FULLCAST HOLDINGS CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥53.48B
• Operating Income: ¥6.09B
• Net Income: ¥4.19B
• EPS: ¥116.38

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

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

AI Integrated Analysis

Analysis integrating XBRL data (GPT-5) and PDF earnings presentation (Claude)

Executive Summary

Fullcast Holdings (4848) reported FY2025 Q3 consolidated results under JGAAP showing solid top-line growth with improved operating profitability. Revenue was ¥53,481 million, up 5.9% year over year, demonstrating resilient demand in its core short-term staffing and related services. Gross profit reached ¥17,986 million, implying a gross margin of 33.6%, which is healthy for an asset-light staffing model. Operating income rose 16.7% YoY to ¥6,093 million, evidencing positive operating leverage as costs were held in check relative to revenue growth. Ordinary income was ¥6,189 million, slightly above operating income, indicating modest positive non-operating contributions. Despite stronger operating performance, net income declined 1.7% YoY to ¥4,070 million, suggesting a heavier tax burden or other below-the-line factors. The implied operating margin is 11.4%, reflecting solid execution and scale efficiencies in a typically low-fixed-asset business. DuPont metrics indicate ROE of 13.51% driven by a 7.61% net margin, 1.148x asset turnover, and 1.55x financial leverage, consistent with an efficient, moderately levered service business. Liquidity appears strong with a current ratio of 269.5% and no inventory exposure, supporting working capital flexibility. The balance sheet shows total assets of ¥46,606 million and total liabilities of ¥12,599 million, implying low balance-sheet risk and ample equity cushion. Interest expense is minimal at ¥9 million, and interest coverage is very high at 677x, underscoring limited financial risk from leverage. Cash flow statements were not disclosed in this dataset (zeros reflect non-disclosure), so operating cash flow and free cash flow quality cannot be assessed. Likewise, depreciation and amortization, EBITDA, cash and equivalents, and dividend data are not available here, limiting cash-based and payout analyses. The reported equity ratio is shown as 0.0% in the dataset; based on disclosed totals, equity of ¥30,132 million versus assets of ¥46,606 million implies an equity ratio around the mid-60s, highlighting strong capitalization. Overall, fundamentals point to steady growth, margin enhancement, and high ROE, with the key caveat that cash flow and dividend disclosures are missing in this snapshot.

From Earnings Presentation: Fullcast Holdings' Q3 FY2025 results showed revenue of 53,481 million yen (up 5.9% YoY) and operating profit of 6,093 million yen (up 16.7%, with operating margin improving 1.1 percentage points to 11.4%), demonstrating significant profitability improvement at the operating level. Net income attributable to parent company shareholders was 4,070 million yen (down 1.7%), a slight decrease primarily due to the absence of the 1,295 million yen gain on sale of BOD Co., Ltd. shares recorded as extraordinary income in the prior year period. All segments achieved revenue growth, with the short-term staffing business maintaining growth despite absorbing the impact of BOD's deconsolidation in the prior year. The sales support business performed well in IT communication product sales leveraging the dealer network (revenue up 4.0%, operating profit up 24.2%). The restaurant business achieved revenue growth through store renewals and new brand launches, but operating profit declined due to opening and renovation costs. The security and other business showed significant growth with revenue up 64.3% and operating profit up 237.3% through securing temporary security contracts related to the Osaka-Kansai Expo. Progress rates against full-year forecasts are solid at 73.2% for both revenue and operating profit, and no revision to forecasts is deemed necessary after incorporating Q4. Strategic investment expenses decreased YoY, with revenue growth and cost control contributing to operating margin improvement.

Financial Analysis

Profitability

ROE_decomposition: ROE 13.51% = Net margin 7.61% × Asset turnover 1.148 × Financial leverage 1.55. The margin component reflects disciplined cost control; asset turnover indicates efficient use of a lean asset base; leverage is moderate and supportive without adding material risk. margin_quality: Gross margin at 33.6% supports an 11.4% operating margin (¥6,093m OI on ¥53,481m revenue). The expansion in operating income (+16.7% YoY) outpaced revenue (+5.9% YoY), indicating improved mix, pricing, or utilization. Net margin at 7.61% was pressured relative to operating performance by a higher effective tax burden. operating_leverage: Revenue +5.9% vs operating income +16.7% implies positive operating leverage. Fixed-cost absorption and SG&A discipline likely contributed. Ordinary income slightly exceeded operating income (+¥96m), suggesting small net non-operating gains. The decline in net income despite stronger OI points to below-the-line headwinds (primarily taxes).

