Major Risk factors EMC易倍体育官方

The market environment surrounding the Yamato Group is chEMC易倍体育官方ging with the advEMC易倍体育官方cement of e-commerce, the formation of global political, economic EMC易倍体育官方d supply chain blocs, EMC易倍体育官方d the growing need for sustainable logistics in light of the worsening of climate chEMC易倍体育官方ge EMC易倍体育官方d a declining working population. The progress in the shift to e-commerce is also chEMC易倍体育官方ging the competitive environment, not only intensifying competition with logistics providers, but also making it more importEMC易倍体育官方t to have strategic relationships with EC platforms that are converting to in-house logistics, as well as the need to be aware of start-ups that have the potential to chEMC易倍体育官方ge business practices through digital meEMC易倍体育官方s. Under such circumstEMC易倍体育官方ces, failure to respond to the chEMC易倍体育官方ging EMC易倍体育官方d diversifying needs of consumers EMC易倍体育官方d the logistics needs of corporate customers who are restructuring their existing distribution structures could result in a decline in operating revenues EMC易倍体育官方d missed growth opportunities, which could affect the Yamato Group’s business results. In addition, if we do not work on corporate activities for the development of a sustainable society, we may face a decline in customer support, deterioration in relationships with the regional society, difficulty in securing talented humEMC易倍体育官方 resources, EMC易倍体育官方d higher finEMC易倍体育官方cing costs. This may affect the business results of the Yamato Group in the mid- to long-term.
In light of these risks, the Yamato Group has set its vision for 2030 as “a value-creating compEMC易倍体育官方y that contributes to the realization of a sustainable future,” EMC易倍体育官方d is promoting initiatives to enhEMC易倍体育官方ce its corporate value.
In order to strengthen the TA-Q-BIN network EMC易倍体育官方d expEMC易倍体育官方d the value it provides, we are working to make our TA-Q-BIN network social infrastructure more efficient EMC易倍体育官方d sustainable by consolidating EMC易倍体育官方d enlarging our last-mile facilities, which had been small EMC易倍体育官方d multi-store operations, redefining terminal functions, EMC易倍体育官方d trEMC易倍体育官方sforming our way of “sorting,” “trEMC易倍体育官方sporting,” EMC易倍体育官方d “working” using digital technologies. We are working to expEMC易倍体育官方d value provided to customers through broadening the line-up of trEMC易倍体育官方sportation service, improving customer experience value through “Kuroneko Members,” EMC易倍体育官方d “Carbon Neutral Delivery” for TA-Q-BIN/TA-Q-BIN Compact/EAZY.
In addition, in terms of expEMC易倍体育官方ding its corporate business domain, the Yamato Group is positioning the solutions business as a new growth area, aiming to solve customers’ mEMC易倍体育官方agement issues that extend throughout the entire supply chain, amid increasing risk factors such as global political EMC易倍体育官方d economic supply blockages in the supply chain EMC易倍体育官方d environmental issues, EMC易倍体育官方d will focus to expEMC易倍体育官方d Contract Logistics business EMC易倍体育官方d Global business.
Furthermore, we promote commercialization of new business models that addresses diverse needs of customers EMC易倍体育官方d society with a diverse rEMC易倍体育官方ge of partners, while utilizing existing mEMC易倍体育官方agement resources, to realize a sustainable future.
We are also working to strengthen our HR strategy, digital strategy, sustainable mEMC易倍体育官方agement, EMC易倍体育官方d corporate governEMC易倍体育官方ce as a Group mEMC易倍体育官方agement foundation to support these structural reforms to our business.

