Financial and Investment Strategies

We manage the Group’s businesses based on the two pillars of Mobility and Lifestyle Solutions. Under “To the Next Stage” 2034, we have established KPIs for each of these, to accelerate our dual-axis management. Let me explain the direction of our specific initiatives aimed at improving profitability to achieve the KPIs for each axis. I would also like to talk about the new measures we have introduced to realize a return on our investments that exceeds inflation and rising interest rates.
Regarding Mobility, under the Medium- to Long-Term Growth Strategy for Mobility Business “PRIDE & INTEGRITY” announced in September 2025, we will enhance the level of safe and stable transportation while also increasing capacity through measures such as train timetable adjustments and new vehicle production and stimulating demand through the creation of new destinations. In this way, we aim to generate customer flow, including inbound tourism, and ultimately increase the number of people interacting with local communities. Meanwhile, the revision of passenger fares, which we requested to ensure the sustainable operation of the railway business, was approved in August 2025. In addition to making preparations for the fare revisions that come into effect in March 2026, we will continue to request more measures from the Japanese government. This includes the implementation of a simpler and more flexible fare-setting system, such as the ability to adjust Shinkansen free seating express fares by notification and the introduction of a mechanism to enable timely fare adjustments based on inflation, as well as a review of the total cost method itself. In addition, we will review our pricing system, including for high-value-added trains, and further promote pricing strategies that can be implemented through notification. Hitherto, we have positioned Mobility as a sustainable business that provides stability as well as growth. Based on safe and stable transportation, we have aimed for sustainable business operations within the scope of cash flow. Going forward, we will target discontinuous growth in Mobility, too. To achieve this, we have established a mechanism that allows us to invest the necessary cash while controlling the balance between medium-term earning power and interest-bearing debt. We will also review our investment criteria and control the level of investment over the medium to long term, rather than on an annual basis. In addition to enhancing the flexibility and efficiency of our investments to increase earning power, we will push ahead with structural reforms aimed at pursuing sustainable mobility, and achieve our KPIs.
In Lifestyle Solutions, we will pursue our Medium- to Long-term Business Growth Strategy, Beyond the Border, announced in June 2024. Specifically, we will set prices and rents based on our strengths, such as location and customer needs, while generating added value in collaboration with Mobility. Regarding our real estate development projects, we will promote the expansion of the business based on our area strategy (stronger acquisition and development of Company-owned land and urban real estate) and accelerate the real estate rotation business. At the same time, we will take inflation and rising construction costs into account when assessing profitability. In the Real Estate & Hotels segment, while focusing on speed and actively utilizing interest-bearing debt in the short term, we will control the balance between earning power and interest-bearing debt in the medium to Long-term, taking industry standards into account. In the real estate rotation business, we will make flexible investment decisions based not only on the profitability of each property but also on the overall ROA of the real estate business. We will speed up property acquisitions to accelerate business growth. Through Suica Renaissance, Suica will evolve from a mobility and payment device to a lifestyle device. We will position it as a business platform that connects the Group’s various businesses. By using Suica as a hub to create synergies among our businesses, we aim to achieve an increase of approximately 20 billion yen in operating income from FY2025.3 through FY 2032.3. We will do this by expanding customer touchpoints and enhancing loyalty, as well as through the growth of the advertising business, utilizing data from Suica and other sources. We will flexibly and swiftly make investment decisions led by Lifestyle Solutions to enhance our earning power, while being mindful of industry standards and yields, and achieve our KPIs. In addition to growth in each of the dual axes of Mobility and Lifestyle Solutions, we will promote integration and collaboration to realize a conglomerate premium by generating new added value through synergies. At TAKANAWA GATEWAY CITY, the development of the railway network has made it possible to achieve community development by reorganizing rail yards and other assets. This city serves as an “experimental site to create enriching lives for the next 100 years,” where we are working together with our co-creation partners to address global challenges. Through the Group’s community development initiatives, we aim not only to create economic value but also to address the social issues faced by communities, incorporating diverse perspectives and a Long-term timeline. By combining the value of these soft aspects with the hard value of our strengths in railway network enhancement and the integrated development of stations and communities, we aim to create unique added value through the proactive promotion of transit-oriented development (J-TOD*), leveraging the Group’s railway network. We will connect our resources through J-TOD and other initiatives for integration and collaboration between our dual business axes. Through this unique power of the JR East Group to generate synergies, we will achieve profit growth.
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• *JR East Transit-Oriented Development, railway network-based town development leveraging the strengths of the JR East Group

