| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1376.9B | ¥1330.7B | +3.5% |
| Operating Income / Operating Profit | ¥199.0B | ¥188.3B | +5.7% |
| Ordinary Income | ¥201.0B | ¥189.1B | +6.3% |
| Net Income / Net Profit | ¥150.5B | ¥127.4B | +18.1% |
| ROE | 30.9% | 26.1% | - |
For the fiscal year ended March 2026 (Full Year), Revenue was ¥1,376.9B (YoY +¥46.2B +3.5%), Operating Income was ¥199.0B (YoY +¥10.7B +5.7%), Ordinary Income was ¥201.0B (YoY +¥11.9B +6.3%), and Net Income was ¥150.5B (YoY +¥23.1B +18.1%). The core Temporary Staffing (engineer dispatch) business performed steadily, and improvements in SG&A efficiency (SG&A ratio 11.9%, YoY -95bp) lifted the operating margin by +30bp to 14.5%. Net Income achieved double-digit growth partly due to a ¥6.4B gain on sale of fixed assets. Revenue increased for the third consecutive year, while both profitability and capital efficiency remained at high levels.
[Revenue] The core Temporary Staffing business recorded Revenue of ¥1,363.7B (YoY +3.6%), accounting for 99.0% of total Revenue and driving the top line. Maintenance of utilization rates and firmness in billing rates contributed to Revenue growth. By contrast, the Recruiting Placement (engineer placement) business recorded Revenue of ¥13.2B (YoY -9.9%) and is in an adjustment phase, but its impact on consolidated Revenue is minor.
[Profitability] Gross profit was ¥362.9B (gross margin 26.4%, -66bp from 27.0% in the prior year) and declined slightly, but SG&A restraint (¥163.9B, SG&A ratio 11.9%, -95bp YoY) was effective, improving Operating Income to ¥199.0B (Operating margin 14.5%, +30bp). By segment, the Temporary Staffing business generated Operating Income of ¥196.9B (margin 14.4%, YoY +7.5%), maintaining high profitability. Ordinary Income was ¥201.0B, with non-operating income of ¥2.1B (interest income ¥1.1B, etc.) offset by non-operating expenses of ¥0.1B, contributing marginally. In extraordinary items, a gain on sale of fixed assets of ¥6.4B was recorded while impairment losses of ¥0.8B and others were recognized, resulting in a net positive contribution of ¥5.4B. Income before income taxes was ¥206.4B; after deducting income taxes of ¥55.8B (effective tax rate 27.0%), Net Income amounted to ¥150.5B (Net margin 10.9%, +135bp from 9.6% prior). In conclusion, this was a year of revenue and profit growth, with SG&A efficiency and a one-off gain on sale of fixed assets amplifying the profit increase.
The Temporary Staffing business recorded Revenue of ¥1,363.7B (YoY +3.6%), Operating Income of ¥196.9B (YoY +7.5%), and a margin of 14.4%, maintaining high profitability. Profit growth outpacing Revenue growth reflects effective utilization management and indirect cost efficiency. The Recruiting Placement business posted Revenue of ¥13.2B (YoY -9.9%), Operating Income of ¥4.7B (YoY -17.6%), and a margin of 35.5%—still high but down YoY due to market adjustments. Its contribution to consolidated Operating Income is limited at 2.4%, with the Temporary Staffing business at the core of the profit structure.
[Profitability] Operating margin improved to 14.5% (+30bp YoY), with the decline in gross margin to 26.4% offset by a 95bp reduction in SG&A ratio. Net margin improved materially to 10.9% (from 9.6%, +135bp), though this includes a one-off gain on sale of fixed assets. ROE is very high at 30.9%, explainable by Net margin 10.9% × Total Asset Turnover 1.53× × Financial Leverage 1.84×. Recent improvements mainly reflect expansion in Net margin. [Cash Quality] Operating Cash Flow (OCF) to Net Income ratio is 1.01×, indicating healthy cash generation. Depreciation was ¥2.8B versus capital expenditures of ¥0.1B, reflecting an asset-light business model. [Investment Efficiency] Total Asset Turnover is high at 1.53×, indicating asset efficiency in a labor-intensive business. Intangible fixed assets are minimal at ¥1.4B (0.2% of total assets), limiting goodwill-related risks. [Financial Soundness] Equity Ratio improved to 54.3% (from 52.1%, +2.2pt), Current Ratio is 296.8%, and Quick Ratio is also 296.8%, reflecting extremely healthy liquidity. Cash and deposits of ¥528.4B are 2.2× short-term liabilities of ¥245.4B, indicating low maturity mismatch risk. Retirement benefit liabilities of ¥165.0B are recorded in noncurrent liabilities, but abundant current assets provide a buffer. Debt-to-equity (liabilities-to-equity) is 0.84×, indicating a high level of financial safety.