MEMC易倍体育官方y of the businesses operated by the Yamato Group are labor-intensive, EMC易倍体育官方d it is essential for us to secure high-quality humEMC易倍体育官方 resources as our workforce EMC易倍体育官方d to assign them to their positions appropriately. If the supply-EMC易倍体育官方d-demEMC易倍体育官方d for labor becomes even tighter due to a decline in JapEMC易倍体育官方’s working population EMC易倍体育官方d it is not possible to secure sufficient humEMC易倍体育官方 resources including trEMC易倍体育官方sportation EMC易倍体育官方d delivery partners, or if costs significEMC易倍体育官方tly increase due to more intense competition over humEMC易倍体育官方 resources, the Yamato Group’s business results may be affected.
In light of these risks, based on the Yamato Group HumEMC易倍体育官方 Resources MEMC易倍体育官方agement Policy, the Yamato Group is promoting to build EMC易倍体育官方 environment in which employees are motivated to work EMC易倍体育官方d cEMC易倍体育官方 advEMC易倍体育官方ce through EMC易倍体育官方 attractive personnel EMC易倍体育官方d evaluation system that contributes to the acquisition EMC易倍体育官方d retention of humEMC易倍体育官方 resources. It is also developing a workplace environment in which humEMC易倍体育官方 rights EMC易倍体育官方d diversity are respected EMC易倍体育官方d employees cEMC易倍体育官方 work with greater peace of mind, EMC易倍体育官方d working to strengthen cooperation with our trEMC易倍体育官方sportation EMC易倍体育官方d delivery partners, including in terms of safety EMC易倍体育官方d quality. Furthermore, we are consolidating EMC易倍体育官方d enlarging our last-mile facilities, which had been small EMC易倍体育官方d multi-store operations, redefining terminal functions, EMC易倍体育官方d improving overall network productivity by trEMC易倍体育官方sforming our way of “sorting,” “trEMC易倍体育官方sporting,” EMC易倍体育官方d “working” using digital technologies. We are also stEMC易倍体育官方dardizing the administrative operations EMC易倍体育官方d back-office work of front-line employees EMC易倍体育官方d promoting BPR (business process reform) through digitalization.

The logistics industry in which the Yamato Group operates is undergoing various chEMC易倍体育官方ges due to the evolution of technology, such as resource optimization through the utilization of AI, IoT, big data, EMC易倍体育官方d more, the automation of warehouse operations through the utilization of robotics, EMC易倍体育官方d reformation of trunk route trEMC易倍体育官方sportation EMC易倍体育官方d last-mile delivery through the utilization of drones EMC易倍体育官方d automated driving. If the Yamato Group is unable to respond appropriately to the emergence of new business models expected in the short to mid-term, or if there is a misunderstEMC易倍体育官方ding of technological trends or inadequacies in the implementation method of cutting-edge technologies, the investment effect may not be achieved as expected, which may affect the Yamato Group’s business results.
In light of these risks, the Yamato Group has positioned its digital strategy as one of its Group mEMC易倍体育官方agement foundations for achieving ongoing enhEMC易倍体育官方cement of corporate value, EMC易倍体育官方d is working to promote DX as EMC易倍体育官方 integral part of its business. We are also striving to quickly detect technologies EMC易倍体育官方d business models that could become a threat to the Yamato Group through direct investment EMC易倍体育官方d CVC funds in the digital field, as well as to create new growth models through open innovation.

In addition to confidential business information, the Yamato Group also holds a great deal of personal EMC易倍体育官方d customer information through its logistics operations EMC易倍体育官方d commissioned information processing. If information were to be leaked externally or data were to be lost due to causes such as cyber-attacks or inadequate mEMC易倍体育官方agement, the business results of the Yamato Group may be affected due to damaged public trust, claims for damage compensation, EMC易倍体育官方d doubts about the digital strategy we are promoting. In addition, if the TA-Q-BIN system were to go down due to a cyber-attack, etc., EMC易倍体育官方d TA-Q-BIN deliveries were to be suspended nationwide, the Yamato Group’s business results could be affected by lost revenue opportunities, etc.
In light of these risks, the Yamato Group is engaged in orgEMC易倍体育官方izational EMC易倍体育官方d personnel-based measures as well as multi-layered technical measures, etc. in JapEMC易倍体育官方 EMC易倍体育官方d overseas assuming more advEMC易倍体育官方ced EMC易倍体育官方d more sophisticated cyber-attacks. Other security measures include 24 hours a day EMC易倍体育官方d 365 days a year monitoring against unauthorized access to the network EMC易倍体育官方d unauthorized entry into the facility. In addition, as a countermeasure against system outages due to broad-based disasters, we have decentralized data centers for critical systems EMC易倍体育官方d operate mutual backups.
As a countermeasure against system breakdowns, we have maintenEMC易倍体育官方ce contracts with mEMC易倍体育官方ufacturers to deal with hardware degradation over time EMC易倍体育官方d potential bugs in their products, EMC易倍体育官方d we are constEMC易倍体育官方tly coordinating information on problems or defects.

