FY22.3
Financial Results Overview,First Quarter
August 3, 2021

Contents

Ⅰ

Financial results for the First Three-Months of FY22.3,
Full-Year Performance Forecasts, and Dividend Forecasts

3

Ⅱ

Status of Segments

11

Ⅲ

Status of Initiatives to Address Issues Faced by the Group

192

Ⅰ Financial results for the First Three-Months of FY22.3,
Full-Year Performance Forecasts, and Dividend Forecasts

3

Consolidated Financial Highlights for the Three-Month Period
Ended June 30, 2021 (Year on Year)
Operating revenue（\bil）

3 months ended

3 months ended

June, 30 2020

June, 30 2021

Operating revenue

61.8

72.0

10.2

116.6%

Operating income(15.7)

(1.3)

14.3

-

Ordinary income(15.2)

0.3

15.6

-

7.0

0.0

(7.0)

0.8%

(5.1)

0.9

6.0

-

(9.1)

5.0

14.1

-

Extraordinary gains andlosses
Net income attributable toowners of the parent
EBITDA※

YoY※Note: EBITDA = operating income + depreciation expense (excluding depreciation of leased assets held for subleasing purposes). The same applies hereafter

Operating income
Due to the implementation of cost reductions(railway business expenses: [¥(3.6) billion] andother initiatives, the scale of the operating loss
was reduced, but nonetheless an operating loss
was recorded due to the continued influence of
the COVID-19 infection.

Change in operating income by segment

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

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.

（¥bil）
（億円）

900
90

550

+13.7

+6.8

700
70

+1.0

(10.1)

(0.6)

(5)
△
50

+0.6

+0.4
(1.3)

+8.7

(0.6)

61.8

+4.3

Retail andRestaurant

72.0

Real Estateand Hotels

00

800
80

(0.0)

△(10)
100

60
600
△(15)
150

(15.7)

50
500

運
輸
サ
ー
ビ
ス

建
設

不
動
産
・
ホ
テ
ル

流
通
・
外
食

そ
の
他

Operatingincome2022.3(FY22.3)

営
業
利
期 益
）

Other

（

Construction

営
業
収
期 益
）

Transportation（

Operatingincome(FY21.3)
2021.3

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(FY21.3)
2021.3

（

△(20)
200
（

営
業
利
期 益
）

4

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

YoY

Major factors

June, 30 2020

June, 30 2021

Operating revenue

61.8

72.0

10.2

116.6%

Transportation

17.3

24.1

6.8

139.7%

16.2

22.8

6.5

140.6% Increase due to moderate recovery in demand

Construction

Railway Business (non-consolidated)

16.8

17.9

1.0

106.3% Increase in construction

Real Estate and Hotels

11.5

25.2

13.7

219.2%
Increase due to opening of Kumamoto Station Building and Miyazaki Station

Real Estate Lease

10.2

13.9

3.7

136.5% Building, increase due to rebound from previous fiscal year’s building
closures, rent reductions, etc.

Condominium Sales

0.4

9.6

9.2

Hotel Business

0.8

1.6

0.8

Retail and Restaurant

19.6

9.4

(10.1)

48.2% Decrease due to transfer of a portion of holdings of the shares of JR Kyushu Drug Eleven

Other

14.3

13.6

(0.6)

95.5%

Operating income(15.7)

(1.3)

14.3

-

Transportation(13.9)

(5.2)

8.7

-

Railway Business (non-consolidated)- Increase in condominium sale revenues
197.2% Increase due to rebound from previous fiscal year’s building closures(13.5)

(5.0)

8.5

-

Construction

0.2

0.1

(0.0)

69.5%

Real Estate and Hotels

(0.3)

4.0

4.3

-

Real Estate Lease

1.6

4.0

2.3

241.4%

Condominium Sales

(0.2)

1.5

1.7

-

Hotel Business

(1.8)

(1.4)

0.3

-

Retail and Restaurant

(1.5)

(0.8)

0.6

-

Other

0.1

0.5

0.4

427.1%EBITDA

(9.1)

5.0

14.1

-

(11.3)

(3.1)

8.2

-

(11.1)

(3.1)

7.9

-

Construction

0.5

0.4

(0.0)

83.7%

Real Estate and Hotels

2.6

7.5

4.8

284.7%

Real Estate Lease

4.0

6.9

2.8

171.2%

Condominium Sales

(0.2)

