FY22.3
Semi-Annual Investors Meeting
November 4, 2021

Contents

Ⅰ

Financial Results for the First Six-Months of FY22.3

4

Ⅱ

Full-Year Performance Forecasts and Dividend Forecasts for
FY22.3

8

Ⅲ

Understanding of the Current Business Environment andStrategic Direction

19

APPENDIX

34

2

Highlights
Financialresults for the
first sixmonths of
FY22.3 The COVID-19 infection had an influence, but consolidated operating revenues,
operating income, ordinary income, and net income attributable to owners of theparent all increased due to a gradual recovery in demand, etc.

 Accompanying the re-spread of the COVID-19 infection, mobility demand declined,leading to sluggish revenues from railway transportation, etc., and the recovery in

Full-year
performance
forecasts anddividend
forecasts for
FY22.3demand has been later than initially expected. As a result, we are anticipating lower
revenues in the second half, and we have implemented downward revisions, centered on
the railway, hotel, and retail and restaurant businesses.
 Despite cost reductions, centered on the railway business, we revised the full-year
consolidated performance forecast to call for an operating loss.
 We have not revised the dividend forecast. We are planning an annual dividend of ¥93

per share (year-end dividend only).

Understanding of
the current
business
environment andstrategic direction

 Railway usage is currently increasing, but in the short term we do not expect arecovery to the level before COVID-19.
 We are working to strengthen our business portfolio, implement structural reforms inexisting businesses, and further advance city-building around our bases.
3

Ⅰ

Financial Results for the First Six-Months of FY22.3

4

Consolidated Financial Highlights for the Six-Month Period Ended
September 30, 2021
Operating revenue（\bil）
6 months ended

6 months ended

YoY

September 30,2020 September 30,2021

Operating revenue

124.5

141.6

17.0

113.7%

Operating income(20.5)

(4.0)

16.4

-

Ordinary income(19.5)

(1.0)

18.4

-

2.9

(0.9)

(3.8)

-

(10.2)

(2.0)

8.2

-

(7.3)

8.8

16.1

-

Extraordinary gains andlosses
Net income attributable toowners of the parent
EBITDA※※Note: EBITDA = operating income + depreciation expense (excluding depreciation of leased assets held for subleasing purposes). The same applies hereafter

Change in operating revenue by segment（億円）（¥bil）

+0.8
+7.6
1,250
125

+2.5

Operating income
Due to higher operating revenue and continued
cost reduction efforts, operating results
improved by ¥16.4 billion year on year.
Nonetheless, due to the continued influence of
the COVID-19 infection, we recorded an
operating loss.

Change in operating income by segment（億円）（¥bil）

+16.4

1,500
150

Despite the continued influence of the COVID-19
infection and the change of JR Kyushu Drug
Eleven to an equity-method affiliate [¥(12.4)
billion], operating revenue increased due tocondominium sales and a moderate recovery indemand in each business.

(9.7)

141.6

0

+5.2

(0.5)
+9.1

△ (10)
100

124.5

+0.8

+0.8
(4.0)

+0.1

△ (20)
200(20.5)
100
1,000

不
動
産
・
ホ
テ
ル

流
通
・
外
食

そ
の
他

Operatingincome(FY22.3)
2022.3

建
設

Other

運
輸
サ
ー
ビ
ス

Retail andRestaurant

営
業
利
期 益
）

Real Estateand Hotels（

Construction

営
業
収
期 益
）

△ (30)
300

Transportation（

Operatingincome2021.3(FY21.3)

調整額Operatingrevenue
2022.3(FY22.3)

その他

Adjustment

流
通
・
外
食

Other

不
動
産
・
ホ
テ
ル

Retail andRestaurant

建設Real Estateand Hotels

運
輸
サ
ー
ビ
ス

Construction

営
業
収
期 益
）

Transportation

Operatingrevenue
2021.3(FY21.3)

（

（

営
業
利
期 益
）

5

Results for the First Six Months of FY22.3 (by segment)（\bil）
6 months ended

6 months ended

September

September

30,2020

30,2021

YoY

Major factors

Operating revenue

124.5

141.6

17.0

113.7%

Transportation

41.3

48.9

7.6

118.4%

38.9

46.2

7.3

118.8% Increase due to moderate recovery in demand

Construction

36.1

38.6

2.5

106.9%

Real Estate and Hotels

27.3

43.7

16.4

160.3%

Real Estate Lease

22.9

28.3

5.3

123.2% Building, increase due to rebound from previous fiscal year’s building

Real Estate Sales

1.9

11.9

10.0

626.0% Increase in revenue from sales of condominiums

Railway Business (non-consolidated)

Increase due to opening of Kumamoto Station Building and Miyazaki Station
closures, rent reductions, etc.
Hotel Business

2.4

3.5

1.1

146.1% Increase due to rebound from previous fiscal year’s building closures

Retail and Restaurant

29.4

19.6

(9.7)

66.8% Decrease due to transfer of a portion of holdings of the shares of JR Kyushu Drug Eleven

28.2

27.7

(0.5)

98.0%

Operating income

Other(20.5)

(4.0)

16.4

-

Transportation(21.1)(11.9)

9.1-(20.3)(11.6)

8.7-

Construction

1.0

1.1

0.1

111.8%

Real Estate and Hotels

1.4

6.7

5.2

456.1%

Real Estate Lease

5.0

7.3

2.3

146.4%

Real Estate Sales

(0.3)

1.5

1.9

-

Hotel Business

(3.1)

(2.1)

1.0

-

Retail and Restaurant

(1.9)

(1.1)

0.8

-

Other

0.4

1.2

0.8

295.2%EBITDA

(7.3)

8.8

16.1

-

(15.7)

(7.7)

8.0

-

(15.4)

(7.8)

7.5

-

Railway Business (non-consolidated)

Transportation
Railway Business (non-consolidated)
Construction

1.5

1.6

0.1

108.2%

Real Estate and Hotels

7.4

13.7

6.2

183.0%

Real Estate Lease

9.8

13.1

3.3

134.1%

Real Estate Sales

(0.3)

1.5

1.9

-

Hotel Business

(2.0)

(1.0)

0.9

-

Retail and Restaurant

(1.2)

(0.5)

0.6

-

Other

1.2

2.1

0.8

167.0%

6

Results for the First Six Months of FY22.3 (non-consolidated)(\bil)

Operating revenue

6 months ended

6 months ended

September

September

30,2020

30,2021

YoY

Major Factors

56.2

74.7

18.4

132.8%

32.6

39.8

7.2

122.1%

Shinkansen

9.0

11.3

2.2

125.4%

Conventional Lines

23.6

28.5

4.9

120.8%

Other revenue

23.6

34.8

11.2

147.5% Increase in revenue from sales of condominiums

Operating expense

70.3

77.6

7.2

110.3%

19.7

20.6

0.9

104.8%

36.1

42.8

6.6

118.4%

Energy cost

4.0

4.1

0.1

102.9%

Maintenance cost

11.1

10.8

(0.2)

97.3%

Other

21.0

27.8

6.8

132.6% Increase in cost of sales due to increase in revenue from sales of condominiums

Taxes

5.9

6.2

0.2

104.0%

Depreciation cost

8.4

7.8

(0.6)

92.6% Decrease due to revision of depreciation method(14.1)

(2.8)

11.2

-

and expense

9.0

3.0

(5.9)

34.2%

Ordinary income

(5.1)

0.1

5.2

-

Railway transportation
revenues

Personnel expense

Increase due to moderate recovery in demand

Non-personnel
expenseOperating income
Non-operating income

Decrease in dividend income

Rebound from the sale of a portion of holdings of theshares of JR Kyushu Drug Eleven
Extraordinary gain
and losses

3.7

(0.8)

(4.5)

-

Rebound from disaster expenses associated with heavy
rains in July 2020
Rebound from increase in provision for loss on disaster
related to restoration of Hitahikosan Line, etc.

Net income

3.9

(0.2)

(4.2)

-

7

Ⅱ

Full-Year Performance Forecasts and Dividend
Forecasts for FY22.3

8

Performance Forecasts for FY22.3:
Revision of Revenues Expectations in Each BusinessWith consideration for the influence of the lengthening of the customer restraint in going out / movingaround due to the extension of the period of the state of emergency, we revised the assumptions forrevenues expectations in each business.

