Solid Half year at Persol Holdings
Persol Holdings has announced its Q2 results showing sales of JPY 452,260 million (up 39.3% year-on-year (YOY)), operating profit was JPY 20,453 million (up 27.7% YOY), ordinary profit was JPY 20,660 million (up 1.5% YOY), and quarterly net profit attributable to parent company shareholders was JPY 11,987 million (up 30.0% YOY).
Representative Director, President and CEO Masamichi Mizuta, said, “While the outlook for the Japanese economy for the consolidated cumulative second quarter under review remains unclear due to trade friction between China and the U.S. etc., corporate results were supported by various economic policies resulting in progress being made with the underlying theme of increased income and profit. The Japanese economy grew modestly and was generally steady.
The employment situation is steadily recovering with Japan's September 2018 job-to-applicant ratio experiencing high levels (multiple of 1.64 times) for the first time in 44 years. On the other hand, trends shifted; the number of completely unemployed individuals decreased, whereas the number of employed persons increased. In an employment environment where Japan is approaching full-employment, various human resources related companies find themselves confronted with labor force shortages coupled with abundant demand for talent. The human resources related market in Japan tended to be sound overall.
PERSOL Group business results grew due to: the addition of the PROGRAMMED segment, steady growth within the PERSOLKELLY segment (formerly known as the "Overseas" segment), and progress made towards strengthening the sales structures in the recruitment business which led to an increase in the number of hire contracts that were successfully closed etc.
In light of this environment, PERSOL Group amended the trading names of core companies within each business to reflect the "PERSOL" nomenclature. PERSOL aims to resolve challenges relating to labor/employment in various sectors by leveraging the integrated strengths within PERSOL Group that extend beyond sectoral boundaries. One manifestation of this aim was the merger of 10 subsidiaries within the Temporary staffing/BPO segment with effect 1 October 2018. The information held by each of these subsidiaries (staff/candidate registrations, customer information, and market information etc.) will be aggregated, and IT technology utilized to enhance the precision and speed when matching job opportunities with candidates. Also, the PERSOL Career entity within the Recruiting segment re-branded its 8-year-old "DODA" job change support service brand to "doda" in October 2018. PERSOL is evolving its brands to express its respect of the value of a diverse range of working people, and the notion of supporting "work" that suits the individual.
Meanwhile, in oversea segment, the PERSOLKELLY segment grew sales by successfully expanding its sales structures above and beyond that seen in the previous platform. Also, the PROGRAMMED segment (focused primarily on the Australian market), made progress with its business. The previous structures were used as a foundation which have been strengthened by moves made to augment the business structures with “must-have” internal controls. It is through these 2 overseas focused segments; the PERSOLKELLY and PROGRAMMED segments that PERSOL aims to continue to strengthen its competitiveness and expand the business by enhancing its presence in the Asia Pacific (APAC) region over the medium to long-term.
As a result of the above, sales during this consolidated cumulative 2nd quarter under review were JPY 452,260 million (up 39.3% year-on-year (YOY)), operating profit was JPY 20,453 million (up 27.7% YOY), ordinary profit was JPY 20,660 million (up 1.5% YOY), and quarterly net profit attributable to parent company shareholders was JPY 11,987 million (up 30.0% YOY). Business results by segment (before inter-segment/company write-offs) are as follows: Reporting segment categories changed in both the previous 1 st quarter (Q1) accounting period, as well as 3rd quarter (Q3) consolidated accounting period.
The following year-on-year (YOY) comparisons are made after amending previous year figures and substituting with the amended segment category figures. j Temporary Staffing/BPO Segment Sales in this segment during this consolidated cumulative 2nd quarter period amounted to JPY 248,508 million (up 5.5% year-on-year (YOY)), and operating profit was JPY 11,111 million (up 4.1% YOY). With favorable corporate results and structural shortages of labor as a backdrop to this consolidated cumulative 2nd quarter period, demand was strong leading to sales of JPY 248,508 million. In addition, there was an increase in costs related to the merger of subsidiaries, but on the other hand, there was an increase in placement fee revenues with corporate clients hiring workers directly associated with effects of revisions to Japanese laws.
Recruiting Segment Sales in this segment during this consolidated cumulative 2nd quarter period amounted to JPY 41,042 million (up 16.1% year-on-year (YOY)), and operating profit was JPY 7,560 million (up 60.7% YOY). Sales in this segment during this consolidated cumulative 2nd quarter period amounted to JPY 41,042 million which were underpinned by a healthy demand for HR resources and was mainly reflected in an increase in the number of hire contracts that were successfully closed etc. On the profit side, marketing costs declined, and the aim was to bolster sales structures by investing in headcount. On the other hand, the HR placement business played a leading role in expanding sales which resulted in earnings growth and operating profit of JPY 7,560 million.
PROGRAMMED Segment Sales in this segment amounted to JPY 102,464 million during this consolidated cumulative 2nd quarter period, and operating profit was JPY 218 million. Sales in this Segment during this consolidated cumulative 2nd quarter period amounted to JPY 102,464 million characterized by a strengthening of client relationships, and a changing competitive environment where there was a decline in orders from existing clients in staffing business. On the profit side, operating profit was JPY 218 million as a result of reductions to operating costs. Furthermore, please note, there are no comparisons with the same quarter in the previous year as this segment was established anew as a new reporting segment in the previous consolidated cumulative 3rd quarter period.
PERSOLKELLY Segment Sales in this segment during this consolidated cumulative 2nd quarter period were JPY 36,122 million (up 13.6% YOY), and operating profit was JPY 357 million (operating loss in the same period last year was JPY 285 million). Sales in this segment during this consolidated cumulative 2nd quarter period amounted to JPY 36,122 million which was the result of expansion in proactive sales structures in the buoyant APAC market environment. On the profit side, operating profit was JPY 357 million as a result of increased labor costs associated with structural alignments, but on the other hand, there was an expansion of services focusing on temporary labor/placement services. Furthermore, there was a change in title of this segment to “PERSOLKELLY” segment due to the PROGRAMMED segment being newly established in the previous consolidated fiscal year.”