1.5

1.7

-

Transportation
Railway Business (non-consolidated)

Hotel Business

(1.2)

(0.9)

0.2

-

Retail and Restaurant

(1.0)

(0.5)

0.5

-

Other

0.5

0.9

0.4

189.5%

5

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

Operating revenue

3 months ended

3 months ended

June 30, 2020

June 30, 2021

YoY

Major Factors

24.1

40.5

16.3

167.6%

13.2

19.6

6.4

149.0% Increase due to moderate recovery in demand

Shinkansen

3.2

5.3

2.0

164.2%

Conventional Lines

9.9

14.3

4.3

144.0%

Other revenue

10.9

20.8

9.8

190.1% Increase in revenue from sales of condominiums

Operating expense

34.5

40.3

5.8

116.9%

Personnel expense
Non-personnel

11.2

10.4

(0.8)

92.5%

expenseEnergy cost

16.5

23.3

6.7

140.8%

1.9

1.9

0.0

103.8%

Maintenance cost

4.8

4.6

(0.2)

95.2%

Other

9.7

16.6

6.9

170.8% Increase in cost of sales due to increase in revenue from sales of condominiums

Taxes

2.5

2.6

0.1

107.4%

Depreciation cost

4.1

3.9

(0.2)

93.5% Decrease due to revision of depreciation method(10.3)

0.1

10.5

Non-operating income

9.0

3.6

(5.4)

Ordinary income
Extraordinary gain

(1.2)

3.8

5.0

-

6.9

0.1

(6.8)

1.9%

7.8

4.6

(3.2)

59.0%

Railway transportation

Operating income

and losses
Net income

40.2% Decrease in dividend income

6Consolidated Financial Highlights for FY22.3（\bil）

Results

Forecasts

FY21.3

FY22.3Operating revenue

293.9

344.2

50.2

117.1%

Operating income(22.8)

10.6

33.4

-

Ordinary income(19.3)

10.6

29.9

-

(18.9)

12.9

31.8

-

4.6

37.9

33.2

817.0%Net income attributable toowners of the parent
EBITDA

YoY

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

+12.2
344.2
+122 3,442

+17.7
+177

350
3,500
+32.2
+322

3,000
300

Operating income
Moderate recovery in each segment.
Increase in profit due to expense
reductions of approximately ¥14.0 billion
in railway business. Anticipating return toprofitability.

Change in operating income by segment（¥bil）
（億円）
500
50

25
250

△61
(6.1)

+25.3
+253

293.9
2,939

0 0
(25)
(250)

+64
+6.4

+3.0
+30

+0.3
+3

Retail andRestaurant

△16
(1.6)

Increase in revenue due to moderate
recovery in demand in the Transportation
Segment and other segments

Real Estateand Hotels

△41
(4.1)

Operating revenue

そ
の
他

10.6
106

(2.0)
△20
(22.8)
△228

(50)
(500)

250
2,500

運
輸
サ
ー
ビ
ス

建
設

不
動
産
・
ホ
テ
ル

流
通
・
外
食

Operatingincome22.3(FY22.3)

営
業
利
期 益
）

Other

（

Construction

営
業
収
期 益
）

Transportation（

Operatingincome(FY21.3)
21.3

調
整
額

Operatingrevenue(FY22.3)
22.3

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
21.3(FY21.3)

（

（

営
業
利
期 益
）

7

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

Forecasts

FY21.3

FY22.3

YoY

Major factors

Operating revenue

293.9

344.2

50.2

117.1%

Transportation

95.2

127.5

32.2

133.8% Increase due to moderate recovery in demand in railway business

89.7

120.4

30.6

134.1%

Construction

96.5

94.9

(1.6)

98.3% Decrease in railway construction orders from JR Kyushu

Real Estate and Hotels

80.1

97.9

17.7

122.2%

Real Estate Lease

49.7

59.4

9.6

119.4%

Condominium Sales

23.5

23.0

(0.5)

97.6% Rebound decrease in revenues from condominium sales

Hotel Business

6.8

15.5

8.6

227.7% Increase in number of guests due to moderate recovery in demand, increase due to Kumamoto hotel opening

Retail and Restaurant

51.4

47.3

(4.1)

