OREANDA-NEWS. August 10, 2011. In the first quarter of the fiscal year ending March 31, 2012 (from April 1, 2011, to June 30, 2011),challenging conditions in employment and personal consumption persisted in the Japanese economy, affected by the Great East Japan Earthquake, even though manufacturing activity began recovering gradually from the disruptions the disaster caused, reported the press-centre of East Japan Railway Company.

East Japan Railway Company and its consolidated subsidiaries and equity-method affiliates were also affected in a number of ways by the disaster. Among other consequences, operations of railway services on certain lines were suspended and shopping centers were forced to close temporarily. In addition, consumers refrained from spending and engaging in leisure activities in deference to victims of the disaster, while tolls were suspended on certain expressways.

As a result, JR East was left to contend with an exceptionally harsh business environment.

During the first quarter, operating revenues decreased 9.8% to .568.9 billion due to a substantial decrease in operating revenues from transportation and other effects of the Great East Japan Earthquake. Operating income fell 32.4% to .78.1 billion. Furthermore, ordinary income decreased 39.9% to .54.8 billion. As a consequence of the extraordinary losses recorded in relation to the Great East Japan Earthquake and other factors, net income was down 50.4% to .22.3 billion.

Recovery from the Great East Japan Earthquake is an issue of utmost priority for JR East in the fiscal year ending March 31, 2012, and various initiatives have been undertaken to this end.

The Group organized efforts to restore railway lines and facilities damaged by the disaster. As a result of the support received from all parties involved, service on the Tohoku Shinkansen Line was restored on April 29. Operations on affected conventional lines have resumed in stages, with the exception of the segments along the northeastern Pacific coast damaged severely in the tsunami.

JR East will coordinate its efforts to restore train lines along the Pacific coast with other efforts to rebuild the area as a whole and plans to rebuild towns. Some segments of the Joban Line and Senseki Line have resumed operations, while restoration work is underway in stages along other reparable segments. Bus services were introduced along segments that remained inoperable, in an effort to provide modes of transportation in the affected regions.

JR East will also do its very best to assist with the recovery of the affected areas and with other rebuilding efforts to fulfill its social mission as a corporate group that conducts businesses throughout eastern Japan. The various initiatives taken to date in support of recovery include hosting of farmers’ markets in support of the various affected areas in eastern Japan, establishment of evacuation facilities for victims of the disaster, and expansion in hiring quotas. As an additional initiative in the wake of the disaster, JR East inspected the group’s response following the earthquake and tsunami, and examined measures to restore railway operations promptly, provide temporary resting places to passengers unable to go home and distribute emergency provisions. Furthermore, JR East has engaged in group-wide efforts to conserve energy in responseto electric power shortages in the aftermath of the disaster, while seeking the understanding of customers regarding these efforts.

Specific measures to this end include a special train schedule, launched in late June, that was designed to address the Power Usage Limitation Order issued by the government. The Group has reduced the number of trains operating during the middle of the day on weekdays, turned down or turned off lighting within stations and railcars, and suspended the operations of a number of ticket vending machines.

Segment Information
Transportation
In the Transportation segment, with railway operations as its core operations, JR East, aiming to further improve safety and customer satisfaction, sought to maintain revenues by introducing measures to encourage the use of its Shinkansen network and Tokyo metropolitan area railway network.

In December 2010, the service on the Tohoku Shinkansen Line to Shin-Aomori Station commenced. To create demand for this new service and contribute to recovery of the areas affected in the disaster, JR East launched the Aomori Destination Campaign, based on the theme “Be Strong Japan! Be Strong Tohoku!,” to generate publicity for and spotlight Aomori area attractions. JR East also sold discount tickets such as the JR EAST PASS as a means to stimulate tourism and support the movement of people involved in the recovery effort, among other things.

In addition, JR East established train services in response to passenger usage over the Golden Week spring holiday season, and continued to introduce new, highly reliable railcars to the Keiyo Line and other lines. JR East worked also to boost tourism by increasing the number of destinations available for its travel product Tabi-Ichi, which offers attractive local programs, and establishing travel products targeting members of the Otona no Kyujitsu Club. Further efforts were made to enhance the attraction of rail travel through the sale of the Weekend Pass, in response to a reduction in expressway tolls.

billion, due to suspension of train services in the aftermath of the Great East Japan Earthquake and consumers refraining from leisure activities. Operating income was down 40.8% to .50.9 billion.

Station Space Utilization
In the Station Space Utilization segment, JR East made progress in its Station Renaissance program, which seeks to maximize the value of spaces within railway stations. Specifically, JR East fully opened ecute Shinagawa South (Tokyo) in May 2011, and renovated its commercial facilities within Mitaka Station and Nishi-Funabashi Station.

Despite these initiatives, the Station Space Utilization segment recorded a 7.9% decrease in operating revenues to .93.8 billion, as consumers refrained from spending and engaging in leisure activities following the earthquake and tsunami. Operating income was down 26.3% to .6.5 billion.

