| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1668.5B | ¥1947.5B | -14.3% |
| Operating Income / Operating Profit | ¥106.1B | ¥80.7B | +31.5% |
| Ordinary Income | ¥108.3B | ¥82.7B | +31.0% |
| Net Income / Net Profit | ¥46.4B | ¥108.1B | -57.0% |
| ROE | 14.4% | 29.8% | - |
For the fiscal year ended March 2026 (Full Year), Revenue was ¥1,668.5B (YoY -¥279.0B, -14.3%), a decline, while Operating Income was ¥106.1B (YoY +¥25.4B, +31.5%) and Ordinary Income was ¥108.3B (YoY +¥25.6B, +31.0%), representing substantial year-over-year profit increases. Net Income was ¥46.4B (YoY -¥61.7B, -57.0%), a decrease primarily due to the absence of the prior-year special gain (¥62.3B gain on sale of subsidiary shares). Profitability improvement through the ordinary income stage is clear. In a revenue-decline / profit-increase pattern, gross margin improved to 19.2% (up +2.8pt from 16.4% prior year) and operating margin improved to 6.4% (up +2.3pt from 4.1%), indicating significant profitability enhancement. The Motor & Energy Business (Operating Margin 9.0%) and Semiconductor Business (9.1%) maintained high profitability; the Agent Business recovered sharply with Operating Income +104.8%; the Next Career Business secured a 3.8% margin despite declines in revenue and profit. SG&A ratio edged up slightly to 12.8% (prior year 12.3%), and positive operating leverage worked as expense growth lagged revenue decline.
[Revenue] Revenue was ¥1,668.5B (‑14.3%), reflecting a reduction in headline scale due to the sale of the Vietnam business (prior year ¥291.6B). On a continuing-operations basis, the Motor & Energy Business grew to ¥520.5B (+12.2%) and the Semiconductor Business to ¥376.3B (+3.1%). Conversely, the Agent Business declined to ¥631.7B (‑6.1%) and the Next Career Business to ¥147.2B (‑5.8%), affected by economic slowdown and customer hiring restraint. Business mix: temporary staffing sales accounted for ¥1,388.9B (83.2% of total) and contract work for ¥234.8B (14.1%), reflecting mix improvement toward higher-margin assignments.
[Profitability] Operating Income was ¥106.1B (+31.5%), a significant increase. Gross profit was ¥319.9B (gross margin 19.2%), a slight YoY decrease of ¥0.5B but with gross margin up +2.8pt, improving profitability. SG&A decreased substantially to ¥213.7B (‑¥24.9B), with SG&A ratio at 12.8% reflecting efficiency gains. Other income was ¥3.5B (including interest income ¥0.6B), other expenses ¥1.4B (including interest expense ¥0.7B), making non-operating items minor. Ordinary Income was ¥108.3B (+31.0%), reflecting operating-level gains. Extraordinary gains were ¥0.3B and extraordinary losses ¥0.5B, small; profit before income taxes was ¥107.9B. After deducting income taxes of ¥35.9B (effective tax rate 33.3%), Net Income Attributable to Owners of Parent was ¥71.2B (‑20.6%). The decline in Net Income is due to the absence of prior-year extraordinary gain of ¥62.3B (gain on sale of subsidiary shares), but profitability through the ordinary stage improved, converting a prior pattern of revenue growth with profit decline into revenue decline with profit increase.
The Motor & Energy Business reported Revenue ¥520.5B (+12.2%) and Operating Income ¥46.9B (+34.0%, margin 9.0%), achieving revenue and profit growth and solidifying its position as a core segment. Strong demand from major automotive manufacturers and expanded use of Japanese staffing contributed. The Semiconductor Business reported Revenue ¥376.3B (+3.1%) and Operating Income ¥34.2B (+28.2%, margin 9.1%), maintaining high profitability supported by stable demand for semiconductor personnel. The Agent Business recorded Revenue ¥631.7B (‑6.1%) but Operating Income improved to ¥19.9B (+104.8%, margin 3.1%), with enhanced recruitment agent functions and pruning of low-margin assignments proving effective. The Next Career Business had Revenue ¥147.2B (‑5.8%) and Operating Income ¥5.5B (‑11.9%, margin 3.8%), with weakness in personnel intake demand from major manufacturers affecting results. All segments showed margin improvement, with Motor & Energy and Semiconductor standing out for high operating margins.
[Profitability] Operating margin 6.4% (up +2.3pt from prior year 4.1%), Net margin 4.3% (down -3.0pt from prior year 7.3%); while improvements are evident through the ordinary income stage, Net margin declined due to loss of special gains. Gross margin 19.2% (up +2.8pt) reflects mix shift to higher-margin assignments, SG&A ratio 12.8% (up +0.5pt) indicates controlled expense increase despite revenue decline. ROE 14.4% (down from prior year 31.7%) was materially impacted by lower Net Income but remains above the three-year average.
