Message from Our President and CEO
Market Environment for Reporting Period 62 (Fiscal year ending January 31, 2024)
As the market makes a full recovery, demand for engineers was strong from all industries, including automobile related and semiconductor manufacturing equipment manufacturers.
I extend my sincerest sympathies to those affected by the 2024 Noto Peninsula Earthquake, their families, and others afflicted. As society makes a full recovery from the COVID-19 pandemic, the market also regained its pre-pandemic vitality. Compared to previous years, this past year saw stronger demand for our engineers from automobile related and semiconductor manufacturing equipment manufacturers. In addition, noticeable was the increase in demand in various industry fields. Demand for engineers picked up from the digital transformation-related sector and the information and communications sector.
Summary of Business Results for Reporting Period 62 (Fiscal year ending January 31, 2024)
The unit price for newly graduated engineers at their first assignments continued to rise. Coupled with a high utilization rate and an increase in the number of operative personnel, we achieved the tenth consecutive period of growth in both sales and profit.
The unit price for newly graduated engineers at their first assignments continued to rise in an active market environment. This has contributed to the Company’s growth and profit margin improvements in the following fiscal year. The large ratio of engineers assigned to automobile related manufacturers, including CASE, was another factor behind the high profit margins. In addition, the utilization rate remained at a high level, and the number of operative personnel also increased.
Based on the above, Reporting Period 62 saw the tenth consecutive year of growth in both sales and profit, with sales of ¥10,110 million (up 9.4% year-on-year), operating profit of ¥1,522 million (up 27.5% year-on-year), ordinary profit of ¥1,532 million (up 27.4% year-on-year), and profit of ¥1,051 million (up 17.5% year-on-year).
Forecast for Reporting Period 62 (Fiscal Year Ending January 31, 2024)
We predict accelerated development at automobile related and semiconductor manufacturing equipment manufacturers, and we expect that demand for our engineers will remain high.
In the FY2025 market environment, we predict that the pace of development at automobile related and semiconductor manufacturing equipment manufacturers will become even faster. Accordingly, we anticipate strong demand for our engineers, following on from FY2024.
In the IT field, we currently have a high ratio of mid- to low-end engineers.
If highly skilled engineers are trained in this field, we expect the overall profit margin can be increased.
Based on the above, the Company expects to post higher sales and profits for Reporting Period 63, with sales of ¥10,656 million, operating profit of ¥1,696 million, ordinary profit of ¥1,700 million, and profit of ¥1,178 million.
Differences between the financial results targets in the Medium-Term Business Plan and the FY2025 forecast of financial results
We welcomed 171 newly graduated engineers in April 2024, surpassing the previous year’s figure. Nevertheless, the total number of engineers is expected to fall short of our 1,600 target. We forecast an operating margin of 15.9%, exceeding our 14.0% target.
In FY2025, the final year of the Medium-Term Business Plan, 171 newly graduated engineers joined the Company in April 2024, surpassing the previous year’s figure. Additionally, we plan to hire 100 career engineers (including non-recent and recent graduates). However, due to the increasingly intense recruitment environment, we expect that the total number of engineers will fall short of the 1,600 numerical management target.
Our operating margin is forecast at 15.9%, exceeding the numerical management target of 14.0%. This projection is attributed to the positive evaluation of our engineers at their places of assignment, leading to engineers’ higher added value and an increase in the unit price of engineers.
Unless there is a significant economic slowdown, we expect that the challenging recruitment environment due to a shortage of engineers will continue. To meet our clients’ engineer needs even in these circumstances, securing engineers is considered a management priority at Artner. In FY2024, we increased our staff and improved our organizational structure for the recruitment of newly graduated and career engineers. In FY2025, we will make maximum use of such human resources for our recruitment efforts.
Progress on the Plan Toward Compliance with the Listing Maintenance Criteria
Tradable share market capitalization achieved compliance with the listing maintenance criteria of the Prime Market of the Tokyo Stock Exchange one year ahead of schedule.
To achieve tradable share market capitalization of ¥10 billion, which was an incomplete criterion preventing us from meeting the listing maintenance criteria of the Prime Market of the Tokyo Stock Exchange, we set the theoretical stock price at ¥1,400, taking into account the requirements of earnings per share (EPS) and price earnings ratio (PER). We delivered solid financial results to raise the EPS, and we implemented measures such as increasing shareholder returns and improving capital efficiency to increase the stock price. To make these strengths, initiatives, and financial results of the Company known to more stakeholders, we strengthened our IR activities. As a result, the stock price significantly exceeded the theoretical stock price, and the tradable share market capitalization criterion of ¥10 billion was achieved as of January 31, 2024, a year earlier than the scheduled FY2025.
Furthermore, from the transition standard date to January 31, 2024, the stock price increased from ¥858 to ¥2,012,* representing an increase of ¥1,154 (2.3 times), and tradable share market capitalization increased from ¥4.1 billion to ¥14.9 billion, representing an increase of ¥10.8 billion (3.6 times). EPS increased from ¥68.59 to ¥98.99, representing an increase of ¥30.40 (1.4 times).
For stable compliance with the listing maintenance criteria, continued efforts will be made to further increase enterprise value and enhance IR activities.
*Average daily closing price over a three-month period ending on the last day of the fiscal year, etc.
To Our Shareholders and Investors
With our policy to maintain a 50% payout ratio, we will continue to grow our profit this year to distribute dividends that are at least at the same amount as the previous year and continue to increase.
We would like to thank our shareholders and investors for their continued support.
I would like to once again explain the Company’s dividend policy. Supplying stable dividends to shareholders and investors is a management priority of the Company. Our basic approach is to maintain a payout ratio of 50%, while continuing to grow our profit this year to distribute dividends that are at least at the same amount as the previous year and continue to increase. In FY2024, the ordinary dividend totaled ¥75.0 (payout ratio 75.8%), consisting of an interim dividend of ¥37.5 and a year-end dividend of ¥37.5. In FY2025, we plan to distribute dividends totaling ¥80.0 (payout ratio 72.1%), consisting of an interim dividend of ¥40.0 and a year-end dividend of ¥40.0 (up ¥5.0 year on year).
We at Artner are grateful for your continued understanding support, and cooperation.
Impact of Hot Market Topics on Artner
Q. Impact of world-leading semiconductor manufacturers’ plant construction in Japan
A. We anticipate that upward pressure on wages caused by inflation will likely result in base wage increases for our clients’ employees. We expect this will have a positive impact on negotiating engineers’ contract unit prices with our clients.
Q. Employing online meetings in the future
A. I believe online meetings, which we introduced out of necessity due to the COVID-19 pandemic, will continue to be a useful tool after the pandemic. The current online meeting system is a high-quality platform and is effective for increasing efficiency. However, there are times when face-to-face meetings are necessary. One of the things we gained from the pandemic is having this choice of online or in-person meeting.
April 26 , 2024
President and CEO SEKIGUCHI Sozo
Past Message from Our President and CEO
》 Q2 of Reporting Period 62 (FY2024)
》 Reporting Period 61 (FY2023)
》 Q2 of Reporting Period 61 (FY2023)
》 Reporting Period 60 (FY2022)
