PERSOL HOLDINGS CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥752.74B
• Operating Income: ¥36.60B
• Net Income: ¥24.84B
• EPS: ¥10.93

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Persol Holdings (2181) delivered solid topline and profit expansion in FY2026 Q2 (IFRS, consolidated), with revenue of 7,527.41 and operating income of 366.03, up 4.9% and 14.0% YoY respectively. Gross profit was 1,657.62, implying a gross margin of 22.0%, while SG&A of 1,333.27 grew below gross profit, enabling operating leverage. Operating margin improved to approximately 4.9%, evidencing cost discipline and mix benefits despite a tight labor market. Net income reached 239.76 (+12.1% YoY), with an effective tax rate of 27.1% (tax expense 97.37 on PBT 359.74). DuPont analysis shows ROE of 10.6% driven by a 3.2% net margin, 1.338x asset turnover, and 2.49x financial leverage, a balanced profile for a staffing/services company. EBITDA was 524.40 (7.0% margin), indicating modest but improving operating efficiency typical of the human capital services industry. Operating cash flow was 199.21, below net income (OCF/NI 0.83x), reflecting working capital usage consistent with receivables-intensive staffing operations. Free cash flow totaled 125.02 (using OCF plus investing cash flows), positive but not sufficient to fully fund dividends plus buybacks, as financing CF was a net outflow of 428.94 including dividends of 98.24 and share repurchases of 200. The balance sheet shows total assets of 5,626.02 and equity of 2,258.54, with an equity ratio of 37.1% and a debt-to-equity ratio of 1.48x (based on total liabilities), reflecting a moderate leverage stance. Liquidity appears adequate with cash and equivalents of 828.18, though current ratio cannot be computed due to unreported current liabilities. Receivables are sizable at 1,797.94 and payables at 995.08, consistent with the business model; receivables management remains a key driver of cash conversion. Capital expenditures were restrained at 16.70, while broader investing outflows of 74.19 likely reflect M&A or intangibles, supporting strategic growth. Dividend sustainability metrics warrant monitoring: the calculated payout ratio is high at 90.3% and reported FCF coverage is 0.58x during the period, though these may be distorted by half-year timing. Overall, revenue growth quality appears stable and profitability improved YoY, but cash conversion lagged earnings and shareholder returns were partly debt/equity-funded this half. Data limitations exist for items such as interest expense, debt breakdown, goodwill/intangibles, and current liabilities, which constrain deeper diagnostics.

Profitability Analysis

roe_decomposition: ROE 10.6% = Net profit margin 3.2% x Asset turnover 1.338 x Financial leverage 2.49x. The modest margin is typical for staffing; asset turnover is healthy, and leverage provides a meaningful lift to equity returns. margin_quality: Gross margin 22.0% and EBITDA margin 7.0% indicate gradual efficiency gains. Operating margin improved to about 4.9% (366.03 / 7,527.41), reflecting SG&A control and possibly mix/pricing improvements. Net margin at 3.2% is supported by a normalized tax rate of 27.1%. operating_leverage: Revenue +4.9% YoY vs operating income +14.0% implies a degree of operating leverage of ~2.9x, highlighting cost scalability. Continued leverage depends on maintaining utilization, bill rate discipline, and overhead efficiency.

Growth Assessment

revenue_sustainability: Topline growth of 4.9% YoY is consistent with steady demand in human capital services; sustainability hinges on macro labor conditions, client hiring appetite, and pricing power in dispatch and professional staffing. profit_quality: Profit growth outpaced revenue, driven by improved margins and SG&A control. However, OCF/NI at 0.83x signals some pressure from working capital, tempering the quality of earnings from a cash perspective. outlook: With EBITDA margin at ~7% and operating margin nearing 5%, there is room for incremental improvement through mix shift toward higher-value solutions and digital/outsourcing offerings. Near-term growth should track employment trends and client activity; watch for seasonality and M&A contributions implied by investing outflows.

