Japanese staffing firm Outsourcing Inc. (2427:JP) reported revenue rose by 25.5% for the first quarter ended 31 March 2022 to JPY 155.31 billion (1.18 billion).

Outsourcing Inc., which ranks as the third-largest staffing firm in Japan, according to SIA, provides outsourcing services in electronics, cars and other areas. It also provides temporary staffing services, known in Japan as worker dispatch.

Last month, Outsourcing Inc. (2427:TYO) announced it was acquiring Sankyo Logi Associate Co. Ltd., a provider of warehouse worker staffing in the Kanto, Tohoku, Kansai and Chugoku areas of Japan. The company also announced that, through its subsidiary American Engineering Corporation, that it would acquire California Pacific Technical Services LLC.

In January 2022, the company signed an early purchase agreement for the remaining shares of Netherlands-based staffing firm Otto Group. The difference between put option liability and the acquisition price of the remaining shares was recorded as finance cost of approximately JPY 2.4 billion (USD 18.3 million) in the current period. Outsourcing Inc. first announced that it acquired 56% of shares in the Otto Holding B.V. in 2018.

The group has five reportable segments, namely “Domestic Engineering Outsourcing Business,” “Domestic Manufacturing Outsourcing Business,” “Domestic Service Operations Outsourcing Business,” “Overseas Engineering Outsourcing Business,” and “Overseas Manufacturing and Service Operations Outsourcing Business.” Revenue for all five reportable segments successfully rose to another high in the current period.

The Domestic Engineering Outsourcing Business experienced limited negative effects of the Covid-19 pandemic and continued to see a large increase in both revenue and profit from a year earlier during the current period.

In the Domestic Manufacturing Outsourcing Business, dispatching and outsourcing services as well as fee-charging recruiting service of fixed-term employees in the manufacturing field were negatively affected by production adjustments on the back of semiconductor shortages and supply chain disruptions under the pandemic.

The Domestic Service Operations Outsourcing Business mainly provides services to US military facilities, which are less susceptible to macroeconomic dynamics, unlike businesses in the manufacturing field. The business saw steady growth during the current period by offering renovation and maintenance services for US military buildings and facilities without being significantly affected by the pandemic.

The Overseas Engineering Outsourcing Business saw a large increase in both revenue and profit from a year earlier during the current period. Although the outsourcing business for public debt collection in the UK saw a dent in collection rates in certain areas, businesses grew at a brisk pace in Ireland and the Oceania region.

In the Overseas Manufacturing and Service Operations Outsourcing Business, the e-commerce related business centred around major supermarkets in the Netherlands continued to grow. In the UK, the recruiting and placing business for government and the Business Process Outsourcing (BPO) business for local government performed well, the group added. Segment profit went down due to the recording of impairment of goodwill of JPY 460 million (USD 3.50 million) in the UK and JPY 60 million (USD 0.4 million) in Brazil, and also due to extra costs required to take countermeasures against the quick spread of new variants of Covid-19

Included in Other Businesses are the shared service of administrative work and sign-language classes provided by disabled workers from the group’s special subsidiary company, which went well during the current period.

Looking ahead, the group forecasted revenue of JPY 695.0 billion (USD 5.29 billion) for the year ended 31 December 2022.

Shares in Outsourcing Inc closed at JPY 1,249.00 (USD 9.52), down 2.19% on the day and 17.94% above the 52 week low of JPY 1,059.00 (USD 8.07) set on 9 March 2022. The company has a market cap of JPY 160.81 billion (USD 1.22 billion).