91.9% Decrease due to transfer of a portion of holdings of the shares of JR Kyushu Drug Eleven
90.3% Decrease due to lower sales of construction materials

Railway Business (non-consolidated)

63.6

57.5

(6.1)

Operating income(22.8)

10.6

33.4

-

Transportation(37.6)(12.3)

25.3-(36.6)(12.5)

24.1

-

Other

Railway Business (non-consolidated)

6.9

4.9

(2.0)

70.1%

Real Estate and Hotels

9.9

16.4

6.4

165.4%

Real Estate Lease

12.0

14.0

1.9

116.0%

Condominium Sales

2.6

2.2

(0.4)

83.3%

Hotel Business

(4.7)

0.2

4.9

-

Retail and Restaurant

(2.5)

0.5

3.0

-

Other

1.7

2.1

0.3

119.9%EBITDA

4.6

37.9

33.2

817.0%(26.5)

(3.4)

23.1

-

(26.4)

(3.9)

22.5

-

Construction

Transportation
Railway Business (non-consolidated)

8.0

5.8

(2.2)

72.1%

Real Estate and Hotels

22.2

30.6

8.3

137.7%

Real Estate Lease

22.0

25.8

3.7

117.2%

Condominium Sales

2.6

2.2

(0.4)

82.9%

Hotel Business

(2.4)

2.6

5.0

-

Retail and Restaurant

(1.1)

1.7

2.8

-

Other

3.7

4.6

0.8

124.1%

Construction

Increase due to opening of Kumamoto Station Building and Miyazaki Station
Building, increase in revenues from leases due to moderate recovery in demand8Non-consolidated Financial Forecasts for FY22.3(\bil)
Results

Forecasts

FY21.3

FY22.3

YoY

Major factors

144.7

177.2

32.4

122.4%

76.3

106.0

29.6

138.9% Increase due to moderate recovery in demand

Shinkansen

22.4

36.0

13.5

160.1%

Conventional Lines

53.8

70.0

16.1

130.0%

Other revenue

68.4

71.2

2.7

104.1%

Operating expense

165.3

173.7

8.3

105.1%

39.3

42.1

2.7

107.0% Increase due to results recovery

97.5

103.5

5.9

106.1%

7.9

8.3

0.3

103.8% Increase due to moderate recovery in demand

Maintenance cost

29.0

31.7

2.6

109.1% Increase due to moderate recovery in demand

Other

60.5

63.5

2.9

104.9% Increase due to moderate recovery in demand

Taxes

10.8

11.4

0.5

105.4%

Depreciation cost

17.5

16.7

(0.8)

95.0% Decrease due to revision of depreciation method(20.5)

3.5

24.0

9.7

1.1

(8.6)

(10.8)

4.6

15.4

-

(5.7)

-

5.7

-

(11.1)

10.1

21.2

-

Operating revenue
Railway transportation
revenues

Personnel expense
Non-personnel
expenseEnergy cost

Operating income
Non-operating income
and expense
Ordinary income
Extraordinary gains
and losses
Net income

11.3% Decrease in dividend income

9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%

-

113.3%

13.8%

26.3%

30.2%

78.6%

-

113.3%* Implementation of a share
repurchase (¥10 billion)

10

Ⅱ

Status of Segments

11

Status of segments (1)Customer usage weakened because customers refrained from going out/moving around due to thedeclaration of a state of emergency, etc.
Currently, there are signs of a gradual recovery in demand in each business following the lifting of thestate of emergency, etc.

Transportation Segment

Retail and Restaurant segment* Calculated bysubtracting the results of
JR Kyushu Drug Eleven,which became an entity
accounted for using theequity method from theend of the 1st quarter of
FY21.3. Versus figuresfrom the period before
COVID-19.

Real Estate and Hotels Segment* July preliminary figures
are the total of sales ofmajor Group companies

12Status of segments (2)Status of state of emergency, etc., in Kyushu
Declaration of state of emergency: Fukuoka Prefecture (May 12 to June 20)
Infection prevention and other priority measures: Fukuoka Prefecture (June 21 to July 11)
Kumamoto Prefecture (May 16 to June 13)
Requests from local governments to shorten operating hours: All of Kyushu
Influence of declaration of state of emergency, etc., on major segments
Segment

Transportation

Business
Railway

Number of passengers declined accompanying recommendations forpeople to refrain from going out/moving around, for teleworking, etc.

