A Message from the President

On Assuming the Position of President

I am committed to creating a new JR East Group using the insights and perspective I have acquired during my long tenure in positions that have given me an overview of the Group’s businesses.

On April 1, 2024, I was appointed president and CEO of JR East, becoming the first president of the Company whose career began after its establishment. In 1989, I joined the Company as an administrative employee and served in frontline operations at Ueno Station, Shinjuku Station, and other locations. I was then engaged for many years in human resource related duties and was also involved in corporate planning and investment planning. As general manager of the Management Planning Department, I contributed to the formulation of the current JR East Group Management Vision “Move Up” 2027 (“Move Up” 2027). Most recently, I served as director general of the Marketing Headquarters, where I was in charge of the preparation and implementation of growth strategies for Lifestyle Solutions. Many years of service in corporate planning and human resource positions have provided me with an overview of the Group and given me insights into its many different businesses. Moreover, I have developed a perspective on these businesses that is based on medium- to long-term changes in the business environment. I believe that these insights and this perspective will be an advantage in steering management as president. In addition, as director general of the Marketing Headquarters, I was involved in Lifestyle Solutions businesses, which have a wide range of point of contact with customers’ daily lives. In this capacity, I took on ambitious new initiatives aimed at greatly expanding Lifestyle and IT & Suica services. As a result, I have acquired insights and perspective that will be useful for building the Suica economic zone.

As for my basic approach to business management, I strongly believe that our employees are the foundation and drivers of all growth of the Group and that we must steadily promote sound business management.

During my long career in human resources, I always emphasized employees’ job satisfaction and personal growth. This emphasis stems from seeing how the growth of employees links directly to the development of the Group as a whole. Each Group employee plays a leading role. Together with our employees, I aim to create a corporate group that continues to address social issues through its business activities. To this end, we must create systems and organizations that empower employees and develop new types of jobs and fields of work. I realize that cultivating a new engagement between employees and management is one of my main roles as president. As a company established following the Japanese National Railways (JNR) privatization reforms, we must firmly uphold the principles of safety first, autonomy and self-reliance, and customers first, which are a legacy of the JNR privatization reforms. I have internalized these principles, which have been passed down over generations and become part of our DNA.

The JR East Group’s Value Creation

Based on the trust of customers and local communities, we will develop a wide range of businesses in a people-focused manner, thereby helping our customers and people in communities to realize enriched lives.

On a macro level, the JR East Group’s raison d’être is to provide infrastructure that underpins Japan’s economic activities. Further, on a micro level, it is to support the daily lives of customers and local communities. “Move Up” 2027 sets out making regional areas more prosperous as one of the main focuses of business development initiatives, alongside making cities more comfortable and developing businesses for the world. Heightening the convenience of Tokyo and other metropolitan areas even further and enhancing value is of course an important task. However, the foundations of our growth are vibrant regional communities that are interconnected throughout Japan by our multilayered networks, including our transportation networks. In this sense, I believe that our value as a corporate group lies in the ability to resolutely address the problems of regions. We must step up the pace of digital transformation to increase and diversify points of contact with customers even further. I am convinced that these efforts will become a milestone in the advancement of the Group’s growth.

As a railway operator, we view safety as the top priority of business management. One of our major missions is to provide a variety of value based on the trust that our pursuit of ultimate safety levels has garnered from customers and local communities. We will forge ahead with day-to-day duties based on our three strengths: trust, employees, and networks.

The trust that our railway business has earned from customers, local communities, and other stakeholders is unmatched by other companies. Based on this trust, we will not develop in a railway infrastructure-focused way but instead develop a wide range of businesses in a people-focused manner by further deepening various types of integration and collaboration—among the Transportation, Lifestyle, and IT & Suica businesses; among Group companies; and with municipal authorities and many different external companies. In this way, the Group will grow by leveraging its combined strength to realize business development that is aimed at helping customers and people in communities to realize enriched lives.

“Move Up” 2027 calls on all Group employees to play leading roles in structural reform. To align the growth of each employee with the overall growth of the Group without being restricted by the narrow frameworks of human capital management, I believe that employees must be open-minded about the outside world. Through “internal globalization,” I want to enable our employees to demonstrate their significant potential in a variety of business initiatives.

