IR

Financial Results
CONSOLIDATED FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED MARCH 31,1998

EAST JAPAN RAILWAY COMPANY(9020)

Years ended March 31, 1997 and 1998  
Millions of Yen(except for Net Income per Share)
  1997.3 1998.3 change(%)
Operating Revenues 2,513,790 2,514,807 0.0
Net Income 70,661 66,234 -6.3
Net Income per Share(yen) 17,665 16,558 -6.3
Total Assets 7,384,462 7,381,794 -0.0
Shareholders' Equity 719,509 765,423 6.4
Figures are rounded down to the nearest million.

Overview of Results

During the fiscal year ended March 31, 1998, the difficulties plaguing the Japanese economy became increasingly pronounced. Domestic demand, such as consumer spending and housing construction, fell sharply due to the April 1997 consumption tax rate hike and other factors. Additionally, there was a series of bankruptcies late in 1997, notably among financial institutions.

In this difficult economic environment, JR East and its consolidated subsidiaries focused on creating a sound and stable management base through increasing revenues, cutting expenses and improving the consolidated financial position in order to raise operating efficiency. As a result, consolidated operating revenues were up 0.0% to 2,514.8 billion yen, ordinary income was down by 11.8% to 105.0 billion yen, and net income was down by 6.3% to 66.2 billion yen.

Performance by business segment is as follows:

In transportation, operating revenues were down by 1.0% to 1,885.2 billion yen because of the adverse economic environment and a fall in sales of commuter passes and tickets following the temporary rise in these sales prior to the consumption tax rate hike. Operating income declined by 13.9% to 323.1 billion yen mainly due to the termination of special reductions in property taxes at the parent company.

In merchandise sales, aggressive marketing activities at subsidiaries offset the effects of the closing of underperforming stores and restaurants by the parent company, resulting in a 0.7% increase in operating revenues to 366.4 billion yen. These closures and other measures brought about an improvement in efficiency. As a result, performance has improved significantly in both of the past two fiscal years and the segment operating loss declined by 79.0% to 0.8 billion yen.

In real estate leasing, an increase in the number of consolidated companies and other factors raised operating revenues by 7.8% to 160.8 billion yen and operating income by 5.1% to 27.1 billion yen. Up to the previous fiscal year, real estate leasing was included in "other services." Due to its increased significance, real estate leasing became an independent segment in the fiscal year that ended on March 31, 1998.

In other services, aggressive marketing activities and rising efficiency led to 6.3% growth in operating revenues to 169.5 billion yen and a 19.3% increase in operating income to 7.4 billion yen.

The number of consolidated subsidiaries was 80, seven more than in the prior fiscal year. This is due to the inclusion of eight new consolidated subsidiaries including the newly formed JR East Department Store Co., Ltd. and Tetsudo Kaikan Co., Ltd., which became a subsidiary during the fiscal year, and the elimination of Kinshicho Terminal Development Co., Ltd. following its merger with Kinshicho Station Building Co., Ltd.