February 18, 2009 Chairman Yano's regular press conference

(Moderator)

Then we will start a regular conference.

(Chairman)

Hello everyone.
There are some topics today as well. Now, let's start with an overview of the business for January.
Toll revenue in January was -10.5% year-on-year. The breakdown is minus 11.2% for highways and minus 2.5% for general pay. We judge that highways are being affected by the reduction in charges due to the "emergency comprehensive measures to realize peace of mind" that have been implemented since last fall, the increase in discounts due to the spread of ETC, and the recession. Sales of general charges also decreased for the same reason.
The number of traffic is almost flat, down 0.2% from the same month of the previous year. The breakdown is minus 0.8% for highways and plus 2.2% for general charges.
The discount amount of ETC this month is 15.9 billion yen, which is a 22.6% increase from the same month of the previous year. Compared to the toll revenue without ETC discount, the ETC discount rate is 27.6%.

The status of construction. The other day, Kisei Expressway opened between OmiyaOdai IC and KiseiOuchiyama IC. The average daily traffic volume for one week after opening is 5,500, which is considerably higher than the expected 2,800. I will explain later based on the materials.
Also, on the 20th of this week, the four lanes between Gifuyamato IC and Shirotori IC of Tokai-Hokuriku Expressway will be completed. The content was announced by Nagoya Regional Head Office the other day, but I will explain it later in the material.

It is a composition of each vehicle type that is announced every month in relation to the number of passing vehicles. The figures for national expressways are 107.4% for light vehicles and 100.8% for ordinary vehicles, which are higher than the same month last year for these two models. On the other hand, 92.2% of medium-sized vehicles, 89.8% of large-sized vehicles, 81.4% of oversized vehicles, and 99.2% of all national expressways in total, and it can be said that the trends are clearly divided by the difference in vehicle type. think.

Next, regarding the usage status of ETC, the daily average usage rate for the entire month increased from 73.6% in the same month of the previous year to 78.4%. In the last week, the utilization rate has been almost flat when comparing February 6th to 12th with January 9th to 15th. The cumulative number of on-board units installed has increased by about 300,000 compared to December last year, up 1.3% to about 22.59 million.

Regarding the status of SA, this month it is 93.9% compared to the previous year. This is because the GS division is down 35 points to 64.4% from the same month of the previous year, which is holding back overall, and the other divisions are 104.9%. Looking at the big part, the food and beverage department is 101.1%, and the product sales department is 107.6%.
The above is the current state of the business.

Next is the topic. There are 6 contents to be announced today.
First, I touched on the traffic conditions for a week after the opening of the Kisei Expressway. Today, at the same time, the Nagoya Regional Head Office and the Kise National Highway Office of the Chubu Regional Development Bureau announced. Everyone, I'm here, so it's a duplicate, but I'd like to talk about it. The average daily traffic volume of the newly opened section is 5,500, which is analyzed as a result of the conversion of traffic from National Route 42 to the Kisei Expressway. We will look at it in the longer term, but I think we can judge that this trend will continue in the future. The traffic volume on Route 42 and the traffic volume on and off the IC are the basis for such a decision.

Next is the opening of a new store in SA / PA. Fifteen new stores will open one after another within the year at 13 SAs and PAs. There are 10 convenience stores, 4 cafe shops, and 1 dessert shop, for a total of 15 stores. As a result, there will be 39 convenience stores, 20 cafes, and 9 dessert shops at the end of the fiscal year. Starbucks will make its debut with Meishin at Hokuriku Expressway, and a store called "Hummingbird Ice Cream" will be the first store to open at Expressway on the In-bound line at Taga SA. In addition, dog runs have been opened in 4 places so far, but this time we will open 2 new places, for a total of 6 places. In addition, we decided to introduce a "kids space" for the first time. Until now, there have been rest facilities where playground equipment such as slides have been installed individually, but we will open a kids' space for the first time, which is called a variety of equipment and compound playground equipment. I have posted a photo, so please have a look. The breakdown of the 15 newly opened stores is as described.