Meanwhile, our networks are multilayered, facilitating not only the movement of people but also the movement of goods and information. Amid a declining population, an aging population, and other structural changes in society, my mission is to rebuild ekinaka locations (inside railway stations) and other real-world assets that have been strengths of the JR East Group into business advantages. To this end, we will combine our real-world multilayered networks with digital technologies, which are evolving with each passing day.

Fiscal 2024 Performance Review

Thanks to concerted efforts to realize “Move Up” 2027, the Group achieved increases in both revenues and income, posting higher operating revenues for the third consecutive fiscal year.

I would now like to review our performance in fiscal 2024, the year ended March 31, 2024. With post-COVID-19 and visitors to Japan as key themes, we implemented various measures to stimulate demand, such as launching the weekday-only discount railway pass, Let’s Travel on Weekdays! Early Booking Discount Pass♥. We also encouraged travel by enhancing initiatives for visitors to Japan and increased revenues through revision of the prices of railway passes used by visitors to Japan. In addition, we advanced measures aimed at transforming our business portfolio through the expansion of businesses that help realize Lifestyle Solutions. For example, we established JR EAST Smart Logistics Co., Ltd. and strategically developed the real estate business. Thanks to such concerted efforts by all Group employees to realize “Move Up” 2027, railway usage rose and revenues from ekinaka stores, hotels, and shopping centers grew. Consequently, the Group achieved increases in both revenues and income, posting higher operating revenues for the third consecutive fiscal year. By business segment, the Transportation, Retail & Services, and Others realized increases in both revenues and income, while the Real Estate & Hotels segment recorded a rise in revenues but a decline in income. Excluding the real estate sales business, however, this business segment grew both revenues and income.

Growth Strategies to Achieve Our Vision

In addition to the favorable progress of the railway business, the finance business associated with the start of JRE BANK operations and the real estate business, which has TAKANAWA GATEWAY CITY at its core, are making steady progress.

When formulating “Move Up” 2027 in 2018, we were already incorporating changes in the business environment that would accompany population decline, such as market changes, the aging of society and other changes in the demographic structure, and labor shortages. Anticipating various other structural shifts in business conditions, such as changes in customer lifestyles, we prepared a management vision with a long time frame of 10 years. The concept is to realize a world that is not a continuation of the status quo by having Group employees play leading roles in transformation and ambitious new initiatives.

During the first half of the 10-year period, I believe that the railway business became structurally leaner as a result of steady progress in the introduction of condition-based maintenance (CBM), smart maintenance that utilizes drones, and driver-only operations. In addition, several projects that we have been undertaking will come to fruition in the second half of the 10-year period. For example, an ¥86.0 billion investment for the introduction of Green Cars (first-class carriages) to the Chuo Rapid Line in spring 2025 is expected to generate ¥8.0 billion in annual revenues. We are steadily enhancing the convenience of Suica. By the end of fiscal 2024, the Suica usage area had been expanded to include Aomori, Iwate, Akita, and Yamagata prefectures, with further expansion planned through the inclusion of Nagano Prefecture at the end of fiscal 2025. In addition, in June 2023 we began the construction of the Haneda Airport Access Line (tentative name), which is scheduled to open in fiscal 2032. We are also planning to phase in automated operations.

In the Suica and finance business, JRE BANK began operations in May 2024, and we plan to complete the ID integration of eki-net, Mobile Suica, and other digital services by fiscal 2028. Also, we plan to launch a new railway ticketing system through cloud migration by the end of fiscal 2028 and realize integration of these digital services through use of the Suica app (tentative name) by fiscal 2029.

As for the real estate business, which will be a major engine of future growth, we followed on from the establishment of JR East Real Estate Asset Management Co., Ltd. by establishing JREast Real Estate Co., Ltd. in July 2024 in order to monetize unrealized value. We are further expanding the rotational business model with the aim of developing a real estate fund business that has an overall scale of more than ¥400.0 billion by fiscal 2028.

Another important initiative common to all of our businesses is the advancement of comprehensive collaborations with various companies and academic institutions. “Move Up” 2027 calls for the promotion of open innovation. Accordingly, we have concluded numerous comprehensive collaboration agreements aimed at actively incorporating society’s expertise and advanced technologies, thereby moving away from a self-sufficient approach that pursues initiatives in isolation. Our collaborations with a variety of startups are also progressing. We have already held nine DEMO DAY results debriefing sessions for companies selected by the JR East Startup Program, and further sessions are planned.