OCF was ¥152.5B (YoY +13.4%) and remained robust; the ratio to Net Income was 1.01×. OCF before working capital changes totaled ¥208.0B, reflecting core operating cash generation including depreciation of ¥2.8B and interest received ¥1.1B. Cash outflows included an increase in trade receivables of -¥4.0B and corporate tax payments of -¥65.0B. Investing Cash Flow recorded an inflow of ¥0.1B, which included proceeds from sale of fixed assets of ¥8.3B, while capital expenditures were limited to ¥0.1B. Financing Cash Flow was an outflow of -¥154.3B, primarily driven by dividend payments of -¥154.3B. Free Cash Flow (OCF + Investing CF) was ¥152.7B, ample and broadly sufficient to cover dividend payments. Cash and deposits declined slightly from ¥530.1B at the beginning of the period to ¥528.4B at the end, a decrease of -¥1.7B, maintaining strong liquidity. The OCF-to-EBITDA ratio is approximately 0.76×, somewhat weak, largely due to adjustments for non-cash gain on sale of fixed assets and reductions (payments) in consumption tax payable/receivable; core cash generation is nonetheless judged healthy.
With Operating Income of ¥199.0B and Ordinary Income of ¥201.0B, the difference is minimal, indicating core earning power accounts for most profits. Non-operating income was limited at ¥2.1B (interest income ¥1.1B, etc.), indicating low dependence on non-core activities. A gain on sale of fixed assets of ¥6.4B was recorded in extraordinary items, boosting Net Income, but this is a one-off factor. Comprehensive income was ¥154.3B versus Net Income of ¥150.5B, a difference of ¥3.8B attributable to retirement benefit adjustments. The near 1:1 ratio of OCF to Net Income (1.01×) indicates accounting profit is backed by cash generation. However, the gain on sale of fixed assets and the decline in the OCF-to-EBITDA ratio suggest temporary variability in earnings quality, so the sustainability of core operating profit will be a focus going forward.
For FY2027, the company forecasts Revenue of ¥1,408.0B (YoY +2.3%), Operating Income of ¥205.0B (YoY +3.0%), Ordinary Income of ¥207.0B (YoY +3.0%), and Net Income of ¥139.0B (YoY -7.6%). Revenue and Operating Income are expected to grow modestly, while Net Income is projected to decline due to the absence of this period’s ¥6.4B gain on sale of fixed assets. Full-year progress rates stand at Revenue 97.8%, Operating Income 97.1%, and Ordinary Income 97.1%, broadly in line with plans. Company guidance for EPS is ¥180.04, and the dividend forecast is ¥85.00 (Payout Ratio approximately 47.2%), a substantial reduction from ¥196 in the prior year, reflecting normalization after a special ¥30 commemorative dividend for the 50th anniversary in the prior year. The projected decline in Net Income is due to lapse of the one-off gain; on an Operating Income basis, management expects to maintain the growth trend.
The annual dividend for the period was ¥196 (interim ¥90, year-end ¥106), with a Payout Ratio of 101.6%, an extremely high level. This included a ¥30 commemorative dividend for the 50th anniversary; the ordinary dividend was ¥166. Total dividends paid in the period amounted to ¥154.4B, roughly in line with Free Cash Flow of ¥152.7B and covered by cash generation. The dividend forecast for the next period is ¥85 per share, normalizing the Payout Ratio to about 47.2%. With cash and deposits of ¥528.4B, the company has ample capacity to pay dividends, but attention will be on prospects for progressive ordinary dividends and a Total Return Ratio policy. No share buybacks were conducted; shareholder returns have been concentrated on dividends.
Demand fluctuation risk: The Temporary Staffing business accounts for 99% of Revenue; therefore, declines in staffing demand or utilization in an economic downturn would directly hit earnings. Performance is sensitive to major customers’ capex cycles and industry-specific demand trends.
Labor cost inflation and gross margin pressure: Gross margin fell to 26.4% (-66bp YoY). If difficulties in recruiting engineers or rising labor costs outpace pass-through to billing rates, profitability could be pressured. SG&A efficiency offset this in the period, but sustainability is uncertain.
Increase in retirement benefit liabilities: Retirement benefit liabilities of ¥165.0B (33.8% of Net Assets) have accumulated, and decreases in discount rates or increases in benefit levels could trigger additional burdens. A ¥3.8B retirement benefit adjustment was recorded in comprehensive income, and pension funding volatility could affect shareholders’ equity.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 14.5% | 8.1% (3.6%–16.0%) | +6.4pt |
| Net Margin | 10.9% | 5.8% (1.2%–11.6%) | +5.1pt |
Profitability exceeds the industry median by a wide margin, with Operating Margin and Net Margin positioned in the top 25% range.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 3.5% | 10.1% (1.7%–20.2%) | -6.6pt |
Revenue growth is below the industry median, indicating a conservative growth pace.
※Source: Company compilation
High profitability with Operating Margin of 14.5% and strong capital efficiency with ROE of 30.9% stand out. SG&A efficiency absorbed softness in gross margin, and Operating Income grew +5.7% YoY. Going forward, maintaining utilization rates and billing levels will be key to margins.
Cash and deposits of ¥528.4B and Current Ratio of 296.8% indicate a very strong financial base. Next period the dividend is expected to normalize to ¥85 with a Payout Ratio of about 47%, a sustainable level; progressive ordinary dividends and Total Return Ratio policy will be focal points for shareholder returns.
Net Income in the period included a ¥6.4B gain on sale of fixed assets; as this one-off lapses next period, Net Income is expected to decline by -7.6%. On an Operating Income basis, management plans to maintain a +3.0% growth trajectory, so monitoring the sustainability of core earnings will be important.
This report is an earnings analysis automatically generated by AI based on XBRL earnings disclosure data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on public earnings data. Investment decisions should be made at your own responsibility, and, if necessary, after consulting a professional advisor.