Transportation Segment

Retail and Restaurant segment

Handling revenues from railway transportation
運輸取扱収入（対コロナ前）(vs. period before COVID-19）
Commuter revenues
定期収入（累計）(cumulative)

100%

84.5%

75.8%

Non-commuter
定期外収入
revenues

（

50%

55.4%
37.5%

38.8%

１Ｑ

２Ｑ

）

Approx. 90%of previous forecast

Approx.
85%
85%程度

82.6%

Segment
sales (vs. period before COVID-19)
セグメント売上高（対コロナ前）（）

Approx. 70%
of previous forecast

65%程度
Approx.
65%

50%

0%
October
10月速報値

72.9%

74.0%

１Ｑ

October
10月速報値(preliminary
figures)※20日時点*As of the 20th

２Ｑ

Real Estate and Hotels Segment（(vs. period before COVID-19)

Hoteloccupancy rate
ホテル稼働率）Approx. 90%of previous forecast

100%

（

約9割 90%Approx.
Approx.
約8割 80%65.6%

４Ｑ

FY22.3Tenant sales at five major station buildings
主要5駅ビルテナント売上高（対コロナ前）

50%

約90%
9割
Approx.

* Calculated by subtracting the results of JR Kyushu Drug Eleven, whichbecame an entity accounted for using the equity method from the end of the
1st quarter of FY21.3. Versus figures from the period before COVID-19.
* October preliminary figures are the total of sales of major Group companies

FY22.3

100%

Approx.
約8割 80%0%４Ｑ(preliminary figures)*As of the 25th）（

Approx. 90%of previous forecast

100%

66.0%

）

Approx. 70%
of previous forecast

Approx.
約7割 70%50%
Approx.
約5割50%

29.6%
0%

35.3%

0%
１Ｑ

２Ｑ

October
10月速報値(preliminary figures)*As of the 20th

FY22.3

４Ｑ

１Ｑ

２Ｑ

October
10月速報値(preliminary figures)*As of the 20th

FY22.3４Ｑ

9

Performance Forecasts for FY22.3:
Major Factors for Operating Revenue and Operating Income
With consideration for first-half performance and current circumstances, we made downward revisions from the previous
performance forecasts, centered on the railway business.
Despite cost reductions, centered on the railway business, we revised the full-year consolidated performance forecast to call for
an operating loss.
Consolidated Operating Revenues
Railwaybusiness(15.7)

Bus/hydrofoil
ferrybusinesses, Real estateleasingetc.
business

(1.9)

(1.8)

344.2

（¥bil）
Hotel
business(4.8)

Retail and Real estatesales
Restaurant
businesssegment

(3.5)

＋0.6

Construction
segment

＋0.7

Other
segment

Adjustment,
etc.

＋2.1

(4.1)
315.8

Previous forecast
Consolidated Operating Income

10.6
Previous forecast

Current forecast

Decrease inrevenues in
the railway
business(15.7)

Decrease inrevenues in
non-railway
businesses

Further cost
reductions in
the railway
business

Non-railway
business costreductions,etc.

Initially: ¥14.0 billion
This time: ¥20.0 billion(vs. FY2020.3)(2.3)

Current forecast＋9.5(12.7)＋6.0
10

Consolidated Financial Highlights for FY22.3
Operating revenue(\bil)

Due to such factors as thedecline in transportation
revenues resulting from theextension of the period of thestate of emergency, we madedownward revisions to theperformance forecasts.

FY22.3Difference

Results

Previous

Current

FY21.3

forecast

forecast

First-half(August 3)(November 2)

results

YoY results(Reference)from previous
forecast

Second-half
expectations

Operating revenue

293.9

344.2

315.8

141.6

174.1

21.8

107.4%(28.4)

Operating income(22.8)

10.6

(2.3)

(4.0)

1.7

20.5

-

(12.9)

Ordinary income(19.3)

10.6

0.8

(1.0)

1.8

20.1

-

(9.8)

(18.9)

12.9

3.4

(2.0)

5.4

22.3

-

(9.5)

4.6

37.9

24.7

8.8

15.8

20.0

532.4%(13.2)Net income attributable toowners of the parent

EBITDA

Change in operating revenue by segment

Despite cost reductions,centered on the railway
business, we revised the fullyear consolidated performance
forecast to call for an operating
loss.

Change in operating income by segment（億円）（¥bil）（¥bil）
（億円）

50
500

3,500
350

+11.7

+8.1

+14.6
300
3,000

Operating income

293.9

(7.6)

(0.9)

315.8

(4.0)

25
250

△
250
(25)
2,500
250

(2.3)

△
500
(50)
そ
の
他

Operatingincome (22.3(FY22.3)

流
通
・
外
食

Other

不
動
産
・
ホ
テ
ル

Retail andRestaurant

建設Real Estateand Hotels

営
業
利
益
期

)

期

運
輸
サ
ー
ビ
ス

Construction

営
業
利
益

)

)

期

+0.5

(22.8)

Transportation

営
業
収
益

+1.5

(1.5)

Operatingincome (21.3(FY21.3)

調整額Operatingrevenue(22.3(FY22.3)

その他

Adjustment

流
通
・
外
食

Other

不
動
産
・
ホ
テ
ル

Retail andRestaurant

建設Real Estateand Hotels

運
輸
サ
ー
ビ
ス

Construction)

期

Transportation

Operating(21.3
revenue(FY21.3)
営
業
収
益

+4.4

+15.2

0 0

11

Consolidated Financial Forecasts for FY22.3(by segment)(\bil)

FY22.3Results
FY21.3

Previous

Current

forecast

forecast(August 3)(November 2)

Difference

YoY

Major factors

from previous
forecast

Operating revenue

293.9

344.2

315.8

21.8

107.4%(28.4)

Transportation

95.2

127.5

109.9

14.6

115.3% Increase due to moderate recovery in demand in railway business(17.6)

89.7

120.4

104.7

14.9

116.6%(15.7)

Construction

96.5

94.9

95.6

(0.9)

99.0% Decrease in railway construction orders from JR Kyushu

0.7

Real Estate and Hotels

80.1

97.9

91.9

11.7

114.7%(6.0)

Real Estate Lease

49.7

59.4

57.6

7.8

115.8%

Real Estate Sales

23.5

23.0

23.6

0.0

100.2%

0.6

Hotel Business

6.8

15.5

10.7

3.8

157.2% Increase in number of guests due to moderate recovery in demand, increase due to Kumamoto hotel opening(4.8)

Retail and Restaurant

51.4

47.3

43.8

(7.6)

85.1% Decrease due to transfer of a portion of holdings of the shares of JR Kyushu Drug Eleven(3.5)

93.6% Decrease due to lower sales of construction materials

Railway Business (non-consolidated)

Increase due to opening of Kumamoto Station Building and Miyazaki Station
Building, increase in revenues from leases due to moderate recovery in demand

(1.8)

63.6

57.5

59.6

(4.0)

Operating income(22.8)

10.6

(2.3)

20.5

-

(12.9)

Transportation(37.6)(12.3)(22.4)

15.2-(10.1)(36.6)(12.5)(21.8)

14.8

-

(9.3)

6.9

4.9

5.4

(1.5)

77.2%

0.5

Real Estate and Hotels

9.9

16.4

14.4

4.4

145.3%(2.0)

Real Estate Lease

12.0

14.0

13.9

1.8

115.1%(0.1)

Real Estate Sales

2.6

2.2

2.5

(0.1)

94.7%

0.3

Hotel Business

(4.7)

0.2

(2.0)

2.7

-

(2.2)

Retail and Restaurant

(2.5)

0.5

(1.0)

1.5

-

(1.5)

Other

1.7

2.1

2.3

0.5

131.3%

0.2

EBITDA

4.6

37.9

24.7

20.0

532.4%(13.2)(26.5)(3.4)(13.5)

13.0-(10.1)(26.4)(3.9)(13.3)

13.1

-

(9.4)

Other

Railway Business (non-consolidated)
Construction

Transportation
Railway Business (non-consolidated)

2.1

8.0

5.8

6.2

(1.8)

77.1%

0.4

Real Estate and Hotels

22.2

30.6

28.3

6.0

127.3%(2.3)

Real Estate Lease

22.0

25.8

25.6

3.5

116.3%(0.2)

Real Estate Sales

2.6

2.2

2.5

(0.1)

94.2%

0.3

Hotel Business

(2.4)

2.6

0.2

2.6

-

(2.4)

Retail and Restaurant

(1.1)

1.7

0.2

1.3

-

(1.5)

Other

3.7

4.6

4.8

1.0

129.5%

0.2

Construction

12Non-consolidated Financial Forecasts for FY22.3(\bil)

Forecasts
Results
FY21.3Difference

FY22.3
Previous

Current

forecast

forecast(August 3)(November 2)

YoY

Major factors

fromprevious
forecast

144.7

177.2

161.5

16.7

111.6%(15.7)

76.3

106.0

91.0

14.6

119.2% Increase due to moderate recovery in demand(15.0)

Shinkansen

22.4

36.0

28.9

6.4

128.5%(7.1)

Conventional Lines

53.8

70.0

62.1

8.2

115.4%(7.9)

Other revenue

68.4

71.2

70.5

2.0

103.1%(0.7)

Operating expense

165.3

173.7

166.6

1.2

100.8%

(7.1)

39.3

42.1

41.4

2.0

105.2% Increase due to results recovery

(0.7)

97.5

103.5

97.7

0.1

100.1%

(5.8)

