NEXCO CENTRAL (Central Nippon Expressway Company Limited)




October 18, 2006 Chairman Yano's regular press conference

Conference Summary

(Chairman)

Chairman

Hello everyone. Today, I would like to report on the status of each month's business and also talk about three topics.

First is an overview of the business. According to the materials you have.
Toll revenue in September was minus 5.4% compared with the same month the year before, looking at the breakdown, expressways were minus 6.1%, and general toll roads were plus 2.1%. There is one reason that high-speed discounts and ETC have become popular for highways, and I think that the last-minute demand at the Expo last year reached its peak at this time, and I think that the impact is coming out. For general toll roads, the network effect appears. It's the same situation we talk about every month. On the other hand, the total number of traffic is minus 1.0%. However, high speed is plus 1.2%. I think that the triggering effect of time zone discounts due to the spread of ETC is also one of the factors contributing to the increase, but on the other hand, I think it is sluggish due to the impact of the last-minute demand at the Aichi Expo, which I mentioned earlier. The Aichi Expo effect will end in September, so I would like to look at the transition from next month and pay attention to what it will be like. The percentage of general toll roads is minus 9.2%, but this is as reported every month and is due to the free use of Toyokawa Bridge.
The status of construction. Chubu-OdanExpwy Masuho-Southern Alps will open on December 16th.
The average contract win rate for major works was 78.74% in September, and the cumulative total for the year was 83.17%.
Regarding the ETC situation, comparing October 6th to 12th with the last month's 8th to 14th, the average daily use number is 2.8% and the utilization rate is minus 1.9%. The total number of vehicle-mounted devices installed at the end of September was 12.52 million, a 2.8% increase from the end of August, or 340,000. Although it is 63.6%, it is 68.1% on weekdays and 56.6% on holidays, and the phenomenon of low holidays remains unchanged. There are 3 days off during this period, which is slightly lower overall.
Regarding the service area, sales were 100.6% compared to the previous year, and the cumulative total for the year was 4.8%. Regarding September only, all of the food, drink, merchandise sales, and service departments accounted for about 97%, but I think the gas station department is a phenomenon only in August, but it is pushing up the whole by 110.1%. It is in the situation. This is the business overview.

Next, I would like to talk about the topics.
There are three points, the first being the establishment of a toll collection subsidiary. The second point is that we have reached a basic agreement with Lawson and Circle K Sunkus to open a convenience store. The third point is "Sokuyado".
The first step is to establish a subsidiary for toll collection operations, and we have decided to establish two specialized subsidiaries on October 30th that will be wholly owned by our company. This subsidiary will gradually take over business from the companies to which we currently outsource toll collection operations. There are 227 toll plazas within the jurisdiction, but collection operations will be carried out at 220 toll plazas, which have a high network effect. We plan to complete the transfer of business to the companies with which we have concluded negotiations, and we aim to start operations by the end of fiscal 2019, but we would like to start operations as early as fiscal 2018, and if possible, early in fiscal 2019. I think.
Needless to say, toll collection business is the core of Expressway business, so by making it a subsidiary in this way, we would like to proceed with group management as a company subject to consolidated management. Masu. We believe that this will allow us to improve the quality of our services and reduce costs.
In addition, we plan to gradually group other maintenance operations such as traffic management and maintenance inspections.
Document 1 is a summary of the subsidiary to be established, and Nagoya is Central Nippon Extoll Nagoya Company Limited And the one in Yokohama is Central Nippon Extoll Yokohama Company Limited We are considering companies with a capital of 50 million yen each.
Also, in Document 2, there is a list of toll collection companies and their current contract amounts. Of these, "AVIC" listed at the top and "Japan Sogo Service" listed at the top are out of 227 toll plazas. I mentioned that the 220 toll plazas were targeted, but Avic is the company that is in charge of the 7 toll plazas that are not covered, and is in charge of the 1 toll plaza Abotoge Road. Furthermore, ``Japan Sogo Service'' is in charge of Seisho By-Pass 3 Toll Gate and Shin-Shonan By-Pass 3 Toll Gate. For the time being, we will exclude these seven tollgates, but we are thinking of moving and relocating the operations one after another, taking into account network effects and other factors. Regarding other things, ``Highwel'' is a subsidiary in Western Japan, and they also handle our business. "Higashi Nippon Road Service" and "Fuji Tomei" are subsidiaries of Higashi Nippon. Although their dependence on us is low, we are asking them to do some work for us. The top five companies from Mie Highway Service are in the Nagoya area, and the bottom four are in the Yokohama area. This is an explanation of the establishment of a toll collection subsidiary.
Next, we are planning to open convenience stores in earnest at Expressway SAs and PAs, and since we have reached an agreement with Lawson and Circle K Sunkus, we have decided to open eight locations initially. became.
Our plan is to open 10 locations each year and 50 locations (expansion) over the next five years, of which 8 locations have been decided. This means eight of the 20 locations planned by next year. The actual start of operations is scheduled for spring or summer next year. We are currently working with other convenience chains to reach an agreement on the remaining locations where we plan to introduce the system, and we would like to have an opportunity to explain it to you once it has been decided. The breakdown of the eight locations is 6 locations for Lawson and 2 locations for Circle K Sunkus, as stated at the bottom of the document.
Next, the third topic is how to shake off your mobile phone! By doing this, you could make same-day accommodation reservations, so we reached an agreement with Kinki Nippon Tourist and decided to do a joint project called ``Sokuyado.''
The ``soku'' in ``Sokuyado'' means ``soku'' (Expressway), and ``soku'' (soku) means instant decision because it is now possible to make same-day reservations, and reservations can be made using a mobile phone.
We would like to implement this immediately and provide it for the convenience of Expressway users. As a temporary project, today we will be announcing the Ise-Shima area. Among the materials we have distributed is a color catalog, which we began distributing in major service areas in the Tokai region last Friday, October 13th. I will not be able to explain this to you until after the fact, but since the autumn tourist season has already begun, I would like you to understand that I will be distributing it as soon as it is completed. Masu.
That's all my explanation.