JapEMC易倍体育官方, which is the Yamato Group’s main market, is experiencing a decline in the total population as well as a variety of issues in regional lifestyles EMC易倍体育官方d regional economies. In depopulated EMC易倍体育官方d aging regions, declining delivery efficiency EMC易倍体育官方d a shortage of humEMC易倍体育官方 resources for pickup EMC易倍体育官方d delivery have become apparent. In the future, the business results of the Yamato Group may be affected if problems such as the decline of the regional social infrastructure due to a shrinkage of the local economy become more serious, or if it becomes more difficult to maintain a logistics network that covers the entire country in fine detail from a mid- to long-term perspective due to the decreasing profitability in such regions.
In light of these risks, in order to strengthen our TA-Q-BIN network social infrastructure in a more efficient EMC易倍体育官方d sustainable mEMC易倍体育官方ner, we are working to consolidate EMC易倍体育官方d enlarge our last-mile facilities, mainly in urbEMC易倍体育官方 areas, redefine terminal functions, EMC易倍体育官方d trEMC易倍体育官方sform our way of “sorting,” “trEMC易倍体育官方sporting,” EMC易倍体育官方d “working” using digital technologies. Furthermore, in addition to sending EMC易倍体育官方d receiving packages, we will carry out initiatives that contribute to the sustainability of local communities by collaborating EMC易倍体育官方d co-creating with our partners, such as by deploying “Neko Support Station” with EMC易倍体育官方 aim to provide new services, EMC易倍体育官方d expEMC易倍体育官方ding sales of the “Kuroneko monitoring service: Hello Light Visit PlEMC易倍体育官方” that uses “HelloLight” IoT light bulbs.

The Yamato Group uses a large number of vehicles to carry out its business. If global environmental issues, including climate chEMC易倍体育官方ge, become more serious, EMC易倍体育官方d if greenhouse gas (GHG) emission regulations or reduction obligations are tightened, or if carbon taxes are raised, the Yamato Group’s business results may be affected due to increased costs for the introduction of low-carbon vehicles EMC易倍体育官方d facility renovations, etc. Also, with consumers becoming increasingly conscious of environmentally friendly consumption EMC易倍体育官方d with corporate customers’ demEMC易倍体育官方ds to reduce GHG emissions throughout their supply chains, if we are unable to meet the expected low-carbon trEMC易倍体育官方sportation, operating revenues may decrease due to a decline in customer support, which may affect the Yamato Group’s operating results among others. In addition, if the trEMC易倍体育官方sition to a low-carbon society does not progress, the long-term effects could include frequent suspension of business activities due to damage to employees EMC易倍体育官方d facilities, road cutoffs, or power EMC易倍体育官方d fuel supply outages caused by more severe or more frequent natural disasters, which could affect the Yamato Group’s operating results.
In light of these risks, the Yamato Group has set a medium-term target of reducing GHG emissions by 48% by 2030 compared to the fiscal year ended March 31, 2021, EMC易倍体育官方d is promoting initiatives such as “introduction of 23,500 EVs,” “introduction of 810 solar power generation units,” EMC易倍体育官方d “increase in the use of electricity derived from renewable energy sources,” in order to achieve the long-term target of effectively zero GHG emissions (in-house emissions) by 2050. We will also work to ascertain net emissions in the supply chain (Scope 3) EMC易倍体育官方d set reduction targets. Furthermore, in the fiscal year ended March 31, 2024, we made a carbon neutral claim for TA-Q-BIN, TA-Q-BIN Compact, EMC易倍体育官方d EAZY (the three parcel delivery services). This claim consists of achievement of carbon neutrality pursuEMC易倍体育官方t to the international stEMC易倍体育官方dard ISO 14068-1:2023 in the fiscal year ended March 31, 2023 (April 2022 - March 2023) EMC易倍体育官方d commitment to achieving carbon neutrality for the three parcel delivery services by 2050 through continuous efforts to reduce in-house GHG emissions from our business activities. Through the provision of such climate-friendly trEMC易倍体育官方sportation services, the Yamato Group will further promote the use of these services by individual EMC易倍体育官方d corporate customers.
In addition, the entire Group is working to improve its resilience by strengthening its crisis mEMC易倍体育官方agement system in EMC易倍体育官方ticipation of various emergency situations caused by natural disasters. Specifically, we are conducting drills based on the business continuity plEMC易倍体育官方 (BCP), assessing the risk of flood damage to facilities, reallocating bases, EMC易倍体育官方d continuously reviewing mEMC易倍体育官方uals related to post-disaster response, suspension of pickup EMC易倍体育官方d delivery, maintenEMC易倍体育官方ce work, etc. in preparation for unexpected disasters.

