Kyushu Railway : FY21.3 Financial Results Overview, First Quarter

FY21.3

Financial Results Overview, First Quarter

August 4, 2020

Kyushu Railway Company

Contents

• Financial Results for the Three-month Period Ended June 30, 2020

• Recent Circumstances, Current Initiatives, and Results Forecasts

3

11

2

Ⅰ . Financial Results

for the Three-month Period Ended June 30, 2020

3

Consolidated Financial Highlights for the Three-Month Period Ended June 30, 2020 (Year on Year)

						（bil）
	3 months ended	3 months ended	YoY
	June, 30 2019	June, 30 2020
Operating revenue	100.4	61.8	(38.6)			61.6%
Operating income	15.4	(15.7)	(31.1)			-
Ordinary income	16.0	(15.2)	(31.3)			-
Extraordinary gains and	0.1	7.0	6.9			-
losses
Net income attributable to	12.3	(5.1)	(17.4)			-
owners of the parent
EBITDA（※）	21.3	(9.1)	(30.5)			-

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

Operating revenue

Operating revenue declined substantially due to the decrease in railway transportation revenues [¥(24.6) billion] resulting from the influence of the COVID 19 infection.

Operating income

Profits were down accompanying the decline in operating income, despite lower expenses resulting from suspension of train service and store closures.

Extraordinary gains and losses

We recorded a gain on sale JR Kyushu Drug Eleven Co., Ltd., shares (+ ¥9.1 billion) and a provision for loss on disaster [(¥(2.1) billion] related to the restoration of the Hitahikosan Line.

	Change in operating revenue by segment				Change in operating income by segment
	（¥bil）										（¥bil）
	110
		100.4	(26.8)								20			15.4	(23.9)
	90			+4.4	(8.2)			10
										0
					(6.3)
																				(5.4)
	70				(1.7)	+0.1	61.8										+0.7
																(2.2)
						(10)										(0.2)

50

(20)

(15.7)

Operating revenues 3).(FY20

Transportation

Construction

Estate Real Hotels and

and Retail Restaurant

Other

Adjustment

Operating revenues 3).(FY21

Operating revenues 3).(FY20

Transportation

Construction

Estate Real Hotels and

and Retail Restaurant

Other

Operating revenues 3).(FY21

Note: Figures for changes in operating revenues and EBITDA by segment are prior to eliminating intersegment transactions and therefore do not coincide with consolidated figures.

4

Transportation Segment

• There was a significant decline in revenues from railway transportation due to the trend toward people staying inside accompanying the COVID 19 infection and to measures such as the suspension of train operation, etc., which were implemented with the objective of preventing the spread of the infection.
• Operations on all hydrofoil ferry routes were suspended due to a government request to halt passenger transportation.

YoY

• The year-on-year difference is almost entirely due to the influence of the COVID 19 infection.
  （bil）

				3 months ended	3 months ended	YoY
				June, 30 2019	June, 30 2020
Operating revenue		44.1	17.3	(26.8)			39.2%
	Railway Business		41.9	16.2	(25.7)			38.7%
	(non-consolidated)
	Railway transportation		37.8	13.2	(24.6)			34.9%
	revenues
Operating income		9.9	(13.9)	(23.9)			-
	Railway Business		9.8	(13.5)	(23.3)			-
	(non-consolidated)
EBITDA	12.1	(11.3)	(23.5)			-
	Railway Business		11.8	(11.1)	(22.9)			-
	(non-consolidated)

Status of suspended train operations

●We suspended operation of trains, principally during the state of emergency

●From the perspective of preventing the spread of the COVID 19 infection, we suspended operation of all limited express trains on conventional lines during the Golden Week holiday period (May 2 to May 6,).

