Financial Results Meeting: FY Ended March 2010 …...Financial Results Meeting: FY Ended March 2010 (April 1, 2009 - March 31, 2010) May 12, 2010May 12, 2010 1 Contents • KWE Group’s

Financial Results Meeting:FY Ended March 2010

(April 1, 2009 - March 31, 2010)

Financial Results Meeting:FY Ended March 2010

(April 1, 2009 - March 31, 2010)

May 12, 2010May 12, 2010

11

ContentsContents

• KWE Group’s Worldwide Five Regional Management System• Major Topics (FY Ended March 2010)• Non-consolidated Balance Sheet for FY Ended March 2010• Monthly Trends in KWE Consolidated Airfreight Leaving Japan• Actual Volume by Region (Five Regions)• Current Status of Items Handled (1) (Non-consolidated,

Airfreight)• Current Status of Items Handled (2) (Non-consolidated, Ocean

Freight)

Outline of Results (Consolidated & Non-Consolidated) for FY Ended March 2010and the Forecast for FY Ending March 2011

New Medium-Term Management Plan:“Ready for the Next !”FY Ending March 2011 – FY Ending March 2013

• Results for FY Ended March 2010 (1)• Results for FY Ended March 2010 (2)• Major Factors Affecting Results for FY ended March 2010• Worked throughout the Fiscal Year to Achieve the Cost

Reduction• Y on Y Comparison of Net Sales, Operating Cost, Sales &

General Administrative Expenses (Consolidated)• Freight Cost Ratio for Airfreight Exports Revenue• Consolidated Balance Sheet (1)• Consolidated Balance Sheet (2)• Consolidated Cash Flow Statement• Consolidated Net Sales by Category• Consolidated Net Sales and Operating Income by Region• Major Factors Affecting Results by Region• Consolidated Operating Results by Quarter• Projected Results for FY Ending March 2011

(Consolidated, Forecast)- The First year of the New Medium-Term Management Plan

• Net Sales by Category & Region for FY Ending March 2011 (Consolidated, Forecast)

• Goals and background of New Medium-Term Management Plan: “Ready for the Next !”

• Outline of “Ready for the Next !”• New Medium-Term Management Plan: “Ready for the Next !”

Basic Numerical Targets (Consolidated, Three Years)• <Management Strategy 1> Create a Strong Asia (Focused

Investment of Management Resources) • <Management Strategy 2> Sell a Strong Asia (Create a Sales

Structure to Compete with Global Competitors)• <Management Strategy 3> Strengthen Core Competencies

(Human Resources, Quality, IT)• <Management Strategy 4> Ensure Thorough Compliance and

Strengthen a Management System for the Environment• Investment Plan• Net Sales by Category & Region (Consolidated, Forecast)• Dividends

Supplementary Material

22

Results for FY Ended March 2010 (1)Results for FY Ended March 2010 (1)

2009/3 (Results) 2010/3 (Results)

Net Sales¥211.8 billion

Net Sales¥260.3 billion

Y on Y -18.6%

Y on Y -12.7%Ordinary Income

Ordinary Income

Net IncomeNet Income

Operating Income

Operating Income ¥9,025 million

¥3,478 million

¥9,203 million

¥7,451 million

¥4,570 million

¥8,032 million

Y on Y -17.4%

Y on Y +31.4%

33

Results for FY Ended March 2010 (2)Results for FY Ended March 2010 (2)

Non-consolidated

Consolidated

Non-consolidated

Consolidated

Non-consolidated

Consolidated

Non-consolidated

Consolidated

Non-consolidated

Consolidated

Non-consolidated

Consolidated

31.44,570△62.03,478131.23,634△68.71,572

48.44,179△44.72,816

1,292.21,480△96.7106

△2.616,018△19.016,438

△15.376,078△12.189,827△10.036,116△15.740,123

Gross profit

940.53,124△90.5300Net income

△10.24659.1517Volume (Ocean)△14.9869△8.71,021Weight (Airfreight)△9.17,014△6.47,716Shipments (Airfreight & Ocean)

△4.97,596△47.37,991Income before income taxes and minority interests

△12.78,032△38.49,203Ordinary income

△17.47,451△35.09,025Operating income

△18.6211,836△10.9260,330Net sales

Y on Y Y on Y （（%%））Y on Y Y on Y （（%%））

FY ended March 2010 ResultsFY ended March 2010 ResultsFY ended March 2009 ResultsFY ended March 2009 ResultsItemItem

¥91.03FY ended March 2009

¥93.57FY ended March 2010 ¥95.471st half of the FY ended March 2010

5.5%¥1,670.18


¥1,822.95BPS7.3%


ROE

EPSIndicator

Shipments (thousands) Weight (1,000 tons) Volume (1,000 TEU) Amount (￥million)

(Yen-Dollar Conversion Rate)

44

Major Factors Affecting Results for FY Ended March 2010Major Factors Affecting Results for FY Ended March 20101

2

Slowdown in performance of KWE Japan in the second half・ Particularly in terms of exports to Taiwan and China, shipments of LCD-related

items, electronic components, and semiconductor manufacturing equipment gradually recovered, and there was a clear rebound in airfreight export volume. However, a full-fledged recovery in exports to the U.S. and Europe has not yet materialized.

