Central Japan Railway Company

As a railway operator, the Company is subject to permits and approvals from the Minister of Land, Infrastructure, Transport and Tourism, and changes to the upper limits of fares and charges require strict review under the total cost method. Changes in legal regulations could increase compliance costs or restrict business activities. The Company continues to engage with relevant authorities to enable more flexible and simplified fare setting.

Under Article 16, Paragraph 2 of the Railway Business Act, fare revisions are difficult to implement, and the Group is facing rising costs due to changes in the competitive environment and price increases. If flexible fare changes cannot be made in a timely manner, this may affect the Group's earnings. The Company is working to secure revenue and improve efficiency while lobbying relevant authorities to establish a framework enabling more flexible fare setting.

The Tokaido Shinkansen faces competition from airlines, and improvements in air travel convenience—such as expanded airport slots and better access—pose a threat. Additionally, the spread of remote work and web conferencing, as well as demographic changes due to the declining birthrate and aging population, may affect railway usage. As countermeasures, the company is working on operating up to 13 Nozomi trains per hour, introducing N700S trains, and expanding EX Service.

Consolidated long-term debt balance stood at ¥4,768,400 million as of the end of the current fiscal year, with interest expense for the period amounting to ¥78,700 million. Future changes in fund-raising interest rates due to interest rate trends could affect the company's financial position, business results, and cash flows. The company addresses this by diversifying funding methods and striving to secure low-interest, stable financing.

Natural disasters such as earthquakes, heavy rain, typhoons, and volcanic eruptions, as well as terrorism and infectious disease outbreaks, may have a significant impact on the railway business, including the Tokaido Shinkansen. Measures already implemented include the completion of seismic reinforcement of piers and elevated bridge columns on the Tokaido Shinkansen, seismic reinforcement of embankments, and the installation of derailment prevention guards along the entire line. As a countermeasure against heavy rain, the company continues to strengthen embankments through concrete cladding, and is working to further improve safety.

If an accident occurs due to train operations, significant damage may result, potentially affecting the financial position, business results, and cash flows. On the soft side, the Company is thoroughly developing regulations and manuals and conducting employee education and training, while on the hardware side, it is actively promoting safety-related capital investments such as the introduction of new ATC systems, rolling stock renewal, and the introduction of ATS-PT across the entire line. The number of railway operation accidents in the current fiscal year was 30, a significant decrease from 60 in the first fiscal year after the Company's establishment.

If the numerous computer systems used in the railway business and related businesses were to experience failures due to cyber attacks, natural disasters, human error, or other causes, this could affect business operations. Should an external leakage of customer personal information occur, this could affect the financial position, business results, and cash flows through the impact on service provision. The Company is implementing measures such as improving the security functions of its own systems, enhancing employee education and training, and limiting access rights to personal information.

The total construction cost for the Shinagawa-Nagoya section, initially ¥5.52 trillion, increased to ¥7.04 trillion, and as of October 2025 is projected to further increase to ¥11.0 trillion due to price hikes and responses to difficult construction conditions. Rising construction material costs, difficult construction work, higher interest rates, and overall price increases across society are compounding, creating risk of further cost escalation. The company's policy is that if sound management and stable dividends cannot be maintained, it will adjust the pace of construction and aim to complete the project after restoring its management capacity.

Construction of the tunnel in the Shizuoka section of the South Alps Tunnel has not yet commenced, making it impossible to achieve the planned 2027 opening, and no new opening timeline can currently be projected. This delay significantly alters the assumptions underlying the revenue plan and could also affect the plan to accelerate the entire line's completion using ¥3 trillion in fiscal loan and investment funds. In Construction Implementation Plan (No. 3), the expected construction completion timing has been revised to "2027 or later," and efforts are underway to achieve early commencement of construction in the Shizuoka section.

Regarding the construction of the Chuo Shinkansen, administrative litigation seeking revocation of the construction plan approval granted by the national government, as well as civil litigation seeking an injunction against construction, have been filed. Depending on the outcome of these lawsuits, the progress of construction and the overall plan could be affected, which may in turn impact the Company Group's financial position, business results, and cash flows. The Company continues to respond to the litigation while aiming to press forward with the plan toward an early opening.