Type of train	Period of suspension	Suspension rate
(YoY)
Kyushu Shinkansen	March 20 to June 12	19%
Conventional line
March 20 to June 18	28%
limited express
Conventional line	April 11 to May 31	8%
local trains
D&S trains	March 20 to June 18	65%
* Continued suspension of	certain D&S trains

Trend of handling revenues (YoY)

60%47.9%

40%

28.2%

21.8%

20%

			Declaration of state of		～ June 19: Request
				for self restraint in
		emergency, April 7 to May 25		movement among
						prefectures
0%
									1Q
			Apr.		May	June	cumulative
								total
Handling revenues	21.8%	28.2%	47.9%		31.3%
Commuter pass revenues	48.8%	93.3%	108.8%		73.0%
Short distance revenues	31.9%	35.4%	60.0%		41.8%
Medium and long distance	9.1%	12.9%	33.7%		17.9%
revenues

Status of hydrofoil ferry business

Service suspended on all routes since March 9, 2020, in accordance

with a government request to halt passenger transportation
[1Q operating revenues: ¥(0.4) billion YoY]	5

Railway business

Railway Transportation Revenues

										(bil)
				3 months ended	3 months ended		YoY			Major Factors
				June, 30 2019	June, 30 2020
Total	37.8	13.2	(24.6)	34.9%
			Commuter pass	8.3	6.1	(2.1)	73.8%
			Non-commuter pass	29.5	7.0	(22.4)	24.0%
		Shinkansen	13.3	3.2	(10.0)	24.5%		Decline due to influence of COVID 19
			Commuter pass	0.7	0.6	(0.1)	85.4%		Decrease due to rebound from previous year's longer Golden Week
									holiday period
			Non-commuter pass	12.6	2.6	(9.9)	21.0%
		Conventional Lines	24.4	9.9	(14.5)	40.6%	Decline due to influence of COVID 19
										Decrease due to suspension of all limited-express trains during Golden Week
			Commuter pass	7.6	5.5	(2.0)	72.7% period
									periodDecrease due to rebound from previous year's longer Golden Week holiday
			Non-commuter pass	16.8	4.4	(12.4)	26.1%

Passenger-Kilometers

					（Millions of passenger-kilometer)
			3 months ended	3 months ended	YoY
			June, 30 2019	June, 30 2020
Total	2,361	1,155	(1,205)	48.9%
		Commuter pass	1,122	850	(272)	75.8%
		Non-commuter pass	1,238	304	(933)	24.6%
	Shinkansen	493	135	(357)	27.6%
		Commuter pass	52	44	(8)	84.5%
		Non-commuter pass	440	91	(349)	20.7%
	Conventional Lines	1,867	1,019	(848)	54.6%
		Commuter pass	1,070	806	(263)	75.3%
		Non-commuter pass	797	213	(584)	26.8%	6

Real Estate and Hotels Segment

• In the real estate lease business, revenues were significantly lower due to the closure of station buildings, rent reductions offered to support tenants, etc.
• In the hotel business, there was a significant decrease in occupancy rates due to the influence of hotel

closure and people staying at home.
YoY	Real Estate Lease

• In the real estate lease business and the hotel business, the year-on-year differences are

almost entirely due to the influence of the COVID 19 infection..				（bil）
		3 months ended	3 months ended	YoY
		June, 30 2019	June, 30 2020
Operating revenue	19.7	11.5	(8.2)			58.4%
	Real Estate Lease	13.3	10.2	(3.1)			76.4%
	Condominium Sales	2.3	0.4	(1.9)			20.1%
	Hotel Business	3.9	0.8	(3.1)			20.9%
Operating income	5.0	(0.3)	(5.4)			-
	Real Estate Lease	4.4	1.6	(2.7)			37.6%
	Condominium Sales	0.1	(0.2)	(0.3)			-
	Hotel Business	0.4	(1.8)	(2.2)			-
EBITDA	7.6	2.6	(5.0)			34.2%
	Real Estate Lease	6.6	4.0	(2.6)			60.6%
	Condominium Sales	0.1	(0.2)	(0.3)			-
	Hotel Business	0.8	(1.2)	(2.0)			-

150%

105.9%

104.8%

100.2%

88.5%

100%

41.9%

Station building

tenant sales (YoY)

