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Companies

Yamato stages comeback as price hikes take root

Courier likely to post black ink in April-June after year-earlier loss

Yamato has been able to negotiate higher prices with many business customers after driver shortages hit the company hard.   © Reuters

TOKYO -- Yamato Holdings is expected to report an operating profit of about 5 billion yen ($44.4 million) for the April-June period, marking a third straight quarter in the black and turning around from a 10 billion yen loss a year before.

The Tokyo-based company has raised prices for consumers by 15%, and negotiated higher prices with corporate customers. Of roughly 1 million business clients, Yamato focused on its 1,100 big customers first. Roughly 40% of these customers opted out of Yamato services as a result of negotiations. But Amazon Japan and others that had enjoyed significant discounts accepted higher prices, prompting smaller businesses to follow suit.

Yamato had taken orders beyond its capacity as demand for e-commerce deliveries surged -- costs for overtime and outsourcing delivery pushed it into the red in the January-March quarter of 2017. The company began curbing shipment volumes in October to reduce these expenses. It handled 418 million packages in the April-June quarter, down 7% on the year. Higher prices meant sales still rose about 10% to 400 billion yen.

Recent flooding from heavy rains in western Japan poses a potential hurdle for its continued recovery. Yamato has had to stop accepting packages in some affected areas. "July handling volume will be affected inevitably," said a source at core unit Yamato Transport.

But Yamato's western Japan facilities have not seen any significant damage from the floods. "The opportunity loss will be offset by shipment of aid provisions and packages sent from relatives to people affected by the floods," said an analyst at a foreign securities brokerage.

Yamato plans to announce its April-June results on July 31. For the full year ending March 2019, the company likely will keep its earnings projections of a 63% jump in operating profit to 58 billion yen on sales of 1.6 trillion yen, up 4%.

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