・ Full-term, non-consolidated cost reduction of 3.3 billion yen (versus an original target of 3.0 billion yen)

・ Increased freight costs from 3Q put profits under pressure

East Asia driving profitability・ Thanks to cost reduction and volume recovery, East Asia has far exceeded

original targets.・ The Americas was ahead of targets thanks to the cost reductions, and also

Southeast Asia was solid and in line with targets.・ Subsidiaries in Japan were hit by a drop in domestic demand, and Europe was

badly affected by sluggish markets and insufficient cost reductions.

55

Worked throughout the Fiscal Year to Achieve the Cost ReductionWorked throughout the Fiscal Year to Achieve the Cost Reduction

＋

Cost reductions that go beyond liquidity costs to also include reductions in fixed costs

Cost reductions that go beyond liquidity costs to also include reductions in fixed costs

Cost reductions amounting to 3.3 billion yen at KWE JapanResults essentially in line with targets at domestic and overseas subsidiaries

Rationalization measures throughout the company without exceptions・Reduction in the monthly salaries and bonuses of directors and executive directors ・Reduction in the salaries and bonuses of managers ・Reduction in overtime work for union members ・Reduction in staff, reduction in facility costs, and rent ・Reduction in liquid overhead costs

Deployment of personnel to suit the volumes of business / Merger and consolidation of sales offices

⇒ Flexible staff deployment

66

Year on Year Comparison of Net Sales, Operating Cost, Sales & General Administrative Expenses (Consolidated)Year on Year Comparison of Net Sales, Operating Cost, Sales & General Administrative Expenses (Consolidated)

7,451

28,665

175,720

211,836

FY ended March 2010

9,025

31,097

220,207

260,330

FY ended March 2009

3.5%3.5%Operating income

13.5%11.9%SGA expenses

83.0%84.6%Operating cost

100.0%100.0%Net sales

Ratio to net sales Ratio to net sales

211,836220,207

175,720

31,097 28,665

260,330

0

50,000

100,000

150,000

200,000

250,000

300,000

FY ended March 2009 FY ended March 2010

Net Sales

Operating Cost

SGA Expenses

(Millions of yen)

(Millions of yen, %)

77

Freight Cost Ratio for Airfreight Exports RevenueFreight Cost Ratio for Airfreight Exports Revenue

57.9%

65.7%

62.5%59.2%53.7%55.4%

1st Half of FY 1st Half of FY eendndeded March March

20201010

66.3%66.5%East Asia & Oceania East Asia & Oceania

66.4%

71.9%

63.5%59.2%69.0%

FY ended March FY ended March 20092009

62.7%

69.2%

62.2%54.5%62.2%


Southeast Asia & Southeast Asia & Middle East Middle East

Europe & Africa Europe & Africa

Group as a WholeGroup as a Whole

The Americas The Americas KWE/JapanKWE/Japan

*Fuel surcharges (FSC) were the primary factor behind the decline at KWE Japan during the first half of the FY ended March 2010.

88

Consolidated Balance Sheet (1)Consolidated Balance Sheet (1)

Net assets: 6,16568,03861,873Total net assets 7,487116,640109,153Total liabilities and net assets

47,2796,646

40,632

109,153

10,2932,544

31,20744,045

65,107

FY ended March 2009

Liabilities:

Assets:

1,40042,032Current liabilities:

△776,569Long-term liabilities: 1,32348,602Total liabilities:

7,487116,640Total assets:

2,55246,597Fixed assets

△3999,894Investments and other assets: △4732,071Intangible fixed assets 3,42434,631Tangible fixed assets:

4,93670,043Current assets

Changes FY ended March 2010

(Millions of yen)

99

Consolidated Balance Sheet (2)Consolidated Balance Sheet (2)DebtsDebts

InvestmentsInvestments

Main investments (FY ended March 2010)• Logistics facilities (Narita Terminal Phase 3 construction, investment of about 1.3 billion yen,

Guelph warehouse in Canada, investment of about 8,400 million yen)• IT, vehicles, offices

Main scheduled investments (FY ending March 2011) • Logistics facilities (Guelph warehouse in Canada, investment of about 2,400 million yen, etc.）• IT, vehicles, offices

DepreciationDepreciation

17,365FY ended March 2009FY ended March 2009

△2,06115,304Changes Changes FY ended March 2010FY ended March 2010

205

ChangesChanges

4,000

FY ending March 2011 FY ending March 2011 (Forecast) (Forecast)

3,541

FY ended March 2009FY ended March 2009

3,746

FY ended March 2010FY ended March 2010

3,191FY ended March 2009FY ended March 2009

△423,149ChangesChangesFY ended March 2010FY ended March 2010

(Millions of yen)

(Millions of yen)

(Millions of yen)

1010

25,904

28,500

△2,595

△4,137

△1,663

△6,481

9,687

FY ended March2009

△85925,045Cash and cash equivalents at end of year

△2,59625,904Cash and cash equivalents at beginning of year

2,646△3,834Cash flows from investing activities

1,736△859Net increase (net decrease) in cash and cash equivalents

4,848710Effect of exchange rate changes on cash and cash equivalents

△2,332△3,995Cash flows from financing activities

△3,4276,259Cash flows from operating activities

ChangesFY ended March 2010

Consolidated Cash Flow StatementConsolidated Cash Flow Statement

(Millions of yen)