50%

0%

1Q

2Q

3Q

4Q

1Q

FY2020.3

FY2021.3

Status of closed

Closure of five major station buildings for approximately up to 40 days, centered on the

facilities

period of the state of emergency

Amount of influence

Support measures for station building tenants

in the 1st quarter

During period of

50% reduction

closure

Fixed rent

April to May

During period of

10% to 30% reduction

reductions

operation

Approximately

June

10% to 30% reduction

¥(1.5) billion

Reduction of sales

April to May

100% reduction

promotion expense

payments

In addition to the above, postponed payment of fixed rent and certain expenses in April and May

Office buildings /

Solid trend, with no change in vacancy rates

rental apartments

Hotels

100%

81.8%

79.0%

78.6%

56.1%

Occupancy rate

50%

10.9%

0%

1Q

2Q

3Q

4Q

1Q

FY2020.3

FY2021.3

Status of closed

8 domestic facilities closed for approximately up to 80 days,

facilities

centered on the period of the state of emergency

7

Decline in number of railway passengers

Retail and Restaurant Segment

• Conditions were difficult, mainly at stores in areas surrounding stations, due to a decline in railwaypassengers and a significant decline in the number of visitors to facilities around stations as a result of the closure of station buildings, etc.
• Challenging conditions are expected to continue, especially in the restaurant business, as people refrain from going out.

YoY

● The year-on-year difference is almost entirely due to the influence of the COVID 19 infection.

								（bil）
			3 months ended	3 months ended	YoY
			June, 30 2019	June, 30 2020
Operating revenue	26.0	19.6	(6.3)			75.4%
Operating income	0.7	(1.5)	(2.2)			-
EBITDA	1.1	(1.0)	(2.2)			-

• Due to the transfer of a portion of our shares in JR Kyushu Drug Eleven Co., Ltd., from the end of the first quarter JR Kyushu Drug Eleven became an entity accounted for using the equity method.
  【(Reference)JR Kyushu Drug Eleven's operating revenue in the 1st quarter was ¥12.4 billion】

Status of each business

		approx.
		(40)％
		Short distance revenues
		YoY (June)
Decline in		Decline in
number		number
of people in		of station
areas		building
surroundingstations	approx.	customers	approx.
	(40)％		(40)％
Restaurant sales	Number of people
YoY (June)		entering station buildings
	YoY (June)

Retail

●Favorable sales of masks, etc., despite

Drugstores	difficult conditions, mainly at stores
in areas surrounding stations
	1Q: Basically in line with previous year

Restaurant

●Support from takeout and on-line sales Fast food April to May: Down approximately 30% YoY

June: Down approximately 20% YoY

business

	●Difficult conditions, mainly at stores in
Convenience	areas surrounding stations
stores	April to May: Down approximately 30% YoY
June: Recovery back to level that is down