TAKANAWA GATEWAY CITY is a symbolic example of how we will create new services and value. This development initiative will serve as “an experimental site to create enriching lives for the next 100 years” where we collaborate with a large number of companies and academic institutions. Specifically, the University of Tokyo will establish the cross-disciplinary University of Tokyo GATEWAY Campus. In the new city, we will also partner with the National University of Singapore as well as Institut Pasteur, a French private research institute that is a world authority in research on infectious diseases. Through such collaborations, we will bring together many different types of expertise to develop TAKANAWA GATEWAY CITY into a base for the creation of new business value. We hope to realize a city that creates cycles in which the various ideas originating from such efforts are introduced to society, with the results being disseminated throughout Japan and the rest of the world and feedback on the disseminated initiatives being received and then reflected. I believe that it will become a very exciting city. This urban development project is progressing well. THE LINKPILLAR 1, which is the name of the twin towers in front of Takanawa Gateway Station, is scheduled to open in March 2025, while the construction of THE LINKPILLAR 2, a residential building, and another building will be completed by the end of fiscal 2026. The project is expected to account for overall investment of ¥600.0 billion and annual revenues of ¥57.0 billion. On the former site of a rail yard, we created approximately 13 hectares of land for development. Of this area, we are using approximately 10 hectares to develop TAKANAWA GATEWAY CITY.

The project has symbolic significance for us because our inability to fully monetize our assets has been an issue for the Group. Another example of our efforts to monetize our assets is the Beyond Stations concept, which entails the creation of various revenue sources through greater utilization of railway station space. We have already begun developing businesses that are becoming a “lifestyle platform” that is not limited to sales of goods, food, and beverages. These businesses include a hub that supports business matching for regional industries and clinics that can be used in combination with online services. The development of businesses in this way by using the Group’s assets to create new value and maximize monetization is a major challenge for the growth of the Group. However, I am confident that we are equal to the task.

By steadily advancing the initiatives I have described, we aim to achieve the numerical targets of “Move Up” 2027. The entire Group will forge ahead with its sights firmly set on achieving ROA of approximately 4.0% and reducing the net interest-bearing debt to EBITDA ratio to approximately 5 times in the medium term and to approximately 3.5 times in the long term.

Initiatives Based on a Medium- to Long-Term Perspective

Viewing changes in the business environment as an opportunity to advance structural reforms and get onto a growth trajectory, we will take on the challenge of creating new value through business management based on the two pillars of Mobility and Lifestyle Solutions.

We are facing a transformation of the social environment the likes of which we have never experienced before. In addition to a declining population and an aging society and the labor shortages accompanying these trends, there is greater fluidity in human resources. Further, the social environment is evolving at an accelerating pace due to changes in values and lifestyles, technological innovations such as generative AI, and global climate change. I see these drastic changes in the business environment as an opportunity to make major structural reforms and get onto a growth trajectory. With respect to our aging society, we can create market-oriented businesses based on the concept of creating new markets for seniors. Through structural reform of business management, we will achieve our goal of establishing growth that is based on the two pillars of Mobility and Lifestyle Solutions.

The government has set the realization of 60 million visitors to Japan as a target to be reached by 2030. Without a doubt increasing numbers of visitors to Japan are a major factor supporting the growth of the Group. Including this trend, I believe that our growth will be driven by integrating the three elements of Transportation services, Lifestyle services, and IT & Suica services and by taking on the challenge of creating new people-focused convenience and value in the domestic market. The COVID-19 pandemic exposed the fragility of a management structure built solely on the pillar of Mobility. Therefore, I believe that to ensure our sustainable growth we need to develop Lifestyle Solutions into another management pillar and establish a business management structure based on the two pillars of Mobility and Lifestyle Solutions.

From a medium- to long-term perspective, we will continue to pursue ultimate safety levels and position safety as the top priority of business management. Safety is our unchanging mission and must never be undermined. Safety efforts never end. In our daily work, we are constantly raising levels of safety. This unremitting effort is the meaning of the phrase “pursuing ultimate safety levels.” Clearly, this commitment to safety has been passed down as DNA from the days of JNR. With safety as a foundation, we must rapidly establish business management based on the two pillars of Mobility and Lifestyle Solutions. To this end, the Group will seek sustainable growth while further advancing integration and collaboration among its various businesses.