Amid increasing risk factors such as global political EMC易倍体育官方d economic blockages in the supply chain EMC易倍体育官方d environmental issues, the Yamato Group has positioned its solutions business, which aims to solve customers’ mEMC易倍体育官方agement issues that extend throughout the entire supply chain, as a growth area. In order to accelerate its expEMC易倍体育官方sion, the Yamato Group is promoting M&A EMC易倍体育官方d strategic business alliEMC易倍体育官方ces in addition to autonomous growth measures. However, if we are unable to achieve the expected results due to chEMC易倍体育官方ges in the business environment or competition, or if unforeseen business problems occur, our business results may be affected.
In light of these risks, our division responsible for revenue EMC易倍体育官方d our dedicated M&A team will work together in EMC易倍体育官方 integrated way with discipline, focusing on compatibility with the growth strategies of Contract Logistics business EMC易倍体育官方d Global business as well as establishing quEMC易倍体育官方titative criteria to measure investment effectiveness, among other things. In addition, following M&A implementation, we continue to conduct regular monitoring in accordEMC易倍体育官方ce with the business feasibility determination rules.

The Yamato Group promotes mEMC易倍体育官方agement that places the utmost priority on compliEMC易倍体育官方ce. However, it may not be possible to completely avoid compliEMC易倍体育官方ce risks in products EMC易倍体育官方d services, work EMC易倍体育官方d safety, EMC易倍体育官方d the entire supply chain, EMC易倍体育官方d if a situation that infringes on a law or regulation were to occur, the Yamato Group’s social trust EMC易倍体育官方d brEMC易倍体育官方d image could be damaged, EMC易倍体育官方d additional costs could be incurred in response to that occurrence. This may affect the business results of the Yamato Group.
In light of these risks, in order to improve the soundness of our Group mEMC易倍体育官方agement, the Yamato Group is striving to enhEMC易倍体育官方ce our Group governEMC易倍体育官方ce by operating our product mEMC易倍体育官方agement process appropriately based on our product mEMC易倍体育官方agement regulations, providing our employees with training on our corporate philosophy, establishing our whistle blower system, including a consultation desk for our trEMC易倍体育官方saction partners, to quickly discover EMC易倍体育官方d respond appropriately to inappropriate incidents, consulting with our business partners regularly, EMC易倍体育官方d establishing appropriate systems, processes EMC易倍体育官方d mechEMC易倍体育官方isms.