approximately 20% YoY

business

Izakaya,

restaurants

●Sluggish, major influence from people refraining from going out

April to May: Down approximately 80% YoY

June: Recovery back to level that is down approximately 40% YoY

8

Segment Information 【Summary】

											（bil）
			3 months ended	3 months ended	YoY				Major factors
			June, 30 2019	June, 30 2020
Operating revenue	100.4	61.8	(38.6)			61.6%
	Transportation	44.1	17.3	(26.8)			39.2%		Influence of	the COVID 19 infection, etc.
		Railway Business (non-consolidated)	41.9	16.2	(25.7)			38.7%
	Construction	12.4	16.8	4.4			135.9%		Increase in Shinkansen-related construction, etc.
	Real Estate and Hotels	19.7	11.5	(8.2)			58.4%
		Real Estate Lease	13.3	10.2	(3.1)			76.4%		Influence of	the COVID 19 infection, etc.
		Condominium Sales	2.3	0.4	(1.9)			20.1%
		Hotel Business	3.9	0.8	(3.1)			20.9%		Influence of	the COVID 19 infection, etc.
	Retail and Restaurant	26.0	19.6	(6.3)			75.4%		Influence of	the COVID 19 infection, etc.
	Other	16.1	14.3	(1.7)			88.9%		Decrease due to transfer of leasing/installment financing businesses, etc.
Operating income	15.4	(15.7)	(31.1)			-
	Transportation	9.9	(13.9)	(23.9)			- Influence of	the COVID 19 infection, etc.
		Railway Business (non-consolidated)	9.8	(13.5)	(23.3)			-
	Construction	(0.5)	0.2	0.7			- Increase in Shinkansen-related construction, etc.
	Real Estate and Hotels	5.0	(0.3)	(5.4)			-
		Real Estate Lease	4.4	1.6	(2.7)			37.6%		Influence of	the COVID 19 infection, etc.
		Condominium Sales	0.1	(0.2)	(0.3)			-
		Hotel Business	0.4	(1.8)	(2.2)			- Influence of	the COVID 19 infection, etc.
	Retail and Restaurant	0.7	(1.5)	(2.2)			- Influence of	the COVID 19 infection, etc.
	Other	0.3	0.1	(0.2)			37.1%		Decrease due to transfer of leasing/installment financing businesses, etc.
EBITDA	21.3	(9.1)	(30.5)			-
	Transportation	12.1	(11.3)	(23.5)			-
		Railway Business (non-consolidated)	11.8	(11.1)	(22.9)			-
	Construction	(0.2)	0.5	0.7			-
	Real Estate and Hotels	7.6	2.6	(5.0)			34.2%
		Real Estate Lease	6.6	4.0	(2.6)			60.6%
		Condominium Sales	0.1	(0.2)	(0.3)			-
		Hotel Business	0.8	(1.2)	(2.0)			-
	Retail and Restaurant	1.1	(1.0)	(2.2)			-
	Other	0.8	0.5	(0.3)			62.2%

9

Non-consolidated Income Statements

Operating revenue

Railway transportation revenues

Other revenue

Operating expense

Personnel expense

Non-personnel expense

Energy cost

Maintenance cost

Other

Taxes

Depreciation cost

Operating income

Non-operating income and expense

Ordinary income

Extraordinary gain and losse

Net income

						(bil)
3 months ended	3 months ended	YoY			Major Factors
June, 30 2019	June, 30 2020
51.3	24.1	(27.1)		47.1%
37.8	13.2	(24.6)		34.9%		Influence of the COVID 19 infection, etc.
13.4	10.9	(2.5)		81.3%		Decline in revenue from sales of condominiums, etc.
38.0	34.5	(3.5)		90.6%
					Decline due to the transfer of the hospital business, lower
12.4	11.2	(1.1)		90.7% compensation due to suspension of train service, etc.
19.4	16.5	(2.8)		85.2%
2.3	1.9	(0.3)		83.2%		Decrease due suspension of train service, etc.
5.2	4.8	(0.3)		93.7%
11.9	9.7	(2.1)		81.8%		Decrease in cost of sales of condominiums, etc.
2.6	2.5	(0.1)		92.9%
3.4	4.1	0.6	119.2%
13.2	(10.3)	(23.5)		-
4.8	9.0	4.2	188.4%		Increase in gains on investment securities, etc.
18.0	(1.2)	(19.3)		-
					Increase due to sale of a portion of holdings of the shares of JR
0.1	6.9	6.8		-		Kyushu Drug Eleven
						Increase in provision for loss on disaster related to restoration of
						Hitahikosan Line, etc.
15.1	7.8	(7.2)		52.0%

10

• Recent Circumstances, Current Initiatives, and Results Forecasts

11

Duties that the JR Kyushu Group Must Fulfill Now

We will work together with stakeholders to overcome COVID 19 and fulfill our social duty as a mobility services company in Kyushu as we continue striving to be a trusted corporate group.

Society

Customers

Business

partners

Employees

・Maintaining transportation network as social infrastructure

・Suspending operation of all conventional line limited express trains during the Golden Week holiday period with the objective of preventing the spread of infection resulting from travel between prefectures.

・Exercising self-restraint in regard to events held by the JR Kyushu Group. ・Implementing temporary closure or reduced operating hours at certain

station buildings, hotels, etc.

・Frequent cleaning and disinfecting of railway facilities, station buildings, hotels, and other facilities.

