Improving Profitability Through Appropriate Fee Revisions and Withdrawal from Low-Margin Engagements
First written in FY2020-Q3. 5 of 14 entries say "Advanced", first in FY2020. Latest entry: FY2026.
Kyoei Security Service moved to the "Worse" side of this theme in 2022.
The whole theme swung hardest in 2021: 1 of 6 companies on the "Worse" side.
8 other companies' latest entry also says "Advanced".
- FY2026AdvancedAnnual report
「Profitability was improved through the sharing of the customer base, including the consolidation of sales activities and the optimization of security guard deployment across the Group, as well as through a reduction in low-margin contracts. Cost reductions and greater efficiency resulting from advancing Group management, including the reorganization of business locations and subsidiaries, also contributed. The ratio to net sales was 7.6%.」
The Company improved its earnings structure and efficiency through a reduction in low-margin contracts, the consolidation of sales activities, overall optimization of security guard deployment, and the reorganization of business locations and subsidiaries, resulting in an operating margin of 7.6%. - 2026-09-11AdvancedEarnings
「As a result of promoting group management, including the reorganization of business locations and subsidiaries, consolidating sales activities, and optimizing the allocation of security guards across the Group, we worked to improve profitability over the long term. Gross profit was ¥3,575 million and operating profit was ¥1,163 million, representing ratios to revenue of 23.3% and 7.6%, respectively.」
The company advanced the reorganization of subsidiaries and business locations, consolidation of sales activities, and overall optimization of security guard allocation, achieving an operating margin of 7.6%. - FY2027-H1AdvancedAnnual report
「As a result of improved profitability from advancing group management, operating profit was ¥597 million, up ¥335 million year on year; ordinary profit was ¥613 million, up ¥343 million; and interim net profit attributable to owners of the parent was ¥373 million, up ¥256 million.」
Profitability improved through the advancement of group management, with operating profit increasing by ¥335 million year on year. The improvement in profitability, including the effects of fee revisions and M&A, is reflected in the earnings figures. - FY2025-H1AdvancedAnnual report
「Operating profit increased by ¥65 million from the previous interim consolidated fiscal period to ¥252 million, and the ratio to net sales improved from 4.3% to 5.0%. This increase was mainly due to a lower cost ratio resulting from the aforementioned fee revisions, despite higher SG&A expenses including amortization of goodwill associated with acquisitions and recruitment costs associated with stepped-up hiring activities.」
Fee revisions lowered the cost ratio and improved operating margin from 4.3% to 5.0%. This demonstrates concrete progress, with fee revisions improving profitability despite higher personnel and recruitment expenses and increased amortization of goodwill. - FY2024-Q3WorsenedAnnual report
「Operating profit decreased by ¥236 million from the previous fiscal year to ¥252 million. This decline was mainly due to lower revenue from temporary security services, a higher cost ratio resulting from wage increases, and higher costs associated with replacing the core system and strengthening recruitment activities. Selling, general and administrative expenses also included increased amortization of goodwill and acquisition-related expenses associated with acquisitions.」
Operating profit fell by ¥236 million year on year to ¥252 million due to lower revenue from temporary security services, a higher cost ratio resulting from wage increases, replacement of the core system, stepped-up recruitment, and acquisition-related expenses. - FY2024-Q2WorsenedAnnual report
「Operating profit decreased by ¥135 million from the previous fiscal year to ¥186 million. This decline was mainly due to the disappearance of the previously mentioned temporary security services related to COVID-19, higher recruitment costs associated with stepped-up hiring activities, increased amortization of goodwill related to the aforementioned acquisitions, and higher costs associated with introducing a core system, despite revenue from the aforementioned acquisitions and an increase in recurring-revenue contracts. In addition, although we are proceeding with negotiations with clients to revise fees, the decline was also attributable to the effects of wage increases.」
Despite ongoing negotiations to revise fees, operating profit decreased by ¥135 million year on year due to wage increases, recruitment costs, amortization of goodwill, and costs associated with introducing a core system, resulting in deteriorating profitability metrics. - FY2024-Q1ReframedAnnual report
「Our group is working to improve profitability through digital transformation and quality control, as well as pursuing M&A, to support future growth.」
The company has broadened its profitability-improvement framework from the previous focus on fee revisions and withdrawal from low-margin contracts to efficiency gains, stronger competitiveness, and economies of scale through digital transformation, quality control, and M&A. - FY2023WorsenedAnnual report
「Cost of sales for the current consolidated fiscal year increased by ¥366 million from the previous fiscal year to ¥6,112 million, and its ratio to net sales deteriorated from 71.8% to 76.2%.」
The cost of sales ratio deteriorated from 71.8% to 76.2% due to the reversal of the previous fiscal year’s high-margin temporary security services, and operating profit fell from ¥971 million to ¥489 million. - FY2023-Q2WorsenedAnnual report
「In the first six months of the current consolidated fiscal year, operating profit decreased by ¥378 million from the previous fiscal year to ¥321 million, and the ratio to net sales fell from 15.8% to 8.2%. This decline was due to the reversal of the benefit from high-margin temporary security services in the previous fiscal year, although it included a gain resulting from the company becoming exempt from the value-added component of enterprise taxation following a reduction in capital.」
As a result of the reversal of the previous fiscal year’s high-margin temporary security services, operating profit decreased by ¥378 million and operating margin fell from 15.8% to 8.2%, indicating continued deterioration in profitability metrics. - FY2023-Q1WorsenedAnnual report
「In the first quarter of the current consolidated fiscal year, gross profit decreased by ¥23 million from the previous fiscal year to ¥464 million, and the ratio to net sales fell from 24.8% to 24.2%. This decline was mainly due to higher personnel expenses associated with increasing the number of young permanent employees and the reversal of the benefit from high-margin temporary security services in the previous fiscal year. Operating profit decreased by ¥25 million from the previous fiscal year to ¥155 million, and the ratio to net sales fell from 9.2% to 8.1%.」
Due to higher personnel expenses associated with increasing the number of young permanent employees and the reversal of the previous fiscal year’s high-margin temporary security services, gross profit margin fell from 24.8% to 24.2% and operating margin from 9.2% to 8.1%. Although no withdrawal of the existing policy of fee adjustments is stated, profitability metrics deteriorated in the quarter. - FY2022RestatedAnnual report
「In response to rising personnel expenses, we will work to set appropriate fees.」
The company reaffirms its existing policy of securing profitability by setting appropriate fees in response to rising personnel expenses. - FY2021RestatedAnnual report
「Gross profit margin was 25.8%, unchanged year on year at 0.0%. Although the order environment was challenging, conditions for recruiting personnel improved substantially, and we invested management resources in securing many younger workers in preparation for the expected demand for security services.」
While the company explains that gross margin has been maintained through high-margin contracts and facility security, the operating margin fell to 5.3% due to investments in recruitment and other factors, making the balance between profitability and growth investment an ongoing issue. - FY2020AdvancedAnnual report
「Gross profit margin was 25.7%. Although fee revisions and the acquisition of high-margin contracts contributed to an improvement, the effect of higher costs due to increased personnel expenses kept the margin broadly flat year on year.」
Although fee revisions and the acquisition of high-margin contracts improved profitability, the gross profit margin remained broadly flat at 25.7% due to the impact of higher personnel expenses. - FY2020-Q3First statedAnnual report
「In terms of earnings, we have been working to revise fees for low-margin contracts to appropriate levels and withdraw from some low-margin contracts, and profitability is on an improving trend.」
The company explains that it has revised fees for low-margin contracts to appropriate levels and withdrawn from some contracts, resulting in an improving profitability trend.