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Japan – SMS’ investments in efficiency savings temper H1 profits

31 October 2014

Japanese healthcare staffing provider SMS Co Ltd (2175: JP) reported revenue growth of +16.7% to JPY 7.5 billion (USD 68.8 million) for the six months ending 30 September 2014, up from JPY 6.4 billion (USD 58.7 million) a year ago.

Operating profit for the period decreased by -2.9% to JPY 1.29 billion (USD 11.8 million), down from JPY 1.34 billion (USD 12.3 million) in 2013. Net income, however, rose by +19.8% to JPY 1.3 billion (USD 11.9 million), up from JPY 1.1 billion (USD 10.1 million) a year ago.

According to the company’s financial statement, costs rose during the period as a result of investments in improving the operational and financial efficiency of SMS’ small and medium sized care businesses.

Revenue from the company’s nursing business rose to JPY 1.8 billion (USD 16.5 million), an increase of +35.8% from JPY 1.4 billion (USD 12.8 million) last year. The medical staffing business reported revenue growth of +6.7%, rising from JPY 5 billion (USD 45.8 million) last year to JPY 5.3 billion (USD 48.6 million) this year. The strongest year-on-year revenue growth was reported in the older people’s services business, which rose by +801.4% to JPY 11 million (USD 100,864), up from JPY 1.2 million (USD 11,003) last year. 

Revenue from the company’s overseas operations increased by +315.6% to JPY 316.5 million (USD 2.9 million), up from JPY 76.2 million (USD 698,711) in 2013.  

SMS Co Ltd provider nursing and healthcare serving, as well as services for older people, across Japan, Taiwan, and Sri Lanka.

The healthcare staffing segment in Japan has proven quite lucrative recently, with several recruitment companies; including JAC Recruitment and Dip Corp, reporting revenue growth in healthcare recruitment. 

In trading today, the company’s share price closed up by +0.6% at JPY 3,175 (USD 29.11), an increase of +44.2% compared with a year ago. Based on its current share price, the company has a market value of JPY 66.5 billion (USD 609.8 million).