・Implementing measures to support station building tenants, such as offering reduced rent payments and delaying payment timing.

・Providing information, such as comments from Company leaders to employees.

・Implementing short-term employment adjustments, such as temporary leave, while remaining committed to maintaining employment.

・Utilizing staggered commuting times and teleworking, with the objective of securing the safety of employees and their family members.

Shareholders	・Advancing measures to maintain corporate value, with the highest priority
	on securing liquidity at hand.

12

Recent Circumstances and Current Initiatives （Transportation Segment）

• Circumstances remain challenging in regard to handling revenues, mainly medium to long distance revenues.
• To enable customers to use train services with peace of mind, even during the COVID 19 crisis, we are strengthening Internet reservation services, which do not rely on face-to-face sales, and implementing train ventilation, disinfection, etc.
• We are implementing sales promotion initiatives to foster railway usage demand through the roll-out of new unlimited usage products, etc.

Preliminary handling revenues for July (YoY)

80%

				47.9%
40%	21.8%	28.2%
0%
	Apr.	May	June
Handling revenues		21.8%	28.2%	47.9%
Commuter pass		48.8%	93.3%	108.8%
revenues
Short distance		31.9%	35.4%	60.0%
revenues
Medium and long		9.1%	12.9%	33.7%
distance revenues

【Reference】	* Figures for July are preliminary figures as of July 26

Preliminary short-distance revenues for June and July, by area (YoY)

80%	62%	60%64%	63% 60%	64% 60%	69%	63%
	51%							57%
								43%
40%
0%
Kitakyushu	Fukuoka	Nagasaki	Oita	Kumamoto	Kagoshima
				June		July(preliminary)	* Figures for July are
【Reference】							preliminary figures as of July 26

Status of reserved-seat reservations for the Bon holiday period (as of July 21)

Reserved-seat reservation rate for Shinkansen	10.0% (Reference：previous year	36.7%)
and conventional lines
Reserved-seat reservation rate for D&S trains	17.8% (Reference：previous year	38.9%)

Initiatives to enable customers to use train services with peace of mind

●Strengthening Internet train reservation service Promoting Internet reservations through the introduction of discount products

●Initiatives for ventilation, disinfection, etc., of

station facilities and trains

(Shinkansen / conventional line limited express) Air exchange through air conditioning equipment (Conventional line local trains/rapid-service trains) Opening windows, opening doors when trains are stopped, etc.

Sales promotions to foster demand

●Fostering demand for railway usage through roll- outs of Minnano Kyushu Tickets, a low-price,unlimited-usage product, etc.

●Implementing the "Minna no Kyushu Project," an initiative to invigorate local communities, and other initiatives

13

Recent Circumstances and Current Initiatives

（Real Estate and Hotels Segment）

• We are implementing measures so that customers can use our service with peace of mind, even during the COVID 19 crisis.
• In the real estate lease business, results did not recover to the previous year's level. On the other hand, in offices and rental apartments, the trends are firm with no changes in vacancy rates. In the hotel business, circumstances remain challenging.
• We will keep to our basic strategy of city-building, centered on stations, and advance the development of the areas around two station buildings.

		駅ビル来店
		客数の増加		Status of Miyazaki and Kumamoto station area
Recent status in each business	development
	Station buildings: Gradual recovery together with	● Favorable progress in development construction and leasing
	recovery in short-distance revenues		Miyazaki Station Area Development
	100%	Tenant sales YoY	Approx.
			70%	Planned	November 20, 2020
				* Himuka Kirameki Market
		41.9%		date of
			(Commercial area under elevated
Real	50%		opening
		railway tracks): October 14
Estate					• JR Miyako Twin Building
Lease	0%
		Major	(commercial facilities, offices)
			• Condominiums
		1Q FY2021.3	July(preliminary)	area
		• MJR the Garden Miyazaki
		* Figures for July are preliminary figures as of July 20	develop	Ekimae (182 units)
		ment
		• MJR Miyazakieki Minami Park
	Offices/rental apartments: Firm trends with no changes		Side (48 units)
	in vacancy rates		Kumamoto Station Area Development

Condominium

Temporary closure of model rooms, solid

Planned

Sales

trend in contracts after re-opening

date of

Spring 2021 (station building)

opening

Continuation of difficult circumstances due to influence

• Kumamoto Station West Building

of people refraining from going out from July

(provisional name),

100%

Kumamoto Station North Building

Occupancy rate

Major

(provisional name)

(commercial facilities, offices)

area

Approx.

