Past Message from Our President and CEO
Market Environment up to Q2 of Reporting Period 61 (Fiscal year ending January 31, 2023)
While working to both control the spread the COVID-19 virus and stimulate economic activity, the demand for engineers in the automotive industry and semiconductor-related businesses remained strong, centered around carbon neutrality initiatives.
While working to both control the spread of infection of the COVID-19 virus and stimulate economic activity in society, the demand for engineers from the automotive industry and semiconductor-related businesses remained strong. The demand from automotive companies in particular was focused on next generation batteries for electric vehicles, and the majority were projects related to carbon neutrality.
To support upstream to downstream development processes, the Company has the following groups: High Value Group, Wide Value Group, and Product Value Group. There was a high demand for engineers from all groups on single projects. Being able to provide one-stop solutions to such client needs is, we believe, one of the biggest reasons why clients are choosing Artner.
Summary of Business Results up to Q2 of Reporting Period 61 (Fiscal year ending January 31, 2023)
The placement of newly graduated engineers progressed ahead of schedule, and the utilization rate remained high. The number of operative personnel greatly increased.
The placement of newly graduated engineers has recovered to the level before the COVID-19 pandemic and progressed ahead of the initial schedule. We also received a healthy amount of inquiries allowing the utilization rate to remain high. The number of operative personnel was considerably higher than for the same period last year.
By prioritizing the placement of unplaced engineers, the Company achieved a unit price per engineer that was slightly lower than for the same period last year. Total work person-hours is, generally speaking, progressing at the level of the same period last year.
Regarding the continued expansion of the contracting business, it now comprises 8.4% of the Company’s total sales and is heading toward the 10% target steadily.
Based on the above, the Company achieved sales of ¥4,522 million (up 13.6% year-on-year), an operating profit of ¥690 million (up 21.9% year-on-year), an ordinary profit of ¥691 million (up 19.2% year-on-year), and a profit of ¥479 million (up 14.2% year-on-year).
Progress of the Earnings Forecast (full financial year) for Reporting Period 61 (Fiscal year ending January 31, 2023)
In the second-half of the year, the Company does not expect to see a deceleration in economic activity. We expect higher sales and profits for the full financial year.
Progress in Q2 against the full financial year forecast for Reporting Period 61 (Fiscal year ending January 31, 2023) is favorable, with sales of 51.4% and an operating profit of 60.2%. Further, as society as a whole is adapting to a “living with COVID” world, where we take appropriate infection-reducing measures while continuing economic activity, the Company does not expect economic slowdown in the second-half of the year. The Company is also anticipating that utilization rates will remain strong, as in Q2.
Based on the above, the Company expects to post higher sales and profits for Reporting Period 61, with sales of ¥8,798 million (up 8.6% year-on-year), operating profit of ¥1,147 million (up 13.6% year-on-year), ordinary profit of ¥1,150 million (up 11.4% year-on-year), and profit of ¥797 million (up 9.4% year-on-year).
Progress of the Medium-Term Business Plan (Fiscal year ending January 31, 2023 to Fiscal year ending January 31, 2025)
While aiming for a total number of engineers of 1,600, the Company is focusing on expanding career recruitment in addition to advancing new graduate recruitment.
In this Medium-Term Business Plan, the Company is working toward a numerical management target of a total number of engineers of 1,600. As of the end of Q2, the number of engineers was 1,192, and steady progress is being made towards achieving this goal.
Regarding new graduate recruitment, the Company is proactively recruiting with the goal of hiring 160 new graduates. While the Company has focused on new graduate recruitment in the past, the current Medium-Term Business Plan aims for a roughly one-to-one ratio of new graduate recruitment to career recruitment. In Q2, the Company achieved career recruitment of 25 people, approximately double that hired in the same period of the previous year. In order to achieve the Company’s goals, we consider it essential to build up our knowledge.
The job turnover rate has been improving due in part to a reduction in turnover related to the COVID-19 pandemic as society is adapting to a “living with COVID” world.
Progress on the Plan Toward Compliance with the Listing Maintenance Criteria
Various initiatives have been made to comply with the listing maintenance criteria of the Prime Market of the Tokyo Stock Exchange during the three years of the Medium-Term Business Plan.
The Company has taken various initiatives to achieve the goal of a tradable share market capitalization of ¥10 billion over the three years of the Medium-Term Business Plan. This is an incomplete item from the listing maintenance criteria for listing in the Prime Market of the Tokyo Stock Exchange.
To raise the ratio of tradable shares, the Company implemented a secondary offering following the decision made on April 1, and achieved the goal of a ratio of 70%.
In particular, for the earnings per share, the Company has implemented various initiatives to improve business performance in tandem with achieving the performance goals of the Medium-Term Business Plan.
The Company hopes that these various initiatives will be appreciated by the market and bring our stock price closer to our target.
To Our Shareholders and Investors
Having celebrated its 60th anniversary, the Company continues to develop into a group of engineers providing the greatest added value in the industry.
We would like to thank our shareholders and investors for their continued support.
The Company celebrated its 60th anniversary on September 18, 2022. We would like to take this opportunity to express our sincere gratitude to each of you for your support.
In order to establish the Company as a group of engineers that is recognized, by both ourselves and others, as a provider of the greatest added value in the industry, we are setting various goals in the Medium-Term Business Plan. Additionally, the Company has set as essential to fulfill the incomplete items preventing us from achieving listing maintenance criteria in the Prime Market of the Tokyo Stock Exchange. The Company will work together as one to complete this business matter.
The Company considers stable dividend payments to shareholders and investors as one of its most important management issues, and has raised the dividend payout ratio to 50%. For Reporting Period 61 (Fiscal year ending January 31, 2023), the interim dividend was increased by ¥1.0 compared to the initial forecast, to a total of ¥20.0. The year-end dividend is planned to be ¥19.0, for an annual dividend of ¥39.0.
We at Artner are grateful for your continued understanding, support and cooperation.
October 7, 2022
President and CEO SEKIGUCHI Sozo