Buses

Suspension of operation of certain high-speed buses, reduction in numberof chartered buses operated

Stationbuildings
Real Estateand Hotels

Retail andrestaurants

Major influences

Decline in tenant sales due to shortening of operating
hours at certain tenants

Office buildings,
rental apartments

Solid results, with no sign of major changes in vacancy rates

Condominiums

No particular influence

HotelsSluggish occupancy rates

RetailDecline in customers at stores in areas surrounding stations

Restaurants

Decline in customers at stores in areas surrounding stations, despite strong
takeout business
Shortened operating hours at certain stores
13

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

Operating revenue

3 months ended

3 months ended

June, 30 2020

June, 30 2021

YoY（\bil）

Results

Forecasts

FY21.3

FY22.3

YoY

17.3

24.1

6.8

139.7%

95.2

127.5

32.2

133.8%

Railway Business (non-consolidated)

16.2

22.8

6.5

140.6%

89.7

120.4

30.6

134.1%

Railway transportation revenues

13.2

19.6

6.4

149.0%

76.3

106.0

29.6

138.9%(13.9)

(5.2)

8.7

-

(37.6)(12.3)

25.3-(13.5)

(5.0)

8.5

-

(36.6)(12.5)

24.1-(11.3)

(3.1)

8.2

-

(26.5)

(3.4)

23.1

-

(11.1)

(3.1)

7.9

-

(26.4)

(3.9)

22.5

-

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

Railway Business
Quarterly trend / Results forecast assumptions

Overview••••

Due to the effect of people staying inside as aresult of the declaration of a state of emergency,
etc., circumstances remain challenging,
centered on medium to long distance revenues
Operating loss, despite urgent control measuresand other cost reductions in the railway
business.
Currently, due to the lifting of the state of
emergency, etc., there are signs of a gradual
recovery in demand.
Anticipating gradual recovery in transportation
demand and consumer spending due tovaccination progress, etc.

14

Railway business (transportation data)
Railway Transportation Revenues(\bil)

3 months ended

3 months ended

June 30, 2020

June 30, 2021

Total

YoY

Major Factors

13.2

19.6

6.4

149.0%

Commuter pass

6.1

7.2

1.1

118.0%

Non-commuter pass

7.0

12.4

5.3

175.8%

3.2

5.3

2.0

164.2% Increase due to gradual recovery in demand, increase

Commuter pass

0.6

0.6

0.0

106.8% due to rebound from suspension of all limited-express

Non-commuter pass

2.6

4.7

2.0

177.2%

Conventional Lines

9.9

14.3

4.3

144.0% Increase due to gradual recovery in demand, increase

Commuter pass

5.5

6.5

1.0

119.3% due to rebound from suspension of all limited-express

Non-commuter pass

4.4

7.7

3.3

174.9%

Shinkansen

trains during Golden Week period in the previous year

trains during Golden Week period in the previous year

Passenger-Kilometers（Millions of passenger-kilometer)Total

3 months ended

3 months ended

June 30, 2020

June 30, 2021

YoY

1,155

1,496

340

129.5%

Commuter pass

850

993

142

116.7%

Non-commuter pass

304

503

198

165.0%

135

201

65

148.3%

Commuter pass

44

47

2

106.5%

Non-commuter pass

91

153

62

168.7%

Conventional Lines

1,019

1,294

274

127.0%

Commuter pass

806

945

139

117.3%

Non-commuter pass

213

349

135

163.5%

Shinkansen

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

3 months ended

3 months ended

June, 30 2020

June, 30 2021

Operating revenue

10.2

13.9

3.7

136.5%

49.7

59.4

9.6

119.4%

Operating income

1.6

4.0

2.3

241.4%

12.0

14.0

1.9

116.0%EBITDA

4.0

6.9

2.8

171.2%

22.0

25.8

3.7

117.2%

Quarterly trend / Results forecast assumptions

YoY

Results

Forecasts

FY21.3

FY22.3

YoY

Overview
Station buildings• The opening of station buildings in Kumamoto and Miyazaki
made a contribution to increased revenues, despite influence ofpeople staying inside and shortened operating hours at certain
tenants due to the declaration of a state of emergency, etc.
• Uniform tenant support measures that were implemented in
the previous fiscal year, such as closures and rent/sales
promotion expense reductions [amount of influence in firstquarter of previous fiscal year: ¥(1.5) billion], are not being
implemented this year.
• Currently, due to the lifting of the state of emergency, etc.,
there are signs of a gradual recovery in demand.
• Anticipating gradual recovery in transportation demand andconsumer spending due to vaccination progress, etc.

