| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1114.3B | ¥1015.6B | +9.7% |
| Operating Income / Operating Profit | ¥31.9B | ¥35.5B | -10.3% |
| Ordinary Income | ¥32.0B | ¥35.6B | -10.2% |
| Net Income / Net Profit | ¥19.3B | ¥19.7B | -2.1% |
| ROE | 10.3% | 11.8% | - |
For the fiscal year ended March 2026, Revenue was ¥1114.3B (YoY +¥98.7B +9.7%), Operating Income was ¥31.9B (YoY -¥3.6B -10.3%), Ordinary Income was ¥32.0B (YoY -¥3.6B -10.2%), and Net Income was ¥19.3B (YoY -¥0.4B -2.1%). The result was higher revenue but lower profits. Revenue expanded solidly due to recovery in demand from manufacturing clients and an increase in placements, but gross margin declined to 16.9% (prior year 17.2%) down 0.3pt, and SG&A increased to ¥156.5B (prior year ¥138.9B, +12.7%), outpacing sales growth; consequently Operating Margin contracted to 2.9% (prior year 3.5%) down 0.6pt. Net Income was constrained by a high effective tax burden of 39.2%, while the impact of exceptional items was minor (Extraordinary Gain ¥0.05B, Extraordinary Loss ¥0.23B), limiting the decline.
[Revenue] Revenue of ¥1114.3B was up 9.7% YoY. Recovery in demand for staffing to the manufacturing sector and increased intake drove near-double-digit growth. Gross Profit increased to ¥188.4B (+8.0%), but Gross Margin compressed to 16.9% (prior year 17.2%) down 0.3pt. The compression is likely due to delayed price pass-through against rising labor costs, social insurance expenses and recruitment-related costs, and changes in utilization mix. Segment information is omitted and consolidated as a single Comprehensive Human Resources Services business.
[Profitability] Operating Income of ¥31.9B was down 10.3% YoY. SG&A rose to ¥156.5B (+¥17.7B +12.7%), exceeding sales growth and compressing Operating Margin to 2.9% (prior year 3.5%). Non-operating income and expense roughly offset each other at ¥1.9B each, resulting in Ordinary Income of ¥32.0B (-10.2%). Equity-method losses were -¥0.6B, interest income ¥0.1B, and interest expense ¥0.3B, so non-operating impacts were minor. Extraordinary income included negative goodwill gain ¥0.05B; extraordinary losses comprised loss on disposal of fixed assets ¥0.2B and impairment of investment securities ¥3.2B totaling ¥0.2B, leading to Profit Before Tax of ¥31.8B. After corporate taxes and others of ¥12.5B (effective tax rate 39.2%), Net Income was ¥19.3B (-2.1%). The year ended with higher revenue but lower profits.
[Profitability] Operating Margin 2.9% and Net Margin 1.7%, deteriorating from prior year (Operating 3.5%, Net 1.9%). ROE was 10.3%, decomposed as Net Margin 1.7% × Total Asset Turnover 3.24x × Financial Leverage 1.84x. DuPont shows the decline in Net Margin weighed on ROE, but high asset turnover and light leverage sustain ROE in the 10% range. EPS ¥56.47 (prior year ¥58.92, -4.2%), BPS ¥554.83 (prior year ¥509.04, +9.0%); on a PBR basis per-share value has been accumulating moderately.
[Cash Quality] Operating Cash Flow (OCF) / Net Income 0.81x is below the threshold (1.0), indicating challenges in converting profits to cash. OCF/EBITDA is 0.44x and low; increases in accounts receivable (prior year ¥112.2B → this period ¥131.0B, +16.8%), tax payments ¥14.9B, and working capital expansion are contributors. Free Cash Flow was ¥9.8B (OCF ¥15.3B - Investing CF ¥5.6B), which covers dividends ¥7.3B and share buybacks ¥2.0B but is tight.