1111

48.6%19.6%

13.2%

18.6%

44.2%20.3%

14.3%

21.2%

Consolidated Net Sales by CategoryConsolidated Net Sales by Category

△11.6%30,346△1.8%34,321Other

FY ended March 2010 (Results) FY ended March 2009 (Results)Category

260,330

51,08848,395

126,524Net sales

△10.9%

2.3%△12.2%△16.9%

Y on Y

211,836

42,98444,80593,700

Net sales

△18.6%Total

△15.9%Ocean

△7.4%Logistics

△25.9%Forwarding

Y on Y

Forwarding

Logistics

Ocean

Other

Frei

ght

tran

spor

tatio

nNet Sales by CategoryNet Sales by Category

FY Ended March 2009 FY Ended March 2010(Millions of yen, %)

1212

26.1%

12.8%

9.0%43.9%

8.2% The Americas

Japan

Europe & Africa

East Asia & Oceania

Southeast Asia &Middle East

Consolidated Net Sales andOperating Income by RegionConsolidated Net Sales andOperating Income by Region

3,43556,6493,67371,190East Asia & Oceania

△58△5,482△24△6,720Corporate-wide and unallocated1,06617,8861,17819,786Southeast Asia & Middle East

FY ended March 2010 (Results) FY ended March 2009 (Results) Region

260,330

24,31837,504

114,251Net sales

9,025

4692,5371,191

Operating income

211,836

19,58427,90395,295

Net sales

7,451Total

△18Europe & Africa 1,397The Americas 1,628Japan

Operating income

26.7%

7.4%

42.8%

9.1%

14.0%

Net Sales by Region Net Sales by Region

FY Ended March 2009 FY Ended March 2010(Millions of yen, %)

1313

Major Factors Affecting Results by RegionMajor Factors Affecting Results by RegionJapanJapan・ Airfreight exports decreased 0.7% year on year. (To America decreased 17.9%, to Europe decreased 13.1%, to Asia increased 7.5% year on year).・ Full-year negative impact of fuel surcharges amounted to 200 million yen (previous term: 580 million yen).・ Airfreight import shipments decreased 10.0% year on year. ・ Domestic subsidiaries were struggling partly because of delayed customers’ projects.The AmericasThe Americas・Cost reductions are progressed smoothly and volumes gradually recovered. Good performance in ocean freight exports in Canada.

The Asia to North America (Trans-Pacific Development Project) was in a slump (Asia to North America decreased 15%, North America to Asia decreased 31% year on year).Europe & AfricaEurope & Africa・Shipments to research organizations in the Middle East boosted exports (air and ocean freight) since the beginning of the second half; however, a decline in imports from Japan through the year and insufficient cost reductions resulted in sluggishness.

■■ East Asia & OceaniaEast Asia & Oceania・As a result of a gradual recovery in volume and cost reductions, performance was essentially in line with targets, which were revised upward in 2Q; furthermore, this region is driving theGroup performance.Southeast Asia & Middle EastSoutheast Asia & Middle East・ Performance was essentially on-target thanks to volume recovery from the second halfparticularly in semiconductor-related items, and cost reductions.

1414

Consolidated Operating Results by QuarterConsolidated Operating Results by Quarter

0

1,000

2,000

3,000

4,000

5,000

1Q 2Q 3Q 4Q

2008/3 2009/3 2010/3

0

20,000

40,000

60,000

80,000

100,000

1Q 2Q 3Q 4Q

2008/3 2009/3 2010/3

79,127 (292,333)70,054 (213,206)73,557 (143,152)69,595FY ended March 200838,696 (260,330)68,408 (221,634)81,024 (153,226)72,202FY ended March 2009 61,102 (211,836)55,993 (150,734)49,273 (94,741)45,468FY ended March 2010

4Q3Q2Q1QNet sales (consolidated)

4,133 (13,893)3,745 (9,760)3,077 (6,015)2,938FY ended March 2008956 (9,025)2,399 (8,069)3,247 (5,670)2,423FY ended March 2009

2,113 (7,451)2,565 (5,338)2,046 (2,773)727FY ended March 2010

4Q3Q2Q1QOperating income (consolidated)

4,484 (14,931)3,871 (10,447)3,472 (6,576)3,104FY ended March 2008548 （9,203）2,704 （8,655)3,610 (5,951)2,341FY ended March 2009

2,356 （8,032）2,749 (5,676)2,111 (2,927)816FY ended March 2010

4Q3Q2Q1QOrdinary income (consolidated)

Consolidated Net Sales by Quarter Consolidated Operating Income by Quarter(Millions of yen) (Millions of yen)

(Millions of yen)

Numbers inside ( ) are cumulative figures from the first quarter.

