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FYE 2023 Business Results

(Million Yen)


FYE 2021
FYE 2022
FYE 2023
Increase
(Decrease)
Net sales
14,836
15,589
18,791
20.5%
Operating profit
1,437
1,621
1,321
-18.5%
Non-GAAP operating profit
1,530
1,841
1,606
-12.8%
Ordinary profit
1,439
1,619
1,324
-18.2%
Profit attributable to owners of parent
1,009
962
864
-10.2%

During the consolidated fiscal year, the Japanese economy showed signs of economic recovery as economic activities have normalized with the easing of movement restrictions put inplace for the COVID-19 pandemic.

Within this economic environment, in the construction industry, to which our Group's major customers belong, public investment remained firm due to the execution of related budgets against the background of the National Resilience Plan, etc. Private-sector construction investment increased mainly in the manufacturing industry due to increased willingness to make capital investment in anticipation of the post-COVID-19 situation. Overall, the construction industry was better YoY. At our Company as well, structural problems in the construction industry continue, such as the aging of technical employees and a shortage of young technical employees. Orders received in the technical employee dispatching business are at a level significantly higher YoY. In addition, as the impact of the COVID-19 pandemic has become less significant, the external environment remains steady.

In this business environment, our Group is promoting initiatives aimed at medium- to long-term growth in order to realize the Medium-Term Management Plan "COPRO Group Build the Future 2027" announced in May 2022.


At COPRO-ENGINEERD. Co., Ltd., (currently COPRO CONSTRUCTION. Co., Ltd.) which does construction technician dispatching, in response to the strong demand for human resources as the number of deals from business partners exceeds 3,000 per month, and with a priority on securing technical employees who are the cornerstone of business growth, we have strengthened our recruitment activities and promoted initiatives related to improving the retention rate. In terms of recruitment, we aggressively invested in recruiting costs that nearly tripled YoY, and expanded recruitment through paid media and our own recruiting site “Gen-Kyari”. In addition, as a result of efforts to raise the level of our recruiting activities, including increasing the number of interviews that serve as the gateway, the number of recruits in the consolidated fiscal year reached a record high of 1,472, an increase of 638 YoY. In addition, in order to provide an environment where technical employees can work for a long time with peace of mind, we continued to focus on deep cultivation sales to target companies that have a large number of construction projects and are expected to have a high contract renewal rate. By promoting the conversion of qualified fixed-term technical employees to permanent employees, the number of employees leaving was reduced, and the retention rate improved to 74.4% (up 5.0 points YoY). Furthermore, by taking over the worker dispatch business of Hucoss Co., Ltd., a consolidated subsidiary of Takasago Thermal Engineering Co., Ltd., through an absorption-type company split on April 1, 2022, 122 highly-skilled technical employees who have cultivated experience at major subcontractors were transferred. As a result of these efforts, the number of technical employees at the end of the consolidated fiscal year was 2,777 (versus 1,995 at the end of the previous consolidated fiscal year). In addition, on November 14, 2022, we signed a business alliance agreement with SpiderPlus & Co., which handles DX for the construction industry. By incorporating training related to the DX service “SPIDERPLUS” provided by the company into our training curriculum, we are working to develop immediately effective human resources who can respond to the digital transformation of construction sites and improve the added value of human resources.


ATMOS Co., Ltd., (currenlty COPRO TECHNOLOGY. Co., Ltd.) which provides mechanical design and development engineer dispatch and contract services, opened a Tokyo branch with the aim of capturing demand in the Tokyo metropolitan area. and in addition to hiring experts from major manufacturers, has also stepped up the hiring of inexperienced workers. As a result of these efforts, the number of technical employees at the end of the consolidated fiscal year was 159 (versus 116 at the end of the previous consolidated fiscal year).


Since joining the Group through M&A in October 2021, VALUE ARK CONSULTING Co., Ltd., (currenlty COPRO TECHNOLOGY. Co., Ltd.) which provides SES (system engineering services), has been successful in gradually strengthening its sales structure. Although the number of active workers temporarily decreased in April 2022 due to seasonal factors at the end of the fiscal year, it turned to an upward trend from May, and the number of active engineers at the end of the consolidated scal year was 100 (versus 90 at the end of the previous consolidated fiscal year). In addition, in March 2023, we completely renewed “Happy Engineer,” one of Japan’s largest project introduction sites for IT engineers with over 8,000 registered, and newly opened it as “Best-career IT”. In addition to improving usability such as the user interface, we are working to strengthen branding by appointing comedians, Miyashita Kusanagi, a comedy duo, as brand ambassadors.


In May 2022, the overseas business subsidiary COPRO VIETNAM CO., LTD., which was established in Vietnam in April 2021, partnered with Hanoi University of Industry, a local science and technology national university, with the aim of connecting Vietnamese students who want to work in Japan with Japanese companies that are struggling with human resource shortages. In addition, from July, we will gradually start recruiting students and providing free Japanese language education. We will continue to solidify the foundation for service development.