[Investment Efficiency] CapEx ¥2.1B / Depreciation ¥3.3B = 0.64x, indicating restrained capital investment. Goodwill ¥23.3B (+¥14.4B) and Intangible Assets ¥34.3B (+¥20.2B) increased substantially, indicating an emphasis on M&A and intangible investment. Goodwill / Net Assets 12.5%, Goodwill / EBITDA 0.66x (EBITDA = Operating Income ¥31.9B + Amortization ¥3.3B = ¥35.2B) are within healthy ranges.
[Financial Soundness] Equity Ratio improved to 54.3% (prior year 52.8%). Interest-bearing debt totaled ¥10.3B (Long-term borrowings ¥5.5B + Short-term borrowings equivalent ¥4.8B), Debt/EBITDA 0.29x, Debt/Capital 2.9%—very low levels. Current Ratio 153%, Quick Ratio 153%, indicating solid short-term liquidity. Cash ¥59.1B (prior year ¥81.9B, -27.8%) declined due to dividends, debt repayments and buybacks, but absolute liquidity remains ample.
OCF was ¥15.3B (prior year ¥16.8B, -8.7%). From subtotal before working capital changes of ¥29.9B, deductions included changes in trade receivables -¥7.1B and corporate tax payments -¥14.9B. OCF/Net Income 0.81x and OCF/EBITDA 0.44x (EBITDA ¥35.2B) indicate weak cash conversion. Accounts receivable increased from ¥112.2B to ¥131.0B (+¥18.8B), estimated Days Sales Outstanding ~43 days (this period Accounts Receivable ÷ (Revenue ÷ 365)), which is within a normal range given revenue growth but underscores the importance of collection management. Investing CF was -¥5.6B, including CapEx -¥2.1B, intangible asset acquisitions -¥0.6B, and subsidiary share acquisitions -¥3.1B for M&A. Free Cash Flow was ¥9.8B and Financing CF was -¥32.6B, comprised of dividend payments -¥7.3B, share buybacks -¥2.0B, and long-term borrowings repayments -¥23.1B. Net cash decreased by -¥22.8B during the period to ¥59.1B. Cash reserves currently represent approximately 3.9 months of Operating Cash Flow; if working capital normalizes and OCF improves, financial flexibility should recover.
The difference between Ordinary Income ¥32.0B and Net Income ¥19.3B reflects tax expense ¥12.5B (effective tax rate 39.2%); extraordinary items were minor (Extraordinary Income ¥0.05B, Extraordinary Loss ¥0.2B). Non-operating income ¥1.9B is less than 0.2% of Revenue; dividend income received was zero, and other non-operating income ¥0.5B (including subsidies ¥0.8B) indicates minimal reliance on recurring non-operating sources. Non-operating expense ¥1.9B includes interest expense ¥0.3B but is limited in scale. Comprehensive Income ¥22.2B exceeded Net Income ¥19.3B; Other Comprehensive Income ¥2.9B comprised actuarial adjustments related to retirement benefits ¥2.8B and unrealized gains on available-for-sale securities ¥0.1B, both temporary valuation movements. Accrual ratio (OCF ¥15.3B - Net Income ¥19.3B) / Total Assets ¥344.2B = -1.1% is in a healthy range, but OCF/Net Income 0.81x highlights cash conversion weakness. Operating Margin 2.9% and Net Margin 1.7% reflect low profitability consistent with the labor-intensive staffing model.
The company plans Revenue ¥1185.0B (vs. this period +6.3%), Operating Income ¥35.0B (+9.7%), Ordinary Income ¥35.0B (+9.4%), Net Income ¥21.0B (EPS forecast ¥62.36), expecting both revenue and profit growth. Operating Margin is projected at 3.0% (this period 2.9% +0.1pt) with slight improvement. Achievement depends on recovery in gross margin (price revisions, higher utilization, deployment optimization) and restraint in SG&A growth; price pass-through and expense control are key. Progress through the first half corresponds to roughly half the annual target, so maintaining utilization and restoring profitability in H2 are conditions for meeting guidance.