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Since FY2025.3, we have categorized the wide range of businesses in the Group’s four business segments into 14 businesses. Under this structure, we are striving to maximize cash flows, supported by further growth. I would like to look back over our three initial objectives in terms of the Group’s achievements and challenges.
The first objective was to formulate and implement medium- and long-term strategies from a consolidated perspective. With the introduction of business units, JR East divisions and Group companies that belong to the same type of business were able to join in vigorous discussions concerning medium- and long-term strategies. By regularly holding hearings with the heads of each business, led by the President, we are stepping up discussions on our approach to medium- to long-term strategies and our target levels. For example, we have been able to accelerate the formulation and execution of growth strategies such as the Suica Renaissance.
Our second objective was to achieve sustainable growth. By setting numerical targets focusing on medium-term cash flow, establishing KPIs for each individual business, and allocating the necessary management resources, we have clarified the direction of each business. The cycle of strategy formulation → target setting → execution → evaluation is beginning to operate autonomously in each business.
Our third objective was to advance a portfolio strategy. Here, we still face challenges. While we have been able to ascertain the strengths and weaknesses of each business, we are still working on the comparison of numeric data and the visualization of differences between each business and its competitors. By enabling the swift visualization of information necessary for management decision- making, we will be able to utilize this information to enhance the strategies of each business. For example, in priority fields and fields that should be strengthened, we will make decisions on external collaboration and the use of M&A deals. In fields where discussion on our approach to business is required, we will consider radical measures including withdrawal, while assessing profitability, and take concrete action. In addition, we will optimize the Group’s business classifications and pursue the optimal capital relationships based on the management environment, realizing an optimal business portfolio that maximizes the Group’s synergies.

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The Group’s employees stand at the forefront of integration and collaboration, and each of them will play a leading role in realizing the LX targeted under “To the Next Stage” 2034. To ensure that all of our employees—the drivers of the Group’s growth engine—engage in their daily duties with an awareness of their participation in business management, we will upgrade three systems.
The first system is the ROA(R) System. The “(R)” stands for railway, and “ROA(R)” refers to the ROA of the railway business, which has a particularly large volume of assets. By improving ROA in the railway business, calculated using the fixed assets of the railway business as the denominator and EBITDA as the numerator, we will maximize cash flow by effectively utilizing fixed assets. We have established this system so that an EBITDA KPI showing the cash to be generated is set for each headquarters and branch office. Under the system, these targets can be achieved by increasing revenues, reducing costs, and enhancing asset efficiency. In this way, we continuously generate cash flow at each workplace. Since the introduction of this mechanism in FY 2025.3, various initiatives are underway to effectively utilize owned assets to increase EBITDA, such as the renting of train station buildings to local governments to become tourism hubs and converting the employee parking lots in front of stations into customer parking lots. In this way, management participation by individual Group employees is progressing through the consideration of effective ways to utilize familiar assets. On the other hand, we still face significant issues in reducing the large volume of fixed assets we hold in the railway business. We will identify the assets that can be reduced, establish an order of priority, and steadily work to reduce them. Going forward, we will continue to deepen our efforts in ROA(R) and promote horizontal expansion between workplaces, accelerating improvements in profitability and asset efficiency.