• Hotel

Hotels

developm

50%

(approximately 200 rooms)

30%

ent

10.9%

• MJR Kumamoto The Tower

(230 units)

0%

• RJR Precia Kumamoto Ekimae

1Q FY2021.3

July(preliminary)

(144 units)

* Figures for July are preliminary figures as of July 20

14

Recent Circumstances and Current Initiatives （Retail and Restaurant Segment）

• In the retail business, there is a gradual recovery trend, centered on stores in suburbs. We are advancing sales area improvement, etc., with consideration for demand from people staying at home.
• In the restaurant business, there is a recovery trend, centered on fast food. We are strengthening initiatives for takeout and on-line sales, which are favorable.

In preparation for a recovery in the railway business, we are working to further strengthen our earning power by creating sales areas in line with customer needs, etc.

Increase in number of

railway	Approx. 20 point
passengers	increase
	Short distance revenues
	YoY (1Q→July preliminary figures)

Increase in	Increase in
number of	number of
people in areas	station
surrounding	building store
stations	customers

Approx. 20 point	Approx. 20 point
increase	increase
Convenience store sales	Number of people
YoY (1Q→July preliminary figures)	entering station buildings
	YoY(1Q After reopening
	→July preliminary figures)

Recent status in the retail business

●With consideration for demand from people staying at home, improve sales areas and product lineups

100% Existing convenience stores, YoY

Approx. 80%

Approx.60%

50%

0%

1Q

July(preliminary)

* Figures for July are

FY2021.3

preliminary figures as

Recent status of restaurant business

of July 20

●Strengthen takeout/on-line sales

Existing restaurants, YoY

Approx.

100%

100%

Approx.70%

Approx.

60%

50%

Approx.30%

0%

1Q

Fast food

July(preliminary)

* Figures for July are

preliminary figures as

FY2021.3

Izakaya, restaurants, etc.	of July 20	15

Recent Circumstances and Current Initiatives （Cash flow management）

• We are raising funds on a large scale so that we can ride out the continued influence of the COVID 19 infection.
• We are postponing/limiting investment other than railway safety investment and investment in the Miyazaki and Kumamoto station area development projects. In addition, we are advancing initiatives to thoroughly reduce costs.

Amount of decline in EBITDA by segment in 1st quarter (YoY)

（¥bil）	Transportation Construction	Real Estate	Retail and	Other
		and Hotels	Restaurant

0

(7)

(14)

1. +0.7

(28)	(23.5)
	(5)
(35)	(2.2)	(0.3)

Status of fund-raising

New borrowing	¥100.0 billion
Bond issuance	¥40.0 billion

Establishment of	¥120.0 billion
commitment line
CP issuance	Acquisition of (a-1+)
short-term rating

Reevaluating growth investment, maintenance and upgrade investment

• Considering reevaluation of capital investment on a scale of several tens of billions of yen

（¥bil）		Maintenance and		Growth
	upgrade investment		investment

125 112.0

10095.2

75			68.0
				57.6
						442
50
25
		44.0			37.5			289
0
			Plan		Results	FY2021.3
			FY2020.3

*Excluding M&A

Initiatives to reduce costs

• Controlling personnel costs through the use of temporary leave, etc.
• Implementing significant reductions in operational expenses, such as advertising and promotion expenses
• Thoroughly reevaluating operations by using IT tools, etc.
• Controlling and postponing maintenance expenses, other

than expenses related to safety	16

Forecasts for FY21.3

• Due to the influence of COVID 19 infection, future revenue trends are very unclear, and it is difficult to rationally calculate performance forecasts. Accordingly, at this point we have not yet determined our consolidated forecasts.
• At this point, our annual dividends have not yet been determined, including the interim dividend.
• In the future, when it becomes possible to make a forecast, we will release it promptly.

