Chuo Warehouse Co.,Ltd. Q2 FY2026 earnings call

• Overall Consolidated Performance

  • Consolidated operating revenue for the first half was 14.136 billion yen, a 1.6% increase year-over-year, supported by ongoing price rationalization and new business development, but constrained by existing customers' supply chain reviews.
  • Consolidated operating profit was 1.126 billion yen, a 6.7% decrease year-over-year, pressured by rising labor costs (starting salary increases and base pay hikes), higher depreciation from new truck purchases, and increased system outsourcing costs for core system renewal.
  • Interim net profit increased 35.5% year-over-year due to the absence of the prior-year period's investment securities valuation loss and affiliated company share sale loss.
  • Capital expenditures in the first half totaled 1.5 billion yen, with an additional 1.2 billion yen planned for the second half, bringing full-year capital expenditure to 2.7 billion yen, as part of a 120 billion yen planned investment over the mid-term management plan period. Key projects include a new warehouse in Ama City, Aichi Prefecture (completion scheduled for January 2027, targeting automotive and machine tool parts and export business), 6 new dump-up tractors for resin transport at subsidiary Nakura Rikuun Un, and the completed COJICCO retail facility in Kyoto with 3 of 5 tenant spaces occupied.

• 8th Mid-Term Management Plan (NEXT CS-100) Growth Strategies

  1. Build new revenue models through constant challenge in growth areas: Focus on expanding import chemical handling, PET resin recycling logistics in partnership with Toyotsu PET Recycling Systems, and growing volume of electric/electronic materials and automotive parts (to be supported by the new Ama City warehouse).
  2. Expand domestic and international logistics networks: Grow via alliances with other firms (as solo geographic expansion is difficult), leverage the new Ama City warehouse for sales growth, and expand cross-border trade (non-Japan routed trade, e.g. China-India, India-Thailand) centered on Southeast Asia, which has delivered unexpected growth amid US trade policy changes.
  3. Improve profitability via high service quality and value creation: Prioritize securing specialist talent and reducing turnover to address persistent industry labor shortages, and continue investment in human capital.
  4. Improve production efficiency via information system strengthening: Invest in infrastructure to migrate from outdated closed systems to open systems, and build new systems for the transportation division to replace manual/people-dependent order taking and dispatching, to address labor shortages.
  5. Maintain healthy financial structure and implement capital efficient financial strategy: Continue share buybacks and reduce policy-held shares. The company targets 5% ROE to improve PBR toward the 1.0x goal, and plans a 1 billion yen share buyback for the current year (same as prior year).
  6. Strengthen sustainability initiatives: Implement TCFD-aligned disclosures with annual targets, and continue initiatives to improve workplace quality including -on-1 meetings, engagement surveys, and expanded benefits.

• Recent Operational Highlights

  • The COJICCO new retail real estate leasing facility opened in November 2025, with revenue recognized starting this fiscal year.
  • The company signed its first sustainability-linked evaluation loan with Shiga Bank, which evaluated its sustainability initiatives based on its TCFD disclosure KPIs.
  • The company has strengthened talent recruitment, successfully hiring several system specialist mid-career hires, and continues to focus on turnover reduction. It also sponsors local professional sports teams for community engagement.

1. Domestic Logistics Business: This is the company's largest segment. It achieved operating revenue of 11.352 billion yen, a 0.7% increase year-over-year, driven by price revisions, new business additions, and deeper penetration of existing business. Operating profit decreased 4.1% year-over-year due to rising labor and fuel costs. This segment accounts for approximately 80.3% of total consolidated operating revenue.
2. International Cargo Business: It achieved operating revenue that increased 5.8% year-over-year, with operating profit increasing 3.6% year-over-year to an 80 million yen increase year-over-year. Growth was driven by expanded handling of resin and precision machinery import and export, especially a 16.4% increase in export volume (led by precision machinery to Europe and the US) and rising virgin PET resin imports. Rising wages, raw material and packaging costs limited profit growth. This segment accounts for approximately 14.5% of total consolidated operating revenue.
3. Real Estate Leasing Business: The new small-scale segment has stable high-profit margin revenue, with only a slight year-over-year decrease in revenue, and accounts for approximately 5.2% of total consolidated operating revenue. It leases former warehouse sites to third-party operators, including the Kyoto Umekoji hotel and new retail facility COJICCO.

• Dividend guidance: The company maintains its progressive dividend policy (maintain or increase prior year dividend based on performance and financial health). The interim dividend is set to 16 yen per share (1 yen increase year-over-year, in line with prior guidance), full-year dividend is guided to 38 yen per share (2 yen increase year-over-year), consisting of 16 yen interim and 22 yen year-end dividend (1 yen increase year-over-year for year-end).
• Capital expenditure guidance: 1.5 billion yen spent in H1, 1.2 billion yen planned for H2, with a total of 120 billion yen planned for the entire mid-term management plan period.
• Share buyback guidance: A 10 billion yen share buyback is planned for the period November 2025 to October 2026, unchanged from the prior year program, as part of ROE improvement efforts.
• Strategic growth guidance: Management expects continued growth in chemical imports, recycling logistics (especially automotive and home appliance recycling), and cross-border trade in Southeast Asia over the mid-term period, with the new Ama City warehouse supporting growth in automotive and industrial parts logistics starting from 2027.

• Macroeconomic risks: Sustained price increases (led by food prices) have suppressed personal consumption, which has driven stagnant growth across the logistics industry. US tariff policy and ongoing geopolitical risks (e.g. the Ukraine conflict) have created direct and indirect headwinds for the business. Stagnant economic growth in China also negatively impacts trade volumes.
• Industry cost pressures: Rising fuel and labor costs (driven by wage increases to address labor shortages) continue to pressure operating margins across all business segments.
• Labor shortage risk: Long-term demographic decline has led to a shrinking working-age population, creating persistent, growing labor shortage pressure across the logistics industry that requires ongoing investment in automation and systemization to offset.
• Operational imbalance risk: Industry-wide, warehousing volume has an unbalanced trend of rising inbound volume and stagnant outbound volume, which creates a challenging operating environment for warehouse businesses due to the disrupted flow of goods turnover.

Q: Under the NEXT CS-100 mid-term plan, which business areas is Chuo Warehouse currently prioritizing, and which areas show the most promising early results?

A: Management prioritizes chemical logistics first. Many large Japanese chemical manufacturers have halted domestic production and shifted to imports, so Chuo Warehouse is capturing growing demand for import customs clearance and domestic chemical logistics. Management also prioritizes recycling logistics, particularly PET resin recycling, where it handles all logistics for Toyotsu PET Recycling Systems, covering both raw material handling and end-of-life product recycling.

A: The fastest growing current opportunity is automotive recycling. The company leverages its existing PET recycling logistics expertise to handle waste collection and transportation for automotive and home appliance recycling, both of which require specialized equipment and knowhow that not all logistics providers have. The company is pursuing growth in both physical and chemical recycling, and expects strong growth in this segment over the mid-term plan period.

A: In addition, amid widespread industry labor shortages, the company is expanding its business of supporting customer manufacturers' internal logistics efficiency improvements. The company has already delivered successful efficiency gains for several clients, and management sees significant room to expand this line of business moving forward.