Message from the Management

Revenues Continue to Grow Despite Harsh OperatingEnvironment
Yamato Transport Co., Ltd., again faced extreme adversity in the Takuhaibin (door-to-doorparcel delivery services) market in fiscal 2003, ended March 31, 2003, as the severity of theemployment and wage environments increased amid the prolonged economic slump inJapan. Under these conditions, we increased the quality of our existing services, rebuilt ourinformation systems, and continued to open more small delivery centers, resulting in both
higher revenues and earnings. Consolidated operating revenues rose 4.3% to ¥972,135
million (US$8,087.6 million). Cost cutting programs and other measures pushed operating
income up 6.8% to ¥56,818 million (US$472.7 million), while net income jumped 76.3% to¥48,502 million (US$403.5 million).

New Three-Year Plan
We instituted a new three-year plan in April 2002 to meet the challenges of an operating
environment continually characterized by stiff competition and shifts in distribution
modes. The plan calls for further refinements in the Company’s service network to create
new value for society. Rather than positioning our transportation capabilities as a solitary
function, the plan revolves around our comprehensive resources and expertise in distribution, information, and settlement services. The plan also calls for reassessment of ourbusiness practices and policies to create a framework that better facilitates profit growth.
To ensure that these efforts translate into greater operational efficiency, we will create amore focused portfolio with clearly defined business domains. By doing so, we aim toconstruct a system for creating businesses that are capable of operating as stand-alone
units in every area of our operations, with the ultimate goal of enhancing the value of theGroup as a whole.

Better than Expected Progress
The new plan covers the three-year period ending in March 2005. The first priority isapproximately doubling within 10 years the number of our delivery centers, the backboneof our service infrastructure. Through realignments and divisions of existing centers into
smaller ones, we plan to increase the number of centers from 2,600 to 5,000. This will
better position us in the ongoing battle for market share in the door-to-door parcel delivery
market, where volume has peaked at around three billion packages annually. Still, Yamato

LeftKeiji Aritomi
ChairmanRightAtsushi Yamazaki
President

Transport has much experience in maintaining close links with consumers as the pioneer ofJapan’s parcel delivery industry. We aim to further expand our nationwide logistics network
to provide even denser service coverage and to further differentiate our services from thecompetition. We expect to achieve ahead of schedule the target of increasing the number ofparcel delivery centers as part of a plan to upgrade our infrastructure. Moreover, we established a unit called the Mail Delivery Center specifically to handle the Kuroneko mail business and turned the BIZ-Logistics business, which specializes in transporting items betweencompanies, into an independent unit to cultivate new customers. We also launched newservices for small and midsize companies. Aimed at contributing to revenues, these services
include the provision of settlement and financing functions at our business locations.
We are confident that the framework and systems constructed in the first year of thenew plan will contribute to earnings in its second year, the fiscal year ending March 31, 2004.
In an external development, Japan Post was inaugurated in April 2003. Although thisorganization has a massive infrastructure and scale of operations, we welcome its arrival
as a competitor that will provide renewed vitality to our markets.
We would like to thank our shareholders and ask for their continued support in taking
up the challenges ahead.

Keiji Aritomi

Atsushi Yamazaki

ChairmanPresident

YAMATO TRANSPORT Annual Report 2003

02,03