[Cash Quality] Operating Cash Flow (OCF) to Net Income ratio was 1.64x, indicating good cash backing of profits. OCF to EBITDA ratio was 0.63x, relatively low, constrained by tax payments of ¥48.9B and working capital movements (Accounts receivable increase ¥5.2B), leaving room to improve cash conversion efficiency.
[Investment Efficiency] Total asset turnover 2.63x (prior year 2.93x) declined with lower revenue but remains high for a staffing services business. ROIC 11.6% (up from prior year 10.2%) improved with profitability gains.
[Financial Soundness] Equity Ratio 50.6% (down from 54.7%) decreased due to share buybacks but remains healthy. Current ratio 231.9%, Quick ratio 231.9% indicate very strong short-term liquidity. With interest-bearing debt of ¥69.5B and cash of ¥295.1B, net cash is ¥225.6B, close to a debt-free position. Debt/EBITDA 0.57x and Interest Coverage 153.8x indicate ample financial capacity.
Operating Cash Flow was ¥76.0B (YoY +33.8%), indicating solid cash generation relative to profit before tax ¥107.9B. Subtotal (before working capital changes) was ¥125.0B; adding back non-cash items such as depreciation ¥15.4B and goodwill amortization ¥4.0B, main cash outflow was income taxes paid of -¥48.9B. Working capital changes were modest: accounts receivable increase -¥5.2B, inventory decrease +¥0.9B, accounts payable decrease -¥0.9B, partially offset by decrease in bonus accruals -¥2.3B. Investing Cash Flow was -¥3.3B, with capex -¥0.5B and intangible asset acquisitions -¥3.8B, relatively light investment; subsidiary share acquisitions -¥18.4B were partially offset by proceeds from subsidiary sales +¥10.1B. Free Cash Flow was ¥72.7B, indicating maintained cash-generating capacity. Financing Cash Flow was -¥94.7B, reflecting dividend payments -¥76.5B and share buybacks -¥40.7B, while long-term borrowing proceeds +¥50.0B and repayments -¥30.5B were executed. Ending cash balance was ¥295.1B (YoY -¥22.0B), maintaining ample liquidity, but cash decreased due to shareholder returns exceeding FCF, making the balance between future returns and business investment a watch point.
Against Operating Income ¥106.1B, extraordinary items were minor (extraordinary gains ¥0.3B, extraordinary losses ¥0.5B), and the majority of earnings originated from recurring operations. Other income ¥3.5B consisted of interest income ¥0.6B, insurance dividends ¥0.1B, etc., indicating limited one-off factors. Other expenses ¥1.4B included interest expense ¥0.7B and fees ¥0.3B, keeping financial costs low. Comprehensive income ¥72.0B versus Net Income ¥71.2B shows minor differences, mainly due to foreign currency translation adjustments -¥3.6B; unrealized gains on available-for-sale securities +¥0.1B were limited. OCF ¥76.0B to Operating Income plus depreciation (EBITDA equivalent ¥121.5B) ratio was 0.63x, somewhat low, with tax payments and accrual timing (bonus accrual decrease, accounts receivable increase, etc.) delaying cash conversion. Accrual ratio was -0.8%, within a good range. Earnings quality is generally sound, but continued improvement in cash conversion efficiency (tax management, receivables collection) is an important ongoing task.
For the fiscal year ending March 2027 (Full Year), guidance is conservative: Revenue ¥1,700.0B (YoY +1.9%), Operating Income ¥100.0B (YoY -5.8%), Ordinary Income ¥100.0B (YoY -7.7%), Net Income Attributable to Owners of Parent ¥61.0B (YoY -14.3%). Full-year progress rates against the guidance were: Revenue 98.1%, Operating Income 106.1%, Ordinary Income 108.3%, Net Income 117.3%, indicating actual results exceeded initial plans. Next fiscal year plan anticipates lower operating profit, reflecting a cautious stance against the prior year’s high-level profitability improvement and potential economic slowdown and labor demand fluctuations. EPS guidance of ¥10.70 and dividend guidance of ¥10.23 (Payout Ratio approx. 96%) indicate continued high shareholder returns; note this is calculated on a post-stock-split basis (1 share → 15 shares, implemented January 2026), so the substantive level of return is high. Achieving the full year will depend on maintaining margins in the Motor & Energy and Semiconductor businesses and continued profitability improvements in the Agent Business.
