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Japan-Update

JR East, West on track for record profit

Freight sibling turns in first profit in core operations

TOKYO -- East and West Japan Railway have both forecast record profits for the fiscal year ending March 2018, anticipating more bullet train passengers and higher income from real estate and other noncore operations.

West Japan Railway said Friday it expects a group net profit of 109 billion yen ($978 million) for the fiscal year through March 2018, up 19% on the year.

Ridership should rise on its Sanyo shinkansen bullet train line as people go to the island of Kyushu to help the local economy recover from last year's earthquake. The purchase of a Mitsubishi Heavy Industries real estate unit should add a boost. JR West plans to hike its annual dividend to 160 yen per share, up 20 yen from the year-earlier payout.

East Japan Railway sees net profit growing 3% to 286 billion yen, expecting its own jump in bullet train revenue from foreign tourists traveling beyond metropolitan areas. A rise in office tentants at the JR Shinjuku Miraina Tower, a multipurpose building near Tokyo's Shinjuku station, should also contribute to profit growth.

Rail freight on a roll

Japan Freight Railway earned a 500 million yen operating profit from freight services in the fiscal year ended March 31, marking this segment's first result in the black since the unlisted company began provide earnings breakdowns in fiscal 2006. JR Freight benefited from a shift in shipping from trucks to rail amid a shortage of truck drivers, as well as an unexpected series of orders for transporting cargo less than 500km. At present, it apparently is negotiating nearly 100 new contracts.

Group sales shrank 0.5% on the year to 190.2 billion yen, but pretax profit shot up 43.4% to 10.3 billion yen. Net profit more than doubled to 12.9 billion yen.

JR Freight has said it will prepare for an eventual listing, and turning a profit in its core operations is a step in that direction. Other goals include sustaining a group pretax profit of 10 billion yen. Rising fuel and other rail-related costs will put pressure on earnings.

(Nikkei)

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