Message from Our President and CEO
Market Environment up to Q2 of Reporting Period 62 (Fiscal year ending January 31, 2024)
The demand for engineers from the automobile and semiconductor industries remained strong in tandem with the growth in post-COVID-19 demand.
In tandem with the growth in post-COVID-19 demand, manufacturers in industries related to automobiles and semiconductor manufacturing equipment still had a strong development drive, and this resulted in continued demand for Artner’s engineers. Efforts to achieve carbon neutrality by 2050, combined with technology development that will shape the future of automobiles including CASE (connected, autonomous, shared, and electric), accelerated software development, which plays a central role in these initiatives.
Summary of Business Results up to Q2 of Reporting Period 62 (Fiscal year ending January 31, 2024)
The unit price for newly graduated engineers at their first assignments rose, leading to higher profitability. The number of operative personnel and the unit price of engineers surpassed that of the same period of the preceding year, contributing to strong business results.
Transportation equipment, electrical equipment, precision equipment, and information and communications accounted for larger shares of the Company’s net sales by industry. In terms of business fields, the share of software engineers who are highly demanded by clients rose to 41.8%. Engineers are becoming scarce due to strong demand from clients. As a result, the unit price for newly graduated engineers at their first assignments rose, which in turn increased our profitability. Furthermore, we assigned newly graduated engineers ahead of schedule. Accordingly, the number of operative personnel and the unit price of engineers surpassed that of the same period of the preceding year, which contributed to the Company’s strong performance.
Based on the above, the Company achieved sales of ¥5,006 million (up 10.7% year-on-year), an operating profit of ¥882 million (up 27.7% year-on-year), an ordinary profit of ¥882 million (up 27.6% year-on-year), and a profit of ¥617 million (up 28.8% year-on-year).
Progress of the Earnings Forecast (full financial year) for Reporting Period 62 (Fiscal year ending January 31, 2024)
In the second half of the year, we still do not expect any major downside risks to the business environment. We predict steady net sales and profits in line with our full-year forecast of financial results.
Despite the unstable world situation, such as the situation in Russia and Ukraine, we still do not expect any major downside risks to the business environment and economic conditions surrounding the Company for the second half of the year. Therefore, we expect that our clients will further accelerate their development projects, leading to an increased demand for engineers in the lead-up from the second half of the year onward to next year.
As for the full-year forecast of financial results, the progress of individual prerequisites to the plan varies, such as the number of engineers, utilization rate, and the unit price of engineers. Nonetheless, we anticipate that they will complement each other, and net sales and profits will make steady progress overall.
Based on the above, the Company expects to post higher sales and profits for Reporting Period 62, with sales of ¥9,797 million (up 6.0% year-on-year), operating profit of ¥1,325 million (up 11.0% year-on-year), ordinary profit of ¥1,328 million (up 10.4% year-on-year), and profit of ¥920 million (up 2.8% year-on-year).
Progress on the Plan Toward Compliance with the Listing Maintenance Criteria
Tradable share market capitalization reached ¥10 billion one year ahead of our target to comply with the listing maintenance criteria of the Prime Market of the Tokyo Stock Exchange.
Through our IR activities, we have actively informed the market, more than ever before, of our continued strong financial results, including nine consecutive periods of growth in both sales and profit and the expectation toward the tenth consecutive period of such growth, as well as our commitment to shareholder and investor returns. We view that this has contributed to a greater understanding of the Company, and the current stock price level reflects this. We have set FY2025 , the final year of the Medium-Term Business Plan, as our deadline for achieving a tradable share market capitalization of ¥10 billion, which is the listing maintenance criteria of the Prime Market of the Tokyo Stock Exchange. Tradable share market capitalization was ¥12.4 billion as of September 7, 2023, meaning the criteria was reached one year ahead of our target.
Progress of the Medium-Term Business Plan (Fiscal year ending January 31, 2023 to Fiscal year ending January 31, 2025)
We will conduct recruitment activities to achieve our business targets, mindful of our brand image as a “high value-added engineering group.”
The target in the Medium-Term Business Plan is to have a total of 1,600 engineers. To achieve this goal, we are focusing on our strengths, namely, offering engineers an attractive work and education environment, providing opportunities to develop their careers in-house through job-based employment, and offering a job change assistance program that enables engineers to be employed by manufacturers in the future. We aim to meet our target by recruiting 220 new graduates to join in April 2024 and 180 career hires in FY2024.
Sales and recruitment are in a trade-off relationship. Sales is seeing a very strong demand for engineers, while recruitment of engineers is becoming highly competitive. That being said, Artner has built a reputation as a “high value-added engineering group,” and this is how customers view the Artner brand. To preserve this brand image, we will carry out recruitment activities while being conscious of making quality hires.
With our policy to maintain a 50% payout ratio, we will continue to grow our profit this year to distribute dividend that is at least at the same amount as the previous year and continues to increase.
We would like to thank our shareholders and investors for their continued support.
I would like to provide some additional clarification regarding the Company’s dividend policy. Our policy is to maintain a 50% payout ratio. At the same time, we attach importance to making stable dividend payments.
Our basic approach is to continue to grow our profit this year, ensuring that the dividend remains at least at the same amount as the previous year and continues to increase.
For Reporting Period 62 (FY2024 ), the interim dividend increased by ¥5.5 compared to the initial forecast, to a total of ¥37.5. The year-end dividend is planned to be ¥32.0, for an annual dividend of ¥69.5 (¥9.5 more than the previous year; payout ratio 80.2%).
We at Artner are grateful for your continued understanding support, and cooperation.
Impact of Hot Market Topics on Artner
Q. Impact of upward pressure on wages caused by recent inflation
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. Impact of yen depreciation or appreciation
A. We are closely following the impact of exchange rates on our clients. We believe that exchange rate fluctuations will not affect our business environment for the foreseeable future.
Q. Impact of post-COVID-19 trends on business
A. We are seeing whether our clients will do away with practices such as working from home and teleworking, or if these new work styles are here to stay. If they are here to stay, it will become easier to accommodate the work location and regional preferences of students and job seekers.
Q. Impact of ChatGPT and other generative AI on business
A. Artner is engaged in the development of semiconductor manufacturing equipment, which is essential for generative AI that process vast amounts of data. We anticipate demand for semiconductor manufacturing equipment to increase, and we expect this will have a positive impact on our business.
October 6, 2023
President and CEO SEKIGUCHI Sozo
Past Message from Our President and CEO
》 Reporting Period 61 (FY2023)
》 Q2 of Reporting Period 61 (FY2023)
》 Reporting Period 60 (FY2022)