1515

6.17,441△9.17,014Shipments (Airfreight, Ocean)Shipments (Airfreight, Ocean)

10.9235,000△18.6211,836Net salesNet sales

24.510,000△12.78,032Ordinary incomeOrdinary income

――△10.036,116Gross profitGross profit

34.210,000△17.47,451Operating incomeOperating income

FY ending March 2011 (Forecasts)FY ended March 2010 (Results)Item

Y on Y (%)Y on Y (%)

26.95,80031.44,570Net incomeNet income

31.610,000△4.97,596Income before income taxes Income before income taxes and minority interestsand minority interests

10.7514△10.2465Volume (Ocean)Volume (Ocean)

11.0965△14.9869Weight (Weight (AirfreightAirfreight))

Projected Results for FY Ending March 2011 (Consolidated, Forecast)- The First year of the New Medium-Term Management PlanProjected Results for FY Ending March 2011 (Consolidated, Forecast)- The First year of the New Medium-Term Management Plan

Shipments (thousands) Weight (1,000 tons) Volume (1,000 TEU) Amount (Millions of yen)

1616

20.2%

19.9%

13.7%

46.2%

Net Sales by Category & Region for FY Ending March 2011 (Consolidated, Forecast)Net Sales by Category & Region for FY Ending March 2011 (Consolidated, Forecast)

Net Sales by Category Net Sales by Category

13.7%32,100Other

FY ending March 2011 (Forecast) Category

235,000

46,70047,600

108,600Net sales

100.0%Total

19.9%Ocean20.2%Logistics 46.2%Forwarding

Composition

8.5%

26.6%

8.7%

12.4%

43.8%

10,000-

1,3003,800

3001,5003,100

Operating income

235,000△6,00021,00064,00020,50030,000

105,500

Net sales

FY ending March 2011 (Forecast)

East Asia & Oceania

Corporate-wide and unallocated

Southeast Asia & MiddleEast

Region

Total

Europe & Africa

The Americas

Japan

Net Sales by Region Net Sales by Region

The Americas

Japan

Europe & Africa

East Asia & Oceania

Southeast Asia &Middle East

Forwarding

Logistics

Ocean

Other

FY ending March 2011 (Forecast) (Millions of yen, %) FY ending March 2011 (Forecast) (Millions of yen)

Frei

ght

tran

spor

tatio

n

New Medium-Term Management Plan:“Ready for the Next !”

FY Ending March 2011 – FY Ending March 2013

New Medium-Term Management Plan:“Ready for the Next !”

FY Ending March 2011 – FY Ending March 2013

1717

1818

Goals and background of New Medium-Term Management Plan: “Ready for the Next !”Goals and background of New Medium-Term Management Plan: “Ready for the Next !”

FY ending March 2011 – FY ending March 2013 ●Designed to build a strong corporate structure that will enable

us to compete on an even footing with global competitors

The business environment has suddenly changed as a result of the worldwide recession 2008

→ We decided to review the KWE Grand Design for the 21st Century and the Phase III Medium-Term Management Plan (both extending to the year ending March 2012), and started to formulate a new medium-term management plan in the fall of 2009.

→ The result of this effort is “Ready for the Next !”. FY ending March 2011 – FY ending March 2013

1919

Outline of “Ready for the Next !”Outline of “Ready for the Next !”

Targets by March 2013Consolidated net sales: 300 billion yen ( +40% from FY ended March 2010)Consolidated operating income: 15 billion yen (+100% from FY ended March 2010)Consolidated ordinary income: 15 billion yen ( +90% from FY ended March 2010)Consolidated operating margin: 5.0% (1.5% improvement over FY ended March 2010 )

Targets by March 2013Targets by March 2013Consolidated net sales: 300 billion yen ( +40% from FY ended March 2010)Consolidated operating income: 15 billion yen (+100% from FY ended March 2010)Consolidated ordinary income: 15 billion yen ( +90% from FY ended March 2010)Consolidated operating margin: 5.0% (1.5% improvement over FY ended March 2010 )

Construct a balanced management structureImprove competitiveness in the global marketConstruct a balanced management structureImprove competitiveness in the global market

1. Create a Strong Asia (focused investment of management resources)2. Sell a Strong Asia (create a sales structure that allows for competition

with global competitors)3. Strengthen core competencies (human resources, quality, IT)4. Ensure thorough compliance and strengthen a management system

for the environment

1. Create a Strong Asia (focused investment of management resources)2. Sell a Strong Asia (create a sales structure that allows for competition

with global competitors)3. Strengthen core competencies (human resources, quality, IT)4. Ensure thorough compliance and strengthen a management system

for the environment

VisionVision

Management Strategy

Management Strategy

Increase corporate and shareholder values by establishing partnerships with customersProvide reliable services and customer satisfaction all over the world as a Global Logistics Partner

Increase corporate and shareholder values by establishing partnerships with customersProvide reliable services and customer satisfaction all over the world as a Global Logistics Partner

Basic Philosophy

Basic Philosophy

2020

New Medium-Term Management Plan: “Ready for the Next !”Basic Numerical Targets (Consolidated, Three Years)New Medium-Term Management Plan: “Ready for the Next !”Basic Numerical Targets (Consolidated, Three Years)

￥8,000 million

￥7,400 million ￥8,800 million￥7,000 million

￥5,800 million￥4,500 million

￥15,000 million


￥211,800 million


￥235,000 million

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2010/3 (Results) 2011/3 (Plan) 2012/3 (Plan) 2013/3 (Plan)0