 

(Moderator)

I would like to ask any questions.

 

(Reporter)

I would like to ask you about the establishment of a toll collection business. How many companies are currently collecting tolls as subsidiaries or consolidated companies? Also, I would like to ask what will happen to the companies that are currently in the collection business after establishing the two new companies.

 

(Chairman)

Currently, there are no consolidated companies. In the administrative cost statement, we have been consolidating so-called family companies as trial calculation values, so we intend to release the material in the future, but as a target of consolidation based on the Securities and Exchange Law and Company Law, So far, no company has entered. This time, we will make the two companies wholly owned subsidiaries, so if we do so, it means that for the first time the business of a family company will have a consolidated company. These 9 companies are independent companies, so it will be up to each company to decide the future, but what kind of judgment will be made as it is not a company specializing only in toll collection? I think that I will leave it to you.

 

(Reporter)

Are all 9 family companies?

 

(Chairman)

Six of these are family companies.

 

(Reporter)

Where is it?

 

(Chairman)

Chunichi Highway Service, Central Japan Road Service, Hokuriku Highway Toll Service, Mie Highway Service, Weiza, and Japan Torex. Also, there are 3 similar companies, but these are subsidiaries of 2 East and 1 West companies and are not covered by us.

 

(Reporter)

From the former Japan Highway Public Corporation, the heavens Out-bound due, it is that company there are parties.

 

(Chairman)

That's right. However, heaven Out-bound Hamou, because it does not go a long time, we have quite a few are reduced.

 

(Reporter)

It refers to convenience stores. How much will this business contribute to the profits of the company by opening eight new stores? Also, are Lawson finished at 6 places and Circle K at 2 places? Will it increase more?

 

(Chairman)

Contribution to profit depends on the sales of convenience stores, but we feel that we are consulting with each other, and we think that the average sales will be about 260 million yen a year. The land and building fees we rent will be our return, so if sales increase, that amount will lead to our profit. It is not possible to announce what percentage you will receive because it is a matter of contract between the two parties, but the basic method is such a contract that sales increase and our profit increases.
And for the two companies, Lawson is all in these six places. This means 6 out of 20 in the last two years. Circle K Sunkus is all in these two stores. Two years later, I think that after that, we will have a new consultation.