Office buildings, rental apartments• Solid results, with no sign of major changes in vacancy
rates at existing properties.
16Real Estate and Hotels Segment (2)Condominium sales business【Results】（\bil）【Forecasts】（\bil）

3 months ended

3 months ended

June, 30 2020

June, 30 2021

Operating revenue

0.4

9.6

9.2

-

23.5

23.0

(0.5)

97.6%

Operating income

(0.2)

1.5

1.7

-

2.6

2.2

(0.4)

83.3%

EBITDA

(0.2)

1.5

1.7

-

2.6

2.2

(0.4)

82.9%

YoY

Results

Forecasts

FY21.3

FY22.3

YoY

Hotel business【Results】（\bil）【Forecasts】（\bil）

3 months ended

3 months ended

June, 30 2020

June, 30 2021

Operating revenue

0.8

1.6

0.8

197.2%

6.8

15.5

8.6

227.7%

Operating income

(1.8)

(1.4)

0.3

-

(4.7)

0.2

4.9

-

EBITDA

(1.2)

(0.9)

0.2

-

(2.4)

2.6

5.0

-

Quarterly trend / Results forecast assumptions

YoY

Results

Forecasts

FY21.3

FY22.3

YoY

Overview• We continued to implement cost reductions to improve thebreakeven point in the hotel business, but operations wereaffected by people staying inside due to the declaration of astate of emergency, etc., and occupancy rates weresluggish.
• Currently, due to the lifting of the state of emergency, etc.,
there are signs of a recovery in demand, but the timing of afull-scale recovery in accommodation demand is not clear.
• From the second quarter, anticipating gradual recovery intransportation demand and consumer spending due tovaccination progress, etc.

17Retail and Restaurant segment【Results】【Forecasts】（\bil）（\bil）

3 months ended

3 months ended

June, 30 2020

June, 30 2021

Operating revenue

19.6

9.4

(10.1)

48.2%

51.4

47.3

(4.1)

91.9%

Operating income

(1.5)

(0.8)

0.6

-

(2.5)

0.5

3.0

-

EBITDA

(1.0)

(0.5)

0.5

-

(1.1)

1.7

2.8

-

YoY

Results

Forecasts

FY21.3

FY22.3

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

Overview

Quarterly trend / Results forecast assumptions•••* 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.
* July preliminary figures are the total of sales of major Group
companies•

Continued challenging circumstances,
especially for stores in areas surrounding
stations, due to shortened operating hours at
certain stores and a decline in railway
passengers, as a result of the effect ofpeople staying inside due to the declarationof a state of emergency, etc.
Favorable results for takeout at fast foodstores. In certain business formats, existing
store sales higher than two years ago.
Currently, due to the lifting of the state of
emergency, etc., there are signs of a gradual
recovery in demand.
Anticipating gradual recovery intransportation demand and consumer
spending due to vaccination progress, etc.
18

Ⅲ Status of Initiatives to Address Issues
Faced by the Group

19

Status of major initiatives in the current fiscal year
Issuesrevealed by
COVID-19

Business modelthat depends onthe flow ofrailway users tostations

Damage tobusinesses witha highpercentage of
fixed costs

The sustained
development of
Kyushu is directly
linked to theGroup’s results

Current courses of action

Major items to be implemented

Business management withthe highest priority on safety
and peace of mind

Rigorous initiatives for safety, which is the foundation of
all of our businesses

City-building that further
enhances the value of stations
Advancing new businesses that
do not depend on the flow ofpeopleSafety/services that reflect consideration for new lifestyles
opening effect of Kumamoto Station area
❶ Maximizing
development
Advancing Nagasaki Station area development,
Kagoshima-Chuo Station west entrance development

Cargo transport using the Kyushu Shinkansen

Advancing into logistics facility leasing business❷ Railway business cost structure reform
Advancing cost structurereforms and securing the top
line

discount tickets, advancing shift to➌ Reevaluating
on-line sales❹ Improving profits in the hotel business
Strengthening initiatives toinvigorate Kyushu➎ Expanding business fields through M&A
collaboration in transportation services➏ Strengthening
through MaaS
Implementing flexible investment through theestablishment of specialized regional funds