7.9

8.3

8.3

0.3

103.8%-

Maintenance cost

29.0

31.7

30.5

1.4

105.0%

(1.2)

Other

60.5

63.5

58.9

(1.6)

97.3%

(4.6)

Taxes

10.8

11.4

11.2

0.3

103.6%(0.2)

Depreciation cost

17.5

16.7

16.3

(1.2)

92.8% Decrease due to revision of depreciation method(0.4)(20.5)

3.5

(5.1)

15.4

9.7

1.1

1.9

(7.8)

(10.8)

4.6

(3.2)

7.6

-

(7.8)

(0.8)

4.9

-

(0.8)

1.7

12.8

-

(8.4)

Operating revenue
Railway transportation
revenues

Personnel expense
Non-personnel
expenseEnergy cost

Operating income
Non-operating income
and expense
Ordinary income
Extraordinary gain
and losses
Net income(5.7)(11.1)

10.1

19.5% Decrease in dividend income

(8.6)
0.8

13

FY22.3 dividend forecasts
Shareholder return policy
 The Company views the return of profits to shareholders as one of its most importantmanagement tasks. Accordingly, the Company believes it is important to provide stableshareholder returns over the long term.
(Policy up to FY22.3)
・Aim for a dividend payout ratio of 35%, with a minimum dividend per share of ¥93.0
・To increase capital efficiency, implement share repurchases depending on the situation

FY22.3 dividend forecasts
 We are forecasting continued
extremely severe results for FY22.3.
(Yen）
However, as a result of consideration100in accordance with the above policy,80
the dividend forecast for FY22.3 is60¥93.0 per share.
40
 As in FY21.3, in FY22.3 we plan to20
pay dividends in one part, which0will be the year-end dividend, withno interim dividend. This is due to
Dividend
the need to carefully consider the
payout ratio
influence on future results of matters Total payout
ratiosuch as the COVID-19 infection.

(Reference) Annual dividends per share
Interim
中間配当

dividend

83.0
44.0

Year-end
期末配当
dividend

93.0

93.0

51.5

46.5

38.5
38.5

39.0

41.5

46.5

FY17.317.3期

FY18.318.3期

FY19.319.3期

FY20.3
20.3期

93.0

93.0

93.0

93.0

FY21.321.3期

FY22.322.3期（Forecast）

13.8%

26.3%

30.2%

46.9%

-

429.8%

13.8%

26.3%

30.2%

78.6%

-

429.8%* Implementation of a share
repurchase (¥10 billion)

14

(Reference) Transportation Segment【Results】【Forecasts】（\bil）

6 months ended

6 months ended

September

September

30,2020

30,2021

Operating revenue

Results

YoY

FY21.3

41.3

48.9

7.6

118.4%

Railway Business (non-consolidated)

38.9

46.2

7.3

118.8%

Railway transportation revenues

32.6

39.8

7.2

122.1%(21.1)(11.9)

9.1-(20.3)(11.6)

8.7-(15.7)(7.7)

8.0(15.4)(7.8)

7.5

Operating income
Railway Business (non-consolidated)
EBITDA
Railway Business (non-consolidated)（\bil）

FY22.3
Previous

Current

forecast

forecast(August 3)(November 2)

Difference

YoY resultsfrom previous
forecast

95.2

127.5

109.9

14.6

115.3%(17.6)

89.7

120.4

104.7

14.9

116.6%(15.7)

76.3

106.0

91.0

14.6

119.2%(15.0)(37.6)(12.3)(22.4)

15.2-(10.1)(36.6)(12.5)(21.8)

14.8

-

(9.3)

-

(26.5)(3.4)(13.5)

13.0-(10.1)-(26.4)(3.9)(13.3)

13.1

-

(9.4)

Railway Business
Quarterly trend / Results forecast assumptions

Overview(Results)• Due to the influence of customer restraint in going out / movingaround resulting from the extension of the period of the state of
emergency, the circumstances remain challenging, centered on
non-commuter revenues.
• Operating loss, despite continued cost reduction initiatives in therailway business.

FY22.3(Performance forecasts)• Based on first-half results and current circumstances, we revised
the second-half outlook and revised the performance forecasts.
• Revised cost reduction plan for railway business from -¥14.0
billion to -¥20.0 billion, in comparison with FY2020.3.
• Currently, due to the lifting of the state of emergency, etc., there
are signs of a gradual recovery in demand.
• Going forward, we expect mobility demand and consumer
spending to gradually recover.
15

(Reference) Real Estate and Hotels Segment (1)Real estate leasing business【Results】（\bil）

September

30,2020

30,2021（\bil）

FY22.36 months ended 6 months ended
September【Forecasts】
Results

YoY

FY21.3

Previous

Difference

Current

forecast

forecast(August 3)(November 2)

YoY resultsfromprevious
forecast

Operating revenue

22.9

28.3

5.3

123.2%

49.7

59.4

57.6

7.8

115.8%(1.8)

Operating income

5.0

7.3

2.3

146.4%

12.0

14.0

13.9

1.8

115.1%(0.1)

EBITDA

9.8

13.1

3.3

134.1%

22.0

25.8

25.6

3.5

116.3%(0.2)

Quarterly trend / Results forecast assumptions

Overview(Results)• Despite contributions from the opening of the station buildings
in Kumamoto and Miyazaki, due to the influence of customer
restraint in going out / moving around resulting from theextension of the period of the state of emergency, tenant sales
were sluggish.
• Uniform tenant support measures that were implemented from
April to July in the previous fiscal year, such as closures andrent/sales promotion expense reductions (approximately ¥1.9
billion), are not being implemented this year.
• In office buildings and rental apartments, results are solid, withno sign of major changes in vacancy rates at existing properties.

FY22.3(Performance forecasts)• Revised outlook for station building tenant sales, revised
performance forecasts.
• Currently, due to the lifting of the state of emergency, etc.,
there are signs of a gradual recovery in demand.
• Going forward, we expect mobility demand and consumer
spending to gradually recover.

16

(Reference) Real Estate and Hotels Segment (2)Real Estate sales business【Results】（\bil）

September

30,2020

30,2021（\bil）

FY22.36 months ended 6 months ended
September【Forecasts】
Results

YoY

Previous

FY21.3Difference

Current

forecast

forecast(August 3)(November 2)

from

YoY results

previous
forecast

Operating revenue

1.9

11.9

10.0

626.0%

23.5

23.0

23.6

0.0

100.2%

0.6

Operating income

(0.3)

1.5

1.9

-

2.6

2.2

2.5

(0.1)

94.7%

0.3

EBITDA

(0.3)

1.5

1.9

-

2.6

2.2

2.5

(0.1)

94.2%

0.3

Hotel business【Results】（\bil）

September

30,2020

30,2021（\bil）

FY22.36 months ended 6 months ended
September【Forecasts】
Results

YoY

FY21.3

Previous

Difference

Current

forecast

forecast(August 3)(November 2)

from

YoY results

previous
forecast

Operating revenue

2.4

3.5

1.1

146.1%

6.8

15.5

10.7

3.8

157.2%(4.8)

Operating income

(3.1)

(2.1)

1.0

-

(4.7)

0.2

(2.0)

2.7

-

(2.2)

EBITDA

(2.0)

(1.0)

0.9

-

(2.4)

2.6

0.2

2.6

-

(2.4)

Quarterly trend / Results forecast assumptions

Overview• Real estate sales business: firm trend(Results: Hotel business)• We continued to implement cost reductions, but due to the
influence of customer restraint in going out / moving aroundresulting from the extension of the period of the state of
emergency, occupancy rates were sluggish.
(Performance forecasts: Hotel business)• Reevaluated outlook for occupancy rates, revised performance
forecasts• Currently, due to the lifting of the state of emergency, etc., there
are signs of a recovery in demand.
• Going forward, we expect mobility demand and consumer
spending to gradually recover.

17

(Reference) Retail and Restaurant segment【Results】（\bil）

September

30,2020

30,2021（\bil）

FY22.36 months ended 6 months ended
September【Forecasts】
Results

YoY

FY21.3

Previous

Difference

Current

forecast

forecast(August 3)(November 2)

from

YoY results

previous
forecast

Operating revenue

29.4

19.6

(9.7)

66.8%

51.4

47.3

43.8

(7.6)

85.1%

(3.5)

Operating income

(1.9)

(1.1)

0.8

-

(2.5)

0.5

(1.0)

1.5

-

(1.5)

EBITDA

(1.2)

(0.5)

0.6

-

(1.1)

1.7

0.2

1.3

-

(1.5)

*Amount of influence of JR Kyushu Drug Eleven becoming anequity-method affiliate： [¥(12.4) billion]

Quarterly trend / Results forecast assumptions

Overview(Results)• Due to the influence of customer restraint in going out /moving around resulting from the extension of the periodof the state of emergency, etc., operating hours wereshortened at certain stores. Circumstances remainchallenging, especially for stores in areas surrounding
stations.
• On the other hand, favorable results for takeout at fast
food stores. In certain business formats, existing store
sales higher than two years ago.

