In Q2, we achieved growth in both sales and profit, as the U.S. tariffs had no direct impact on our business, which is primarily focused on upstream development processes. We aim for the 12th consecutive period of growth in sales and profit.
Capitalizing on our expertise in upstream development processes, we enjoyed robust demand for engineers from automobile-related manufacturers and semiconductor manufacturing equipment manufacturers whose development themes are becoming increasingly diverse.
While concerns lingered over the impact of the U.S. tariffs on the entire industry, we fully benefited from our strength of having a high proportion of engineers in the upstream development processes, demonstrating resilience in the current economic environment. Demand for engineers from automobile-related manufacturers and semiconductor manufacturing equipment manufacturers remained robust.
The automobile industry, in particular, is undergoing a major transformation, and the development themes have become more diversified.
The strategic shift from engineer dispatching to contracting progressed smoothly. The utilization rate remained high, while the number of operative personnel increased. The unit price of engineers has increased across the board, including for that of newly graduated engineers on their initial assignments.
One noteworthy result in Q2 is that sales from the contracting business accounted for 12.3% of net sales (compared with 10.9% in the same period of the previous year), representing a 21.4% year-on-year increase. Our business model, which enables engineers to build a track record through dispatching services and advance to project leadership roles in contracting, has been progressing steadily. In addition, the utilization rate of engineers remained at a high level, especially in the field of software, and the number of operative personnel also increased as newly graduated engineers were assigned ahead of schedule. Moreover, the operating margin rose to 18.7%, as the unit price of engineers went up across the board, supported by a year-on-year increase in the unit price of initial assignments.
Based on the above, the Company achieved net sales of ¥5,876 million (up 7.9% year on year), operating profit of ¥1,099 million (up 14.5% year on year), ordinary profit of ¥1,101 million (up 14.5% year on year), and profit of ¥770 million (up 14.7% year on year).
Although growth is expected to slow slightly due to the U.S. tariffs, we do not anticipate significant changes in development activities among automobile-related manufacturers. We expect to see continuing demand for engineers.
The impact of the U.S. tariffs on our clients, if any, will likely materialize in the second half of the fiscal year or later. However, we do not believe this will result in an immediate reduction in development-related budgets. Automobile-related manufacturers, in particular, pursue a wide range of development themes, and even if progress in one theme slows, the budget can be reallocated to others, making a significant reduction in the overall budget unlikely. Based on the above, the Company expects to post sales and profit growth for the full year of Reporting Period 64, with net sales of ¥11,492 million, operating profit of ¥1,838 million, ordinary profit of ¥1,838 million, and profit of ¥1,274 million.
We aim to boost the number of engineers by 10% on average each year in order to secure 2,100 engineers. We plan to establish a framework to develop engineers capable of contributing to high-end, cutting-edge fields. We aim to enhance our ability to supply talent by leveraging our collective strengths, including business alliances with partner companies.
In line with our Medium-Term Business Plan, which sets a goal of securing 2,100 engineers, we have stepped up our recruitment efforts for new graduates, recent graduates with some work experience, and mid-career professionals amid an increasingly competitive hiring market. We seek to recruit 180 new graduates who will join the Company in April 2026, and 100 mid-career professionals by the end of FY2026, aiming to increase the total number of engineers by an average of 10% per year.
In the engineer dispatching business, we have set a goal of increasing the proportion of engineers assigned to high-end fields to 50%, in an effort to build a group of high-value-added engineers. We will work to improve the quality of engineers by hiring and educating engineers capable of being assigned to the fields. We also aim to establish a framework in which engineers with the potential to work in high-end fields are first assigned to contracting business projects, have their skills developed over a period of 2 to 3 years to reach the required level, and are then dispatched to clients’ projects. We believe that the recognition and trust such engineers earn through project assignments will lead to further requests for engineers from clients.
In the contracting business, we have set a goal of raising the personnel ratio to 30%, thereby promoting the optimal utilization of diverse talent. To achieve a 1:1 ratio between Artner employees and external personnel, we have been expanding our network of partner companies and have recently entered into a business alliance agreement with Fujitechno holdings Co., Ltd., which includes a partnership for the mutual utilization of human resources. By leveraging our collective strengths, we aim to enhance our ability to supply talent and address future challenges, such as the declining birthrate and aging population, shrinking workforce, and shortage of engineers.
Aiming for the 12th consecutive period of growth in both sales and profit, we plan to provide stable dividends with no year-on-year decline, in line with our basic policy of maintaining a 50% payout ratio.
To all our shareholders and investors, we would like to express our sincere gratitude for your ongoing support. Providing stable dividends to shareholders and investors is a key business priority for our company. Building on our basic policy of a 50% payout ratio, we aim to achieve strong financial results, increase profits steadily, and provide dividends at or above the previous year’s level. We have achieved 11 consecutive periods of growth in both sales and profit through the 63rd fiscal year (Reporting Period 63) and are sincerely grateful for your support. As we aim for our 12th consecutive period of growth, we are pleased to report that we have maintained steady earnings in Reporting Period 64.
The interim dividend for Reporting Period 64 was ¥42.00. We plan to pay a year-end dividend of ¥42.00, for an annual dividend of ¥84.00. We sincerely appreciate your continued understanding, support, and cooperation.
Q. What impact will the 15% U.S. tariffs have on the automobile industry?
A. Unlike the global financial crisis of 2008 and other structural recessions, it is likely that automobile-related manufacturers have already factored some potential impacts of the tariffs into their earnings. We have not seen any contract cancellations of our engineers so far. Rather than focusing on the tariffs and other short-term issues, the automobile industry is undergoing once-in-a-century technological innovation and advancing medium- to long-term development themes. Against this backdrop, we expect demand for engineers to remain strong.
Q. What is the impact of the slowdown in electric vehicle (EV) development among major automobile manufacturers?
A. While the pace of EV development has indeed been slowing down worldwide, the automobile industry continues to pursue a variety of other development themes, including hybrid vehicles (HVs), fuel-cell vehicles (FCVs), batteries, and automated driving, all aimed at achieving carbon neutrality. As the situation unfolds, we expect that the budget previously allocated to EV development will likely be reallocated to other themes. Given that our operations primarily focus on upstream development processes, we have not seen any significant impact at this point.
Q. What is the impact of the increasing demand for semiconductors used in generative AI?
A. The demand for semiconductors has indeed been increasing, driven by the growing use of generative AI and data centers. With this trend, the development of semiconductor manufacturing equipment has been advancing, and the demand for engineers from our key clients, the semiconductor manufacturing equipment manufacturers, remains strong. Furthermore, as electrification, automated driving, and connected technologies advance, semiconductors used in automobiles are becoming increasingly sophisticated, creating even more demand for engineers involved in their development, which we expect to have a positive impact on our business.
October 7, 2025
SEKIGUCHI Sozo
President and CEO
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