5,000

10,000

15,000

20,000

25,000

Net sales(Plan - left)

Net sales(Results - left)

Operating income and ordinary income (right)

Net income (right)

Operating income （Results-right）

Ordinary incomeOrdinary income

Operating incomeOperating income

Ordinary incomeOperating income(Plan)

Ordinary incomeOperating income(Plan)

Net incomeNet income

16.6%

11.4%

6.8%

Annual

737

1,201

8,551

2013/3 (Plan) 4 years change

58.5%

38.2%

21.9%

465Volume (Ocean)

869Weight (Air)

7,014Shipments (Air & Ocean)

2010/3 (Results)

26.3%Operating income

24.4%Net income23.1%Ordinary income

12.3%Net sales

Average annual growth rate over

three yearsAim for 2008/3’s record high

Net sales ¥292,300 millionOperating income ¥13,800 million

Aim for 2008/3’s record highNet sales ¥292,300 millionOperating income ¥13,800 million

Shipments (thousands) Weight (1,000 tons) Volume (1,000 TEU)

(Millions of yen) (Millions of yen)

2121

<Management Strategy 1>

Create a Strong Asia (Focused Investment of Management Resources)<Management Strategy 1>

Create a Strong Asia (Focused Investment of Management Resources)

(1) Secure a position of absolute advantage in bonded logistics business in China・Aggressive investment in bonded areas in China・Establish a new subsidiary in the Shanghai Pudong International Airport Comprehensive Bonded Area・Greater South China Concept: Expand business through integrated operation of subsidiaries in Southern China

(2) Construct a distribution network that covers all of Asia・Strengthen warehouse businesses and logistics functions in Korea, Taiwan, the Philippines, India, and Thailand

(3) Get a head start on competitors to enter into emerging countries (coping with our customers’ “China plus one” strategies)・Begin operating in Bangladesh・Consider entering Cambodia and Myanmar

(4) Improve logistics functions in the American consumer market・Strengthen logistics functions

・Create a structure for expanding Pacific Rim transportation

(5) Make ocean freight forwarding a core business・In addition to the NVOCC business, work on supplementary services such as CFS, warehousing, and buyer’s consolidation, etc.

Improve Asian distribution bases to further strengthen our network. Strengthen logistics and ocean freight forwarding businesses in Asia for

a balanced business portfolio of the Group as a whole.

Improve Asian distribution bases to further strengthen our network. Strengthen logistics and ocean freight forwarding businesses in Asia for

a balanced business portfolio of the Group as a whole.

2222

KWE Hong KongKintetsu Logistics (Shenzhen)GuangzhouShenzhenDongguanZhuhaiZhongshanYantian

Beijing KWEBeijing

KWE XiamenKintetsu Logistics (Xiamen)Xiamen

Shizean

Chengdu

Chongqing

Kunming

Wuhan

Shenyang

Tianjin

JinanQingdao

Nanjing

Hangzhou

Suzhou Kintetsu LogisticsSuzhou Kunshan

Ningbo

Shanghai Kintetsu LogisticsShanghai

Dalian Kintetsu LogisticsDalian

Zhengzhou

Changsha

Huangdao

Changchun

Kintetsu South ChinaKintetsu Far East DevelopmentKintetsu Aerospace Logistics

ウルムチ

Yantai

Wuxi

Fuzhou

Harbin

Nanning

Nanchang

Yangzhou

Wenzhou

Nantong

Hefei

Huhhot

TaiyuanShijazhuang

Lianyungang

<Management Strategy 1>Create a Strong Asia (Focused Investment of Management Resources (1))<Management Strategy 1>Create a Strong Asia (Focused Investment of Management Resources (1))

1) Aggressive investment in bonded areas in China Promote cross-structural action within specialist teams dealing with bonded logistics in China.Aggressive advancement into bonded areas in China

2) Establish a new subsidiary in the Shanghai Pudong International Airport Comprehensive Bonded Area (scheduled to operate in December 2010)We are setting up a new company in the comprehensive bonded area adjacent to Shanghai PudongInternational Airport, and will aggressively sell warehousing services where the demand is expected to increase.

Basic Information of KWE China(As of March 31, 2010)

Shanghai Pudong International Airport Comprehensive Bonded Area (Image)

11 subsidiaries44 cities

109 locations

57 warehouses (Total area 312,531㎡)

1,060 trucks

(1) Secure a position of absolute advantage in bonded logistics business in China

2323

XiamenXiamen

GuangzhouGuangzhou

<Management Strategy 1>Create a Strong Asia (Focused Investment of Management Resources (1))<Management Strategy 1>Create a Strong Asia (Focused Investment of Management Resources (1))

3) Greater South China Concept: Expand business through integrated operation of subsidiaries in Southern China・ Establish a new system principally controlling the four subsidiaries in South China (KWE Hong Kong, KWE Shenzhen, KWE Xiamen, and KWE Guangzhou), and promote sales and operations with a unified Group approach (in order to facilitate more efficient usage of Group resources)→ By covering the entire South China, more flexible supports for customers' locations and requirements arepossible.・ Expand into the new Guangdong bonded area, aiming to establish a bonded network covering the entire Pearl River Delta.

