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Japan-Update

Yamato hangs on to 60% of corporate clients amid rate hikes

Net profit still takes a double-digit fall in upgraded forecast

TOKYO -- Yamato Holdings has kept Amazon Japan and around two-thirds of its other big customers following rate hike negotiations, brightening its earnings outlook for the year ending March 31.

The parent of top Japanese door-to-door delivery company Yamato Transport increased rates for consumers last October as part of measures to offset higher personnel expenses linked to a shortage of delivery drivers.

And now, rate hike negotiations with 1,100 high-volume clients are largely complete. Roughly 60% of clients have maintained contracts with Yamato, agreeing on average to a rate hike "larger than the 15% increase for individual customers," according to Kenichi Shibasaki, senior managing executive officer in charge of financing strategy. Hikes for Amazon Japan, its largest client, took effect in January.

Yamato has not revealed what share of its business comes from the 40% of volume customers terminating their contracts. While shipping volume is expected to decline to some extent, the price hikes are expected to help earnings. The company on Tuesday updated its earnings forecast for the year ending March 31, projecting 14.5 billion yen ($133 million) in group net profit, or 2.5 billion yen more than was forecast in October. This would amount to a nearly 20% drop on the year.

Sagawa Express, a unit of SG Holdings, raised its own retail rates in November. Individual and corporate clients leaving that service and Yamato flocked to Japan Post, which handled a record number of home delivery packages in December.

Price increases by a host of other Japanese businesses are bringing the country a step closer to leaving the threat of deflation behind. USJ, operator of the Universal Studios Japan theme park, raises prices for the ninth year running Wednesday, while chicken pub operator Torikizoku raised prices for the first time in 28 years in 2017.

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