20❶Maximizing opening effect of Kumamoto Station area development
Maximizing opening effect by strengthening collaboration between railways and urban districts, while
implementing environmental burden reduction measures and infection prevention measures

Opening effect (Comparison with period before opening on April 23, 2021)
Number of visitors to
Amu Plaza Kumamoto*Approximately
2.14 million*Total up to June 30

Short distancerevenues*
Up approximately 10%

Working population

Residential population*

Up approximately
4,500 people

Up approximately
1,000 people*Comparison of results at Kumamoto Station from
April 23 to May 15 with period before opening* Estimate after condominiums areoccupied

Overview of Kumamoto Station Area Development

Centered on the JR Kumamoto Station Building, the area will be developed in a unified manner, integrating commercial facilities, offices
condominiums, and hotels. We will work to create a lively atmosphere and a place where people want to live, work, and visit.
Amu Plaza Kumamoto
opening day (April 23)

Condominiums
Rentalapartments

Hotels
Office buildings

Parking lots

Office buildings

Kumamoto Station
Parking lots

Amu Plaza
Kumamoto

RJR Precia
Kumamoto Ekimae

MJR Kumamoto
The Tower

Completion: January 2021
Total number of units: 144 units

Completion: February
2023 (planned)
Total number of units:
230 units

JR Kumamoto
Station Building

JR Kumamoto Kasuga
South Building

Opening: April 23, 2021
Completion: December 2020
Total floor space: Approximately 110,000㎡(commercial facilities opened April 21,
Number of hotel rooms: 203 rooms
2021)
1st to 8th floors: Amu Plaza Kumamoto
Total floor space: Approximately 3,600 ㎡(commercial, weddings)
1st floor: Commercial, services
9th to 12th floors: THE BLOSSOM KUMAMOTO (hotel) 2nd to 4th floors: Offices

JR Kumamoto
Shirakawa Building
Completion: December 2020
(commercial facilities opened March 5, 2021)
Total floor space: Approximately 17,000 ㎡
1st to 3rd floors: Amu Plaza Kumamoto(BicCamera）
4th to 12th floors: Offices

Reducing the environmental burden and implementing infections countermeasures at the JR Kumamoto Station Building• Greening of walls and use of daylight, natural ventilation, radiant heat air conditioning, installation of high-efficiency / energy-saving equipment, etc.
• Installation of flapper gates and thermometers at employee entrances/exits, securing natural ventilation in common spaces, anti-microbial coating, etc.

21❷Railway Business Cost Structure ReformIn the current fiscal year, urgent control measures will continue to be the main initiative. To
reduce fixed expenses from the next fiscal year, we will advance BPR initiatives. We will aim
to reduce costs by ¥14.0 billion, about 10% of railway business expenses in FY20.3.
Previous fiscal
year results

Cost reduction amount

Approximately¥18.0 billion

Expectation from next
fiscal year

Current fiscal year plan
Cost reduction amount*
Approximately¥14.0 billion• Personnel expenses:¥4.0 billion• Non-personnel
expenses: ¥10.0 billion

Main focus on urgent
control measures, such as
postponement

Urgent control measures will be the main focus, but wewill realize a certain fixed-expense reduction effect due to
BPR implemented from the previous fiscal year.
Cost reduction progress in first quarter• Repair expense reduction• Operational expense
reduction, etc.

Personnel expenses:¥1.1 billion
Non-personnel expenses:¥2.5 billion% of target achieved
in first quarter

Approximately

26%

Total: ¥3.6 billion

Cost reduction amount*
Approximately¥14.0 billion per year
Under next Medium-Term Business
Plan, aiming for fixed cost reductions
through BPR
Anticipated fixed-cost reductions
Fixed-cost reductions¥14.0
billion

Expectation
for FY22.3

Specific BPR initiatives
Provision of services in line with demand• Reevaluating station administration systems (reducing numberof ticket offices and number of machines)• Optimizing timetables and rolling stock use
Streamlining rolling stock/facilities• Reducing quantity of rolling stock needed through the use of
longer seats, etc.
Optimizing inspection/maintenance levels• Reevaluating facility inspection standards and replacement
standards
Disposing of unnecessary facilities