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The second system is referred to as the Area Management System. Starting in FY2025.3, all headquarters and branch offices implemented initiatives for visualizing area revenues and costs and visualizing the numerical results of measures in areas that encompass and unite workplaces. By making the results visible to our employees, we encourage each of them to take action with a consciousness of business management. For example, each workplace is developing and assessing promotional measures based on data analysis for the Let’s Travel on Weekdays! Early Booking Discount Pass, which we launched in 2024. We succeeded in maximizing sales by swiftly and continuously improving the touchpoints with our customers, while analyzing the cost- effectiveness of various measures tailored to local characteristics, such as advertising, free papers published by local governments, and sampling. Our individual employees participated in business management, perceiving it as their own responsibility to heighten the value of their own areas. This is a significant achievement.
The third system is the Group-wide enhancement of working environments. We will collect requests for working environment enhancements from our Group companies and partner companies, determine the order of priority, and implement approximately 100 improvements by FY 2027.3. We will create a new sense of engagement between employees and the Group, further enhancing job satisfaction and the employee-friendliness of working conditions, while also promoting a continuous cycle of sustainable growth for both employees and the Group.
By encouraging autonomous and decentralized management participation by each employee and implementing bottom-up initiatives, as outlined in “To the Next Stage” 2034, we will effectively utilize our assets to maximize cash flow and improve our ROA, aiming to achieve an ROE of 10% or more by FY 2032.3.

Shareholders and investors are important stakeholders for the JR East Group. We update our action to implement management that is conscious of the cost of capital and stock price each half-year. The Company’s price-to-book ratio (PBR), which indicates the stock market’s evaluation, is the product of return on equity (ROE), in other words the rate of return, multiplied by the price-earnings ratio (PER), which reflects anticipated growth. Therefore, we will increase PBR by both raising the rate of return and improving growth expectations.
We have made ROE our KGI under “To the Next Stage” 2034, to clearly convey the Group’s growth story to a wide range of stakeholders, including the capital markets. By improving the profitability of each of the dual axes and effectively utilizing assets as I have explained so far, we aim to raise ROA to 3% or more in Mobility and 7% or more in Living Solutions, achieving an overall ROA of at least 5%. In this way, we aim to attain an ROE of 10% or more. At the same time, we aim to reduce the cost of equity and enhance the expected growth rate to improve the PER. We recognize that the cost of equity is around 6% to 7%, given the level of the market’s expected return that we have gauged through Shareholders and investors are important stakeholders for the JR East Group. We update our action to implement management that is conscious of the cost of capital and stock price each half-year. The Company’s price-to-book ratio (PBR), which indicates the stock market’s evaluation, is the product of return on equity (ROE), in other words the rate of return, multiplied by the price-earnings ratio (PER), which reflects anticipated growth. Therefore, we will increase PBR by both raising the rate of return and improving growth expectations. We have made ROE our KGI under “To the Next Stage” 2034, to clearly convey the Group’s growth story to a wide range of stakeholders, including the capital markets. By improving the profitability of each of the dual axes and effectively utilizing assets as I have explained so far, we aim to raise ROA to 3% or more in Mobility and 7% or more in Living Solutions, achieving an overall ROA of at least 5%. In this way, we aim to attain an ROE of 10% or more.
At the same time, we aim to reduce the cost of equity and enhance the expected growth rate to improve the PER. We recognize that the cost of equity is around 6% to 7%, given the level of the market’s expected return that we have gauged through dialogue with shareholders and investors. We will reduce the cost of equity and expand the equity spread through active dialogue between the Company’s senior management, shareholders and investors, as well as by clarifying the Group’s growth story through the establishment of our KGI and the KPIs for each business axis. We will also enhance the communication of our growth strategies in each business through initiatives such as increasing the frequency of our Investor Relations Days (IR Days) to twice each year and aim to improve the expected growth rate.
The Group’s strength lies in each of our employees, who diligently and sincerely performs their daily tasks while playing a leading role in LX. Our ideal management is one in which each of our employees “ beyond the norm” to create new value with a sense of determination to shape the JR East Group over the next 10 years. Going forward, we will continue to seek deeper dialogue with shareholders and investors, pursuing the enhancement of Group-wide corporate value to exceed their expectations.

• (Note)The fare revisions to be implemented starting March 2026 are reflected in the numerical targets of “To the Next Stage” 2034.