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Business

Japan Post faces revamp overseas as Australian unit Toll slumps

Group seeks new path for logistics, eyes postal consulting in Southeast Asia

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A woman walks past an advertisement board at Japan Post's Tokyo headquarters. The ad touts the company's local presence throughout Japan.   © Reuters

TOKYO -- Japan Post looks to redraw its overseas strategy after stumbling on plans to strengthen corporate logistics services via Australian unit Toll Holdings.

Low resource prices have taken a toll on Australia's economy, eroding demand for logistics services. Toll's operating profit tumbled by more than two-thirds to 83 million Australian dollars ($62.8 million) for the April-December period, with operating revenue shrinking 7% to A$5.9 billion.

Japan Post likely will write down the entire goodwill for Toll, which totaled 386 billion yen ($3.52 billion) at the end of 2016, in the fiscal year ended March 31. Japan Post Holdings, its listed parent company, is expected to decide on the matter at a board meeting Tuesday.

Japan Post group's net profit was projected at around 320 billion yen for that fiscal year, but the massive impairment loss could plunge the figure into negative territory.

A new management team installed by Japan Post in January now oversees Toll's rebuilding effort. Total staff will be slashed by 1,700, or a little over 4%, while five operations will be consolidated to three: overseas logistics, transportation and corporate logistics services. The low resource prices mean energy-related logistics will be dropped as a focus area.

Meanwhile, Japan Post plans to open a 100,000-sq.-meter logistics center in Singapore this summer to strengthen the Asian business.

Japan Post bought Toll with hopes of capitalizing on the latter's broad logistics network spanning over 50 markets and 1,200 operational sites in the Asia-Pacific region, North America and Europe. The Japanese company sought synergies with Toll in light of its limited expertise with bulk orders for corporate logistics services and in running logistics facilities for business customers. But the partnership has progressed little.

"We have ideas of what to do, but progress has been slow," a Japan Post Holdings official said.

Japan Post also must rewrite its script for international logistics operations. Consulting in emerging economies for their postal businesses is a potential focus. The company had won an order to develop Vietnam's postal network, and began providing support to the Southeast Asian country's postal service operator this month. This longer-term involvement compares with past engagements of around half a year for projects in Hanoi, Ho Chi Minh City and other areas.

Elsewhere in Southeast Asia, negotiations are underway for Japan Post to offer similar support. In Myanmar, where the company is already taking part in Tokyo's Official Development Assistance program, Japan Post might also seek opportunities to monetize its postal business know-how down the road.

Japan Post likely will also get involved in handling the delivery of goods purchased through online shopping, which is gaining traction in emerging and advanced countries alike.

(Nikkei)

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