Fixed-cost
reductions:

Urgent control
measures andvariable-cost
reductions¥14.0

billionor moreTarget for period of next
Medium-Term Business Plan

* vs. FY20.3, excluding special factors

Reevaluating use of organizations, human resources• Directly handling cleaning of stations and rollingstock, train patrols, replacement operations, lostproperty management, etc.
• Building business operation systems that transcendgroups(track/electrical equipment inspections, etc.)• Flexible use of human resources(Implementing strategic seconding initiatives insideand outside the Group)

Directly handlingcleaning of rolling stock22➌Reevaluating discount tickets, advancing shift to on-line sales
We will continue to reevaluate discount tickets, strengthen yield management
through the shift to on-line sales, and work to secure the top line by reevaluating
limited-express surcharges.
Items to be implemented

Initiatives in the first quarter
１．Reevaluated prices of discount tickets sold on-line, discount tickets
sold at counters (From April 1, 2021)• Increased on approximately 20% of sections• Average price revision rate for tickets with increased prices: Approximately +8%２．Discontinued discount tickets sold at counters (From April 1, 2021)• Complete discontinuance of two-part tickets on the Shinkansen• Discontinuance of approximately 60% of two-part tickets on conventional lines

Initiatives in the second quarter and thereafter

Discount ticket on-line sales ratio
Shinkansen (discount tickets for travelthat starts and ends on our network)

On-line sales ratio
in FY21.3(Shinkansen)
Approximately

65%

Conventional lines (discount tickets for travelthat starts and ends on our network)

１．Complete discontinuance of ordinary sets of tickets for multiple rides (within Kyushu)(From July 1, 2021)
２．Further progress in the discontinuance of discount tickets sold at counters(From August 1, 2021)• Further progress in the discontinuance of two-part tickets on conventional lines on certain
sections (targeting approximately 70% discontinuance)
３．50% discontinuance for sets of tickets for multiple rides for limited express surcharges(From August 1, 2021)
４．Reevaluating limited express surcharges on conventional lines (From April 1, 2022)• Increasing limited express surcharges for limited express trains (non-reserved seats, reservedseats), special limited express surcharges* No change to prices of discount tickets, such as Kyushu On-Line Tickets

Strengthening yield management, securing the top line, increasing
efficiency of personnel systems and other station systems

On-line sales ratio
in FY21.3(Conventional lines)

Approximately

45%

Projected on-line sales ratio in
FY22.3*• Shinkansen: 100%
• Conventional lines(major sections): 60% or more
* Discount tickets for travel that starts
and ends on our network23❹Improving Profits in the Hotel BusinessWe will continue the cost reduction initiatives that we have been implementing since theprevious fiscal year, and we will advance initiatives to enhance customer drawing power sothat we do not miss a recovery in demand.
Cost reduction initiatives
We will continue to advance multi-tasking; bring in-house operations that had been outsourced, such as cleaning; advance DX, etc. In
this way, in FY22.3, despite a rise in expenses due to the opening of THE BLOSSOM KUMAMOTO and increases in occupancy rates, we
anticipate a decline in operating expenses in comparison with the period before COVID-19 (FY20.3).
Advancing multi-tasking

OperatingOperatingrevenue
expenses¥16.6 ¥15.8
billion billion

Advancing multi-tasking, under which
one staff member handles the front,
customer rooms, restaurant, etc.

Results trend in the hotel business

Operatingexpenses
Operatingrevenue【Cost decrease factors】• Reducing
administration staff• Directly handlingcleaning operations, etc.
• Reducing salescommissions

FY20.3 results

Operatingexpenses

Operatingrevenue¥6.8
billion¥11.6
billion

FY21.3 results

Initiatives to enhance customer drawing power• Strengthening sales with a focus on a recovery in the attitude to senior citizens
toward travel(Collaboration with tickets for seniors, such as Zipangu Club and Active 65)• Development of products reflecting collaboration with restaurants in surroundingarea• Expansion of plan lineup reflecting enhancement of double occupancy ratio (DOR)• Improving RevPAR through flexible fare setting aligned with demand• Enhancing service level and productivity by implementing human resources
development through temporary transfers to other Japanese-style inns, etc.