Expand into bonded area in Guangdong province to

develop logistics business

Expand into bonded area in Guangdong province to

develop logistics business

ZhuhaiZhuhai OfficeOffice

DongguanDongguanBranchBranch

CLK AirportCLK Airport

ATL ATL LogisticsLogistics

YKK YKK LogisticsLogistics

Shenzhen Shenzhen W/H No 1, 2 W/H No 1, 2 & 3& 3

ShenzhShenzhen A/P en A/P OfficeOffice

YantianYantianOfficeOffice

KWE Hong KongKWE Hong Kong HQHQSunshine LogisticsSunshine Logistics

KWEXMN KWEXMN Guangzhou Guangzhou BranchBranch

◆◆

◆

◆◆

◆

◆

◆ZhongshanZhongshanBranchBranch

KWE KWE Shenzhen Shenzhen HQHQ

Shenzhen and Guangzhou areaShenzhen and

Guangzhou area

2424

Bangladesh Delegate Office(Opened April 2010)

ILC-licensed* warehouse in Taoyuan, Taiwan (* June 2009)

Begin operating in Bangladesh

Begin operating in Bangladesh

Consider entering Cambodia and Myanmar

Consider entering Cambodia and Consider entering Cambodia and MyanmarMyanmar

<Management Strategy 1>Create a Strong Asia (Focused Investment of Management Resources (2)(3))<Management Strategy 1>Create a Strong Asia (Focused Investment of Management Resources (2)(3))

(2) Construct a distribution network that covers all of Asia

Mumbai Warehouse in India

Strengthen warehouse businesses and logistics functions in Korea, Taiwan, the

Philippines, India, and Thailand

Strengthen warehouse businesses and Strengthen warehouse businesses and logistics functions in Korea, Taiwan, the logistics functions in Korea, Taiwan, the

Philippines, India, and ThailandPhilippines, India, and Thailand

(3) Get a head start on competitors to enter into emerging countries (coping with our customers’ “China plus one” strategies)

2525

(4) Improve logistics functions in the American consumer market

(5) Make ocean freight forwarding a core business

<Management Strategy 1>Create a Strong Asia (Focused Investment of Management Resources (4)(5))<Management Strategy 1>Create a Strong Asia (Focused Investment of Management Resources (4)(5))

・Create a structure for expanding Pacific Rim transportation⇒ Strengthen logistics functionsFor example: Opening a new 40,000㎡ warehouse in Guelph, Canada (scheduled for July 2010)

- NVOCC+ α (supplementary services) strategy -Enhance functions and services that complement ocean transportation, such as CFS, warehousing, and buyer's consolidation.

2626

<Management Strategy 2>Sell a Strong Asia (Create a Sales Structure to Compete with Global Competitors)

<Management Strategy 2>Sell a Strong Asia (Create a Sales Structure to Compete with Global Competitors)

(1) Expand freight volume by strengthening logistics functions・ Expand the freight volume between Asia and Japan, Asia and the Americas, and Asia and Europe・ Expand the freight volume within Asia

(2) Strengthen competitiveness by raising productivity・Strengthen buying power

・Standardize operations

(3) Engage in sales in a way that accurately reflects customer needs・Have personnel exchanges based on sales strategies ・Conduct proactive efforts in logistics services between countries other than Japan

(4) Share customer information across the entire Group organization・Construct long-term stable relationships with customers

Create a structure for the Group as a whole to sell a “Strong Asia” in the global market with the goal of expanding our air and ocean freight volume between Asia and Japan, Asia and the Americas, and Asia and Europe, as

well as within Asia.

Create a structure for the Group as a whole to sell a “Strong Asia” in the global market with the goal of expanding our air and ocean freight volume between Asia and Japan, Asia and the Americas, and Asia and Europe, as

well as within Asia.

2727

<Management Strategy 2>Sell a Strong Asia (Create a Sales Structure to Compete with Global Competitors (1) (2))


EuropeEurope

The AmericasThe Americas

Intra-AsiaIntra-Asia AsiaAsia

JapanJapan

(1) Expand freight volume by strengthening logistics functions

・Expand the freight volume within Asia・Expand the freight volume between Asia and Japan, Asia and the Americas, and Asia and Europe

(2) Strengthen competitiveness by raising productivity

・ Strengthen buying power ・ Standardize operations

2828



・Have personnel exchanges based on sales strategiesInteraction currently taking place between sales personnel of each subsidiaries in the directions of Korea to America, Taiwan to China, Europe to China, etc. These efforts will be intensified going forward.

・Conduct proactive efforts in logistics services between countries other than JapanExpand transportations between overseas subsidiaries without passage through Japan.

To this end, internal systems are being built and optimized.

(3) Engage in sales in a way that accurately reflects customer needs

(4) Share customer information across the entire Group organization

・Construct long-term stable relationships with customers

2929

<Management Strategy 3>

Strengthen Core Competencies (Human Resources, Quality, IT)<Management Strategy 3>

Strengthen Core Competencies (Human Resources, Quality, IT)

Position human resources, quality and IT as our core competencies as pursuing overall management strategies. Work continuously to improve them to establish a

competitive edge.