* Calculated by subtracting the results of JR Kyushu Drug Eleven,which became an entity accounted for using the equity methodfrom the end of the 1st quarter of FY21.3. Versus figures from theperiod before COVID-19.
* October preliminary figures are the total of sales of major Group
companies(Performance forecasts)• Reevaluated outlook for earnings, revised performance
forecasts• Currently, due to the lifting of the state of emergency, etc.,
there are signs of a gradual recovery in demand.
• Going forward, we expect mobility demand and consumer
spending to gradually recover.
18

Ⅲ Understanding of the Current Business Environment andStrategic Direction

19Understanding of the Current Business Environment
Dramatic change in the Group’s business environment due to COVID-19.
In the current period, the Group is advancing initiatives to address its structuralissues.
Understanding of the current business environment

Ongoingissues✔

Progression of the declining and aging of
the population in Kyushu✔ Natural disasters of increased severity✔
Impact of
COVID-19

Dramatic changes in consumer behavior• Increasing demand for safe and secure products, services, andfacilities• Adoption of remote working styles (teleworking, on-line
meetings, staggered commuting, etc.)• Style of consumption that does not involve going out (expansionof e-commerce, delivery, etc.)• Tourism demand that is influenced by the infection trend

Railway usage iscurrently gradually
recovering, but in the
short term we do not
expect a return to thelevel before COVID19.

20

Influence of COVID-19 on Each Business
Quarterly Trend

Operating Income Trend

Revenues (vs. period
before COVID-19)
取扱収入（対コロナ前）

Railway100%

business

50%

(non-

0%

73.0%

21.4%

1Q

consolidated)

70.3%

37.4%

79.6%

81.5%

53.0%

56.4%

2Q

3Q

4Q

FY21.3

leasingbusiness

38.8%

37.5%

1Q
FY22.337.6%
1Q

83.6% 81.4%

66.5%
2Q

3Q

4Q

sales business

200%

20.1%

34.7%

1Q

2Q

146.2%
416.8%

403.9%

0%
3Q

4Q

FY21.3100%
50%

Hotel business10.9%

Segment

0%

4Q

1Q

October

figures)*As of the 20th71.3%

84.7% 87.1% 72.9% 74.0%

2Q

3Q

4Q

Other
Segments

FY22.3118.8%
85.8% 104.2%

153.2%

FY20.320.3期

FY21.3
21.3期

1.5
15

26
2.6

2.5
25

FY20.3

FY21.322.3期計画
FY22.3117.4%

FY22.3firm with no changes in vacancy rates.

21.3期

・Solid trend, with no major influence.

Forecast for(¥bil)

50 5

・Occupancy rates sluggish accompanying spread of

0.7
7

COVID-19-50(5)(4.7)-47
FY21.321.3期

FY20.3
20.3期

50 5・With a high percentage of fixed costs, sales declines

(2.0)

-20

Forecast for

22.3期計画
FY22.3suburban areas. On the other hand, substantial decline inrevenues at stores/restaurants in areas surrounding(2.5)-50(5)-25

FY20.3

FY21.320.3期

建設
Construction (¥bil)
その他
Other

100
10

505

directly connected to profits
・ Solid trend for takeout and stores/restaurants located in

2.8
28

0 0

figures)*As of the 20th

92.9% 74.7% 101.9% 101.6% 93.7% 78.3%
1Q
2Q
3Q
4Q
1Q
2Q
FY21.3

Approx.
約80%
8割

2Q (preliminary

100%
0%

Forecast for
22.3期計画
FY22.3(¥bil)

October

1Q

Sales to external customers
外部顧客への売上高（対コロナ前）(vs. period before COVID-19)

Construction /Approx.
約50%
5割

2Q (preliminary
FY22.3

FY21.3200% 152.9%

・In rental apartments and office buildings, the trends are

20.3期

1Q

hours by certain tenants. On the other hand, the trend in
profits is stable.

00

2Q

Sales (vs. period before COVID-19) *

55.3%

13.9
139

00

50 5

売上高（対コロナ前）※

100%
50%

12.0
120

0 0
3Q

directly connected to profits(¥bil)

Hotel occupancy rate
54.9% 稼働率
34.1%
29.1% 29.6% 35.3%

2Q・With a high percentage of fixed costs, sales declines

・Decline in tenant sales due to shortening of operating

16.7
167

100
10

FY22.3

FY21.3Retail and

21.3期
FY21.3

Forecast for
22.3期計画
FY22.3

10010

0%
1Q

Restaurant

Approx.
約8
割
80%

54.9%

1Q

(36.6)-366

20.3期
FY20.3

FY22.3400%

out/moving around, for teleworking, etc.
-218
(21.8)(¥bil)

Sales (vs. period before COVID-19)
売上高（対コロナ前）

600%

recommendations for people to refrain from going

-400
(40)

200
20

October
2Q (preliminary figures)*As of the 20th

FY21.3

Real estate

October
2Q (preliminary figures)*As of the 25th

1Q

・Number of passengers declined accompanying

20.0
200

-200
(20)

55.4%

65.6% 66.0%(¥bil)

200
2000

Tenant sales at five major station buildings

50%
0%

75.8%

定期外
Non-commuter

82.6%

主要5駅ビルテナント売上高（対コロナ前）(vs. period before COVID-19)

100%

Real estateCommuter
定期(累計)(cumulative)

84.5%

Overview

21.3期
Construction
建設
6.9
69

6.5
65

22
2.2

20.3期

stations, which account for the majority of thesebusinesses.

その他
Other
5.4
54
1.7
17

00
FY20.3(1.0)-10Forecast for
22.3期計画
FY22.3

FY21.3

21.3期

2.3
23

・ Sales and profits both firm, centered on B-to-B
business.

Forecast for

22.3期計画
FY22.3* Calculated by subtracting the results of JR Kyushu Drug Eleven, which became an entity accounted for using the equity method from the end of the 1st quarter of FY21.3.
Versus figures from the period before COVID-19. October. Preliminary figures are the total of sales of major Group companies

21

Business Structure and Strategic Direction
With consideration for our business structure, we will further advance citybuilding initiatives, centered on mobility services in Kyushu, whilestrengthening our business portfolio and advancing reforms of existing
businesses in preparation for the post COVID-19 period.
Current business structure

Strategic Direction*The size of the circles indicates operating income(dotted lines are for the period before COVID-19)
Real estate leasing business(Office buildings, rental
apartments)

Growthpotential

Real estate
sales

Construction/ other❶Direction ofefforts tostrengthenbusiness portfolio
Retail andrestaurants(Decline into
losses)Hotels(Decline into
losses)❶Strengthening business portfolio
Introducing businesses that do not dependon the flow of people and have high growthpotential, strengthening resistance tovolatility, such as pandemics

Real estate leasing(station buildings) ❷COVID-19 has amajor influence dueto the dependence on❷Structural reform in existing
the flow of people
and the highbusinesses
percentage of fixed
In businesses damaged by COVID-19,
costs

such as railways and hotels, converting toan efficient business structure throughcost structure reforms, etc.

Railways(Decline into
losses)Degree of dependence on the flow of people tostations❸Further advancing city-building
around our bases
Continuing to allocate capital todevelopment related to city-building,
expanding the resident and nonresident
populations, creating employment
22❶Strengthening the Business Portfolio:
New Businesses That Do Not Depend on the Flow of People
We will take on the challenge of making full use of the Group’s strengths and management
resources in order to move forward in new business fields that do not depend on the flow ofpeople.
Participating in cargo transport using railways•••

Started cargo transport service using the Kyushu Shinkansen from May 2021
Together with West Japan Railway Company and Sagawa Express Co., Ltd., implementing verification testing targeting
commercialization of cargo transport between Shin-Osaka Station and Hakata Station
Starting service enabling customers to order fresh Japanese sweets with short shelf lives and fresh-baked bread that are
popular in Fukuoka. Customers can order them on a JR Kyushu e-commerce site and then pick up the orders at KagoshimaChuo Station

Commercializing Shinkansen cargo transport

Transporting cargo on the Shinkansen,
pick up at ticket offices

Collaboration with West Japan Railway
Company / Sagawa Express Co., Ltd.
Selling Kyushu local specialties in Kansai area

E-commerce site × Shinkansen cargotransport
Same-day delivery, even for freshly madeproducts and products with short shelf lives(pick-up at ticket offices)

Logistics using the Shinkansen
UnloadingLoading

Acceptance

Delivery of■ 当社直営の荷物輸送事業と、佐川急便と連携した荷物輸送事
of cargocargo
業を開始（2021年5月18日～）
Customer(cargo owner)