Next, we decided to renew our sales facilities at 5 SA locations. We aim to open it within 2010. In this renewal, the area will be converted into a commercial complex and transformed into a more attractive facility. In addition to improving openness and mobility, we will work to create facilities that are environmentally friendly so that we can welcome customers from neighboring areas.
As you can see in the material, I would like to work on the top and bottom of Ashigara SA, the top and bottom of Gozaisho SA, and the Out-bound of Taga SA while making the best use of the characteristics of each region.

Then, Hokuriku Expressway of Kitasabae PA and Onagatani PA will start the catalog sale of alcoholic beverages at. It contracts with a famous long-established brewery in Fukui prefecture and sells 10 types of sake. Dangozaka SA already sells wine, but you can order it at the store based on the panel photo, or you can order it by fax later by looking at the catalog, and you can buy the actual wine at PA. It is a style that you do not buy it, but send it to your home later. The list of sake we handle is as shown in the material, and this is the first sake initiative on the Expressway.

We will hold a ceremony of "Lover's Sanctuary" at Suizu PA on the Hokuriku Expressway. I talked about Hamanako SA at this place last month, but this Suizu PA also received the certification of "Lover's Sanctuary" and held a ceremony and event such as the unveiling ceremony of the certification commemorative plate on March 14th. I decided to do it on the day. Details are as described in the materials, but we will hold lottery and sell commemorative products. As you may know, this is a famous sunset view spot all over the country, and it is a very romantic place.

Next is the fast-paced spring menu. It will be on sale from March 7th. Up until now, we have announced new menus for each of the spring, summer, autumn, and winter seasons, but this time we will also be dressed up with 20 new menus. The breakdown is as shown on the back of the material. It has been three years since it first appeared in November 2006, and we have received the patronage of many people. However, as in the past, the number of items sold at stores is limited, so we accept reservations over the phone.

The above is what we are announcing today. The items after this have already been announced, but I would like to introduce them again and let everyone know.

From Gifuyamato IC of Tokai-Hokuriku Expressway to Shirotori IC, four lanes will be completed. As I mentioned a little earlier, it was announced by Nagoya Regional Head Office on February 4, and will open on February 20. Thanks to you, Tokai-Hokuriku Expressway went through all the way in July last year, and the traffic volume has increased, but I hope that this four-lane system will eliminate the congestion. The provisional two lanes between Shirotori IC are left between GujoHachiman IC and Gifuyamato IC, but we are aiming for completion by the end of fiscal 2009 and are proceeding with construction so that it can be opened as soon as possible. I'm here.
Please refer to the materials we announced on February 4th.

Next is the intensive work of Meishin and the refreshment work of Higashi-Meihan, which was also announced on February 12th from Regional Head Office in Nagoya. Although it is an annual construction, we would like to ask many drivers for their understanding and cooperate in various ways.
The Meishin Expressway is from May 11th to 23rd, and the Tomei Expressway is from May 25th to June 6th. We would like to make every effort to get the cooperation of everyone by repeating the notification, but there is a traffic jam at the end of the traffic jam, or there is a traffic jam on the national road or Expressway. We would be grateful if you could make a travel plan with plenty of space.
The materials announced on the 12th are also attached for reference.

Finally, we signed a memorandum of understanding with PLUS, a Malaysian company that builds and operates Expressway. This was also announced at the same time in Japan and Malaysia on the 12th when the signing was done, but I have attached the material again, so please refer to it. PLUS is Malaysia's largest Expressway operator and manages approximately 1,000km of routes. It is said that road construction in Malaysia has come to an end, but overseas, we are expanding into the Expressway business in India and Indonesia.
The memorandum of understanding was signed at the PLUS headquarters in the suburbs of Kuala Lumpur. Malaysian Ambassador Horie and the Malaysian Government attended the Vice-Minister of Public Works, Abdu Munitt. From our company, Managing Executive Officer Nakayama attended the signing and signed with President Tan Sri Sheriff PLUS.
Regarding what we will do in the future, we will send trainees to each other for about half a year, and I will start with that. About two trainees will come to Japan from the other party as early as April. We will dispatch one person, which I think will be around June. The trainees from the other party want to learn the technical capabilities of our company's Expressway operation and maintenance technology and ETC, especially ETC, which has advanced technology. We are expanding PLUS's overseas business and business outside Malaysia, so we are trying to study the knowledge and know-how around that. The training is scheduled for about half a year.
Please see the attached photos of the signing ceremony.

