Profitability continues to improve, with operating profit rising despite lower revenue

Revenue for the nine months ended September was ¥13,338 million, down 2.6% year on year. Operating profit was ¥702 million, ordinary profit was ¥711 million, and net profit attributable to owners of the parent was ¥464 million, with each exceeding the year-earlier figures. In the interim period as well, operating profit was ¥478 million on revenue of ¥8,806 million, showing that revenue declined while profit improved at the same time. The key question is whether this reflects an ongoing change in the earnings structure rather than a merely temporary quarterly factor.

By segment, the Human Capital business recorded revenue of ¥10,131 million for the nine months ended September, down 5.4% year on year, while segment profit rose 2.1% to ¥1,427 million. The Staffing business posted revenue of ¥3,249 million, up 5.0%, and a segment loss of ¥34 million, while Other businesses recorded revenue of ¥51 million and a loss of ¥690 million. Growth in profit from the Human Capital business is supporting consolidated earnings, but the loss in Other businesses is offsetting part of the improvement.

The company attributes the improvement in margins to the shift from paid media to owned media, greater operating efficiency and SG&A optimization. The operating margin for the nine months ended September was approximately 5.3%, calculated from revenue of ¥13,338 million and operating profit of ¥702 million, up slightly from approximately 5.1% a year earlier. Accordingly, the next full-year results should clarify whether the improvement in gross margin resulted from a change in revenue mix or fixed-cost reductions, and the size of the effect in millions of yen.

The full-year operating profit forecast is ¥1,060 million, meaning that ¥358 million will be required in the fourth quarter following the ¥702 million recorded for the nine months ended September. For profit growth despite lower revenue to be viewed favorably, the improvement in margins must continue in the final quarter and the company must achieve this level while containing further losses in Other businesses.