Issues to Address

Our top management priority and the unchanging mission as a Group is to pursue “Ultimate Safety” and to continually improve our safety levels. 
During the fiscal year ended March 31, 2025, we caused great inconvenience and anxiety to our customers and stakeholders due to improper handling of press-fitting figures in wheel axle assembly work in addition to two incidents of release of the coupling in which the Tohoku Shinkansen came to a stop while the Shinkansen train was running. 
In the event where the Tohoku Shinkansen came to a stop while the coupling part was detached, an emergency comprehensive inspection was carried out on all the vehicles involved. As an immediate measure, a device that mechanically secures the coupler was installed to ensure safety so that the coupler would not split even in the event of any electrical malfunction, and coupled operations have been resumed. In the future, as a permanent measure, we will review the mechanism so that the circuit that releases the coupler will not operate while the train is in motion.
 As an improvement measure on the wheel axle, we replaced the wheel axles the press-fitting of which was lower than the specified figure, reviewed the internal regulations, and standardized the operation with the understanding of the actual status of the regular inspection of rolling stock. At Group companies, we established internal regulations, improved our educational system, prevented rewriting of work records, and inspected and reviewed our safety management system. In addition, we will provide compliance education to all Group employees, and utilize the results of the compliance awareness survey for all Group employees in quality control. At the same time, the planning division, which supports frontline operations, monitors improvement measures, checks whether rules and 2 mechanisms are functioning properly, and makes revisions as necessary. Through audits by the internal audit division, we will check the status of control of operations at front-line and planning division. Furthermore, we do not view this incident narrowly as an incident that only affects our transportation services, but rather as a quality control issue for the entire Group’s services provided to customers, as well as a lesson for governance. 
In order to gain greater trust from our customers and local communities, which is the foundation of all of our operations, each and every employee will sincerely consider “Ultimate Safety” seriously and continue to take concrete actions.

As the environment surrounding the Group changes dramatically, we view changes as opportunities. We will further accelerate structural reforms we have promoted under “Move Up” 2027 to extract the potential of the Group to the maximum extent. 
We will strive to maximize consolidated cash flow by increasing the value of our products and services with the market-in approach as well as a sense of speed and conceptual power. We will develop new products and services that respond to changing demand for transportation and lifestyles. Our Group’s strength lies in its ability to combine real and digital customer contact points to provide a variety of products and services to a large number of customers. 
In addition to promoting the creation of destinations for customers’ travel, we will utilize Suica-centered data and digital contact with customers to provide services tailored to the needs of each and every customer. In December 2024, we announced “Going beyond the Common Notion for Suica: Suica Renaissance.” Within the next decade, we will gradually upgrade Suica functions, transcending the conventional principle of “mobility and payment devices” and have them reborn as “lifestyle devices” that can be used not only for transportation and payment, but also in the various lifestyles of local customers.
In March 2025, we welcomed the opening of “TAKANAWA GATEWAY CITY.” The integration and collaboration of Mobility and Lifestyle solutions has created a town that addresses social issues for a better future, and it is regarded as an experimental site to create enriching lives for the next 100 years. We will continue to promote urban development by making effective use of assets of the Group and accelerate our aggressive strategy through a revolving real estate business. For urban development centered on stations in the Shinagawa area, we aim to achieve a revenue scale of 100 billion yen.

Our group, as well as domestic railway operators, is facing the challenge of a decreasing productive age population. In order to address this issue, we will promote comprehensive collaboration with other companies in the field of railway maintenance and the commonality of rolling stock equipment and parts, and work to further improve the level of safe and stable transportation and sustainable operations.
In June 2024, we formulated a new business growth strategy, “Beyond the Border.” This will dramatically expand the business sphere of the Group, helping “our customers and people in communities to realize enriched lives.”
In addition, in order to respond to the social role required of railways and the diversifying needs of customers, and to continue to operate the railway business sustainably, 3 we submitted an application for approval to revise the upper limit of rail passenger fares in December 2024. We will continue to make requests to the government to realize a simple and flexible system of freight rates.
At the same time, for local lines, we will advance discussions with local municipalities, etc. in areas alongside the railway lines to establish sustainable transportation systems. In May 2024, regarding the Tsugaru Line (between Kanita and Minmaya), the Company reached an agreement on a shift to automotive transportation with local municipalities along the line, and coordination with relevant parties is underway for the operation of new regional transportation. In response to a report compiled by the “Study Council of Regional Transportation along the JR Kururi Line (between Kururi and Kazusa-kameyama)” in October 2024, we announced the following November that we believe it is necessary to switch to a new transportation system centered on buses and other facilities.
Moreover, the Company continues to reform its organization with the aim of flexibly responding to the rapidly changing business environment and enhancing management structure through the improvement of each employee’s motivation for work and the improvement of productivity. In addition to helping resolve social issues in line with local conditions, creating excitement, pursuing “Ultimate Safety,” and improving service quality speedily, we aim to create a virtuous cycle of growth for our employees and the Group by enhancing job satisfaction and ease of work by expanding the fields in which employees can play an active role.

The Group will clarify strategies such as those related to human resources, digital transformation (DX) and intellectual property, and finance and investment that form the foundation of our efforts, and work as one towards the realization of “Move Up” 2027.
With regard to our human resources strategy, we will enhance the fields in which diverse human resources can create diverse values from the perspectives of diversity, innovation, and flexibility. We will advance business reform based on flexible ideas that are not constrained by conventional work styles, and create an environment in which employees can take on challenges beyond their borders.
With regard to DX and intellectual property strategies, we will actively incorporate the latest trends in digital technology, develop technologies that utilize internal and external technologies and knowledge through open innovation, and promote DX to create businesses and reform work systems.
With regard to financial and investment strategies, we will promote the formulation and implementation of strategies for each business in order to maximize consolidated cash flow and group value. In addition, we will introduce the concept of cash allocation and interest-bearing debt that are appropriate for business management based on the two pillars of Mobility and Lifestyle solutions, and diversify our financing to accelerate growth and maintain creditworthiness.

By working to resolve social issues through our business activities, we aim to raise corporate value and help “our customers and people in communities to realize enriched lives.”
With respect to the environment, the Group will continue to strive for the achievement of “net zero” CO₂ emissions by fiscal 2051, which is listed in the long-term 4 environmental target “Zero Carbon Challenge 2050” announced in fiscal 2021, in order to provide a new value with the aim of realizing a sustainable society. We will also contribute to the reduction of greenhouse gas emissions throughout the entire supply chain of the Group’s business. In addition, we will proceed with demonstration tests of the hydrogen hybrid train “HYBARI” with the aim of starting commercial operation in fiscal 2031.
With respect to society, with the aim of regional revitalization, the Group will promote a range of initiatives, including town development centered around regional core stations, and promote sixth-sector industrialization, i.e., diversification by primary producers to stimulate local economies. We will also work to develop employees with knowledge, skills, and mindsets to realize an inclusive society. At the same time, we will foster “barrier-free attitudes” with our customers and local residents through support for parasports and other activities. 
With respect to corporate governance, we have adopted a Company with Audit and Supervisory Committee for its organizational design, working to accelerate decision-making and business execution and to strengthen the monitoring function of the Board of Directors. Going forward, we will strive for higher corporate value by further enhancing corporate governance.