As a result of these factors, in terms of business results for the consolidated fiscal year, in addition to an increase in the number of technical employees at COPRO-ENGINEERD. Co., Ltd., (currently COPRO CONSTRUCTION. Co., Ltd.) which dispatches construction technicians, ATMOS Co., Ltd. and VALUE ARK CONSULTING Co., Ltd. (currenlty COPRO TECHNOLOGY. Co., Ltd.) also increased the number or technical employees. As the number of consolidated technical employees at the end of the consolidated fiscal year increased to

3,036 (versus 2,201 at the end of the previous consolidated fiscal year), sales were 18,791,365,000 yen (a 20.5% increase YoY). In terms of profits, while the gross profit margin increased as a result of the increase in sales, operating profit was 1,321,738,000 yen (down 18.5% YoY), and ordinary profit was 1,324,251,000 yen (down 18.2% YoY) because of such factors as increased recruiting costs due to proactive upfront investment, an increase in personnel expenses due to the strengthening of the sales department necessary for business expansion, and an increase in selling, general and administrative expenses due to an increase in the number of consolidated subsidiaries. Net profit attributable to the shareholders of the parent company was 864,595,000 yen (down 10.2% YoY).

Since the Group has only one segment, which is the technical employee dispatching business, the description for each segment is omitted.


FYE 2024 Forecasts (As of November 14, 2023)

(Million Yen)

FYE 2023
FYE 2024
(Forecasts)
Increase
(Decrease)
Net sales
18,791
24,298
29.3%
Operating profit
1,321
2,042
54.5%
Non-GAAP operating profit
1,606
2,342
45.7%
Ordinary profit
1,324
2,115
59.7%
Profit attributable to owners of parent
864
1,361
57.4%

Regarding the future outlook, in the construction industry, which is a major customer of the Group, strong construction demand is expected to continue, such as the Osaka Expo scheduled to be held in 2025, construction related to the Linear Chuo Shinkansen (between Shinagawa and Nagoya) scheduled to open in 2027, construction related to urban development projects, and redevelopment of existing infrastructure that is aging. In addition to the structural problems of an aging population and a shortage of young people, which are more pronounced than in other industries, since, from April 2024 bills related to work-style reform will go into effect, and penalties are scheduled to be established when overtime hours breach the upper limit, the shortage of human resources will become more severe as tasks that were previously completed by a single person will have to be divided among several people. It is forecast that the use of dispatched human resources in companies will continue to accelerate in the future.

Under these circumstances, the Group has formulated the Medium-Term Management Plan, “COPRO Group Build the Future 2027,” which runs from FYE2023 to FYE2027, and we are working to achieve sustainable growth and increase corporate value over the medium to long term. Based on the purpose (reason for existing) of our Group, which is [The Best “Work Style.” The Best “Workers”], during this Medium-Term Management Plan period, the focal point will be the career advancement of each technical employee, and the building of a "Technician Support Platform" equipped with a wide range of services and mechanisms to support this. We will strive to systematically promote various measures and system design to revitalize the organization with business innovation via DX, expand the mechanical design and SES business, and strengthen our organizational capacity.

During FYE2024, in construction technician dispatching, which is our core business, the results of the sales and recruitment reforms that have been promoted up to the previous FY are expected to bear fruit, and we will transition to a profit creation phase, which will be a harvesting stage. While striving to further strengthen our business foundation, we will take measures to actively and efficiently invest in recruiting costs and improve the retention rate. In addition, regarding the dispatch and contracting of mechanical design and development engineers, and SES, we expect to increase the number of engineers by continuing to invest in growth. Through these efforts, the number of consolidated technical employees at the end of FYE2024 is expected to reach 4,271, exceeding 4,000, and an increase of 40.7% YoY. Based on these assumptions, the consolidated earnings forecast for FYE2024 is sales of 24,298 million yen (up 29.3% YoY), operating profit of 2,042 million yen (up 54.5% YoY), ordinary profit of 2,115 million yen (up 59.7% YoY), and net profit attributable to the shareholders of the parent company of 1,361 million yen (up 57.4% YoY).

Please note that forward-looking statements, such as the earnings forecasts contained in this document, are based on information available to the Company and certain assumptions that are deemed reasonable, and it does not mean that we are promising to achieve the forecasts. In addition, actual results may differ significantly due to various factors.

The forward-looking statements in this document are based on information available to the Company and certain assumptions that the Company considers reasonable, and are not intended to be a promise by the Company that they will be achieved. Actual results may differ significantly due to various factors.

(Note) For an overview of the medium-term management plan, please refer to the "Notice of Medium-Term Management Plan" released on May 13, 2022.