone to 6 zones from 4, thus improving quality (November 2005)
・Reinforced sales activitiesAssigned to each branch a sales representative dedicated to handle small cargo Promoted sales for short distance transport and small cargo
- The handling volume has seen a year-on-year upturn since April 2006 Domestic air cargo concentrated on B-to-B. A new product of specified mail delivery launched
(February 2006) Expanded sales of Privacy Guard
・Boosted operational efficiency Jointly handle terminal work and distribution work with domestic air cargo division and Nippon Express Group Companies.
1.Measures taken in the second half of FY March 2006 and onwards
All Rights Reserved,copyright 2006 Nippon Express CO.,LTD3
・Cost reductions Implemented career change support measure (favorable treatment for early retirement)
- involving 541 people and an annual effect of 4.6 billion yen
・Improved unit rates Response to increasing costs due to steep rise in fuel pricesTrack, domestic shipping, air-freight forwarding from November 2005
・Company-wide use of IT in accounting work Process completed in October 2005
- Administrative Center functions will be developed and expanded in future
・ Create a new business division for heavy haulage and construction work.
□ Various measures to improve domestic revenues and reduce payments
— Although we were successful in substantially reducing labor costs, negotiations with our customers on raising unit freight rates did not see sufficient progress —
1.Measures taken in the second half of FY March 2006 and onwards
All Rights Reserved,copyright 2006 Nippon Express CO.,LTD4
□ Financial results for the past three years and projections for this fiscal year
Consolidated segment information
FY March 2005
FY March 2006
Japan 2.3 2.2
Americas 4.6 4.5
Europe 4.8 5.5
Asia/Oceania
4.24.0
Operating margin
1.Measures taken in the second half of FY March 2006 and onwards
All Rights Reserved,copyright 2006 Nippon Express CO.,LTD5
2.New Medium-Term Management Plan: Power-up Three-year Plan(from April 2006 to March 2009)
□ Five Power-up Items
Power-up in sales Try to strengthen sales by implementing measures based on the characteristics of each business.Expand global business, enhance 3PL business, services specially made for each regions, and develop new businesses
Power-up at operational frontsDevelopment of human resources, quality improvement, sales promotion capability, and improvement of operational efficiency, etc.
Power-up in CSR practices Compliance, risk management/security control, and environmental management
Power-up in management practicesEffective use of assets, low cost, efficient use of funds, and IT, etc.
Power-up in small cargo businessTry to solve management issues by promoting reforms in businesses.
2.New Medium-Term Management Plan: Power-up Three-year Plan (from April 2006 to March 2009)
All Rights Reserved,copyright 2006 Nippon Express CO.,LTD6
□ Target value
2.New Medium-Term Management Plan: Power-up Three-year Plan (from April 2006 to March 2009)
All Rights Reserved,copyright 2006 Nippon Express CO.,LTD7
Consolidated Sales Ordinary profit
FY March 2006 Results1,793.9
(Balance after deduction of on-consolidated profit: 497.7)
49(Balance after deduction of non-
consolidated profit: 17.3)
Increase in revenue on non-consolidated basis 87.8
Overseas business 46.0
Overseas new consolidated companies
Nittsu Shoji, etc.
Consolidated/eliminations
Total
35.0
55.0
(17.7)
206.1
Target for FY March 20092,000
(Total of all companies excluding non-consolidated companies: 616)
60(Total of all companies excluding non-
consolidated companies: 19)
11(Balance after deduction of
non-consolidated profit: 1.7)
31.71,296.2FY March 2006 Results
Ordinary ProfitOperating RevenuesNon-consolidated
Total
Reduction in handling volume, etc.