Dividend is a year-end lump sum ¥25 (Payout Ratio 37.3%); prior year had no recorded dividend (Dividend Per Share ¥0), suggesting resumption or continuation. Total dividends ¥7.3B against FCF ¥9.8B gives FCF coverage 1.35x, indicating sustainability. Including ¥2.0B share buybacks, total shareholder return was ¥9.3B and Total Return Ratio 48.3% ((Dividends ¥7.3B + Buybacks ¥2.0B) / Net Income ¥19.3B). Dividends + CapEx total ¥9.4B are covered by FCF ¥9.8B, indicating a broadly appropriate balance between investment and returns. Given cash ¥59.1B and light leverage (Debt/EBITDA 0.29x), there is scope to increase dividends or returns if profitability and OCF improve; conversely, weak cash generation would justify a maintenance stance on payouts.
Margin Pressure Risk: Gross Margin 16.9% (-0.3pt), Operating Margin 2.9% (-0.6pt) show deteriorating profitability. Delays in passing through higher labor costs, social insurance and recruitment expenses, and shifts in utilization mix are causes. SG&A ratio rose to 14.0% (prior year 13.7%, +0.3pt) and SG&A growth (+12.7%) outpaced revenue growth (+9.7%), reversing operating leverage. Continued lag in price adjustments and expense control would sustain downward pressure on margins.
Cash Conversion Risk: OCF/Net Income 0.81x, OCF/EBITDA 0.44x indicate weak cash generation. Accounts receivable increased by ¥18.8B, tax payments ¥14.9B, and working capital expansion constrained OCF; Free Cash Flow ¥9.8B barely covers dividends and CapEx total ¥9.4B. Prolonged extension of receivables collection or working capital growth with increased placements could further deplete cash (¥59.1B, -¥22.8B) and reduce financial flexibility.
Underinvestment Risk: CapEx/Depreciation 0.64x shows restrained investment. While Goodwill ¥23.3B and Intangible Assets ¥34.3B reflect active M&A and intangible investment, JGAAP amortization (Goodwill amortization ¥2.4B) compresses profits, and reinvestment shortfall relative to Depreciation ¥3.3B risks delaying productivity improvements and digital investments. Raising CapEx will be necessary to maintain competitiveness medium-term.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 2.9% | 8.1% (3.6%–16.0%) | -5.2pt |
| Net Margin | 1.7% | 5.8% (1.2%–11.6%) | -4.1pt |
| Profitability is well below industry median, reflecting structural low margins of labor-intensive staffing services. |
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 9.7% | 10.1% (1.7%–20.2%) | -0.4pt |
| Growth is roughly in line with the industry median, indicating standard top-line expansion capability. |
※ Source: Company compilation
While revenue growth was maintained, margin deterioration persists; establishing an improvement trend for Gross Margin 16.9% and Operating Margin 2.9% is the top priority. If SG&A growth (+12.7%) continues to outpace revenue growth (+9.7%), achieving the company plan (Operating Income ¥35.0B, Operating Margin 3.0%) will be difficult. Progress on price pass-through, optimization of utilization mix, and controlling hiring/retention costs are key to margin recovery.
With OCF/Net Income 0.81x and OCF/EBITDA 0.44x, strengthening working capital management is urgent. Shortening Days Sales Outstanding from ~43 days, optimizing accrued payables, and smoothing tax payments would improve OCF, stabilizing cash ¥59.1B and supporting dividends and investment. Recovering OCF/Net Income to above 1.0x is a target for improving cash quality.
Accumulation of Goodwill ¥23.3B and Intangible Assets ¥34.3B indicates mid-to-long-term growth investment, but JGAAP amortization burden (¥2.4B) continues to weigh on profits. Goodwill/Net Assets 12.5% and Goodwill/EBITDA 0.66x limit impairment risk, but early realization of acquisition synergies and earnings contribution from intangibles will determine M&A strategy assessment. Monitoring medium-term investment efficiency, including CapEx/Depreciation 0.64x, is necessary.
This report was auto-generated by AI analyzing XBRL financial statement disclosure data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.