To date, our businesses have almost exclusively served customers who use railway stations. These businesses include ekinaka stores, shopping centers, and offices. While improving the services of these businesses, we need to broaden our field of vision to encompass areas outside railway stations and accelerate the development of businesses that target a wide range of customers, not just railway passengers. I believe we have to rebuild our business model based on the premise of customers ordinarily gathering at railway stations.

In Mobility, we will not only actively incorporate a range of expertise and advanced technologies but also use our accumulated technological expertise to create and grow new businesses that offer leading-edge technological services. The trusted brand that we have built up is fundamentally supported by a safe, reliable transportation system. By continuing to promote digital transformation and use machines and systems for tasks that can be performed without humans, we will become a highly productive business and strengthen our profitability. For the Group, the railway business is very significant in that it provides real points of contact with customers. This business will provide a base for creating a competitive edge that no other company has, thereby contributing to the growth of the entire Group. Sustainable business operations will be achieved in Mobility through stability and growth.

In Lifestyle Solutions, we aim to increase profits through our medium- to long-term business growth strategy “Beyond the Border.” With an eye on the future, we will further heighten the growth potential of existing businesses through market-oriented business strategies based on customer data and other information. In conjunction with these efforts, we will design new strengths by creating purposes (destinations) of travel and strengthening points of contact with individual customers through digital transformation. We will concentrate the investment of management resources on building the Suica economic zone through the evolution of Suica into a digital platform and the use of JRE POINT as a hub that links the Group’s diverse businesses. In this way, we aim to double operating income over the next 10 years.

Initiatives in Fiscal 2025

In the current fiscal year, we are shifting management from the defensive mode of the COVID-19 pandemic to an offensive mode. We aim to create unprecedented new value by realizing synergies through integration and collaboration that takes advantage of our strengths in Transportation services, Lifestyle services, and IT & Suica services.

Fiscal 2025 will be a major milestone year as post-COVID-19 economic activities begin in earnest and a generational shift takes place in-house as the generation hired by JNR reaches retirement age. I view this significant social and economic transformation as an opportunity to further accelerate the Companywide structural reforms we have been undertaking. Beginning from the current fiscal year, I want to usher in a new era by setting out new growth strategies and boldly advancing them. With the aim of operating under a new framework for consolidated cash flow management in the current fiscal year, we have defined strategies and KPIs for each of our four business segments and 14 businesses as well as for the foundations of growth, which comprise human resources; digital transformation and intellectual property; finance and investment; and environmental, social, and governance (ESG) factors. Based on these strategies and KPIs, Group employees will create value through integration and collaboration, maximize cash flows (economic value), and advance business activities that contribute to the solution of social issues (social value).

Regarding specific measures in fiscal 2025, in Mobility we will further increase driver-only operations while continuing to streamline maintenance work through the utilization of digital transformation. In addition, we will work to increase tourism, including initiatives to attract more visitors to Japan, and implement growth investments for the introduction of Green Cars to the Chuo Rapid Line and the construction of the Haneda Airport Access Line (tentative name). Further, as the Revenue Cost Calculation Guidelines were partially revised in April 2024, we are carefully examining revenues and cost in light of this guideline, and if the conditions are met, we will promptly apply to the Ministry of Land, Infrastructure, Transport and Tourism for approval of a train fare revision. We hope to further popularize off-peak commuter passes by lowering their prices in October.

