Japan's Big 3 Logistics Firms Q1 FY2027: Revenue growth masks a profit divide

• Revenue gains did not translate evenly into profits. SG Holdings increased revenue 21.7% year on year and operating profit 14.9%. Yamato's revenue rose 1.4%, but it remained in operating loss.
• Higher labor and procurement costs weighed on results. Yamato's operating expenses rose by about ¥4.4 billion from a year earlier, reflecting improved employee compensation and higher energy and materials costs.
• International logistics supported growth. SG benefited from the consolidation of acquired Morrison and from air and ocean freight. At Nippon Express, the recovery in international logistics and rate revisions helped support profit.
• Passing on costs and reshaping business portfolios are key to improving earnings. Yamato expanded its corporate business and narrowed its operating loss to about ¥4.9 billion from about ¥6.5 billion a year earlier.

Yamato and SG Holdings reported for the first quarter of FY2027, while Nippon Express reported interim results for the year ending December 2026. Direct comparisons of revenue and profit should therefore be treated with caution.

Nippon Express stood out for profit momentum, while SG led on growth and margin. Nippon Express lifted interim operating profit 56.7% year on year to ¥44.8 billion. Net profit rose 186.8%, and the company raised its full-year operating profit forecast.

SG Holdings increased operating profit 14.9% to ¥20.1 billion, and posted the highest operating margin of the three at 4.5%. It also recorded the fastest revenue growth. By contrast, Yamato reported revenue of ¥443.3 billion and an operating loss of ¥4.9 billion, with an operating margin of minus 1.1%.

Yamato narrowed its loss through more appropriate pricing and expansion of its corporate business. But it could not offset higher labor and other costs, and a return to profitability will require further improvement in its earnings structure. The focus shifted from revenue growth to the ability to generate profit.

• SG Holdings included the consolidation effect of acquired Morrison. International freight forwarding was also strong, helping revenue rise 21.7% year on year. In domestic delivery, however, costs remain a challenge even as parcel volumes increase.
• Nippon Express benefited from a recovery in international logistics, rate revisions and business restructuring. Operating profit rose 56.7% year on year. The company also raised its full-year operating profit forecast, though gains from property sales should be assessed separately from its core operations.
• Yamato grew small-lot corporate and consumer shipments, as well as its corporate logistics business. That helped offset a decline in courier parcel volumes and narrow its operating loss from a year earlier. But losses in its express business and other issues show that its earnings restructuring remains a work in progress.

All three companies are looking beyond parcel delivery, with corporate and international logistics emerging as areas of focus.

• Labor shortages and rising wages can make it harder to retain profit even when shipping volumes increase. Yamato's continued losses and SG's sluggish profit growth in domestic delivery illustrate the pressure.
• Higher fuel, energy and materials costs weigh on earnings when companies are slow to pass them on through freight rates.
• Geopolitical tensions and supply chain disruptions can affect demand and pricing for air and ocean freight. Nippon Express also reported uneven profit performance across regions.
• M&A and gains from property sales can boost results, but their durability needs scrutiny. Investors should also assess post-acquisition integration and the underlying profitability of core operations.

Revenue ranked Nippon Express first, followed by SG Holdings and Yamato. Nippon Express reported interim results while the other two reported first-quarter results, so the difference in scale cannot be taken at face value.

SG led on operating margin at 4.5%, followed by Nippon Express at 3.3%; Yamato recorded minus 1.1%. The gap reflects SG's international logistics expansion, Nippon Express's recovery and restructuring, and the cost burden of Yamato's domestic parcel operations.

Growth opportunities extend beyond parcel delivery to international and corporate logistics. SG's M&A and Nippon Express's restructuring point to rising demand for expertise in overseas operations, logistics planning and data use.

At the same time, addressing labor shortages and improving operational efficiency are shared challenges. When evaluating employers, consider not only business growth prospects but also efforts to reduce frontline workloads and improve compensation.