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Weak e-commerce parcel deliveries hit Yamato's operating profit

Likely saw nearly 30% fall in April-December on slower Amazon business

Yamato Holdings, Japan's largest parcel delivery service, has seen earnings hit by a decline in business from e-commerce companies such as Amazon Japan. (Photo by Wataru Ito) 

TOKYO -- Yamato Holdings' operating profit likely fell nearly 30% from a year earlier to around 55 billion yen ($500 million) in the nine months to December 2019, as its earnings continued to languish.

The top door-to-door delivery company in Japan has been hit by a sharp drop in home deliveries of packages after major customers in online retailing, including Amazon Japan, cut back on use of its service.

From October to December, the volume of home deliveries fell nearly 3% on the year to about 510 million parcels. The figure for the first nine months of fiscal 2019 ending March this year slipped 0.7% versus the previous year to about 1.39 billion parcels.

Yamato has also been affected by a labor shortage in Japan, forcing it to raise prices and limit customer orders for a year in October 2017. During that time, key customers started to do more business with cheaper rivals, which eroded Yamato's client base.

Both revenue and profit may have fallen in Yamato's mainstay home delivery business in the October-December period. The extra revenue it earned from raising prices was limited by the drop in volume. Cost cuts failed to make up the difference.

Yamato earlier lowered its operating profit target for the year ending March to 62 billion yen, up 6% on the year, forecasting a rise of a little over 2% in home-delivery volume. Many market insiders believe the company will be hard pressed to reach this target through a strong fourth quarter. Sales typically fall in January to March, a slow period.

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