Nippon Express (9147) Q2 2024 earnings summary

Executive summary

• Q2 FY2024 revenues rose 10.4% year-over-year to ¥1,249.9 billion, driven by global logistics recovery and the addition of cargo-partner group.

• Operating profit fell 52.4% year-over-year to ¥19.2 billion, mainly due to impairment losses from business integration and lower volumes in heavy haulage.

• Profit attributable to owners of parent dropped 55.0% year-over-year to ¥11.4 billion.

• Forwarding business gross profit per unit declined, with higher personnel expenses and reduced infectious disease-related material volumes impacting profits.

• The logistics industry faced unstable demand, cost pressures from labor shortages and fuel, and direct impacts from geopolitical risks, especially in international freight.

Financial highlights

• Gross profit decreased 6.9% year-over-year to ¥106.1 billion, while selling, general, and administrative expenses increased 12.3% to ¥80.6 billion.

• Q2 FY2024 consolidated segment income (business income) was ¥25.5 billion, down 39.6% year-over-year.

• Business profit ratio decreased to 2.0% from 3.7% a year ago.

• Gross profit per unit in air forwarding dropped 7.9 points QoQ, while ocean freight forwarding saw an 8.5 point decline.

• Cash and cash equivalents at June 30, 2024 were ¥218.5 billion, down ¥96.6 billion from year-end 2023.

Outlook and guidance

• Full-year 2024 revenue forecast revised upward to ¥2,570.0 billion (up 14.8% year-over-year), but operating profit and net profit forecasts were revised downward due to high logistics and personnel costs.

• Profit attributable to owners of parent for FY2024 is now forecast at ¥40.0 billion, down 27.3% from the previous forecast.

• Basic earnings per share for FY2024 is projected at ¥461.89.

• Profitability in forwarding business began recovering in June and is expected to continue improving from Q3.

• Long-term vision focuses on accelerating global business growth and restructuring Japanese operations.