During the consolidated interim period under review, the Japanese economy showed signs of improvement in terms of employment and personal income and was on a gradual path toward economic recovery. At the same time, however, price increases, particularly the rise in energy and food prices due to the depreciation of the yen and other factors, are pushing up the overall inflation rate, and the economy has yet to reach a full-fledged recovery. As a result, the environment companies operate in remains harsh, and the outlook is not optimistic.
In the information services industry to which the Group (comprising the Company, consolidated subsidiaries, and equity-method affiliates) belongs, there have been active inquiries about business efficiency systems designed for corporate work-style reforms and contactless solutions. In addition, efforts such as the expansion of cloud computing, the increased use of big data and artificial intelligence (AI), and the promotion of IoT, all under the theme of Digital Transformation (DX), are ongoing, leading to a continuing trend of increasing investment in system-related areas.
In this situation, the Group is entering the final year of its Medium-term Management Plan (April 2022 - March 2025). To achieve the numerical targets of “net sales of 40,000 million yen, operating profit of 3,200 million yen, operating profit margin of 8.0%, and ROE of 10% or more,” the Group is making concerted efforts to expand its business.
In the consolidated interim period under review, net sales amounted to 18,875 million yen (down 0.5% year on year), operating profit was 1,025 million yen (down 34.9%), ordinary profit was 1,020 million yen (down 36.3%), and profit attributable to owners of the parent company totaled 1,005 million yen (down 3.5%). Profit attributable to owners of parent was 1,005 million yen (down 3.5%).
Net sales grew significantly in the second quarter of the year on a non-consolidated basis, but this growth was insufficient to compensate for the decline in the first quarter. Net sales of the data center and cloud services and the commissioned calculation services for service stations (SSs, gas stations), remained solid. Also, net sales of the mailing services increased year on year. However, the system development services experienced sluggish sales growth overall due to delays in the development of some projects, resulting in a year-on-year decline in net sales.
Both operating profit and profit attributable to owners of the parent decreased year on year. As in the previous quarter, costs remained high in this interim period, leading to an overall slowdown in growth of profit. Profit attributable to owners of the parent remained slightly lower year on year as we recorded a gain on the sale of its investment securities held. The high costs, which are the main factor behind the decrease in profit, are being resolved through sales at appropriate prices that match profitability and due to the effect of increased sales from new acquisitions, and the results have already begun to appear.
(Source: Financial Results for the Six Months Ended September 30, 2024)