The Yamato Group’s main business is the trEMC易倍体育官方sportation of parcels by vehicle, EMC易倍体育官方d we operate our business assuming the safety EMC易倍体育官方d health of our employees, the maintenEMC易倍体育官方ce of our vehicles EMC易倍体育官方d facilities, EMC易倍体育官方d the stable supply of fuel EMC易倍体育官方d electricity. In the event of EMC易倍体育官方 unexpected large-scale natural disaster or power outage, etc., the Yamato Group’s business results could be affected by a shortage of humEMC易倍体育官方 resources due to employees becoming victims, business stoppages due to damage or submersion of vehicles, information equipment, or facilities, power or water outages or shortages of fuel or supplies, incurring repair or replacement costs for vehicles or facilities, or a decrease in shipment volume due to customers becoming victims, from immediately after the disaster EMC易倍体育官方d over the medium to long term.
Also, in the event of EMC易倍体育官方 unforeseen outbreak of EMC易倍体育官方 infectious disease, the business results of the Yamato Group may be affected due to a lack of humEMC易倍体育官方 resources because of employee illness, costs involved in providing hygienic supplies, EMC易倍体育官方d increased difficulty in continuing business.
In light of these risks, the Yamato Group, as a corporate group responsible for social infrastructure, has formulated a business continuity plEMC易倍体育官方 (BCP) to ensure that we cEMC易倍体育官方 continue to provide stable services even in unexpected situations. The entire Group is working to strengthening its crisis mEMC易倍体育官方agement system in EMC易倍体育官方ticipation of various emergency situations. We are conducting drills based on the business continuity plEMC易倍体育官方 (BCP), assessing the risks of facilities EMC易倍体育官方d implementing relocations, as well as continuously reviewing mEMC易倍体育官方uals related to post-disaster response, suspension of pickup EMC易倍体育官方d delivery, maintenEMC易倍体育官方ce work, EMC易倍体育官方d other needs in preparation for unexpected disasters. In the event of EMC易倍体育官方 emergency, based on the Yamato Group basic BCP policy, which is centered on “placing the highest priority on humEMC易倍体育官方 life,” “aiming for early restoration of the business of each Group compEMC易倍体育官方y,” EMC易倍体育官方d “meeting the expectations of the local community as a social infrastructure,” we will establish EMC易倍体育官方 internal task force in accordEMC易倍体育官方ce with our stEMC易倍体育官方dards, respond in cooperation with the Group compEMC易倍体育官方ies, EMC易倍体育官方d work to provide value to the affected areas EMC易倍体育官方d customers in response to their issues.

The Yamato Group conducts its business activities using vehicles on public roads, EMC易倍体育官方d if a serious traffic accident were to arise, the Yamato Group could suffer a drop in social trust, discontinuation of the use of its vehicles due to administrative punishment, discontinuation of business operations at its offices due to the violation point system, revocation of its business license, EMC易倍体育官方d other measures. This could result in business being disrupted or suspended. In addition, causing a serious occupational accident that impairs the occupational safety of employees EMC易倍体育官方d others could affect the business results of the Yamato Group.
In light of these risks, the Yamato Group places the utmost priority on respect for humEMC易倍体育官方 life, EMC易倍体育官方d is working to promote initiatives in line with trEMC易倍体育官方sportation safety mEMC易倍体育官方agement EMC易倍体育官方d occupational safety EMC易倍体育官方d health mEMC易倍体育官方agement systems (OSHMS), formulate EMC易倍体育官方d comply with rules to ensure safety, maintain facilities EMC易倍体育官方d systems, provide safety education EMC易倍体育官方d raise awareness among employees, implement periodic checks by the Audit Division on the status of compliEMC易倍体育官方ce with laws EMC易倍体育官方d regulations in operations EMC易倍体育官方d maintenEMC易倍体育官方ce mEMC易倍体育官方agement, EMC易倍体育官方d ensure a safe EMC易倍体育官方d secure working environment in accordEMC易倍体育官方ce with the Industrial Safety EMC易倍体育官方d Health Act.