Departure station

Arrival station

Customer(recipient)Suzukake

AMAMDACOTANDACOMECCA

Participating in logistics through real estate
Aiming for diversification of risk through business portfolio reevaluation and for
growth into a new source of earnings in the real estate business, contributing to thesustainable development of Kyushu.
Acquiring logistics facilities (near the Kyushu Expressway/Fukuoka Interchange (completion
scheduled for February 2023)• Scheme: Land: lease; building: acquire and lease to tenants• Tenant: NIPPON ACCESS, INC. (comprehensive food wholesale company in the ITOCHU Group)

Illustration of acquired
property23

❷Strengthening Business Portfolio:
Utilizing M&A and Specialized Regional Funds
In addition to conventional M&A, we will implement flexible, agile investment throughspecialized regional funds. In this way, we will rapidly strengthen the Group’s businessportfolio and contribute to the sustained development of Kyushu.
M&A

Specialized regional funds

Features•Principal targets are businessthat have synergies with orcomplement existing
businesses
Basically, direct investment by
JR Kyushu alone••【M&A results over the past 2 years】••

Broad scope of investment targets
to facilitate a focus on commercial
viability throughout theinvestment period
Joint investment through funds
will enable options other thanmaking companies into
subsidiaries
Support in such areas as humanresources from the JR Kyushu
Group and the J-WILL Group
Aiming to expand earnings
opportunities through funds

Considering about 200 cases since April 2021

Synergies with existing Small
businesses

•

Large

Points incommon(1)Strengthening business portfolio by strengthening the Group’s corebusinesses and expanding business areas(2)Contributing to the sustainable development of Kyushu through theresolution of issues such as a lack of successors at strong companies thatcan contribute to the invigoration of Kyushu.

Scope of investment targets

M&A by the JR Kyushu Group

Investment throughspecialized regional
funds

Small

Investment scale

Large

For specialized regional funds, even if there is a low levelof synergies with existing businesses, investments will beconsidered from such perspectives as whether it will bepossible to provide products and services closely tied to
the region, and whether there is potential for growth into
a new business pillar in the future

Making investment decisions based on whether the acquisition cost is appropriate, withconsideration for the cost of capital, and whether a contribution to increased corporate
value will be possible over the medium to long term24

❷Existing Business Structural Reforms:
Railway Business Cost Structure Reform
Advancing BPR* initiatives to reduce fixed costs by ¥14.0 billion or more during the period of the next
Medium-Term Business Plan.

＊Business Process Re-engineering

Principal BPR initiatives to increase efficiency

Aiming to generate stable profits even though revenues from railway transportation do not return to the level
before COVID-19, we will re-establish operational processes and systems.
❶Provision of services in line with demand❷Streamlining rolling stock/facilities➌Optimizing inspection/maintenance levels

Reevaluating station administration systems(Reducing number of ticket offices and ticket sales
machines)• Reducing quantity of rolling stock needed
through the use of longer seats, etc.

••

Spring 2021:
Reduced number of ticket offices by 7

FY22.3: Planning to introduce
long seats on 26 railcars

Reevaluating inspection standards by increasing efficiency ofequipment inspection work and enhancing inspection accuracy

Inspection cycle: Revision from once every
year to once every two years
Visual inspections

Inspections through on-board 4K
camera images

Overhead electrical line
facilities for trains

FY22.3 Cost reductions
Cost reductions this period are principally urgent control measures.
Achieved a portion of BPR fixed-cost reductions ahead of schedule.
Accompanying the downward revision of transportation revenues, etc., the current year’s plan has beenrevised, with safety as the major precondition.
¥20.0
Status of progress withbillionInitialplan¥14.0 billion

Personnel expenses:¥4.0 billion
Non-personnel expenses:¥10.0 billion¥20.0 billion
Revisedplan

FY22.3 cost reductions

Personnel expenses:¥4.5 billion
Non-personnel expenses:¥15.5 billion* Cost reductions are vs. FY20.3,
excluding special factors

Future fixed cost reductions in therailway business
Fixed-cost
reductions
Urgent control
measures andvariable cost
reductions

Results in 2nd quarter¥10.2 billion% of target achieved
in 2nd quarter

Approx.

51%

Fixed-cost
reductions¥14.0
billionor moreRailwaybusiness
operatingexpenses

Personnel expenses:¥2.3 billion
Non-personnel expenses:¥7.9 billion

Expected to increase
due to increased
depreciation, theopening of the NishiKyushu Shinkansen,
etc.

Of which, fixed-cost reduction
results through BPR¥1.5 billion

Approx.
¥4.0
billionFull-year outlook
Approx. ¥4.0 billion

Expectation
for FY22.3

Target for period of next
Medium-Term Business Plan

25

❷Existing Business Structural Reforms:
Hotel Business Cost Structure Reforms

Lowering the break-even point by advancing cost-structure reforms, centeredon fixed costs
Details of major initiatives

Results of initiatives

Details of improvement*

1. Advancing multi-tasking
2. Bringing consigned
operations in-house

1. Fixed-cost reductions

3. Controlling employment
4. Expanding seconding topositions outside of hotels
5. Advancing DX, etc.

2. Improvement ofbreak-even point

Personnel
expenses-25%

Break-even
occupancy
rate

Improved by

10 points
or more*** vs. period before COVID-19**Calculated based on an assumption of
securing a certain level of ADR

26

❷Existing Business Structural Reforms:
Advancing the Shift to On-Line Sales
Existing Business Structural Reforms: Advancing the Shift to On-Line Sales
Finished reevaluation of tickets for which the shift can be rapidly implemented
Moving forward, we will further strengthen yield management in line with the introduction of EX-IC,
while advancing yield control.

Details of major initiatives
ticket❶ Discountreevaluation, etc.
•••

limited express❷ Reevaluatingsurcharges on conventional

reevaluation➌ Consideringof tickets in line withlines

Increasing discount ticket prices (online, ticket counters)
Discontinued discount tickets sold atcounters(Complete discontinuance for
Shinkansen / substantial
discontinuance for conventional lines)
Discontinuance of sets of tickets for
multiple rides

introduction of EX-IC*• Reevaluating limited express surcharges
for limited express trains (non-reservedseats, reserved seats), special limited
express surcharges* No change to prices of discounttickets, such as Kyushu On-Line Tickets

From April 1, 2021

From spring 2022

From April 1, 2022

* With Central Japan Railway Company and WestJapan Railway Company, planning to extend EX Service
area to the Kyushu Shinkansen*Increased revenue effect is calculated for a full year
based on revenue in the period before COVID-19

Discount ticket on-line sales ratio for travel thatstarts and ends on our network

Reference: Yield results

Accompanying complete discontinuance of discount Shinkansen tickets sold atcounters, achieving 100% on-line sales ratio for discount Shinkansen tickets

Unit price per passenger-kilometer showing
increasing trend from FY20.3

Shinkansen

Conventional lines（Yen/passengerkilometer)

31

FY21.3
Approx. 65%

FY22.3,
2nd quarter

100%

FY21.3
Approx. 45%

FY22.3,
2nd quarter
Approx.

50%Companywide(excluding
commuter
全社（定期外）passes)

Shinkansen(left)
新幹線（左軸）（Yen/passengerkilometer)

30.2

30
29

28.6

28.5

28.4

28
27

23.0

23.2

23.5

26

23.7

23.9

FY20.320.3期

FY21.321.3期

26

FY17.3
17.3期

28

29.0
28.5

FY18.318.3期

FY19.3
19.3期

30

24.4
24

FY22.322.3期2Q
2Q

22

27

Disclosing profitability by train line and holding meetings to consider
issues related to the utilization of train lines
Disclosing profitability for train lines with an average of less than 2,000 passengers per day
Of these, in regard to those lines on which the average number of passengers has declined by 70% or more in comparison withthe point at which the JR companies were established, in collaboration with local governments in the areas around our train
lines, we have established meetings to consider issues related to the utilization of train lines, and are discussing utilization
measures to make the lines sustainable.
№ Name of line
KokuraHakata
3

①

7

②
❸

5

9

Tosu

SaseboSaga④

6

Kurume❺Yufuin8

Oita

Nippo Main Line
Chikuhi Line

Nagasaki
Ａ

Ｂ

10
12

Lines for which
meetings havebeen establishedLines, other thanthose in group A,
for whichprofitability isdisclosed