Shopping Centers & Office Buildings
In the Shopping Centers & Office Buildings segment, JR East opened excel MiNAMi(Ibaraki) in June 2011, after its opening was postponed due to the earthquake and tsunami. In addition the segment enhanced its competitiveness further through the renovation of existing facilities including GRANDUO Tachikawa (Tokyo).

As a result of these initiatives, as well as the early commencement of bargain sales at LUMINE Co., Ltd. and revenue increases from the renewal of atre Kichijoji (Tokyo) completed during the last fiscal year, the Shopping Centers & Office Buildings segment recorded a 0.5% increase in operating revenues, to .57.3 billion. Operating income was up 8.0% to .18.0 billion.

Others
In hotel operations, JR East took initiatives to offer assistance to areas affected by the disaster by introducing a special plan in which a portion of the room charge is donated as relief money. In credit card operations, the Group received donations in support of recovery efforts from the points members had accumulated in the View Thanks Point program. A new membership campaign was also launched to increase the number of View Card members. In Suica shopping
services (electronic money), JR East actively developed affiliated stores in markets beyond railway stations, including the launch of Suica settlement of parcel deliveries with YAMATO TRANSPORT Co., Ltd. As a result, Suica electronic money was accepted at approximately 152,060 stores as of June 30, 2011.

Despite these initiatives, Others posted a 3.8% decrease in operating revenues to .108.7 billion, due to a decline in operating revenues from advertising and publicity operations as a result of restraint in consumer spending following the disaster. Operating income was down 41.3% to .1.9 billion.

Note: JR East applies the Accounting Standard for Disclosures about Segments of an Enterprise and Related Information (Accounting Standards Board of Japan Statement No. 17, June 30, 2010) and the Guidance on Accounting Standard for Disclosures about Segments of an Enterprise and Related Information (Accounting Standards Board of Japan Guidance No. 20, March 21, 2008). The operating income of each segment of JR East corresponds to the segment income under the said Accounting Standard and Guidance.

Qualitative Information on Consolidated Performance Outlook
In the fiscal year ending March 31, 2012, JR East will make every effort to recover from the Great East Japan Earthquake. This disastrous earthquake will also be viewed as an impetus for JR East to take on a new perspective in rigorously enhancing “extreme safety levels,” “service quality reform,” “securing revenue and reviewing cost structures” and other key initiatives. JR East expects the management environment to remain challenging for the foreseeable future due to the effects of the breakdown at the Fukushima Daiichi Nuclear Power Station, related power shortages, and other factors that continue to create uncertainties for the Japanese economy. Against this backdrop, in the fiscal year under review, JR East will, in addition to marking 25 years since the restructuring of Japanese National Railways, reform its management with the mindset of starting anew in an effort to achieve “Creative Reconstruction.”

In railway operations, JR East will work towards generating a greater volume of tourism in partnership with local communities through initiatives linked to local tourist attractions in eastern Japan such as the World Heritage sites in Hiraizumi, and by promoting the Gunma Destination Campaign from July through September. JR East will also introduce a new type of limited express railcar to the Joban Line. This new railcar, designed for greater comfort and reduced running noise and vibration, will start operations in the spring of 2012. Furthermore, plans are in place to strengthen Internet sales, such as through eki-net and Mobile Suica, by devising a more flexible pricing plan.

In life-style services businesses, JR East will progress with construction of Tokyo Station City and the JR South Shinjuku Building (provisional name) while promoting the remodelling of commercial facilities inside stations, including at Akabane Station. In a similar vein, JR East plans to open LUMINE Yurakucho (Tokyo) in October 2011.

In Suica operations, JR East will continue to work towards a mutual usage service network across all ten transportation-based IC card networks currently in use in Japan by the spring of 2013, and will seek to expand the number 4 of stores accepting Suica electronic money.

Consolidated earnings forecasts for the year ending March 31, 2012 had yet to be determined as of the April 27, 2011, publication of Fiscal 2011 Financial Results. However, in view of the financial results for the three-month period ended June 30, 2011, and other results, sufficient information has been ascertained to forecast operating revenues, operating income, ordinary income, and net income as follows.

Fiscal 2012 Earnings Forecasts
Operating Revenues: .2,499.0 billion (1.5% year-on-year decrease)
Operating Income: .307.0 billion (11.0% year-on-year decrease)
Ordinary Income: .214.0 billion (15.9% year-on-year decrease)
Net Income: .105.0 billion (37.8% year-on-year increase)

Six-month period ending September 30, 2011
Operating Revenues: .1,209.0 billion (6.6% year-on-year decrease)
Operating Income: .171.0 billion (27.0% year-on-year decrease)
Ordinary Income: .121.0 billion (34.3% year-on-year decrease)
Net Income: .52.0 billion (46.5% year-on-year decrease)

Dividend Forecast for Fiscal 2012
For the current fiscal year, ending March 31, 2012, JR East plans to pay cash dividends of .110 per share, including interim dividends of .55 per share.