Financial Health

liquidity: Cash and equivalents of 828.18 provide a buffer. Current ratio and quick ratio are not calculable due to unreported current liabilities; thus, short-term liquidity assessment is constrained. solvency: Equity ratio is 37.1%, and total liabilities to equity are 1.48x (3,333.63 / 2,258.54), indicating moderate leverage appropriate for the business model. Interest coverage cannot be computed due to unreported interest expense. capital_structure: Shareholder returns (dividends 98.24 and buybacks 200) and net financing outflow of 428.94 reduced financial flexibility in the half, though balance sheet capacity remains acceptable. Breakdown of interest-bearing debt is unreported, limiting detailed leverage analysis.

Cash Flow Quality

earnings_quality: OCF/Net income of 0.83x suggests earnings not fully converting to cash, likely due to receivables timing in a growing revenue base. This is common in staffing but bears monitoring. fcf_analysis: Free cash flow of 125.02 (based on OCF plus net investing outflows) is positive but modest relative to shareholder distributions. Capex is low at 16.70, implying limited maintenance burden; investing CF (-74.19) likely includes M&A or intangibles that depress FCF in the period. working_capital: Accounts receivable of 1,797.94 and accounts payable of 995.08 indicate substantial working capital tied to operations. Without current liabilities detail, precise working capital metrics (e.g., DSO/DPO) cannot be computed; nonetheless, receivables collection remains a key lever for OCF normalization.

Dividend Sustainability

payout_ratio_assessment: Calculated payout ratio of 90.3% appears elevated for the half-year context; depending on seasonality and full-year earnings trajectory, this may normalize, but it limits room for dividend growth absent stronger earnings. fcf_coverage: Reported FCF coverage of 0.58x indicates dividends were not fully covered by FCF during the period when considering broader investing flows; on a capex-only basis, coverage would appear stronger. Buybacks (200) materially increased total cash returns beyond internally generated FCF. policy_outlook: Given moderate leverage (equity ratio 37.1%) and cash on hand (828.18), the company can maintain current dividends near term, but sustained high payout and concurrent buybacks will depend on improved cash conversion and earnings growth. Policy clarity is limited due to unreported DPS details.

Risk Assessment

Business Risks:

• Cyclical exposure to client hiring trends and macroeconomic slowdown
• Pricing pressure and wage inflation affecting gross margin in staffing
• Regulatory changes in Japan and overseas staffing markets impacting flexibility and costs
• Execution risk in M&A and integration suggested by investing CF outflows
• Talent acquisition and retention in specialized/IT segments

Financial Risks:

• Cash conversion risk given OCF/NI of 0.83x and large receivables balance
• Moderate leverage (total liabilities/equity 1.48x) with unreported interest cost details
• Shareholder returns (dividends and buybacks) exceeding period FCF, reducing financial headroom
• Potential goodwill/intangibles impairment risk (balances unreported) inherent to M&A

Key Concerns:

• Sustaining margin improvement while managing wage and SG&A pressures
• Improving receivables collection to lift OCF toward or above net income
• Calibration of capital returns relative to internally generated cash

Investment Implications

Key Takeaways:

• Topline grew 4.9% YoY with operating profit up 14.0%, demonstrating operating leverage
• ROE at 10.6% is supported by healthy asset turnover and moderate leverage
• Operating margin improved to ~4.9% and EBITDA margin to ~7.0%
• Cash conversion lagged (OCF/NI 0.83x), highlighting working capital sensitivity
• Positive FCF (125.02) but below total shareholder returns, implying reliance on balance sheet
• Equity ratio 37.1% and liabilities/equity 1.48x reflect manageable solvency

Metrics to Watch:

• OCF/Net income and receivables days
• Operating margin and gross margin trajectory
• EBITDA growth versus revenue growth (operating leverage)
• Equity ratio and any changes in interest-bearing debt
• Shareholder return outlays (dividends and buybacks) relative to FCF

Relative Positioning: Within Japan’s human capital services, Persol shows steady growth, improving margins, and ROE in the low double-digits, positioning it competitively though below the margin scale of top-tier peers with larger high-value segments; cash conversion remains the key differentiator to close the quality gap.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
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