[Company analysis] East Japan Railway Company (東日本旅客鉄道)

「East Japan Railway Company (東日本旅客鉄道)」is the largest railway company in Japan. It is one of the three Japan's representative railway companies(「East Japan Railway Company(東日本旅客鉄道)」,「West Japan Railway Company(西日本旅客鉄道)」and「Central Japan Railway Company(東海旅客鉄道)」which inherited the railway business from「National Railways(日本国有鉄道)」on April 1, 1987. This company is commonly known as "JR East Japan" and the English abbreviation is "JR East". The number of consolidated employees is approximately 72,402.

 

1. Company Profile

2. Summary and Features

3. Major Business

4. Financial Information

 

 

 

1. Company Profile

 

※Unit is JPY million, as of 2019

Company name	East Japan Railway Company
Company name (Japanese)	東日本旅客鉄道
Date of establishment	Wednesday, April 1, 1987
Headquarters location	〒151-8578 東京都渋谷区代々木二丁目2番2号
Capital	200,000
Consolidated sales	3,002,043
Consolidated operating profit	484,860
Consolidated total assets	8,359,676
Consolidated capital	3,094,378
Capital adequacy ratio	37.0%
Consolidated number of employees	72,402

 

 

 

2. Summary and Features

 
In Japan,「East Japan Railway Company」has regional railway lines centering on the Tohoku, Kanto, and Koshinetsu regions, and they carry out other related businesses through affiliated companies. this company is also developing overseas businesses such as the operation of "West Midlands Trains" in the UK and the supply of vehicles for the Bangkok subway. As a railway operator,「East Japan Railway」is one of the world's top-class company could be comparable with「Deutsche Bahn」in passenger traffic and operation distance.

It is no exaggeration to say that the「East Japan Railway Company」has many routes in the Tokyo area, where approximately 30% of Japan's total population lives, and that commuting transportation in this area is its main business. The average daily number of passengers is approximately 16.59 million, and annual sales amount to 2.7 trillion yen. Approximately 40% of its sales come from commuting routes in the Kanto region, and 18% comes from Shinkansen. In addition, this company has the longest operating distance in Japan (total of 7,401.7km).

As mentioned above, the railway business has received stable profits by operating conventional lines in the Tokyo metropolitan area. Nevertheless,「East Japan Railway Company」 conducts business diversification very actively compare to other JR Group companies. They define businesses other than railways as “living service businesses” and develops businesses from various angles such as shops inside stations, nearby shopping centers, hotels, advertisements, and homes.

Although the total population of Japan is on the decline, cities in the Tokyo metropolitan area are still developing. Along with that,「East Japan Railway Company」is also trying to secure solid source of profits in the distribution and real estate fields. In addition, they have popularized "Suica", a transportation IC card, into electronic monetization. By this, they can expect to obtain not only purchase data but also commission sales by partnering with other industries.

 

 

3. Major Business

 

■ Railway business
It has the longest operating distance in Japan (7,401.7km), which covers more than 30% of the total population of Japan. Thanks to the high population density in the Tokyo metropolitan area, they have achieved sales of the No. 1 Japanese railway company.

■ Life service business
They develop shopping centers, offices, and retail stores centering on JR stations, and develop "town building" business. In particular, they are promoting the creation of new businesses by utilizing the network across East Japan.

■ IT / Suica business
This is a business centered on Suica, which started its service in November 2001. Currently, the number of issued cards has reached 57 million. And with this one card, you can use almost all railways and buses in Japan. Besides, 「East Japan Railway Company」is trying to utilize Suica for various business fields. 

■ Rail vehicle manufacturing business
In 2014, in order to maximize the synergistic effects of the entire group by leveraging the know-how accumulated in the railway business, they added the railway vehicle manufacturing business of「Niitsu Rolling Stock Manufacturing Co., Ltd.(新津車両製作所)」 in 2014. They manufacture not only general commuter trains, but also various high-quality trains such as Shinkansen and hybrid cars.

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated sales		2,880,802	2,950,156	3,002,043
Consolidated operating profit		466,309	481,295	484,860
Consolidated total assets		7,911,114	8,147,676	8,359,676
Consolidated net assets		2,675,353	2,884,552	3,094,378
Breakdown of sales	Transportation business	1,989,839	2,017,876	2,038,195
	Distribution・Service business	502,414	514,962	521,877
	Real estate・Hotel business	326,311	340,144	349,013
	Others	62,237	77,172	92,956