 

(Reporter)

Regarding the development of convenience stores, it means that there are already 8 locations. When and what chain stores are operating and where? And, will the new store be opened by a person who is currently selling products in SA as a member store?

 

(Chairman)

There are eight existing locations, but I have been asking for them since the JH era.
The new store will be operated by a new contract between Central Japan Exis and Lawson.

 

(Reporter)

Regarding the relationship between the toll collection subsidiaries, it is said that the family companies are not being sorted out. In that situation, the meaning of creating two new companies and the fact that they created two It would be meaningful if the family companies up to the point of becoming practically dissolved, but I would like to know what kind of relationship you have in that area.

 

(Chairman)

In particular, the toll collection company is the people who come into direct contact with customers, and about 3,000 people work in total. In other words, I think it is one of the core businesses of the road management business. Therefore, I think we can improve the quality of services as a consolidated management subsidiary by promoting the integration of business with them.
In addition, the overhead of each company's building and officers can be saved. Since each company has only one director in the form of a representative director, we think that it will be possible to significantly reduce overhead costs.
However, among the family companies, only 6 companies were targeted this time. In total, there are 12 maintenance companies, but only 6 of them. Probably, in the case of many companies, I think that it will be the form of closing the store, but each company has a side business, so we can not say anything about it. However, all toll collection operations are subject to business transfer. The person at the receiving company will retire once and re-employment, so I would like you to think that the relationship with the six companies will be completely lost.
Other than that, there are 3 family companies that remain in maintenance management, traffic management, maintenance inspection, maintenance and repair, etc., but there are 6 family companies remaining. It means to proceed.
There have been many discussions about the relationship with family companies, but I think it can be arranged and solved completely. Rather, as consolidated management, we believe that by working under our management philosophy, we will be able to provide better services.

 

(Reporter)

The initial contract for fiscal 2006 was 14.3 billion yen, but I do not know if it will increase or decrease by dividing this into two companies. What is the calculation?

 

(Chairman)

I think it's flat for now. Whether or not toll income will increase depends on the number of road users. The company's business depends on how much it can reduce costs. I think we can improve on those points.
Right now, it's a bit like a chest but it's about 65% going back and forth. On weekdays, more than 70% of the days have come, but I think it's still a long way off. The more ETC users there are, the fewer payees there will be. In principle, I think it will be such a relationship. If you do so, the way the whole company manages will also change, and I think it is fully possible that it will appear in the numbers.

 

(Reporter)

The total number of people in the collection business is about 3,000. How many will the two companies have?

 

(Chairman)

1,800 in Nagoya and 1,100 in Yokohama. That's a total of 2,900, or about 3,000.

 

(Reporter)

Does that mean that you are not thinking about reducing too much?

 

(Chairman)

If somebody does not want to do so, or some people will try to change jobs, in principle, the idea is that people will accept it. Therefore, there is no increase in the starting line, but there may be a decrease in the number of people depending on your wishes. In principle, the idea is to accept.

 

(Reporter)

When are the current 1,800 and 1,100 people? From the beginning?

 

(Chairman)

At that time, we are doing that. With a scale of 2,900 people, we are operating now, so those people will move.

 

(Reporter)

People in the existing family companies have moved, and almost all of them are companies.

 

(Chairman)

I think that it will be a form that some people will remain for other work, such as overtime work arrangement.

 

(Reporter)

The numbers are 1,800 and 1,100. How many years and how many people do you have in mind?

 

(Chairman)

Anyway, we can't afford to lose service, at least to improve quality. Inevitably, toll collection is a company of people. Rather than doing something with the equipment, it is a game of people. It's a downfall that we can't provide services by reducing the number of people, so I want to keep doing so while maintaining people.

 

(Moderator)

If there are no other specific questions, today's regular press conference will end.

 

(Chairman)

I will tell you one news. I've talked about "quick dialing" before, but now that I can do it from the beginning of November, I can't do it with so many SAs, but I would like to start at some places. If we can do public information around the end of October, we would like to have a tasting party for everyone, so if you have a convenient time, please give it a try. We would like to receive various opinions. Thank you.
Thank you very much.