Value Creation Story of the SG Holdings Group

Value Creation Model of the SG Holdings Group

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The SG Holdings Group has perpetuated its philosophy from the time of its founding, and has always aimed to provide logistics optimized for the needs of customers while flexibly responding to changes in the environment.

We will continue to strengthen our logistics functions and provide solutions that make customers more competitive, in addition to working toward the enhancement of corporate value and the realization of a sustainable society through engagement with our stakeholders.

Strengths of the SG Holdings Group
- Seven Key Assets -

	Resource characteristics
Intellectual capital	Insight, know-how and IT infrastructure forming the source for proposal of optimal solutions Intellectual capital such as insight and know-how accumulated within the Group as we have met the diverse requirements of customers since the Group was founded, and IT infrastructure supporting the promotion of DX are significant management resources that are essential for the Group’s growth, leading to the resolution of fundamental issues faced in logistics. GOAL plays a central role in this, serving to provide advanced logistics solutions by connecting the Group’s management resources.	Logistics solutions Express package delivery services TMS 3PL Real estate Global Other (IT, payment, etc.) Full digitalization of invoice information (Completed in April 2022) Common Group IT infrastructure (SGH platform) Smart Club members Approx. 14 million Number of LINE friends (as of August 2023) Approx.14million
Human capital	Source of value-added creation “Our employees” are one of the Group’s most important management resources. We propose optimal order-made solutions by understanding needs and discovering wants of customers through day-to-day communication. The Group’s strength is GOAL playing a central role to resolve customers’ logistics issues based on information gathered by approximately 26,000 SALES DRIVERs. The information gathering capability of SALES DRIVERs and the problem-solving capability of GOAL are the source creating added value. Furthermore, we will strive to create workplaces in which diverse personnel are able to work without prejudice based on gender, age, disability or nationality to realize the enhancement of corporate value.	Consolidated number of employees 94,087 (including partner employees: 41,819) Number of SALES DRIVERs Approx.26,000 GOAL members Approx. 500 Employee engagement survey Employee engagement (positive responses) 57% Environment for leveraging employees (positive responses) 54% Percentage of female employees 33.5% Percentage of female managers 13.3%
Partner companies	Partners supporting business growth The Group actively coordinates with partner companies in long-haul transportation and the last one mile delivery. This enables dynamic responses according to the number of express delivery packages and the creation of a business model in which profitability is not affected by changes in the number of packages. Strategic alliances have been built not only with fellow transportation companies, but also by partnering with companies in different businesses such as IT companies. We believe it is necessary to rely on our own strength as well as build business partnerships with partners in a wide range of industries to meet the diverse needs of customers and also achieve sustained growth.	Long-haul transportation partner companies Approx. 310 Companies providing services together (Japan Post, Seino Holdings, Japan Freight Railway, CBcloud, etc.) Delivery supporters Approx.3,600companies Local governments with agreements 478 TMS partner companies Approx. 1,620 (Open innovation activities)
Financial base	Sound financial structure The Group will increase earning capacity and stabilize its financial base to further enhance medium- to long-term corporate value by striving to balance investment aimed at future growth, stable and continuous returns to shareholders and internal reserves for the future.	Operating margin 9.4% ROE 24.1% Equity ratio 61.2% Free cash flow 193.4 billion yen
Logistics facilities and mobility	Nationwide network The Group is a corporate group with 1,462 locations throughout Japan. We constantly review our network and equipment to increase transportation efficiency and improve productivity. We also contribute to the realization of a sustainable society by introducing environmentally friendly technologies and equipment and reducing CO2 emissions.	Number of locations 1,462 (including Sagawa Express locations: 427 sales offices, 22 transfer centers, 403 small stores) Total warehouse floor area (Sagawa Global Logistics) Approx.1.48million sqm Number of vehicles 27,435
Customers	Customer base spanning all industries and areas The Group provides services to over one million companies, meeting the logistics needs of diverse industries and domains. With the stay-at-home demand and changes in lifestyle during the COVID-19 pandemic, companies that had previously only conducted in-person sales through stores, etc. entered the e-commerce channel, expanding change in distribution routes, leading to the emergence of new markets and the expansion of markets ranging from food to pharmaceuticals. The Group recognizes that target industries and domains are expanding, therefore we will provide solutions leading to the resolution of customers’ issues and their business growth by increasing products and services in response to these.	Number of customers using services 1million companies
Environmental resources	Promotion of environmental initiatives leading the industry Promotion of decarbonization is recognized as a priority issue for a corporate group handling social infrastructure in the form of logistics. The Group has been leading the industry with initiatives to reduce environmental impact since the 1990s, such as switching to environmentally friendly vehicles. We also implement preservation activities in the forests we own.	Percentage of environmentally friendly vehicles including EVs 64.1% Area of forests owned 862ha Renewable energy percentage in electric power used 27.8% Number of eco-friendly uniforms used (FY2002-2022) Approx. 3.5million (equivalent to 17.4 million PET bottles)

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Business model and competitive strengths

The Group’s business starts with needs and issues learned from customers by Sales Drivers in the express package delivery services that are the Group's core business. The Group’s business model is to combine the resources of the Group and partner companies so as to make order-made logistics proposals, accumulate knowledge and know-how, and enhance logistics solutions through approximately 26,000 Sales Drivers finding logistics issues by communicating with customers when they conduct day-to-day collection and delivery operations.