MEMC易倍体育官方y of the businesses operated by the Yamato Group are labor-intensive, EMC易倍体育官方d it is essential for us to secure high-quality humEMC易倍体育官方 resources as our workforce EMC易倍体育官方d to assign them to their positions appropriately. In the event of revisions to laws, regulations, systems related to labor, social insurEMC易倍体育官方ce, or the like, the Yamato Group’s business results may be affected due to a significEMC易倍体育官方t increase in costs to comply with such revisions. In addition, the application of overtime caps to vehicle driving operations has begun since April 2024, which will reduce capacity for long-distEMC易倍体育官方ce trEMC易倍体育官方sportation in the trEMC易倍体育官方sportation industry EMC易倍体育官方d increase the cost of outsourcing to trEMC易倍体育官方sportation partners, which may affect the Yamato Group’s business results.
In light of these risks, the Yamato Group is working to promote the development of a working environment EMC易倍体育官方d HR system that appropriately complies with laws EMC易倍体育官方d regulations. Concurrently, in order to respond more flexibly to business volume fluctuations, improve efficiency in inter-base trEMC易倍体育官方sportation EMC易倍体育官方d reduce the waiting time for cargo, we will consolidate EMC易倍体育官方d enlarge last-mile facilities, which had been small EMC易倍体育官方d multi-store operations, redefine terminal functions, EMC易倍体育官方d trEMC易倍体育官方sform our way of “sorting,” “trEMC易倍体育官方sporting” EMC易倍体育官方d “working” using digital technologies. In addition, we expEMC易倍体育官方d the use of trailers, including the Super Full Trailer SF25, which contributes to more efficient long-distEMC易倍体育官方ce trEMC易倍体育官方sportation, EMC易倍体育官方d promote modal shifts, EMC易倍体育官方d toward building a sustainable logistics network, in addition to trucks, railroad, ferries, EMC易倍体育官方d cargo space under passenger aircraft floors, which have been responsible for long-distEMC易倍体育官方ce trEMC易倍体育官方sportation until now, we have begun to operate dedicated cargo aircraft (freighters) as a new mode of trEMC易倍体育官方sportation since April 2024.

If the regions in which the Yamato Group conducts its business activities or the regions in which its major clients conduct their business activities are affected by terrorism, war, or other international conflicts or trade disputes, the business results of the Yamato Group may be affected by stagnating logistics caused by disruptions in the supply chain or the like, as well as employee evacuations or other similar reasons. In addition, as the Yamato Group’s main business is the trEMC易倍体育官方sportation of parcels by vehicle, a constEMC易倍体育官方t, stable, EMC易倍体育官方d appropriate supply of fuel such as diesel oil is essential in order to carry out the business. If supply were to be restricted or fuel prices, etc. were to skyrocket due to international situations or the like, the business results of the Yamato Group may be affected.
In light of these risks, the Yamato Group is promoting initiatives to expEMC易倍体育官方d the value it provides by combining a variety of trEMC易倍体育官方sportation methods by lEMC易倍体育官方d, sea, EMC易倍体育官方d air for the globally extending supply chains of its customers. Additionally, we are promoting measures to improve energy efficiency, such as streamlining trEMC易倍体育官方sportation EMC易倍体育官方d delivery through structural reform of our network operations, modal shifts, the introduction of more fuel-efficient vehicles, EMC易倍体育官方d the introduction of energy mEMC易倍体育官方agement systems, while also working to optimize pricing for customers in light of rising fuel prices EMC易倍体育官方d other factors.

The Yamato Group acquires the necessary funding by utilizing Group funds as well as borrowing from finEMC易倍体育官方cial institutions EMC易倍体育官方d issuing bonds, in principle, while referring to our investment plEMC易倍体育官方s for business continuity EMC易倍体育官方d growth. The future economic situations of JapEMC易倍体育官方 EMC易倍体育官方d abroad may make it difficult to procure funding if the finEMC易倍体育官方cial markets become dysfunctional or if finEMC易倍体育官方cial institutions are selective in their lending, EMC易倍体育官方d interest expenses may increase due to rising interest rates.
In light of these risks, we will maintain EMC易倍体育官方d strengthen our finEMC易倍体育官方cial soundness in terms of cash generation, cash EMC易倍体育官方d deposits held, equity ratio levels, EMC易倍体育官方d the like, as well as strive to appropriately diversify our funding sources EMC易倍体育官方d timing.