Japan Post Postal Business Hit By Macroeconomic Headwinds

By Ti Insight

In the financial year ending March 31, 2024, Japan Post’s postal operator business Japan Post Co achieved a 0.01% margin on revenues that grew 2.2% y-o-y to JP¥3,357bn (USD $22.7bn). Parent company Japan Post Holdings saw a 1.6% growth in net ordinary income to ¥668bn and a 7.6% growth in revenues to ¥11.98tn, with much of its income from the financial sides of its business. 

Postal and Domestic Logistics business

•   Revenue ¥1,966bn

•   Net income ¥68.6bn

The sub-segment of Japan Post Co had volume declines of 6.0% y-o-y in mail, and Yu-Mail saw a decline of 7.7% y-o-y. Its small parcel service, Yu-Pack saw a 3.0% increase in volumes that didn’t offset the volume declines in mail. According to the company, a substantial fall in New Year postcards and an increase in personnel expenses as well as expenses associated with collection, transport and delivery impacted the bottom line. Offsetting these issues were collaborations with online marketplace Rakuten and a number of independent parcel carriers in Japan, including Yamato Transport for which it delivers Mail-Bin parcels. Japan Post acting as a line-haul parcel operator has improved the efficiency of all carriers involved and reduces overall costs associated with otherwise part-loaded long distance trucks.

International Logistics

•   Revenue ¥448.8bn

•   EBIT ¥9.5bn

The restructure of Australia based, wholly owned Toll Holdings is well underway, though as its focus is being moved to growth markets in Asia, it has also faced macroeconomic headwinds. These include the global slowdown in air and ocean freight forwarding that both hit revenues and profits, in part because falling expenses associated with lower volumes failed to outstrip the fall in revenues.

Post Office

•   Revenue ¥1,112.9bn

•   Net income ¥72.9bn

The Post Office business is more closely related to Japan Post Bank and the life insurance business than the postal operator side and is more of a financial institution than a postal operating business. Consequently it was hit by lower commissions from the Japan Post financial businesses but these were more than offset by a bumper year for its real estate business. The real estate business fed a 48% growth in net operating income.

As with many postal operators, Japan Post Holdings has diversified away from being a postal operator, and where some have gone big on parcels or being an interface with government, Japan Post has become more of a financial institution. Its postal operator and global logistics businesses make up for a smaller proportion of its revenues and profits as a result. Much of this is exposed to the domestic and international macroeconomic factors that have beset much of the industry worldwide. Where for Japan Post, growth stems mostly from its financial activities, it is less exposed as an institution as a whole to those issues than other postal operators.