Competitive strengths

High-quality information-gathering capability and problem-solving capability

Transactions with diverse customers numbering up to one million companies
Information-gathering by Sales Drivers starting with close communication with customers at the time of collection and delivery
Order-made logistics proposals by highly specialized personnel centered on GOAL

Forward-looking transportation network supporting customers (transportation infrastructure specializing in from B)

Operation of large facilities which enables high volumes of diverse (size and length) packages shipped by corporate customers to handle
Integrated distribution center combining delivery and logistics
Provision of one-stop logistics by combining the functions of Group companies

Transportation network optimized for from B

Flexible and strict workplace control eliciting optimal solutions

Thorough profit management seeking optimization

Visualization of costs, operations and productivity using IT
Realization of appropriate cost control through management of cost per express delivery package
Improvement of margin through initiatives to receive appropriate freight tariffs conscious of costs

A network not affected by the number of packages

Close coordination with partner companies in long-haul transportation and the Last One Mile
Realization of flexible responses and stabilization of margin according to the number of packages in express package delivery services supported by coordination with partner companies

In order to respond to rapidly changing socioeconomic environment, the Group established the long-term vision of “Grow the New Story. New logistics, nurturing a new society together” aimed at 2030. Under the long-term vision, through not only utilizing the Company’s own strength, but also combining with the strengths of diverse partners not constrained by industry, we will jointly develop a new growth story enabling the creation of value linked to the future and the resolution of social issues.

Financial information

We are building a logistics network capable of meeting a variety of needs by conducting business specializing in FromB. We will introduce the characteristics and results of each business segment.

This business, which is the core business of the SG Holdings Group, is not limited to simple transportation services. In coordination with Group companies, we provide one-stop solutions for resolving issues faced by customers in Japan and abroad from a logistics perspective. Centered on the door-to-door delivery service provided by Sagawa Express, we offer a variety of services related to transportation such as the assembly and installation of large furniture and home appliances.

Operating revenue: 955.4 billion JPY in FY2019, 1,014.9 billion JPY in FY2020 and 1,043.1 billion JPY in FY2021. 65.7% of total operating revenue 1,588.3 billion JPY.

Related Group Companies

Sagawa Express

Sagawa Humony

SG Moving

World Supply

Delivery Business

This business provides comprehensive logistics solutions inside and outside Japan, including storage in warehouses, logistics processing, customs clearing, freight forwarding and consigned forwarding. Operation of our overseas network had previously evolved around imports and exports involving Japan, but Expolanka joining the Group in 2014 has led to the expansion of the global network extending to parts of Asia other than Japan in additon to Europe and the United States.

Operating revenue: 135.8 billion JPY in FY2019, 207.8 billion JPY in FY2020 and 477 billion JPY in FY2021. 30.0％ of total operating revenue 1,588.3 billion JPY.

Related Group Companies

Sagawa Global Logistics Co., Ltd.

SGH Global Japan Co., Ltd.

EXPOLANKA HOLDINGS PLC

Logistics Business

This business contributes to making the Group more competitive through the development of new logistics facilities. Furthermore, it realizes optimization of nationwide transportation infrastructure through large-scale renovation and increasing value of aging existing facilities and facilities with low logistics efficiency. We are selling the logistics facilities we own through planned liquidation, and in addition to increasing asset efficiency and capital efficiency, we will continue to develop new properties without increasing the balance of investment by recovering capital invested in development.

Operating revenue: 16.2 billion JPY in FY2019, 22.8 billion JPY in FY2020 and 11.2 billion JPY in FY2021. 0.7％ of total operating revenue 1,588.3 billion JPY.

Related Group Companies

SG Realty Co., Ltd.

SG Assetmax Co., Ltd.

Real Estate Business

This business handles a variety of functions incidental to logistics to increase the quality of proposals and services provided to customers, in addition to creating, proposing and providing added value supporting total logistics. Furthermore, it handles functions contributing to the improvement of operational efficiency within the Group. The Group is providing added value to customers by developing new functions and services in coordination with these logistics.