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Consolidated revenues up over 10% YoY in Q2 2017 for Recruit Holdings

Recruit Holdings, Co., Ltd. Has announced its financial results for the six months ended 30th September 2017.


Consolidated revenue for the three months ended 30th September 2017 was ¥538.6 billion, an increase of 10.8% from the same period of the previous year. This was mainly due to continued favourable growth of its staffing and HR technology segments. The effect of the exchange rate fluctuation positively impacted the consolidated revenue during the period by ¥27.1 billion. As a result, consolidated revenue for the six months ended 30th September 2017, was ¥1,063.0 billion, an increase of 15.0% from the same period of the previous year.


The growth rate for the six-month period was higher than that for the second quarter as USG People, a wholly owned staffing subsidiary, started to be consolidated in June 2016 and recorded its operating results for a one-month period in the first quarter of the previous year.


Consolidated operating income for the second quarter of the fiscal year 2017 was ¥52.0 billion, a decrease of 22.8% from the same quarter of the previous year. This decline was mainly due to a non-recurring gain from sales of shares of subsidiaries of ¥22.1 billion recorded in the second quarter of the previous year resulting from the transfer of a travel business subsidiary in the media & solutions segment. As a result, operating income for the six-month period was ¥108.3 billion, a decrease of 7.7% year on year.


Profit before tax for the second quarter of the fiscal year 2017 was ¥54.1 billion, a decrease of 20.7% year on year. This was due primarily to a decline in operating income impacted by the non-recurring gain mentioned above in the prior year. As a result, profit before tax for the six-month period was ¥113.2 billion, a decrease of 5.1% from the same period of the prior year.


Quarterly revenue in the staffing segment was ¥324.6 billion, an increase of 8.2% year on year. This was mainly because of the increased revenue from the operations in Japan supported by a solid market environment. In addition, revenue from the overseas operation increased as a result of the impact of foreign exchange rate movements in this quarter. As a result, revenue for the six-month period was ¥642.6 billion, an increase of 16.3% year on year. The growth rate for the six-month period was higher than that for this second quarter as USG People started to be consolidated in June 2016.


Quarterly segment EBITDA was ¥20.1 billion, an increase of 14.0% year on year. This was mainly due to the increased revenue from the Japanese operations. The breakdown of segment EBITDA was as follows: ¥9.0 billion from the Japanese operations, an increase of 27.5% year on year, and ¥11.0 billion from the overseas operations, an increase of 4.8% year on year. As a result, segment EBITDA for the six-month period was ¥40.7 billion, an increase of 25.3% year on year. The growth rate for the six-month period was higher than the quarterly figure due to the timing of USG People’s consolidation as mentioned above. Segment EBITDA was comprised of ¥20.4 billion from the Japanese operations, an increase of 40.2% year on year, and ¥20.2 billion from the overseas operations, an increase of 13.2% year on year.


The Japanese staffing market continues to expand moderately as evidenced by the continued increase in the number of active agency workers. Under this environment, the Japanese operations focused on extending existing staffing contracts and increasing the number of new staffing contracts. As a result, quarterly revenue was favourable at ¥123.9 billion, an increase of 10.4% year on year. Revenue for the six-month period was ¥249.6 billion, an increase of 11.5% year on year.


Overseas quarterly revenue was ¥200.6 billion, an increase of 6.9% year on year. The positive effect of foreign exchange rate movements on its revenue during this quarter was ¥22.5 billion. Excluding this effect, the quarterly revenue declined by 4.4% year on year. This was primarily due to its operating focus on profitability based on the Unit management system. In addition, the operations experienced a decrease in transactions with existing clients who limited their spending owing to the challenging business environment in some industries in the United States. As a result, revenue for the six-month period was ¥392.9 billion, an increase of 19.5% year on year. The reason for higher growth rate for the six-month period than the quarterly growth rate was the timing of USG People’s consolidation as mentioned above. Effects of foreign exchange rate movements for the six-month period positively impacted revenue by ¥27.1 billion. Normalised revenue for the six-month period, excluding factors of USG People’s consolidation and applied foreign exchange rates, declined by 4.4% year on year for the same reason as the quarterly revenue growth rate.


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