We will also continue dialogue with local communities regarding local lines. About 30% of all conventional lines had a traffic density of less than 4,000 passengers per day when JR East was established. As of fiscal 2023, the percentage of lines with this density reached about 50% due to the continuing decline in population and a shift to automobile use. The business environment for local lines is expected to become even more challenging in the future due to population decline and other factors. We recognize that it is extremely important to find ways of sustainably maintaining local transportation under conditions in which we are not able to realize the distinctive benefits of railway services, which transport large numbers of passengers to their destinations safely and reliably. In conjunction with efforts to promote management efficiency by streamlining facilities and simplifying operations, we will work together with local communities to gain the understanding and cooperation of the people living in line-side areas and examine how best to achieve sustainable transportation systems. While building sustainable transportation systems, we must also engage with local communities through various businesses, such as tourism, Lifestyle services, Suica services, and Mobility as a Service (MaaS). By enhancing tourism resources so that customers become fans of specific regions and visit them repeatedly, we are increasing the number of people engaging with regions while promoting all kinds of regional industries, including agriculture and fishing industries and industries selling products that are unique to particular regions. The Group as a whole is engaged in collaborative regional development efforts that involve a range of different industries, such as Hako-byun train-based freight transportation service, which utilizes our high-speed transportation network to connect regional industries with the markets of the Tokyo metropolitan area. Going forward, the entire JR East Group will continue tackling the challenges of regions.

In Lifestyle Solutions, we will focus on real estate as a business that enables our future growth. We will move forward with development to increase revenue-producing real estate, and we will strengthen the operational capabilities of existing shopping centers and other facilities. At the same time, the Group will develop the rotational business, which is based on the real estate fund business, to improve capital efficiency and yields. In the current fiscal year, we have already opened many newly developed facilities. For example, we have opened EATo LUMINE, which is inside Shinjuku Station and comprises 28 stores, including new-format stores; the JR Aomori Station East Exit Building, which consists of a hotel, commercial facilities, and a hub aimed at providing medical care locally and attracting medical tourism; and CoCoLo Niigata, where the leasing of approximately 140 stores is progressing. Also, the retail business will further improve profitability by installing more Multi-Ecube lockers, which enable locker functions to be used as part of logistics networks, growing the revenues of JRE MALL, and implementing measures to further commercialize Hako-byun.

The promotion of MaaS is also important. By combining our railway network with local public transportation, we can significantly increase customer numbers in regions. The Group will accelerate MaaS initiatives to establish systems that optimally combine these transportation networks, thereby encouraging their use and helping enrich customers’ lifestyles. Aiming to heighten the experience value of not only transportation services but also various aspects of our customers’ lives, we will pursue alliances with municipal authorities and a range of businesses in the transportation and tourism fields and promote digital transformation.

Initiatives for the Establishment of Growth Foundations

ESG factors are fundamental to our business management. Based on our strengths of trust, employees, and networks, we will create value in relation to various social issues and help to build a sustainable society.

Society faces a variety of challenges, and we have to focus our efforts on addressing these social issues through our businesses. While our activities as a private company are premised on earning money, I think how we earn this money is the question. ESG factors are fundamental to the Group’s business management, and the Group must fulfill social responsibilities in ways that are consistent with the characteristics of each of its businesses. The purpose of the JR East Group will be augmented if it uses its strengths of trust, employees, and networks as advantages to lay the foundations for the creation of many different types of value that build a sustainable society by reflecting increasingly complex and sophisticated social issues.

Specifically, we will accelerate initiatives aimed at the realization of a decarbonized, circular economy, which is a global task for all humankind. Although railways enjoy environmental superiority as a means of transportation, their operation consumes large amounts of energy. With the need for environment-friendly mobility growing, we will actively work to make railways an even more preferred means of transportation. Announced in 2020, our Zero Carbon Challenge 2050 long-term environmental objectives are a 50% reduction in CO2 emissions by fiscal 2031, compared with their fiscal 2014 level, and net zero CO2 emissions by fiscal 2051. Further, in August 2023 we submitted a commitment letter with a view to acquiring Science Based Targets certification. Science Based Targets are emission reduction targets for greenhouse gases that companies set in line with the Paris Agreement goals. The source of the environmental superiority of railways is their extremely high energy efficiency per unit of transportation. Modal shifts to railways are particularly effective for urban and intercity transportation. Given that railways have the lowest CO2 emissions and energy consumption per unit of transportation, I believe that the environmental superiority of railways in such areas will remain unassailable, even if progress toward zero emissions is made in other modes of transportation.