11

13
Miyazaki
4
Kagoshima2
chuo

58.4

-787

3,428

Miyakonojō – Kokubu

42.2

-436

2,029

728

-64%

Imari – Karatsu

33.1

-152

728

180

-75%

1.4

-47

ー

627

ー

20.8

-114

2,981

297

-90%

Jōno - Tagawa-Gotōji

30.0

-517

3,287

1,694(2,595)-48%

Tagawa-Gotōji – Yoake

38.7

―

1,103

― (299)ー

FY2021*

Gotoji Line

Shin-Iizuka – Tagawa-Gotōji

13.3

-170

1,728

890

-48%

⑧

Kyudai Main
Line

Kurume - Hita

47.6

-783

3,040

1,677(3,475)-45%

Hita – Yufuin

51.5

―

2,564

― (1,756)ー⑨

Karatsu Line

Kubota - Karatsu

40.3

-314

3,649

1,704

-53%

Karatsu – Nishi-Karatsu

2.2

-141

1,315

766

-42%

Higo-Ozu – Miyaji

30.8

―

2,711

― (1,854)ー⑩

Hohi Main Line

Miyaji – Bungo-Taketa

34.6

-343

1,028

109(463)-89%

Bungo-Taketa – Miemachi

23.9

-196

2,384

853(1,331)-64%

Yatsushiro – Hitoyoshi

51.8

―

2,171

― (414)ーHitoyoshi – Yoshimatsu

35.0

―

569

― (106)ー

Yoshimatsu – Hayato

37.4

-294

1,109

480(605)-57%⓫

Hisatsu Line⑫

Misumi Line

Uto – Misumi

25.6

-284

2,415

775

-68%

⓭

Kitto Line

Yoshimatsu – Miyakonojō

61.6

-340

1,518

408

-73%

Ibusuki

Kiire - Ibusuki

19.1

-248

3,687

1,661

-55%

Ibusuki – Makurazaki

42.1

-522

942

255

-73%

Tayoshi – Aburatsu

44.0

-569

2,129

934

-56%

Aburatsu – Shibushi

42.9

-398

669

171

-74%

15
14

Saiki – Nobeoka

FY1988⑦

1

Shin-yatsushiro

Average number ofpassengers(passengers/day)%
decline353-90%

Miyazaki Airport
Tayoshi – Miyazaki Airport
Line
Chikuho Main
Keisen – HarudaLine⑥ Hitahikosan Line

Kumamoto

Segment

Operating profit
Operating(loss)
inkilometers
FY2020.3（Km）(¥ million)⓮ Makurazaki Line⓯

Nichinan Line* Figures in parentheses show the average number of passengers in the fiscal year before the disaster occurred. 28

Strengthening Mobility Services Through MaaS
To invigorate the region, we will work to advance MaaS as new regional
infrastructure and to achieve the “creation of mobility demand” and the“building of sustainable public transportation networks.”
Strengthening cooperation amongtransportation companies

Advancing collaboration
regional transportationcompanies, etc.

Strengthening collaboration
with Group companies

Promoting tourism, invigorating
regional economies

Advancing DX

Collaborating with commercial
facilities, accommodations,restaurants

Enhancing convenience forcommunity residents/tourists,
increasing suitability for excursions

Shifting toticketless service

Collaborating with DAIICHI KOUTSU SANGYO Co., Ltd.,
Nishi-Nippon Railroad Co., Ltd.

Collaborating with Miyazaki Kotsu Co., Ltd.

(2)Support for shopping bysenior citizens

Starting transport service collaboration with
Miyazaki Kotsu buses at Takanabe Station(1)Selling digital tickets (sets)on my route• Railway/bustransportation tickets• Taxi coupons• Tourism facility tour
passports•••

Picking up and dropping off senior citizens who are travelingbetween their homes and stores operated by cooperatingcompanies
Drivers also support shopping
Reporting to families regarding appearance and state of healthon that day
Family members in
distant locations

Customers using theservice

Before• Railway and buses operated in parallel• Neither company considered connections

After

Telephoneapplication,
reporting ofstate ofhealth, etc.

Application
by telephone

Picking up anddropping off,
shopping support• Relocating bus stops to in front of station,changing bus routes• Revising schedules with consideration forconnections• Enhancing station waiting environment• Selling convenient my route digital tickets forconnections• Installing Toyota car sharing station in front ofstation (installation completed in June 2021)

Takanabe

Kyushu Shinkansen
Conventional lines29❸Further Advancing City-Building Around Our Bases:
City-Building Throughout Kyushu
Favorable progress with pipeline development even in period before COVID-19
This year, we are planning the largest capital investment projects in our history, such as development in theareas surrounding stations (Kumamoto Station area development, Nagasaki Station area development, Kagoshima-Chuo
Station west entrance development).
For sustained growth, we will continue to consider investment, centered on the Kyushu region❶Project to utilize the former site
❶Kumamoto Stationof Sunoko elementary school

•
•

❶➌❷

•

area development(JR Kumamoto Station
Building)

Joint project with Sakurajyuji Co., Ltd.,and other companies
Uses: Private retirement home,commercial facilities, etc.
Opening: January 2024••

Fukuoka east government building
•
•

❹

❶

Amu Plaza
Kumamoto❷Miyazaki Station west entrance❷Project for effective use of site of•Uses: Commercial facilities,
offices
Opening: April 2021

development

Joint project with FUKUOKA JISHO
CO.,LTD., and ASO CORPORATION
Uses: Commercial facilities, offices
Opening: Spring 2024•••

Joint development with Miyazaki Kotsu
Uses: Commercial facilities, offices
Opening: November 2020

➌Plan for utilizing the space above
the tracks at Hakata Station•

New urban development plan utilizing
three-dimensional aerial images of the
tracks at Hakata Station

JR Miyako Twin Building❹Nagasaki Station area development
Opening of stores under elevated railway
tracks (spring 2022)• Full opening of new station building (fall2023*)* Moved forward from plan of FY2026.3•❷➎

Illustration of new
Nagasaki Station building➎Development at the west entranceof Kagoshima-Chuo Station••●Future development projects in areas around our bases●Projects for which development is completed

Uses: Commercial facilities, offices,multi-story parking garage(Phase 1 development, opening spring
2023)
Residences, etc. (phase 2
development, time of opening not yet
determined)

Illustration ofphase 1development

Illustration ofpedestrian space30

❸Further Advancing City-Building Around Our Bases:
Initiatives in the Hotel BusinessWith a focus on the recovery of travel demand in the future, we will advancedevelopment to capture domestic leisure demand and inbound demand.
Major future development projects
Hotel development by overseas
companies

New Japanese-style inn development• Capturing future inbound demand through global
membership organization• Differentiation from other hotels through the provision ofvalue not available with in-house brands• Acquiring global chain management know-how, enhancing
profitability and service level• Development with domestic leisure demand as main
target• Increasing value of property acquired in line with
regional requests and collaboration• Enhancing convenience through the use of smart
technologies in operations and service

Collaboration with Marriott International at theNagasaki Station area development (hotel
development) (currently under discussion)Development of Japanese-style inn in Ureshino,
Saga Prefecture, aiming for synergies with the
opening of the Nishi-Kyushu Shinkansen

Scheduled opening: Fall 2023

Scheduled opening: FY2024.3
31

❸Further Advancing City-Building Around Our Bases:
Cyclical Investment Model Through Private REITs
Through re-investment via a cyclical investment model utilizing private REITs,
we will aim for the sustainable development of Kyushu and for further growthin the real estate business.

❶Property sales

The funds
obtained will be
reinvested, mainly
in Kyushu

Real estate
securitization••

Growth in the real estatebusiness
Increasing the resident
population, the nonresident population, andemployment in Kyushu

Enhancing
capitalefficiency➌Reinvestment

Cyclicalinvestment
model

PrivateREIT❷Funding fee
revenues••

Gradually increasing
working assets
Enhancing portfolio
valueCity-building that helps to make Kyushu a place
where people want to live, work, and visit
32

Financial Strategies
In FY21.3, with consideration for the rapid worsening of operating cash flow due to the influence of•

COVID-19, we implemented fund-raising with the highest priority on securing liquidity at hand.
Challenging conditions continue this year, but at this point we have secured sufficient liquidity at hand.
•

Equity ratio remains above 40%, and we maintain a solid financial position•

We will continue to pay attention to the status of operating cash flow, and at the same time we will also
focus on generating cash through the sale of real estate to private REITs in the future, and we willconsider raising funds at the appropriate time by drawing on our borrowing ability, as needed.

Status of principal fund-raising since
COVID-19

Balance sheet status

New borrowing

1Q FY21.3¥100.0 billion

Bond issuance

June 2020¥40.0 billion

Green bond issuance

April 2021

¥20.0 billion(億円)（¥bil）
Interest-

有利子負債
bearing debt

5,000
500

自己資本
EquityEquity ratio
自己資本比率

100%

4,000
400
300
3,000

80%
51.8%

49.9%

60%
43.8%

43.7%

200
2,000

40%

100
1,000
107.9
1,079

414.8
4,148

141.5
1,415

413.2
4,132

250.9

2,509

20%

3,901
390.1

274.6
2,746

End of FY21.3
21.3期末150

Growth investment
Maintenance andupgrade investment
Of which, safety
investment

End of 2nd
22.3期

quarter, FY22.3

2Q時点

124.0

100
65.1

0%
End
of FY20.3
20.3期末（¥bil）

3,760
376.0

0
End
of FY19.3
19.3期末Capital investment in FY22.3

50

79.9

39.0
26.0
FY21.3Results

44.1
15.9

19.5

FY22.3Plan

In FY22.3, we will increase
capital investment, including
not only large-scale
development projects, such as
the Kumamoto Station area
development, Nagasaki Station
area development, andKagoshima-Chuo Station west
entrance development, but also
investment in the Nishi-Kyushu
Shinkansen, which is scheduled
to open in fall 2022.