Growth

revenue_sustainability: Top-line growth of 5.9% YoY is consistent with steady demand in staffing and related services. Asset turnover of 1.148x aligns with an asset-light model, supporting sustainable revenue generation relative to the balance sheet size. profit_quality: Operating margin at ~11.4% and OI growth outpacing revenue indicate quality earnings from core operations. Ordinary income (¥6,189m) vs operating income (¥6,093m) confirms limited reliance on non-operating items. Net income decline (-1.7% YoY) appears tax-driven rather than a deterioration in core operations. outlook: With strong liquidity and modest leverage, the company is positioned to sustain operations and pursue disciplined growth. Key sensitivities include labor market tightness, wage inflation, and regulatory changes affecting dispatch staffing. Continued execution on utilization, pricing, and mix should support margins if demand holds.

Financial Health

liquidity: Current assets ¥27,468m vs current liabilities ¥10,191m yields a current ratio of 269.5% and a quick ratio of 269.5% (no inventory disclosed), indicating strong short-term solvency. Working capital stands at ¥17,277m. solvency: Total liabilities ¥12,599m against total assets ¥46,606m imply low leverage. Although the dataset shows an equity ratio of 0.0%, disclosed totals indicate equity of ¥30,132m (~65% of assets), reflecting a solid capital base. capital_structure: Debt-to-equity of 0.42x (based on total liabilities/equity) suggests conservative leverage. Interest expense is only ¥9m with 677x coverage, indicating minimal financing risk.

Cash Flow

earnings_quality: Operating income growth and modest non-operating reliance suggest healthy core earnings. However, the lack of disclosed operating cash flow prevents linking earnings to cash generation. FCF_analysis: Free cash flow is not available due to undisclosed operating and investing cash flows in this dataset. Capex and D&A were not reported, limiting assessment of reinvestment needs. working_capital: Positive working capital of ¥17,277m underpins liquidity. Without cash flow details, we cannot quantify receivables collections or payables timing; monitoring days sales outstanding and seasonality is important for a staffing business.

Dividend Sustainability

payout_ratio_assessment: Dividend per share and payout ratio are shown as 0.00 in this dataset, indicating non-disclosure rather than actual zero. With EPS at ¥116.38, the capacity for dividends exists, but we cannot infer policy or payout without official guidance. FCF_coverage: Free cash flow not disclosed; therefore, cash coverage of dividends cannot be assessed. policy_outlook: No dividend data in this snapshot. Future assessment should reference the company’s stated capital allocation policy, historical payout/buybacks, and cash flow generation once disclosed.

Business Outlook

Q3 cumulative consolidated results are progressing steadily within the initial assumptions, and full-year consolidated results including Q4 forecast values do not reach levels requiring forecast revisions. Therefore, full-year forecasts remain unchanged (revenue 73,020 million yen, operating profit 8,325 million yen, ordinary profit 8,529 million yen, net income attributable to parent company shareholders 5,482 million yen). In short-term staffing business, the company will continue its policy of capturing expanding customer demand centered on temporary staffing, with steady growth expected in job placement and contracting. Sales support business will promote expanded sales of IT communication products utilizing the dealer network and call centers. Restaurant business expects increased customer traffic through domestic store renewal effects and penetration of new brand launches, though some opening and renovation costs will remain in Q4. Security and other business will benefit Q4 revenue from successful completion of Expo-related projects. Overall, the YoY decrease in strategic investment expenses will continue in Q4, with the operating margin improvement trend serving as a supporting factor.

Management Guidance

Management evaluates the 16.7% operating profit growth and 11.4% operating margin (improved 1.1 percentage points) in Q3 cumulative as results of YoY decrease in strategic investment expenses and revenue growth across all segments. Regarding the slight decrease in net income attributable to parent company shareholders, management explains this is mainly due to the absence of the gain on sale of BOD shares (extraordinary income of 1,295 million yen) from the prior year period, and recognizes that underlying profitability is on an improving trend. While maintaining full-year forecasts, management guides that Q4 is also expected to remain within initial assumptions. On capital policy, the company clearly states its commitment to maintaining basic policies of 50% total return ratio target, ROE target above 20%, and D/E ratio ceiling of 1.0x, continuing its stance of enhancing corporate value while maintaining appropriate capital efficiency and financial soundness. As a sustainability policy, the company positions contributions to SDG Goals 8 (Decent Work and Economic Growth), 5 (Gender Equality), 10 (Reduced Inequalities), and 9 (Industry, Innovation and Infrastructure) as materiality, emphasizing social value creation through short-term matching services.

Strategic Initiatives

• Short-term Staffing Business: Continue sales expansion across 'Temporary Staffing,' 'Job Placement,' and 'Contracting' services, centered on temporary staffing to capture expanding customer demand
• 'BPO': Supplement revenue decline from BOD deconsolidation by securing high-margin projects, maintaining increasing trend in gross profit
• Sales Support Business: Strengthen sales of IT communication products utilizing dealer network and call centers, expand alliance and web businesses
• Restaurant Business: Increase customer traffic through store renewals, expand and penetrate new brands 'Ramen Kagetsu Arashi Premium Ginza Corridor Store' and 'Sapporo Miso Ramen Gaku'
• Security and Other Business: Secure and stably operate temporary security contracts related to EXPO 2025 Osaka-Kansai, continuously secure resident security contracts
• Strategic Investment Cost Control: Reduce strategic investment-related expenses YoY, contributing to operating margin improvement (while registered staff welfare expenses increased, overall costs decreased)
• Basic Capital Policy: Maintain 50% total return ratio, ROE above 20%, and D/E ratio ceiling of 1.0x, balancing sustainable corporate value enhancement with appropriate capital efficiency and financial soundness