This is the end of the explanation at the beginning.

 

(Moderator)

Then, thank you if you have any questions.

(Reporter)

Regarding the renewal of the five service areas, how much is the total capital investment? Also, at what pace do you plan to proceed with the renewal in other areas?

(Chairman)

The total investment is 4.8 billion yen. I would like to continue working on other areas while keeping an eye on traffic conditions. In addition, I will explain when the plan is materialized.

(Reporter)

Are you thinking of doing this on other routes in connection with the sale of sake on the Expressway?

(Chairman)

Yes. It is necessary to consult with the local people in each region, and discussions are currently underway in various places. I'm thinking of going forward. Already in July of last year, we started selling local wines on the In-bound line of Chuo Expressway and Dangozaka SA, and sales have been stable. Fukui is the first in Hokuriku, but there are many local famous sakes in various places such as Ishikawa and Toyama. We also want to handle a wide range of local specialties, not just alcohol. We call it "individualization," and as one of them, we would like to continue to actively promote it. It may take some time because the license of the tenant who handles the sales is required and the cooperation of the local brewery is indispensable, but I expect that it will be more and more fruitful in the future.

(Reporter)

About the conclusion of a memorandum of understanding with Malaysia PLUS. It is said that this PLUS company is developing Expressway business in India and Indonesia, but are you thinking of expanding to these countries in the future?

(Chairman)

I can't identify where the country is, but I want to do it. I would like to do if there is something I can do with PLUS, but I haven't decided where it is yet. In the memorandum, we have decided to exchange trainees and exchange information for the time being, but we have also agreed to work together on the projects agreed upon by both parties, so if a specific project comes out in the future, I think.

(Reporter)

Please tell us about the business situation of the Expressway how the impact of the recession will come out in the future.

(Chairman)

Overall, I think the fact that gasoline prices have fallen and the number of price discount menus has increased is the basis, but the effects of the recession will not come out more and more in the future. We are looking at it. I think that is reflected in the fact that the traffic volume of large vehicles larger than medium-sized vehicles has decreased from the previous year. I think it is necessary to take measures and initiatives of the company on the premise that this situation will continue for a long time. As you know, what kind of impact the development of various new tariff measures will have will have a very positive impact on the increase in traffic volume. So it's kind of like a conflict. How long will the recession continue in the future? When I hear that GDP was -12.7% in the last third quarter, I think it's really becoming a big deal. So, first of all, we analyze that there is a clear impact on logistics, and if the employment problem progresses further in the future, it may have a considerable impact on consumption trends, that is, now. Light cars and ordinary cars are positive year-on-year, but I think there is a possibility that consumption behavior such as refraining from going out may have an impact. I would like to continue to make decisions on various measures while observing changes in the situation.

(Reporter)

It seems that the sales of gas stations have dropped considerably due to sales in the service area. What is the cause?

(Chairman)

First of all, the use of gas stations on Expressway is decreasing. I think there is one thing that there is a slight difference between the gasoline price on the Expressway the price in the city, and there is a tendency toward cheaper refueling in the city. Also, the sales of gas stations are the quantity multiplied by the unit price, but both the unit price and the quantity are declining, so I think that it is double affected. I wonder what this will happen in the future, but I think that this tendency will not change easily.

(Reporter)

Regarding the sale of sake, is it all right that it is literally the first time on the Expressway?

(Chairman)

Yes, this kind of catalog sales itself is our first business. It is also the first time to sell sake.

(Reporter)

Isn't it sold in stores?

(Chairman)

At Expressway SA / PA, you must not sell the actual item. It will not be sold in stores. Some customers said, "I can't buy it because I passed by," so I decided to take this method after thinking about it.

(Reporter)

Is this kind of sale possible with either SA or PA?

(Chairman)

Either is possible. However, there are conditions such as possession of tenant qualifications, so it is necessary to clear them. The goal is to clear the conditions and increase the number of locations handled in the future.

(Moderator)

If you have no other questions, this is the end of the 40th regular press conference. Thank you very much for your busy schedule today.

(Chairman)

Thank you very much.