17

Status of major damage caused by heavy rains in July 2020

• Over the period from July 3 to 10, 17 train lines were damaged and operation was suspended on 20 routes.
• On certain segments of the Kyudai Main Line and the Hisatsu Line, restoration is expected to require a considerable amount of time due to bridges being washed away, etc.

						Segments	Kyudai Main Line
Segments	Kagoshima Main Line				that are
			Hita - Mukainoharu
that are	(Kumamoto area)				suspended
suspended	Nagasu - Ueki					Distance	80.1 km
Distance	25.2 km
Major	Rock and debris influx				Major	Bridges washed away, rock and debris
			damage	influx, embankment influx, etc.
damage
				Kokura
Restoration
August 3			Hakata			-August 8 (planned): Hita - Bungo-Mori
timing
						Restoration	-End of August (planned):
						Shōnai - Mukainoharu
						timing
						-Not yet determined: Bungo-Mori -
		Sasebo			Tosu
					Shōnai
					Hita
					Kurume	Yufuin
						Oita
					Mukainoharu
				Nagasu	Ueki
		Nagasaki	Kumamoto
				Segments
Segments	Kagoshima Main Line				Hisatsu Line
			that are
that are	(Kumamoto area)			Shin-yatsushiro	Yatsushiro - Yoshimatsu
		suspended
suspended	Sendai - Kagoshima Chuo	Yatsushiro
Distance	46.1 km					Distance	86.8 km
Major	Rock and debris influx				Major	Bridges washed away, rock and debris
damage				damage	influx, embankment influx, etc.
Restoration	-July 27: Kushikino - Kagoshima Chuo			Yoshimatsu	Restoration
timing	-August 1: Sendai - Kushikino		川内		Not yet determined
		timing
				Sendai
		Kushikino			Miyazaki
				-Kagoshima
				Chuo
						Kyushu Shinkansen
Kushikino -	Sendai - Kushikino				Conventional lines
Kagoshima Chuo				Halted line segments
* Operation on the Sendai - Kumanojo segment limited to rolling stock					18
entering from Hisatsu Orange Railway

Initiatives to Establish Sustainable Mobility Services

MaaS initiatives

• Together with Nishi-Nippon Railroad, from March we have been implementing initiatives to increase the convenience of railway-bus transfers at Shimosone Station. These initiatives have been highly evaluated, and we are considering expanding the area in which they are implemented.
• Our initiatives in Miyazaki have been selected by the Ministry of Land, Infrastructure, Transport and Tourism as an enterprise that advances/supports MaaS in Japan. We will commence verification testing from this fall.

		Kokura
Hakata	Shimosone
Sasebo	Tosu	Hitahikosan Line
Saga	Kurume	Yufuin Oita

Nagasaki Kumamoto

Shin- Planning yatsushiro verification

testing of MaaS

Hitahikosan Line restoration through BRT

• In regard to the Soeda-Yoake segment, which has been suspended since July 2017, we have decided to restore service with BRT.
• In addition to the preparation of roads for exclusive BRT use, on certain segments, BRT will run on general roads near to residential areas. In these ways, we will increase convenience. Through the establishment of new stops, the number of stops]will be increased from 10 to 23.
• Construction will take approximately 3 years, and working expenses are expected to be approximately ¥2.6 billion.

Exclusive road coverage

Parallel road coverage

Soeda			Illustration of Soeda Station
				after restoration
	Hikosan

	Miyazaki
Kagoshima-		Kyushu Shinkansen
	Conventional lines
chuo	Nichinan	BRT restoration segment

※Area scope is an illustration

Chikuzen-

Iwaya

Hoshuyama

Yoake

Fukuoka

Oita

	19
Hita

Initiatives to Establish Sustainable Mobility Services

Disclosure of profitability by train line

• We will disclose profitability for train lines that had an average of less than 2,000 passengers per day in May 2020.
• We will share the difficult situation with regard to profitability with local governments and residents in areas around our railway lines. Aiming to enhance the sustainability of train lines, we will advance collaborative initiatives.

