Our effective Unit Management Raises Profitability and Maintains World-Class EBITDA Margins
Broad Client Base Covering from SMEs to Large Companies in a wide range of industries across Japan
In Japan our operating companies Recruit Staffing Co., Ltd. (RS) and Staff Service Holdings CO., LTD. (SS) provide a wide range of staffing services. Both RS and SS are comprehensive staffing companies.
RS has a relatively strong position in the large company segment in urban areas. It is characterized by its careful assessment of registered staff who can satisfy clients' needs and requirements. SS has a strong position in the SME market segment across Japan. Staff Service is characterized by its ability to speedily supply staff to respond to clients' demand.
Staffing service users are individuals seeking to work in temporary roles and clients are companies looking to employ temporary workers. We ascertain the needs of both parties and then dispatch staff to clients.
Business models for staffing are to a large extent similar around the world. Staffing companies charge their clients a work-based fee. Compensation for staff supplied is recorded as revenue. This impacts the EBITDA margin if expressed as a percentage of revenue. As a percentage of gross profit EBITDA matches the level of the other business units, HR Technology and Media & Solutions.
Market Environment (FY2017)
Market in Japan Operations Continues Its Mild Upward Trend
In Japan the number of people working through staffing agencies has increased year on year for 14 consecutive quarters.
The staffing business in Japan is currently affected by the regulatory changes that require all staffing companies to comply with the Worker Dispatching Act. Apart from that, the staffing market tends to link to macro-economic development such as GDP growth. The penetration rate of temporary staffing is already at a mature level in the Japanese labor market.
Revenue Increased Due to strengthened sales capabilities and successful retention of existing Contracts
In FY2017, the staffing market continued its moderate expansion trend, driven by continued economic growth and increase in the number of active agency workers. Under this environment, results remained favorable mainly in the administrative, engineering and IT divisions, due to factors including strengthening of sales capabilities as well as focusing on the extension of existing staffing contracts and an increase in the number of new staffing contracts. As a result, revenue was 509.2 billion yen, a year-on-year increase of 9.9%.
Our operation focuses on profitability and efficiency using "Unit Management System", which splits a sales organization into effective size units, each with a manager authorized to make decisions. It is a system that aims to continuously improve an organization's effectiveness in order to grow profitability and revenue. The Unit Management System helps us maintain a leading position in Japan in terms of revenue and top-ranked EBITDA margins.
Strategy Going Forward
Continuous improvement and Profitable growth through Unit Management System and a Stronger User Base
Our strengths are that we possess efficient business management know-how called "Unit Management System", a cost management method that enables achieving a high EBITDA margin, and that we have established superb brand value as a result that we provide a full lineup of human resource services, including the HR Solutions operation in the Media & Solutions segment.
Looking ahead, we aim to strengthen our number one position with focus on continuous improvement and profitable growth through Unit Management System, we will continue working to strengthen our user base by efficiently advancing the acquisition of newly registered users and the referral of job openings to existing registered users. This will be done by effectively harnessing our user-capture expertise, IT platforms, and other resources cultivated in our various existing media operations. Through these activities, we will strive to expand the number of new staffing contracts, optimize user attraction cost and improve matching accuracy.
Average Number of Active Agency Workers in Japan/Year-on-Year Growth Rate [People/%]
Annual Revenue [Billions of Yen]
* under Japanese GAAP
FY2017 Revenue Comparison [Billions of Yen]
*1. Sales of Staffing and BPO segments
*2. FYE Mar 2017