CEO Message
Renewed on Nov 8, 2011
Satoshi Ishizaki
I would firstly like to send my best wishes and thanks to all our shareholders.
As regards the consolidated results for the first half of the fiscal year ending March 2012, given a decline in transport demand arising largely from the economic turmoil in Europe and a decrease in U.S. consumption, net sales were below those initially forecast although they did increase 2.3% year-on-year to 136,034 million yen. However despite this there was a large increase in operating income of 34.8% to 6,660 million yen and also for net income in the first half of the fiscal year of 19.3% to 4,719 million yen.
The major facts that lead to a large increase in profits despite a slowdown in net sales growth were a lowering of the ratio between cost to operations revenue as well as other cost reductions due to the ongoing implementation of comprehensive rationalization strategies that has been continuing since the "Lehman Shock".
As regards the forecast results for the entire fiscal year ending March 2012, while the operating environment is expected to become harsher in the second half due to factors such as the long term stagnation in the economies of U.S. and Europe, and also a slowdown of growth in emerging countries such as China and other Asian nations, taking into consideration the positive results in the first half, the year-on-year profit forecasts have been revised upward to net sales 272,000 million yen an 1.6% increase, operating income 13,300 million yen an 11.8% increase and net income 9,200 million yen a 16.7% increase.
Against the above economic background, KWE has accelerated its business expansion in China based upon the strategy set forth in its medium-term management plan. While in the last fiscal year we established bonded distribution companies in coastal cities such as Shanghai, Dalian, and Guangzhou, in this fiscal year we have been expanding our service system with a focus on inland cities. KWE in June established a jointly owned company in Chongqing and in July another in Chengdu. Both these companies are now providing a full-range of logistics services such as bonded distribution services and the like as well as regular bonded truck transport services between coastal and inland areas.
In addition in regions other than China, KWE has been actively expanding its networks. As part of this active expansion, warehouses focusing on automobile parts related operations were established in India in this fiscal period in Noida and Manesar which commenced operations in May and October respectively. In addition to commencing operations of a specialized logistics company focusing on electronic components and automobile parts in Thailand in June, in Indonesia we also established a new warehousing company in September in line with that country's even increasing demand for logistics services.
The wide ranging organizational reforms implemented by KWE in April this year focus not just on increasing in the percentage of operating income provided by our overseas operations but aim for greater functionality in our group management control framework and encouraging a commonality in thinking throughout the entire KWE group that cuts through organizational and regional barriers to achieve the best possible outcome in operations implementation which in turn will greatly improve group functionality.
While medium-term 3-year management plan "Ready for the Next!" enters into its second half in October, at present we believe it is on track to produce the forecast favorable results. Based on the results to date, the entire KWE group as a single entity is committed to the ongoing establishment of a balanced management system to increase its competitiveness in the global market. I would therefore like to take this opportunity to request the continued future support of all our shareholders and investors.