Cash dividends paid this period were ¥76.5B, yielding a Payout Ratio of approximately 107% relative to Net Income Attributable to Owners of Parent of ¥71.2B, exceeding Net Income. Additionally, ¥40.7B of share buybacks were executed, making total shareholder returns ¥117.2B (Total Return Ratio approximately 165%), an extremely high level. Dividend coverage relative to FCF (¥72.7B) is approximately 0.95x, and total return coverage approximately 0.62x, indicating returns far exceeded FCF; the company secured return funding through cash on hand and borrowing (long-term borrowing +¥50.0B). A stock split in January 2026 changed ordinary shares 1-for-15, and the year-end dividend was ¥4.00 on a post-split basis (equivalent to ¥60.00 pre-split). Quarterly dividend history (pre-split basis) was Q1 40.19, Q2 44.61, Q3 38.96, demonstrating quarterly distributions and increased return flexibility. Next fiscal year dividend guidance is ¥10.23 per share (Payout Ratio approx. 100%), maintaining a high-return stance, but setting a sustainable level relative to FCF remains a key consideration. Despite ample cash of ¥295.1B, continuing very high total returns will require improved OCF and cash conversion efficiency.
Sustainability Risk of Profitability Improvement: Operating margin 6.4% (up +2.3pt) benefited from mix shift to higher-margin assignments and cost discipline, but demand volatility and production adjustments in core automotive and semiconductor customers could reduce utilization and compress gross margins, lowering profitability. Prior-year revenue decline with profit growth reflects structural improvements, but sensitivity to macro conditions remains high and profitability may be vulnerable in a downturn.
Continued Low Cash Conversion Efficiency Risk: OCF to EBITDA ratio 0.63x is low, with tax payments of ¥48.9B and working capital movements (accounts receivable increases, bonus accrual decreases, etc.) delaying cash realization. If working capital worsens, OCF could be further pressured, and funding for high shareholder returns (Total Return Ratio 165%) may be insufficient. Prolonged receivables collection or increased tax burden could compress FCF and reduce financial flexibility.
Overly Generous Shareholder Returns Reducing Financial Headroom Risk: With a Payout Ratio of 107% and Total Return Ratio of 165%, returns far exceeded FCF ¥72.7B and cash decreased by ¥22.0B YoY. While borrowing (long-term borrowing +¥50.0B) supplemented return funding, continued high returns could erode cash reserves and increase interest-bearing debt, weakening financial capacity for business investment or resilience in a downturn. Despite cash ¥295.1B and a healthy debt profile, adjustment to sustainable return levels may become necessary.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.4% | 8.1% (3.6%–16.0%) | -1.7pt |
| Net Margin | 2.8% | 5.8% (1.2%–11.6%) | -3.1pt |
Operating Margin 6.4% is 1.7pt below the industry median 8.1%, and Net Margin 2.8% is 3.1pt below the median 5.8%, but year-over-year Operating Margin improved +2.3pt indicating an improving profitability trend.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -14.3% | 10.1% (1.7%–20.2%) | -24.4pt |
Revenue growth -14.3% is well below the industry median 10.1%, largely due to the sale of the Vietnam business (prior-year disposal gain ¥62.3B). On a continuing-operations basis, core segments secured revenue growth, so this is not indicative of structural decline in growth capability.
※ Source: Company aggregation
Structural Progress and Sustainability of Profitability Improvement: Operating margin 6.4% (up +2.3pt) and gross margin 19.2% (up +2.8pt) show significant margin improvement despite revenue decline. High-margin segments Motor & Energy (margin 9.0%) and Semiconductor (9.1%) drove the overall performance, and the Agent Business recovered sharply with Operating Income +104.8%. Mix shift to profitable assignments and SG&A discipline were effective; ongoing focus points are maintaining utilization and pricing power. Resilience to demand swings in core automotive and semiconductor customers and ability to manage rising talent costs will determine sustainability.
Sustainability of High Shareholder Returns and Financial Balance: With Payout Ratio 107% and Total Return Ratio 165% far exceeding FCF ¥72.7B, cash decreased ¥22.0B YoY. Borrowing (long-term borrowing +¥50.0B) supplemented return funding, but with OCF to EBITDA ratio 0.63x and low cash conversion efficiency, continuation of high returns warrants caution. Given cash ¥295.1B and interest-bearing debt ¥69.5B (Debt/EBITDA 0.57x), and a sound financial base, future focus should be on improving OCF and optimizing return levels (prioritizing dividends and tactical buybacks) to sustain capital allocation. Next year’s plan (Payout Ratio ~100%) maintains a high-return stance, but improving FCF coverage and cash generation is a precondition for stable shareholder returns.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings release data. It does not constitute an investment recommendation for any particular security. Industry benchmarks are company-compiled reference data based on public financial statements. Investment decisions are your responsibility; consult advisors as needed.