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Sasebo

Nagasaki

14

		Kokura
	Hakata	7
3	5
Tosu	6
	Saga Kurume	Yufuin

8	Oita
Kumamoto	10
12	1
Shin-yatsushiro

11

13

Miyazaki 4

Kagoshima- chuo 2

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			Operating	Profitability in	Average number of
			FY2019.3	passengers
No.	Name of line	Segment	kilometers	(¥ million)	(passengers/day)
			（Km）	Operating profit (loss)	FY2019.3
①	Nippo Main Line	Saiki - Nobeoka	58.4	(674)		889
②	Miyakonojō - Kokubu	42.2	(392)		1,438
③	Chikuhi Line	Imari - Karatsu	33.1	(193)		222
④	Miyazaki Airport Line	Tayoshi - Miyazaki	1.4	(6)		1,918
Airport
⑤	Chikuho Main Line	Keisen - Haruda	20.8	―	―	(534)※
⑥	Hitahikosan Line	Tagawa-Gotōji - Yoake	38.7	―	―	（299）※
⑦	Gotoji Line	Shin-Iizuka -	13.3	(179)		1,315
Tagawa-Gotōji
⑧	Kyudai Main Line	Hita - Yufuin	51.5	(254)	1,756（2,027）※
⑨	Karatsu Line	Karatsu - Nishi-Karatsu	2.2	(229)		1,005
		Higo-Ozu - Miyaji	30.8	―	― （1,854）※
⑩
Hohi Main Line	Miyaji - Bungo-Taketa	34.6	(348)	101	（463）※
		Bungo-Taketa -	23.9	(206)	951（1,331）※
		Miemachi
		Yatsushiro - Hitoyoshi	51.8	(573)		455
⑪
Hisatsu Line	Hitoyoshi - Yoshimatsu	35.0	(261)		105
		Yoshimatsu - Hayato	37.4	(359)		656
⑫	Misumi Line	Uto - Misumi	25.6	(273)		1,242
⑬	Kitto Line	Yoshimatsu -	61.6	(341)		465
Miyakonojō
⑭	Ibusuki Makurazaki	Ibusuki - Makurazaki	42.1	(405)		291
	Line
⑮	Nichinan Line	Tayoshi - Aburatsu	44.0	(485)		1,160
Aburatsu - Shibushi	42.9	(398)		193

Please use the link below (Company website) to confirm the assumptions, details of calculation methods etc.	20
＞Usage status by train line：https://www.jrkyushu.co.jp/company/info/data/senkubetsu.html

Outline of Future Plans

2030 Long-Term Vision

We will contribute to the sustainable development of Kyushu through city-building/ community development initiatives that leverage the distinctive characteristics of local communities, centered on safe and secure mobility services.

Business	Existing businesses
strategy	Compan ywide strategy
Financial	Balance sheet
strategy

Currently

Management environment worsening as we respond to changes in lifestyles and disasters of increased severity

Business strategies that focus on safety and peace of mind (hygienic mobility spaces, facilities, etc.)

Controlling management resources

(Cash flow management)

We face the issues of recognition that there is excess capital on our balance sheet, concern about significant

worsening of our earnings structure,

and the risk of natural disasters.

Securing cash reserves

Settling issues for the future

Advancing "city-building/ community

development" initiatives that leverage the characteristics of local regions, centered on sustainable mobility services

Vitally important alliances and M&A (reorganization of business portfolio)

Importance of securing a certain level of capital based on the perspective of business sustainability

Maintain ratings, have sufficient financial strength

to purchase superior properties

Share holder return

Implementing stable shareholder return over the long term

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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 the available information, as well as Company estimates and assumptions, at the time these 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 the real estate market, the progress of each individual project, changes in laws and regulations, and a wide range of other risks.

IR materials can be viewed on our corporate website:

http://www.jrkyushu.co.jp/company/ir_eng/library/earnings/

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