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Japan – Recruit Holdings nine month results in line with expectations

10 February 2016

Japanese staffing giant Recruit Holdings (6098: JP) reported net revenue for the nine months ended 31 December 2015 of JPY 1,139 billion (USD 9.91 billion), an increase of 21.8% compared with JPY 935.5 billion (USD 8.1 billion) during the same period last year though much of the increase was due to a number of acquisitions made during the prior year. Net revenue from continuing operations grew by 9.8%.

The company benefited from a weak Yen which lifted the results of its non-Japanese businesses but did not disclose the results on a constant currency basis.

EBITDA increased by 5.4% to JPY 146.6 billion (USD 1.28 billion) or by 5.9% accounting for continuing operations.

 

(JPY billions) Nine Months to 31 December 2015 Nine Months to 31 December 2014 % change
Revenue JPY 1,139.4 (USD 9.91 billion)

JPY 935.5

(USD 8.1 billion)

+21.8%
EBITDA JPY 146.6 (USD  million) JPY 139.1 (USD  million) -5.4%

During 2015, the company acquired a number of businesses including two significant staffing firms, Peoplebank and Chandler MaCleod which gave it a prominent position in the Australian staffing market. The company is currently in the process of acquiring Dutch recruitment company USG People NV for EUR 1.42 billion (USD 1.55 billion).

Recruit reports in four business lines; Marketing Media (life events/lifestyle), HR Media (job boards and other online recruitment services), Staffing, and Other. The Staffing segment is the company’s largest responsible for 57% of Net Sales for the nine month period.

The HR Media business grew Net Sales by 19.1% to JPY 246.4 billion (USD 2.1 billion) with EBITDA lifting +16.9%. The domestic HR Media business grew by 6.7% while the overseas business (which includes international job board, Indeed) grew by 82.9% aided by favourable currency trends. The company highlighted improvements in the effective ratio of job offers to job seekers and increasing numbers of recruitment ads for its domestic business.

The Staffing business grew Net Sales by 30.6% to JPY 649.4 billion (USD 5.7 billion) with EBITDA growing 18.9%. The domestic Staffing business grew by 5.5% meaning that active agency workers (quarterly average) has increased in nine consecutive quarters. However, the company did caution that this growth rate has slowed down. The overseas Staffing business grew by 65.6% aided by acquisitions and currency effects with moderate growth continued in North America, Europe, and Australia.

The company described the Japanese economy as being on a “moderate recovery track amid factors such as continuing improvement in corporate business results and the employment situation against a backdrop of the government’s economic measures and monetary easing by the Bank of Japan, etc. At the same time, the outlook is uncertain due to factors including concerns about the risk of a downswing in the world economy resulting from the economic slowdown in China”.

Looking forward, the company plans to continue with its “aggressive” acquisitive growth overseas and made no change to its full year Net Revenue forecast of JPY 1,550.0 billion (USD 13.5 billion).

On close of the Japanese stock exchange today, Recruit’s shares were at JPY 3,410 (USD 29.67), down -4.75% on the day, but 3.96% above its 52-week low of JPY 3,280 (USD 28.54) set on 25 August 2015. Based on its current share price, the company has a market value of JPY 2.02 trillion (USD 17.5 billion).