YAMATO HOLDINGS CO., LTD.

Amid a changing competitive environment driven by the progress of e-commerce, the global blocization of supply chains, and the rise of startups, failure to respond to the diversifying needs of individual and corporate customers could result in a decline in operating revenue and the loss of growth opportunities. In addition, insufficient response to sustainability issues carries the risk of reduced customer support and higher fundraising costs. In response, the Group is strengthening the resilience of the TA-Q-BIN network, transforming its revenue structure, providing value-added solutions for corporate customers, and advancing human resources, digital, and environmental strategies.

For the Yamato Group, which operates many labor-intensive businesses, a tightening of supply and demand due to the decline in Japan's domestic working-age population carries the risk of making it more difficult to secure personnel, including delivery partners, and significantly increasing personnel acquisition costs. In response, the Group is developing attractive personnel and evaluation systems, building a workplace environment that respects diversity and human rights, strengthening cooperation with delivery partners, and improving efficiency by reviewing transportation methods between terminals.

As technological innovations such as AI, IoT, robotics, drones, autonomous driving, and generative AI bring transformation to the logistics industry, delays in responding to new business models or misjudgment and inadequate implementation of technology trends could result in investment returns falling short of expectations, affecting business results. In response, the Group is promoting data-driven management, strengthening its DX promotion structure, and pursuing open innovation through cooperation with CVC funds and VC funds.

As the Yamato Group holds a large amount of personal and customer information, information leakage or data loss caused by cyberattacks or inadequate management could result in a decline in social credibility, claims for damages, and doubts about its digital strategy. In addition, if a system outage causes the suspension of TA-Q-BIN parcel acceptance nationwide, this would result in a loss of revenue opportunities. In response, the Group implements multi-layered defense measures, including 24/7/365 monitoring for unauthorized access, distribution and mutual backup of data centers, and strengthened data governance.

In addition to the risk of increased costs for introducing low-carbon vehicles and upgrading facilities due to stricter GHG emission regulations and higher carbon taxes, there are risks of declining customer support due to insufficient response to low-carbon transportation, as well as business interruption risk from the intensification of natural disasters. In response, the Group has set a medium-term target of reducing GHG emissions by 48% by 2030 (compared to FY2021 (ending March 2021)), and is promoting the introduction of 23,500 EVs and the use of renewable energy, while also declaring carbon neutrality for its three TA-Q-BIN products.

If a legal violation occurs in operations management or transportation, this could affect the continuation of core businesses through administrative or criminal penalties, or revocation of business licenses. In addition, inadequate response to amended laws such as the Motor Truck Transportation Business Act and the Act on Streamlining Logistics could also affect business results. In response, the Group operates processes based on product management regulations, conducts operations management using systems, maintains an internal whistleblowing system, and conducts risk-based audits by the internal audit department.

In the event of a large-scale natural disaster, power outage, or similar event, personnel shortages due to employees and partners being affected, damage to vehicles, facilities, and data centers, business suspension due to shortages of fuel and supplies, and a decline in shipment volumes due to customers being affected could occur immediately after the disaster and continue over the medium to long term. In response, the Group formulates and trains for BCPs, conducts risk assessments and relocation of facilities, continuously reviews manuals for suspending collection and delivery and conducting maintenance work, and has established a system for setting up a response headquarters under the basic BCP policy centered on

As the Yamato Group primarily operates vehicle-based businesses using public roads, the occurrence of a serious traffic accident could lead to a decline in social credibility, as well as business interruption or discontinuation due to administrative penalties such as vehicle use suspension, business suspension, or revocation of business licenses. In response, the Group promotes initiatives in line with transportation safety management and OSHMS, conducts safety education, has the audit department confirm legal compliance in operations and maintenance management, and promotes heat countermeasures (establishing action standards based on WBGT criteria and introducing cooling equipment).

If international conflicts such as terrorism or war, or trade friction occur, this could lead to a contraction in international trade and disruption of supply chains, causing logistics delays. In addition, fuel supply constraints or sharp rises in fuel prices such as diesel due to international circumstances directly affect the business results of the Yamato Group, whose core business is vehicle-based transportation. In response, the Group combines diverse transportation methods across land, sea, and air, promotes modal shift, introduces fuel-efficient vehicles, adopts energy management systems, and works to optimize pricing for customers.

In M&A and strategic business alliances aimed at accelerating growth in the Contract Logistics Business and the Global Business, changes in the business environment or competitive landscape, or unforeseen business issues, could prevent expected results from being achieved, potentially affecting business results. In response, the Group has established investment decision criteria that emphasize alignment with growth strategy, and conducts regular monitoring based on business viability assessment rules to maintain a disciplined promotion structure.