33

APPENDIX

34

Balance Sheet and Cash Flow Statement
Balance Sheet（\bil）
6 months ended

Results

Total Assets

Major factors

YoY

September

FY21.330,2021

891.3

861.2

(30.1)Cash and time deposits

22.9

32.8

9.9

Securities

42.0

8.0

(34.0) Decrease in negotiable certificates of deposit

Property, plant and equipment

532.0

568.4

36.4 Increase due to Kumamoto Station Building opening

98.0

99.6

1.6

Interest-bearing debt

250.9

274.6

23.6 Increase in bonds

Net assets

395.4

378.1

Capital and paid-in capital

240.0

240.9

0.8

Retained earnings

150.0

132.6

(17.3)

Railway business assets(17.2) Decrease due to payment of dividends

Cash flow statement（\bil）

6 months ended 6 months ended
September

September

30,2021

30,2021

Major factors

YoY(15.1)

21.6

36.8 Increase due to improvement in loss before income taxes

14.1

13.9

(0.1)

(19.4)(52.0)(32.5) holdings of the shares of JR Kyushu Drug Eleven(57.3)(59.5)(2.1)

Free cash flow

(34.6)(30.3)

4.2

Cash flows from financing activities

125.2

5.9

(119.3) Decrease due to loans and issuance of bonds

Cash and cash equivalents

114.4

40.8

(73.5)Cash flows from operating activities
Depreciation expense
Cash flows from investing activities
Capital expenditures

Decrease due to rebound from transfer of a portion of35

Railway business (transportation data)
Railway Transportation Revenues

Passenger-Kilometers（Millions of passenger-kilometer)
6 months ended

6 months ended

September 30,2020 September 30,2021

Total

YoY

2,626

2,952

325

112.4%

1,792

1,900

107

106.0%

834

1,052

217

126.1%

360

425

64

117.9%

Commuter pass

91

92

0

100.2%

Non-commuter pass

268

333

64

124.0%

Conventional Lines

2,266

2,527

261

111.5%

Commuter pass

1,700

1,808

107

106.3%

565

719

153

127.1%

Commuter passNon-commuter pass
Shinkansen

Non-commuter pass

36

EBITDA by Segment
Transportation
EBITDA(¥bil)
（億円）

400
40
30
300

Real Estate and Hotels(¥bil)（億円）

EBITDAマージン
EBITDA
margin

343
34.3

34.4
344

343
34.3

285
28.5

30%

295
29.5

100
10

16.2%

18.7%

18.6%

18.9%

17.0%

0
(10)
-100

31.1
311

FY17.317.3期

FY18.318.3期

FY19.319.3期

FY21.3

FY19.3 20.3期
FY20.3
19.3期(New Segments)

EBITDAマージン
EBITDA margin

33.1
331

32.0
320

60%

35.6
356
30.5
305

30
300

20%

20
200

EBITDA

40
400

50%
22.2
222

20
200

10%

46.2%

46.2%

45.6%

40%
39.5%

10
100

0%

(20)
-200
(30)
-300

△265
(26.5)

27.7%

00

-30%
-10%

30%

33.7%

FY17.317.3期

FY18.318.3期

FY19.319.3期

FY19.319.3期

FY20.320.3期

20%

FY21.3
21.3期(New Segments)

Retail and Restaurant

Construction（億円）(¥bil)

8
80

12%

EBITDAマージン
EBITDA margin

6.7
67

7.0
70

（億円）
(¥bil)EBITDAEBITDA

10
100

Other

7.5
75

7.2
72

7.6
76

8.0
80

6
60
10%

EBITDA
marginEBITDAマージン

51
5.1

53
5.3

5.0
50

10%

4.4
44

8%

8.5%

6.3
63
60
6

8.0% 8.2% 7.7% 7.7%

6%

6%

40
4
4%
20
2

2%

0

0%

20
2

4.3%

FY21.3
FY20.3
FY17.3 FY18.3
FY19.3 FY19.3
17.3期
18.3期 19.3期
19.3期 20.3期(New Segments)

(2)
-20

0%
-2%

8%

41
4.1

4.3

3.7
37

6%

40
4
4%

7.0%

4%

0

(New
Segments)（セグメント区分変更後）* Figures by segment are prior to eliminating intersegment transactions.

5.2% 5.2% 4.9% 4.9%

2%

FY17.3 18.3期
FY18.3 19.3期
FY19.3 FY19.3
17.3期
19.3期FY20.3
20.3期FY21.3
21.3期

39
3.9
3.3

40
4

8.3%

10%

EBITDAマージン
EBITDA margin

50
5.0

8%
6
60

EBITDA80
8(¥bil)（億円）

2
20

5.5% 5.9%

5.8% 6.0% 5.8%
2%

0

0%
FY17.3 18.3期
FY18.3 19.3期
FY19.3 19.3期
FY19.3 FY20.3
FY21.3
17.3期
20.3期 21.3期（セグメント区分変更後）(New Segments)

(1.1)
△11
-4%

37

Trends in the Railway Business(¥bil)（億円）

Railway transportation revenues (Shinkansen), passenger
load factor on the Kyushu Shinkansen (Hakata－Kumamoto)

80
800

55%

Passenger load factor

Shinkansen(left)

新幹線

乗車率（右軸）(right)

70
700

52%

60
600

52%

48%

40
400
30
300
20
200

54.9
549

541
54.1

50.1
501

44%

52.3
523

22.4
224

0 0

40%
FY17.317.3期

FY18.318.3期

FY19.319.3期

FY20.320.3期

Unit Sales
金額(left)(10,000

Sales Amount
販売数4Q累計

2.20
22.0

2.21
22.1

25
250
200
20

14.3
143

457

386

2.39
23.9

（万枚）
tickets)

2.34
23.4

30

12.6
126

150
15
100
10

210

200

5
50

0

0

FY21.321.3期

17.3期
FY17.318.3期
FY18.319.3期
FY19.320.3期
FY20.321.3期
FY21.3

Yield (Companywide (excluding
commuter passes), Shinkansen)

Railway transportation revenues(short distance)

Sales Amount and Unit Sales of
JR-KYUSHU RAIL PASS(¥bil)
（億円）

20.7
207

200
100

350
35
30
300

291

10
100

2.5
25

45%

313
31.3

26.6
266

400
300

400
40

Sales (right)
金額（右軸）

Number ofreservations(left)

500
50%(¥bil)

600
件数

50%

50
500

Internet train reservation services:
Number of reservations, sales（10,000 reservations）（Yen/passengerkilometer)（億円）(¥bil)

Companywide

Shinkansen(left)
新幹線（左軸）31(excluding commuter
全社（定期外）（Yen/passengerkilometer)

passes)

300
30
30

28

2.0
20
20

1.5
15
1.0
10
0.5
5
0

30

30.2

29.0

20
200

29

28.6

28.5

28.5

28.4
26

22.5

22.9

25.1

24.9
249

24.5

10

25.8
258

25.9
259

25.9
259

28

10
100
16.1
161

0.001

0.01
0.01

17.3期
21.3期
FY20.3 FY21.3
FY17.3 18.3期
FY18.3 19.3期
FY19.3 20.3期

0

0

27

23.0

23.2

23.5 23.7

23.9

24.4

26
17.3期 FY18.3
18.3期 FY19.3
19.3期 FY20.3
20.3期 FY21.3
21.3期
FY17.324

22

FY17.3 FY18.3
17.3期
18.3期

FY22.3
FY19.3
FY20.319.3期
20.3期 FY21.3
21.3期 22.3期2Q
2Q

38

Trends in the Real Estate and Hotel Businesses
Station building tenant sales

Hotel occupancy rates and average unit prices（¥bil）（¥）（円）
Other main station buildings