Improve Improve brand valuebrand value

StrengthenStrengthenFinancial positionFinancial position

Improve productivityImprove productivity

Strengthen core Strengthen core competencies competencies

(human resources, quality, IT)(human resources, quality, IT)

Enrich and strengthen internal infrastructure supporting global sales

・Select, train and hire executive candidates on a Group-wide basis, and promote diversity

・Implement global hiring for specified purposes

Use numerically-based quality control to increase employee awareness of quality and to increase customer satisfaction

Construct and implement a global personnel system

Improve service quality all over the world

Strengthen global IT functions

3030

<Management Strategy 4>Ensure Thorough Compliance and Strengthen a Management System for the Environment

<Management Strategy 4>Ensure Thorough Compliance and Strengthen a Management System for the Environment

(1) Instill a keen awareness of compliance throughout the Group

・Strengthen Environment Management System

・Prevent environmental pollution in cooperation with clients and business partners

・KWE GroupCompliance Manual

On-going cross-Group training in compliance

・KWE GroupAntimonopoly Compliance Manual

(2) Strengthen a Group management system for the environment

3131

Investment PlanInvestment Plan

Key Investment Projects

・Logistics facilities in Asia and Japan

・M&A in Asia （Ocean and logistics）

Planned investment amount : approx. ¥4.0 billion（Three-year average）

3232

Net Sales by Category & Region (Consolidated, Forecast)Net Sales by Category & Region (Consolidated, Forecast)

52.1% 44.2% 42.9%

18.9%21.2% 19.3%

17.1%20.3% 22.7%

11.9% 14.3% 15.1%

2008/3 (Results) 2010/3 (Results) 2013/3 (Plan)

Fowarding Logistics Ocean Other

Net Sales by Category (Millions of yen, %)

300,000211,836

42.3% 43.9% 36.6%

12.9% 12.8%13.1%

9.2% 9.0%7.5%

27.2% 26.1%34.6%

8.4% 8.2% 8.2%


Japan The AmericasEurope & Africa East Asia & OceaniaSoutheast Asia & Middle East

300,000211,836Net Sales by Region (Millions of yen, %) Operating Income by Region (Millions of yen, %)

32.0%21.7% 25.5%

19.3%

18.6% 13.5%

34.6%45.7% 44.6%

11.3% 14.2% 13.1%

2.8%

△ 0.2%

3.3%


292,333

292,333

13,893 7,451 15,000

3333

\10

\11

\12

\12

\1

\13

\14

\7

\17(Plan)

\12(Forecast)

\13(Forecast)

2007/3 2008/3 2009/3 2010/3 (Plan) 2011/3 (Forecast)

Memorial Dividend

Year-end

1st half of FY

DividendsDividendsIn the future, 20% of consolidated

net income will be targeted In the future, 20% of consolidated

net income will be targeted Currently targeting 30% of

non-consolidated net income

¥21/year

¥25/year¥27/year

¥24/year (Plan) ¥25/year (Forecast)

* Memorial Dividend for FY Ended March 2008 was to celebrate the company's 60th year in business.

Supplementary MaterialSupplementary Material

3434

3535

KWE Group’s Worldwide Five Regional Management SystemKWE Group’s Worldwide Five Regional Management System

30 countries overseas, 189 cities, 298 locations (as of March 31, 2010)

KWE Group KWE Group

Europe & Africa Europe & Africa (13 companies)(13 companies)

Japan Japan (9 companies) (9 companies)

Includes KWE Japan and Includes KWE Japan and 3 equity method affiliates3 equity method affiliates

The AmericasThe Americas(6 companies)(6 companies)

Southeast Asia & Southeast Asia & Middle East Middle East

(11 companies)(11 companies)East Asia & Oceania East Asia & Oceania

(19 companies) (19 companies)

Acquired ISO 9001 Acquired ISO 9001 certificationcertification

(17 subsidiaries (17 subsidiaries including Japan)including Japan)

Logistics facilities Logistics facilities 141 locations overseas 141 locations overseas

(659,013 m(659,013 m²²) ) 37 locations in Japan37 locations in Japan

(200,376 m(200,376 m²²))

Acquired ISO 14001 Acquired ISO 14001 certificationcertification(14 locations (14 locations

worldwide including worldwide including the Narita terminal)the Narita terminal)

Acquired TAPA Acquired TAPA certificationcertification(19 locations (19 locations

worldwide including worldwide including the Narita terminal) the Narita terminal)

3636

Major Topics FY Ended March 2010Major Topics FY Ended March 2010

December 2009 KWE (Korea) Opens the SuwonLogistics Center

April 2010 Established Bangladesh Delegate Office

November 2009 Completed Phase 3 Narita Terminal Expansion

June 2009 KWE (Taiwan) acquired International Logistics Center (ILC) License KWE (Shanghai) acquired ISO9001 Certification

November 2009 KWE (South Africa) received the Silver Award at the “Logistics Achievers Awards”

January 2010 KWE (Singapore) Acquired ISO13485: Quality Management System Standard for Medical Devices Certification