Regional, new service
3PL Business
Global Business
41.01,384Target for FY March 2009
9.3
(42.2)
87.8
44.0
49.0
37.0
(Unit: Billions of Yen)□ Direction of business
Rev
enue
s C
hang
esR
even
ues
Cha
nges
2.New Medium-Term Management Plan: Power-up Three-year Plan (from April 2006 to March 2009)
All Rights Reserved,copyright 2006 Nippon Express CO.,LTD8
□ Outline of New Management Plan
* International revenues = Sales by location (Americas+Europe+Asia/Oceania) + overseas operating revenues of parent company
・Boost the percentage of revenues from international business within total revenues (to 30% or 600billion yen of total sales of 2 trillion yen after three years)
・Reinforce competitive edge of region-specific business (revitalize overall domestic business by strengthening cost performance, quality, marketability and proposal capabilities; undertakingconcentration, elimination and consolidation of organizations; and realigning sales force and workload)
2.New Medium-Term Management Plan: Power-up Three-year Plan (from April 2006 to March 2009)
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Ranking Company name Market share(%)
Handling weight(1,000t)
1 Nippon Express 20.8 60
2 Kintetsu World Express 13.7 40
3 Yusen Air & Sea Service 12.4 36
Ranking Company name Market share(%)
Handling weight(1,000t)
1 Nippon Express 19.8 53
2 Yusen Air & Sea Service 13.9 37
3 Kintetsu World Express 11.8 32
Ranking Company name Market share(%)
Handling weight(1,000t)
1 Nippon Express 22.4 151
2 Kintetsu World Express 15.5 104
3 Yusen Air & Sea Service 12.3 83
Ranking Company name Market share(%)
Handling weight(1,000t)
1 Nippon Express 21.2 276
2 Kintetsu World Express 14.1 183
3 Yusen Air & Sea Service 12.8 166
・Expansion of international and overseas business
□ Currently ongoing activities in accordance with the Management Plan
Ranking of market share in air cargo business (export from Japan) for FY March 2006 (JAFA)
To USA
ToEurope
To Asia
Total
2.New Medium-Term Management Plan: Power-up Three-year Plan (from April 2006 to March 2009)
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・Business expansion in logistics within regions
Region AreaJapan (Nippon Express Sales Warehouse) 2,439
Americas 435
Europe 297
Asia/Oceania 459
(Unit: 1,000m2)
Comparisons of warehouse area
2.New Medium-Term Management Plan: Power-up Three-year Plan (from April 2006 to March 2009)
All Rights Reserved,copyright 2006 Nippon Express CO.,LTD11
U.S.A.MEXICOBRASILCHILICANADA
NETHERLANDSU.K.
IRELAND
GERMANY
AUSTRIA
HUNGARY
CZECH
FINLAND
POLAND
SWITZERLAND
BELGIUM
LUXEMBOURG
SPAIN
PORTUGAL
FRANCE
ITALY
SOUTH AFRICA
UNITED ARAB EMIRATES
TURKEY
RUSSIAN FEDERATION
SINGAPORE
MALAYSIA
AUSTRALIA
NEW ZEALAND
CHINA
KOREA
TAIWAN
THAILAND
VIETNAM
INDONESIA
PHILPPINES
INDIA
・Business expansion into more countries
37 Countries where our corporate group have made inroads
2.New Medium-Term Management Plan: Power-up Three-year Plan (from April 2006 to March 2009)
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・Expanding the number of consolidated companies by acquiring interests of joint companies
Current situations in Asia/Oceania RegionFY March 2006 Consolidated Results
Transport segment-Asia/Oceania Region 80,728 Million Yen
19,320 Million Yennon-equity method affiliates
23,731 Million YenEquity method affiliates
2,181 Million YenNon-consolidated company
Breakdown
45,232 Million YenTransport segment-Asia/Oceania Region
FY March 2006 Non-consolidated Results
2.New Medium-Term Management Plan: Power-up Three-year Plan (from April 2006 to March 2009)
All Rights Reserved,copyright 2006 Nippon Express CO.,LTD13
・Expansion of 3PL (3-Party Logistics) business Construction of new distribution warehouses
- response to demand for larger facilities and need for distribution warehousesBuilding up human resources and know-how – through education, new hiring and M&ABusiness deployments leveraged on the overall capabilities
- networks, warehouse, transport modes, operations, and information system
Major investments in buildings
Location Usage Size(m2) Scheduled completion
Chiba Air Cargo 16,668 June 2006
Tokyo Trunk room 22,737 January 2007
Osaka Warehousingservice 47,242 April 2007
Kanazawa Warehousingservice 18,965 April 2007
Yokohama R & D facility 10,860 February 2007
Kyoto Distribution center 14,536 August 2007
Tokyo(lease) Terminal 38,481 May 2006
Tokyo(lease)
Warehousing service 56,710 December 2007
2.New Medium-Term Management Plan: Power-up Three-year Plan (from April 2006 to March 2009)
All Rights Reserved,copyright 2006 Nippon Express CO.,LTD14
★Sales trend of differentiated services
★Response to new demands
・Improving services and expanding sales in regions Expand businesses which can be differentiated Response to new demands Cost reductions
- handle work mainly by local employees and reduce management and clerical work Efficient organizational structure
2.New Medium-Term Management Plan: Power-up Three-year Plan (from April 2006 to March 2009)
All Rights Reserved,copyright 2006 Nippon Express CO.,LTD15
3. Strengthening management structure in medium/long term
・Strengthening capabilities of operational fronts → Expand revenues at local regions in Japan
Full scale entry into manpower dispatching service Direct hiring of technical employees, who would be the future leaders of the company Reduce the number of office clerks and improve their standards with the use of information technology and hiring mid-career specialists
・Effective use and reorganization of assets → Boosting efficiency of assets
Concentration of small warehouses into large distribution warehouses Use of smaller urban sites for multiple purposes Draw up a plan for assets disposal or use from medium/long term perspectives
・Shift of business compositions → Improve profit margin
Towards general logistics including warehousing from transportation service mainly by vehicles Shift our focus from transportation to forwarding service Shift our focus from domestic business to international business
3. Strengthening management structure in medium/long term