250

200

187.7

JR Hakata City

203.0

195.8

(left)ADR（左軸）16,000202.6
11,987
12,000

150

81.6

84.4

82.7

85.8

78.4%

139.0

12,17982.3%

Occupancy
稼働率（右軸）Rates(right)100%

13,877

13,103

11,766

80%

82.1%
73.3%

60%

8,000

66.2

100

50

106.1

118.5

113.0

40%
4,000

116.8

32.3%

72.8
0

0
FY17.3

FY18.3

FY19.3

FY20.3

FY21.3

20%

0%
17.3期
FY17.318.3期
FY18.319.3期
FY19.320.3期
FY20.321.3期
FY21.3

Rental apartment numbers (cumulative) andoccupancy rate

Unit sales of condominiums (cumulative)（Units）（戸）（Units）

10000

6,000

（戸）

5,000

8000

Occupancy
入居率
Rates

Number of戸数units 1,607
98.1%

97.4%

97.4%

97.4%

97.7%

97.6%

100%
98%

4,000

96%

6000
3,000
4000
2000

5,475

5,949

6,415

6,989

7,564

8,008

2,000
1,000

2,419

2,637

3,147

3,961

4,438

5,142

92%

0

0
FY16.316.3期

FY17.317.3期

FY18.318.3期

FY19.319.3期

FY20.320.3期

FY21.3
21.3期

94%

90%
FY16.316.3期

FY17.317.3期

FY18.318.3期

FY19.319.3期

FY20.320.3期

FY21.321.3期* Numbers of rooms are as of the end of each fiscal year
* Occupancy rates are averages of the figures at the end of each month (excluding the yearof opening for newly opened properties; excluding newly acquired properties)

39

Natural Disasters(influence of heavy rains in August 2021, heavy rains from typhoon No. 14)
Damage from heavy rains in August
2021Time ofoccurrence

August 2021

Overview

Damage on multiple lines, including the Kyudai MainLine and the Sasebo Line
【Kyudai Main Line】
 Deformation of tracks over bridges
 Damage to tracks due to slope collapse, washout,etc.
 Revetment damage around bridge piers【Sasebo Line】
 Damage to signal equipment and other electricalequipment due to flooding.
 Damage to crossing equipment due to flooding.
 Damage to tracks due to ballast washout, etc.

Influence on
results

Recorded extraordinary loss of approximately ¥0.9
billion (2nd quarter, FY22.3)

Segments
that arecurrently
suspended

None

Damage from typhoon No. 14(2021)
September 2021

Overview

Rock and debris influx in multiple
locations on Nichinan Line from Uchiumi
Station and Ibii Station

Influence on
results

Unknown

Segments
that arecurrently
suspended

Nichinan Line, Aoshima Station to
Shibushi Station

KokuraRock and debris influx

HakataSasebo* Kyudai Main Line restarted operation on September
17, 2021

Time ofoccurrence

HizenYamaguchi

Tosu

Saga

Kurume

Takeo
Onsen

Hita
YUfuinBungoMori

Deformation of tracks over bridges

Oita

Ueki

NagasuKumamoto

NagasakiYatsushiro

Shin-yatsushiro

Yoshimatsu
川内
Sendai
Damage to crossing equipment due
to flooding

Equipment room flooding
above the floor level

Miyazaki

Kushikino
Kagoshimachuo
Shibushi

Kyushu Shinkansen
AoshimaConventional lines
Halted line segments

40

Pursuit of New Mobility Service with Bus Rapid Transit
Restoring the Hitahikosan Line through the construction of a Bus Rapid Transit (BRT) systemFinalized the construction of a BRT system to restore the Soeda-Yoake segment, of which operation has beensuspended since July 2017
In addition to the development of BRT-exclusive roads, in certain areas the BRT will operate on ordinary roads
in proximity to residential areas.
Bus stops will be established in areas other than train stations as well for added convenience.

Construction will be completed in approximately three years with an estimated cost of around ¥2.6 billion.

Soeda
Ordinary roads

Development of station building andsurrounding area (Soeda Station)
Before restoration

After restoration
Former station to be
used as a community facility
Toward Jono Station

HikosanToward Jono Station

ChikuzenIwaya

Toward Yoakeby ordinary roads

Station systems
installed on platform

Development ofstation square

BRT-exclusive
roads

Hoshuyama

Direct transfer
between trains and BRT

Toward Yoake Station

Toward Yoake Station

Platform

The above image may be subject to change.

Ordinary roads

Yoake
Hita

41

Railway Business— Outline of Fares/Charges and Measures to Increase Revenues●Fares/charges(¥bil)

Operating income in the railway business

40
Charges

Fares→Compensation for the use of facilities other than transportation andfor the provision of additional services

25.0→Compensation for the transportation of people or goods0●Procedures for establishing and adjusting fares/charges
・Establishing/adjusting the upper limit for fares and Shinkansen express charges requires theapproval from the Minister of the Ministry of Land, Infrastructure, Transport and Tourism(MLIT).
・Establishing/adjusting fairs and Shinkansen express charges within the scope of the upper limit andestablishing/adjusting conventional line express charges, etc., can be handled by notification to the
Minister of the MLIT.

●Examination standards for upper limit fares/charges
・Prior to giving approval for establishing/adjusting the upper limit on fares, the Minister of the MLIT
must confirm that the new upper limit does not exceed “total cost,” which is the sum of the proper
operating costs if it were to carry out efficient management and the proper profit calculated pursuant
to specified methods.
（The Company implemented a substantial fare revision, other than consumption tax revision, in 1996）

Advancing measures to increase sales using Internet sales

FY15.3(20)(14.0)

20.0

FY16.3

FY21.3
FY18.3

FY19.3

FY20.3(11.5)(40)(36.6)
If examination standards are met (illustration)

Business
compensation

OperatingexpenseNon-operating
revenue
Revenuefrom railway
transportation

Expense ＞ Revenue(Reference) MLIT web site

Current initiatives

Previously

Charges

Regular
price

26.7

20

FY17.3

Fares

28.2

Charges
Implement acrossthe-board discounts
to increase ourcompetitivenessversus othertransportationcompanies

Promotingshift toInternet sales
Fares

Discount
tickets

Regular
price

Controlling unit
sales of discounttickets anddiscount rates inline with demand

Discount
tickets42

Overview of Major Development Pipelines
Name

Shimoori
development

Location

Schedule

Onojo City, Fukukoka
Prefecture

Winter 2019: Start of construction
Spring 2022: Planned opening

Nagasaki City,
Nagasaki Prefecture

Spring 2022: Opening underelevated railway tracks
Fall 2023: Full opening of new
station building* Moved forward from plan of
FY26.3

Floor space/Lot area
Units/Rooms

Notes (Uses, etc.)

Lot area: Approx. 13,000㎡

Integrated development incorporating commercial
facilities, residences, etc.

Floor space: Approx. 102,000㎡

・Integrated development incorporating
commercial facilities, hotels, offices, etc.
・Considering environment burden reduction
measures, use of AI/ICT

Kagoshima City,
Kagoshima Prefecture

Fall 2021: Start of construction
Spring 2023: Phase 1 development
openingPhase 2 development, time of
opening not yet determined

Lot area: Approx. 9,500㎡
Floor space: Approx. 25,400㎡(phase 1 development)

・Phase 1: commercial facilities, offices, multistory parking garage; phase 2: integrated
development, including residences, etc.
・Considering infection countermeasures,
environment burden reduction measures, use of
ICT

Chuo-ku, Fukuoka
City

January 2024:Planned opening

Lot area: Approx. 8,500㎡

Integrated development incorporating private
retirement home, commercial facilities, etc.

Project for effective use of siteof Fukuoka Prefecture east
government building

Hakata-ku, Fukuoka
City

Spring 2022:Start of construction
Spring 2024:Planned opening

Lot area: Approx. 2,600㎡

・Office buildings (section of commercial facilities
and stores)
・Introducing automatic cleaning robot, photovoltaic power generation, etc.

Ureshino Onsen
accommodation facility

Ureshino City, Saga
Prefecture

FY2024.3: Planned opening:

Lot area: Approx. 9,600㎡

Hotel development in
Shimogyo-ku, Kyoto City

Shimogyo-ku, Kyoto
City

Winter 2020: Start of construction
Summer 2022: Planned opening

180 rooms (planned)
Floor space: Approx. 9,600㎡

Minato-ku, Tokyo
Prefecture

September 2020: Start ofconstruction
November 2023: Planned completion

Lot area: Approx. 22,500㎡
Floor space: Approx. 180,700㎡

Nagasaki Station area
development

Kagoshima-Chuo Station West
Entrance Development

Project to utilize the formersite of Sunoko elementary
school* Joint development by six companies,
with Sakurajyuji Co., Ltd. as therepresentative company

Toranomon 2-chome category
1 urban redevelopment
project* Joint development by six companies, withNIPPON STEEL KOWA REAL ESTATE CO.,LTD., as the Group representative for theacquisition of reserved floor area.

Note: Schedules are subject to change

Office building (certain commercial stores)

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Forward-Looking Statements

These materials contain forward-looking statements concerning business forecasts,
targets, etc. of the JR Kyushu Group.
The Company decided on these forward-looking statements based on theavailable information, as well as Company estimates and assumptions, at the timethese materials were created. Please note that actual performance may vary
greatly depending on the impact of various factors such as the economic
environment in Kyushu as well as greater Japan and overseas, the condition of thereal estate market, the progress of each individual project, changes in laws andregulations, and a wide range of other risks.

IR materials can be viewed on our corporate website:

https://www.jrkyushu.co.jp/company/ir_eng/library/earnings/

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