【Cost increase factors】• Hotel opening• Increase inoccupancy rates【Cost decrease factors】
Continued cost
reduction measures¥15.5 ¥15.3
billion billion

FY22.3 forecasts

Establishing family plans in order to increase
DOR (Umehibiki)24➎Expanding Business Fields through M&A
To expand business fields that do not depend on the flow of people and to realize further growth in theGroup’s restaurant business, we acquired Nurubon as a new subsidiary. This barbecue restaurant ishighly popular, centered on Fukuoka.
Overview of newly established subsidiary

Strengths of
NurubonName

Nurubon Inc.

LocationHakata-ku, Fukuoka City

Business activities

Restaurant business, meat and foodstuffs wholesale business

Number of restaurants

15 restaurants (12 barbecue restaurants, 2 pubs, 1 steakhouse)

Date of establishment

August 10, 2021 (planned)

Investment percentage

Kyushu Railway Company: 100%

Nagaoka restaurant:
Yakiniku Nurubon Iori

Menu centered onJapanese beef from Kyushu

Service

Restaurant creation,customer drawing power

Purchasing
capabilities

Brand

Purchasing whole Japanese
beef from Kyushu,
judgment regarding
meat quality and pricing

Focus onKyushu beef

15 restaurants, centered on Fukuoka City suburbs

Objective of M&A
１．Strengthening our business portfolio• In addition to existing businesses in stations and city centers,
add suburban business• Advance into destination barbecue restaurant business withstrong customer-drawing power, even in the suburbs

２．Acquire additional growth know-how
for the Group’s restaurant business• Reduce costs through joint purchasing• Enhancing the service level at the Group’s restaurants• Business development leveraging brand power

Accelerating growth inrestaurant business＋Contributing to thesustained developmentof Kyushu
25

➏Strengthening Cooperation in Transportation Services through MaaS
We will work to strengthen cooperation with other transportation companies, and willconsider expanding areas and services for the period after COVID-19.
Strengthening cooperation with other transportation companies

Joint press conference with
Nishi-Nippon Railroad

Illustration of digital ticket

Cooperation with Nishi-Nippon Railroad Co., Ltd.
• In the “my route” app provided by the Toyota Group, in cooperation with
Nishi-Nippon Railroad, we have begun to sell digital tickets that are sets
combining passenger tickets with shopping vouchers for station buildings,
etc.
• This will help to create a lively atmosphere in the Tenjin/Hakata area andcontribute to economic revitalization.
Cooperation with JR West• We are working to expand services by providing JR Kyushu station
timetables and information about tourism on WESTER, a MaaS app
provided by JR West.

Results of verification testing (Miyazaki City/Nichinan City and surrounding area)

SaseboShimosone
Tosu

Saga Kurume

Nagasaki

Implementation of verification testing related to convenience, etc., of “my route” MaaS app (November 6, 2020, to March 12, 2021)(Selected for the Ministry of Land, Infrastructure, Transport and Tourism’s program for enterprises that advance/support
MaaS in Japan)

KokuraHakataYufuinOita

Kumamoto
Shin-yatsushiro【Details of major initiatives】
Providing one-stop service for route searches, ticket reservations/purchases, and regional information on “my route”
Transportation• Transportation tickets: JR Kyushu passenger tickets, Miyako Bus tickets, Miyazaki Station Buildings shopping
vouchers, etc.
• Reservation system cooperation: JR Kyushu Internet train reservations, high-speed buses, ANA• Mobility cooperation: Taxi dispatching, Toyota car sharing/rental, Pippa! bicycle sharing, etc.

MaaS verification
testing area
MiyazakiKagoshimachuo

Kyushu Shinkansen
Conventional lines

Lifestyle services, tourism• Provision of coupons for commercial facilities,
tourism facilities
Provision of various information• Train delay information, bus location
information, event information, etc.

Nichinan＊Area scope is an illustration.

Railway/route buses
Digital free passes

Route buses
Digital free passes

Digital coupons【Verification results】• As a result of a decline in mobility demand due to COVID-19, the number of downloads and the number of digital tickets sold did
not reach targets.
• However, in a questionnaire-based survey, 71% of respondents said that the app service had played a role in their decision to goout. A certain degree of effectiveness can be expected in terms of increases in mobility utilizing transportation services.

26

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/

27