February 2010 KWE (Singapore) acquired TAPA Class A

Total floor area ： 54,394㎡

Suwon Logistics Center

Overseas service structure

Overseas service structure

Other Other

Japan service structure

Japan service structure

3737

Non-consolidated Balance Sheet for FY Ended March 2010Non-consolidated Balance Sheet for FY Ended March 2010

Net Assets: Net Assets:

Liabilities: Liabilities:

Assets: Assets:

△5019,68219,732Current liabilities Current liabilities △9463,9764,922LongLong--term liabilities term liabilities △99523,65924,654Total liabilities Total liabilities

2,95440,10337,149Total net assets Total net assets 1,95863,76261,804Total liabilities and net assetsTotal liabilities and net assets

1,95863,76261,804Total assets: Total assets:

91138,79337,882Fixed assets Fixed assets

37814,44814,070Investments and other assets: Investments and other assets: △120850970Intangible fixed assets Intangible fixed assets

65423,49522,841Tangible fixed assets: Tangible fixed assets:

1,04624,96823,922Current assets Current assets

ChangesFY ended March FY ended March 20102010


(Millions of yen)

3838

Monthly Trends in KWE Consolidated Airfreight Leaving JapanMonthly Trends in KWE Consolidated Airfreight Leaving Japan

6,685

14,13715,212

14,36613,804

13,309

5,8035,533

12,363

9,855

7,546

14,457

11,395

12,933

11,41112,116

11,353

7,916

10,3929,951

12,222

13,029

10,326

9,139

0

5,000

10,000

15,000

20,000

Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar.

195.7

122.9

91.8104.6

170.7

72.3

172.6

205.9

72.167.9

64.6

54.8

176.1

87.2

120.1

99.8

153.3

182.6

178.1

60.7

68.7

70.7

78.4

58.7

April 2008-March 2009 April 2009-March 2010

*KWE’s Industry Share2010/3 14.2%2009/3 13.5%

*KWE’s Volume2010/3 (Y on Y) 99.3%2009/3 (Y on Y) 73.5%

*Industry Volume2010/3 (Y on Y) 98.0%2009/3 (Y on Y) 74.3%

*KWE’s Industry Share2010/3 14.2%2009/3 13.5%

*KWE’s Volume2010/3 (Y on Y) 99.3%2009/3 (Y on Y) 73.5%

*Industry Volume2010/3 (Y on Y) 98.0%2009/3 (Y on Y) 74.3%

Weight (tons)

Source: JAFA statistics documents

Compared to the KWE figure in the same month the previous year (%)Compared to the industry figure in the same month of the previous year (%)

3939

35,048

27,625

140,736

112,345

43,996

44,933

136,069 135,097

57,39577,104

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

2009/3 2010/3

Actual Volume by Region (Five Regions)Actual Volume by Region (Five Regions)

432,954 Y onY87.2%

74.4%

78.8%

79.8%

99.4%

102.1%

123,014104,715

446,839

189,491

167,534

397,331 358,204

115,592131,731

501,328

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

2009/3 2010/3

Y on Y88.8%

89.1%

85.1%

87.7%

90.2%

88.4%

377,395 1,192,884

1,342,895

(Shipments)(Weight: tons) Airfreight importsAirfreight exports

East Asia& OceaniaEast Asia& Oceania

Europe & AfricaEurope & Africa

The AmericasThe Americas

JapanJapan

Southeast Asia& Middle East

Southeast Asia& Middle East

4040

Current Status of Items Handled (1) (Non-Consolidated: Airfreight)

Current Status of Items Handled (1) (Non-Consolidated: Airfreight)

Electronics-related items

59.3%

Automobile-related products

15.2%

Machinery andconstruction

devices2.0%

Optical devices1.1%

Aircraftcomponents

1.1%

Other0.9%

Medical andchemicalproducts20.4%

Fashion andtextile products

8.5%

Other1.3%


63.0%


0.7%

Machinery-related products

3.2%


― Based on net sales of top 100-ranked companies ―Airfreight Composition

― Based on net sales of top 100-ranked companies ―Airfreight Composition

KWE Japan’s Airfreight Import Composition, FY Ended March 2010

KWE Japan’s Airfreight Export Composition, FY Ended March 2010

4141

Current Status of Items Handled (2) (Non-Consolidated: Ocean Freight)

Current Status of Items Handled (2) (Non-Consolidated: Ocean Freight)

Other15.4%


30.6%

Facilities andmachnery-

related products19.1%


17.2%


Fashion andtextile products

13.3%Machinery-

related products12.0%


10.2%

Generalmerchandise

10.2%

Other11.2%


32.7%


― Based on net sales of top 100-ranked companies ―Ocean Freight Composition

― Based on net sales of top 100-ranked companies ―Ocean Freight Composition

KWE Japan’s Ocean Freight Import Composition, FY Ended March 2010

KWE Japan’s Ocean Freight Export Composition, FY Ended March 2010

KintetsuKintetsu World Express, Inc.World Express, Inc.WebsiteWebsite: http://: http://www.kwe.co.jp/en/index.htmlwww.kwe.co.jp/en/index.html

** The information contained herein does not constitute an offer to solicit investment which can only be made by formal prospectus. The forward-looking statements contained herein are not intended to assure or guarantee future performance. Actual results may vary from that projected herein.

Documents

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