On the social front, we will advance regional revitalization by strengthening ties with local communities and customers, engaging in collaborative community building, advancing regional and tourism-oriented MaaS, and pursuing co-creation with local startups. We will also strengthen business activities that are aimed at respecting human rights, conduct activities in accordance with the JR East Group Policy on Human Rights and the JR East Group Policy on Customer Harassment, and promote sustainable procurement. In particular, to enhance employee engagement, we will create a system for business management that integrates ideas from the senior management team with opinions and ambitious proposals received from employees. We will create a new relationship between the senior management team and employees in which each person can make significant contributions to our operations and have a sense of participation in business management. I believe that this approach to business management will enable us to meet the growth expectations of Group employees and build strong engagement. To continuously increase their corporate value while adapting to changes in the business environment, companies must build human resource portfolios that anticipate the evolution of business portfolios. In addition, it is important for human resource strategies to complement management strategies aimed at such goals as the construction of organizations and the development of personnel that generate innovation and added value. The JR East Group needs flexible human resource policies. We have to create a flexible personnel system that is capable of catering to employees’ diverse ambitions and that is suited to business management based on the two pillars of Mobility and Lifestyle Solutions. We will develop a training system that enables employees to play important roles in an array of business fields, including overseas fields.

I also want to promote initiatives aimed at invigorating communication between the senior management team and Group employees. I regularly visit our workplaces with a view to creating opportunities for direct conversations between executives and employees. For example, we hold Breakthrough Communication sessions in which head office executives talk with junior employees who are embarking on ambitious initiatives. In-house messages that I issue are always directed to all Group employees, and we establish new systems and training programs and implement health and productivity management with the entire Group in mind. The messages I issue to employees constantly emphasize that I am fully cognizant of the whole Group.

Corporate governance and internal control are very important elements of our efforts to grow as a Group. We will implement original internal control initiatives that, rather than simply stopping because there are risks, manage identified risks while enabling them to be optimally leveraged for the advancement of the Group’s development. The Company has established Corporate Governance Guidelines to ensure that it makes transparent, fair, firm, and timely decisions. We strive for genuine collaboration with our stakeholders, including customers, local communities, shareholders and other investors, business partners, and Group employees. In this way, we will endeavor to achieve sustained business growth and enhance our medium- to long-term corporate value.

In June 2023, JR East transitioned to a company with audit and supervisory committee corporate governance structure. Under this structure, the authority to make important decisions on operational execution has been transferred from the Board of Directors to the executive directors to expedite decision-making and operational execution. Also, by strengthening the supervisory function of the Board, we intend to further enhance governance and pursue defensive and offensive risk management that promotes the Group’s development.

We have been reforming jobs and our organization to adapt to dramatic changes in the business environment, heighten job satisfaction, and strengthen management operational efficiency. These reforms are based on a management policy of increasing the fields of work available to employees and thereby aligning their personal growth and job satisfaction with the Group’s growth. Day-to-day issues that become management problems occur in the operations closest to customers and local communities. The Company has undertaken reorganization to transfer roles and authority so that employees who are closest to customers can solve day-to-day issues in the course of their duties. We hope the reorganization will allow employees to demonstrate creativity in operations close to customers and further heighten employees’ motivation to take on the challenge of achieving personal growth and creating new value.

Management That Is “Good For All”

By achieving steady growth, we will offer all our stakeholders enriched, cheerful lives.

The JR East Group creates opportunities for constructive dialogue with its shareholders and other investors to further their understanding of its businesses. Our goal is to build long-term relationships of trust so that we sustain business growth over the medium to long term. In deepening communication with our various shareholders and investors both in Japan and overseas, we will always disclose information in a timely and appropriate manner and facilitate constructive dialogue with these stakeholders based on a good understanding of their expectations, requests, and criticisms. The Group has to grow profits by creating a better world through its business activities. We must then use the earned profits to provide customers, local communities, and shareholders and investors with returns. Moreover, we must not forget to further the happiness of all Group employees and their families. Of course, as a company, we need to grow. Accordingly, we will also use our profits to realize our next stage of growth. We call this management that is “good for all,” and we will conduct well-balanced business management that keeps both corporate growth and stakeholders firmly in mind. Furthermore, we have a strong desire to work together with our employees to create a highly aspirational corporate group that is able to help with the resolution of various social issues, such as environmental problems, regional revitalization, and population aging, by constantly considering how our business activities can benefit society. By achieving steady growth, we will offer all our stakeholders enriched, cheerful lives. As we begin a new chapter, I would like all stakeholders to understand our activities and view the future of the JR East Group with optimism.