Business Risks
- 1. Business trends
- 2. Intensification of competition between businesses
- 3. Exchange rate fluctuations
- 4. Overseas expansion of business
- 5. Abnormal weather
- 6. Disasters, etc.
- 7. Sharp rises in fuel costs
- 8. Legal restrictions
- 9. Management of customer information
- 10. Fluctuation of interest rates
- 11. Disposal and loss of fixed assets
- 12. Liability for retirement payments
1. Business trends
The operating results of the Nippon Express Group are affected by domestic and overseas economies, trends in business conditions, and trends in client companies' demand for transportation.
2. Intensification of competition between businesses
Demand for domestic transportation is continuing to decline with client companies' rationalization of distribution, shifts to overseas production bases and the progressive hollowing-out of domestic industry, resulting in the ongoing intensification of competition between businesses. Under such circumstances, the Nippon Express Group is making efforts to develop and provide transportation services with high added value, but it is possible that further business competition and price competition will adversely affect our management results.
3. Exchange rate fluctuations
Exchange rate fluctuations affect client companies' demand for transportation of import/export freight and may affect the operating results of the Nippon Express Group in the field of international freight.
Also, there are foreign-denominated credits and liabilities such as for marine freight rates and air freight rates due to the handling of export/import freight, and sudden changes in exchange rates may adversely affect our operating results.
Since overseas companies' financial statements, etc., are converted to Japanese yen when we create our own consolidated financial statements, a high-valued yen may result in a smaller-than-appropriate assessment of overseas companies' operating results.
4. Overseas expansion of business
The Nippon Express Group conducts business in countries all around the world, and our operating results may be adversely affected by changes in the international situation, modification of laws and regulations in individual countries, unexpected circumstances, and so on.
5. Abnormal weather
Goods that are transported by the Nippon Express Group include primary products, drinking water, etc., for which transportation demand is affected by the weather. Therefore, abnormal weather conditions such as a cool summer or light rainfall will cause sales to decrease and may adversely affect our operating results.
6. Disasters, etc.
The Nippon Express Group offers wide-ranging means of transport, including railways, automobiles and ships, but if transportation is impeded due to an earthquake, heavy snow, severe rainfall, etc., sales will decrease even with the use of alternative means of transportation, and this may adversely affect our operating results.
7. Sharp rises in fuel costs
If the gas-oil price suddenly increases due to a hike in the price of crude oil, etc., there will be an increase in the cost price of transportation by shipping companies - including increases in fuel, shipping and air freight costs - and sales companies will increase their inventory cost price of gas oil, petrol, etc. Group companies will individually attempt to reduce costs in their respective positions but, if these increased costs cannot be passed on to the consumer, then our management results may be adversely affected.
8. Legal restrictions
The Nippon Express Group offers wide-ranging means of transport, and there are legal restrictions in each field. The Nippon Express Group recognizes compliance management as being of utmost importance and is making efforts in this regard but, if some of our business activities are limited by legal restrictions, etc., or restrictions relating to environmental problems exceed our company's expectations, this may cause sales to decrease or result in new additional expenses, thereby adversely affecting our operating results.
9. Management of customer information
The Nippon Express Group is active in removals, travel and security transport, etc., handling the information of many customers, including their personal information. The Group has established "Compliance Rules" and "Personal Information Protection Regulations", and makes efforts to carry out appropriate management of customer information and personal information, including in-house training of all employees. However, if a problem were to occur due to leakage of customer information, this could have an adverse effect on our future business expansion and operating results.
10. Fluctuation of interest rates
The sales companies of the Nippon Express Group conduct leasing business activities. Lease agreements with customers are entered into based on the interest levels at the time the contracts are executed but, while a fixed amount of revenue is appropriated throughout the period established in the contract, the capital cost price (the supply cost) will vary depending on market interest rates, so our operating results may be adversely affected if there is an increase in interest rates beyond expectations.
11. Disposal and loss of fixed assets
The Nippon Express Group has many distribution bases both domestically and overseas. Capital investments, long-term leases, etc., are implemented after giving sufficient long-term consideration to such factors as calculation of investment effects and cash flow recovery forecasts, but disposal or return may occur earlier than initially planned due to future economic trends, developments at client companies, etc., or temporary losses may arise, which may adversely affect our operating results.
12. Liability for retirement payments
Liabilities and expenses for the Group's employee retirement payments are calculated based on the expected earnings of pension assets and assumed conditions based on mathematical calculations such as discount rates. When actual results differ from the assumed conditions, or when the assumed conditions change, the amount affected is recognized as a disparity in mathematical calculation and, since payments are made at a uniform rate over time, this will affect retirement payment liabilities and expenses. Nippon Express has also established retirement payments with stocks and bonds and, if there is a drop in the prices of these stocks and bonds, this will reduce the market value of pension assets and may adversely affect our operating results by causing unrecognized mathematical disparity, increasing future repayment costs, etc.