Risk Assessment

Business Risks:

• Cyclical demand in staffing tied to macroeconomic conditions and client hiring patterns
• Regulatory changes in labor dispatch and part-time employment that could affect business models and compliance costs
• Wage inflation and tight labor supply potentially compressing gross margins
• Seasonality and working-day effects impacting quarterly revenue and margins
• Client concentration risk in certain verticals or geographies
• Competitive pressure from large HR services firms and digital platforms
• Operational execution risk in large-scale matching and scheduling

Financial Risks:

• Limited visibility into cash flow generation due to undisclosed OCF/FCF in this dataset
• Receivables collection risk inherent to staffing models (DSO sensitivity)
• Tax rate volatility (implied high-30s effective rate in this period)
• Potential working capital funding needs in periods of rapid growth, despite currently low leverage

Key Concerns:

• Cash flow statement not disclosed; OCF/NI ratio shows 0.00 due to non-reporting
• Dividend information not provided; payout capacity and policy unclear in this snapshot
• Equity ratio reported as 0.0% in the dataset conflicts with disclosed totals, indicating a presentation gap rather than balance-sheet weakness
• Depreciation/EBITDA not disclosed, limiting assessment of maintenance capex and cash earnings

Risk Factors from Presentation:

• Risk of decreased 'Temporary Staffing' gross profit due to lapse of COVID-19 and My Number special demand in short-term staffing business (materialized in Q3)
• Operating profit pressure in restaurant business from rising food costs and recording of domestic/overseas store opening expenses and existing store renewal construction costs
• One-time nature risk of Expo-related temporary projects in security and other business (potential decline in Q4 and beyond)
• Increase in registered staff welfare-related expenses (short-term staffing business)
• Profit margin volatility due to fluctuations in strategic investment expenses (decreased this period but potential for re-increase from next period onward)
• While full-year forecast progress rate is solid around 73%, downside risk from external environment changes (economy, consumer trends) in Q4 standalone

Investment Implications

Key Takeaways:

• Revenue growth of 5.9% YoY with operating income up 16.7% demonstrates positive operating leverage
• Operating margin around 11.4% and gross margin 33.6% indicate solid unit economics
• ROE at 13.51% supported by healthy margins, efficient asset use, and moderate leverage
• Strong liquidity (current ratio 269.5%) and low leverage (approx. liabilities/equity 0.42x) reduce financial risk
• Net income decline (-1.7% YoY) largely attributable to higher taxes or below-the-line factors, not core operations
• Cash flow and dividend data are not disclosed here, constraining assessment of cash conversion and payout sustainability

Metrics to Watch:

• Operating cash flow and free cash flow conversion versus net income
• Effective tax rate and drivers of variance
• Utilization rates, bill rates, and mix within the staffing portfolio
• Receivables days (DSO) and bad debt expenses
• Wage inflation and labor supply conditions affecting gross margin
• Regulatory developments in dispatch staffing
• Ordinary-to-operating income gap (non-operating gains/losses)

Relative Positioning: Within Japan’s staffing/services peers, Fullcast appears as an asset-light, mid-cap operator exhibiting high ROE, strong liquidity, and conservative leverage. Profitability is competitive, supported by tight cost control and scale, with less balance-sheet risk than more levered peers; however, near-term visibility is tempered by the lack of cash flow and dividend disclosures in this snapshot.

Supplementary Insights (Key Highlights)

• All segments achieved revenue growth, collectively offsetting the impact of BOD's deconsolidation (a revenue reduction factor) from the prior year
• Operating margin improved 1.1 percentage points from 10.3% to 11.4%, with YoY decrease in strategic investment expenses contributing
• In short-term staffing business, 'Temporary Staffing' grew 6.2% YoY (capturing long-term personnel needs), but gross profit declined 0.6% due to the lapse of COVID-19 and My Number special demand
• 'Job Placement' grew 5.8% in revenue and profit (continuously capturing expanding customer demand); 'BPO' revenue declined due to BOD deconsolidation but gross profit increased 2.2% through securing high-margin projects
• Security and other business operating margin surged 9.0 percentage points from 8.6% to 17.6% due to temporary security contracts related to Osaka-Kansai Expo and stable operation of ongoing resident security contracts
• Restaurant business revenue increased 4.6%, but operating profit decreased 16.1% (operating margin from 7.4% to 5.9%) due to rising food costs, store opening expenses, and renewal construction costs
• Full-year forecast progress rate around 73% for key metrics as planned, with Q4 expected to remain within assumed conditions

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
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis