WORLD HOLDINGS CO.,LTD. Q2 FY2025 earnings call

• Core Business Strategy

  • The company's core human resources and education business follows a "Co-sourcing" philosophy, which focuses on integrating the company's strengths with client strengths to create joint value, rather than operating as a pure outsourcing or staffing firm.
  • Deepened Co-sourcing via two key moves: adding Toho Tech (a specialized titanium processing and welding manufacturer subsidiary of Toho Titanium) to the group, and establishing a first-of-its-kind joint venture with SUBARU focused on automotive industry talent development.
  • The World Intec group, which operates the Products HR business, provides end-to-end support for Japanese manufacturing from upstream R&D to downstream after-sales service, with 229 domestic locations and 22 overseas locations supporting global client expansion.

• Operational Developments

  • Opened a new semiconductor technician training center near TSMC in Kumamoto, and signed an industry-academia collaboration agreement with Kaishin Gakuen to support semiconductor talent development. Signed a regional economic revitalization partnership with Naruto City, Tokushima, following an existing model with Kitakyushu City.
  • Reopened the Chiro no Mori agricultural park in Shiojiri, Nagano at half capacity in response to strong local demand, and is planning new development leveraging the park's 40-hectare owned land amid favorable grape-growing conditions in the region.
  • In Services HR logistics, the company achieved profitable operation within two months of opening its first self-operated logistics warehouse in Ogori, Fukuoka, and a second warehouse in Hisayama (Kyushu) is nearing completion, enabling near-full coverage of Kyushu. The company is collaborating with Yamato Holdings to expand consolidated logistics outsourcing capabilities.
  • In customer service, the company operates 6 full-service sites for the Osaka-Kansai Expo via its joint venture JW Solution with JTB, and has expanded into reception services for commercial facilities, leveraging its existing retail service expertise and collaboration with the real estate segment.
  • Improved recruitment efficiency by shifting a larger share of hiring to the company's owned recruitment site "Kojo Job World", reducing reliance on higher-cost third-party paid recruitment platforms after 3 years of systematic reform.

1. Products HR Business: Achieved year-over-year revenue and profit growth, and outperformed original plan. The semiconductor-related sector, particularly focused on AI-facing semiconductors, drove strong performance. Within the segment, manufacturing accounts for 68% of internal revenue, technology accounts for 20%, and R&D accounts for 11%.
2. Services HR Business: Achieved year-over-year revenue and profit growth, and outperformed original plan. Its core logistics division has returned to strong growth after a post-COVID slowdown in e-commerce-related demand. The customer-facing sales pillar also delivered solid results.
3. Real Estate Business: Achieved large year-over-year revenue and profit growth. Revenue missed original plan due to the delayed handover of the BIZIA Kokura building, but profit outperformed plan, driven by optimal timing of property sales and higher-margin land-only sales.
4. Information and Communications Business: Achieved year-over-year revenue and profit growth, and outperformed original plan. After 5-6 years of a scrap-and-build strategy that reduced store count to ~30 stores, the business has improved quality and is preparing for future expansion, with strengthened corporate solution capabilities.
5. Agricultural Park Business: Faced challenging operating conditions due to poor weather that reduced visitor numbers, but continues to make capital investments in facility upgrades and new content with support from the group.

• Full-year 2025 (ending December 2025) guidance is maintained at the original planned level, despite a stronger-than-expected first half, due to uncertainty over the impact of US tariff policy. Management expects Products HR and Services HR to deliver strong growth in the second half, consistent with historical seasonal patterns.
• The company will prioritize expanding into domestic demand-focused sectors to offset potential tariff-related impacts on export-facing industries, leveraging its broad diversified industry coverage.
• For the 2026 December fiscal year (final year of the mid-term management plan), management reaffirmed commitments to the 275 billion yen revenue target and 15 billion yen operating profit target, with current strategy focused on growing revenue beyond 300 billion yen via continued investment, and the profit target is achievable via existing asset holdings if needed.
• The payout ratio for dividends has been raised to 35%, resulting in a projected record high annual dividend of 106.2 yen per share if full-year results meet expectations.

• Uncertainty over the scale of impact from US trade tariff policy on export-facing manufacturing clients, which could reduce production volumes and client demand for staffing services.
• Persistently high construction costs in the real estate sector create margin pressure for development projects.
• Rising recruitment costs for new hires are an ongoing industry-wide challenge that requires continuous efficiency improvement.
• The agricultural park business is heavily exposed to weather and climate-related risks, which created material headwinds in the first half of 2025.

Q: Why has the owned recruitment site "Kojo Job World" suddenly delivered strong efficiency improvements after years of operation, and will the existing internal employee reallocation strategy continue? / A: The efficiency gain is the result of gradual improvement over several years, not a sudden shift. Results became more visible in the first half of 2025 as the company reduced its reliance on higher-cost third-party paid recruitment platforms and grew the share of hires via the owned site, aligned with shifting recruitment trends toward SNS and owned media. The long-standing strategy of reallocating existing employees between growing and declining industries with reskilling will remain unchanged, and the company will continue improving recruitment efficiency to meet rising client demand.

Q: What bottlenecks exist in traditional Japanese logistics, and how can World Holdings add value via its partnership with Yamato Holdings? / A: Traditional Japanese logistics follows a layered multi-tier subcontracting structure, while e-commerce (led by Amazon) introduced a new model that delivers directly from warehouses to consumers with no intermediaries. As a non-logistics company with no existing industry ties and expertise in productivity improvement from factory contracting, World Holdings is well-positioned to drive change. The partnership with Yamato has given the company deep insight into last-mile delivery operations, and the company is applying its labor management expertise to reduce overall warehouse operating costs via consolidated management of staffing procurement.

Q: Will the company maintain its current 4 core business portfolio, and what are the growth plans for the information and communications segment? / A: In the current highly politically volatile economic environment, the company is prioritizing strengthening existing businesses rather than pursuing aggressive new business expansion. For information and communications, after years of scale reduction, the company will focus on internal improvement first, then expand successful models externally, and management believes the segment will continue to evolve and grow long-term. The company will expand its portfolio by adding complementary adjacent businesses (such as real estate-focused finance) to leverage existing infrastructure, and will actively divest businesses that can grow more effectively under external ownership.

Q: Is the 15 billion yen operating profit target for the 2026 mid-term plan realistically achievable? / A: The 15 billion yen operating profit target is not difficult to achieve, because the company holds multiple high-value assets that can be sold to hit the target if needed. Management's current priority is growing top-line revenue to over 300 billion yen to build scale for global competition, which requires continued upfront investment in people and systems that temporarily suppresses profit margins. Significant progress has been made in reducing operational waste in the core human resources business, so management believes the target is fully achievable with continued effort.