WILL GROUP,INC. Q3 FY2025 earnings call

• Overall Financial Performance

  • Consolidated revenue: 105.35 billion yen, +1.4% YoY; reported operating profit 1.79 billion yen, -35.9% YoY, driven by the lapsing of one-time subsidiary sale gains and deconsolidation impacts; normalized operating profit +9.5% YoY; EBITDA 3.32 billion yen, -24.8% YoY.
  • All core KPIs are tracking above plan, and overall group performance is in line with management expectations.

• Domestic Working Strategy

  • Strategy I (Construction Technician Segment Growth): Aggressive investment over multiple years resulted in the segment turning profitable from Q2. The segment maintains high utilization amid rapid scale growth, with current retention at 71.7%. Average unit prices for new graduate/inexperienced hires increased 6% YoY. All four core KPIs (construction technician hiring volume, retention; non-construction regular staff dispatch working volume, foreign worker support volume) are tracking above plan.
  • Strategy II (Regrowth for Non-Construction Domestic Areas): Regular staff dispatch in the factory outsourcing segment has grown faster than plan, with working volume exceeding full-year target. Foreign worker support has exceeded full-year target, driven by improved retention in factory outsourcing. WILLOF Vietnam received an FDI Award from Vietnamese government for high-quality education and employment support.
  • Portfolio improvement: The share of gross profit from high-value regular staff dispatch and foreign worker support increased from 29.8% (FY2023) to 43% (9M FY2025), with gross margin increasing 1.2pp to 19.7%.
  • WILLOF Brand Promotion: Brand awareness increased 370%, branded search increased 450%, and usage intention increased 310% YoY, supporting higher conversion from paid recruitment channels.

• Overseas Working Operational Response

  • Inflation-driven wage growth has suppressed labor mobility and recruitment activity, and management expects no quick market recovery. Current focus is on two priorities: 1) cost cutting for low-ROI activities to preserve growth capital, targeting 0.8-0.9 billion yen in annual selling, general and administrative expense reduction; 2) refocusing each subsidiary on their core strength areas, pausing expansion into new markets to avoid resource dispersion.
  • Q3 sequential decline in revenue and profit is driven by seasonal extended Christmas holiday downtime, which was fully expected by management.

• Governance and Capital Actions

  • Representative Director Yuichi Kaku purchased up to 0.3 billion yen of company stock, completing purchase of 302,300 shares, bringing his personal holding to 333,000 shares.

1. Domestic Working Segment: Revenue of 62.44 billion yen, +1.3% YoY. Reported segment profit of 2.08 billion yen, -30.5% YoY; normalized segment profit +13.3% YoY. Growth is driven by the construction technician派遣 area, which turned profitable starting Q2 and continued generating profits in Q3, contributing +2.8 billion yen to revenue and +0.5 billion yen to operating profit YoY. Ex-construction technician areas grew +0.4 billion yen in revenue but saw -0.27 billion yen operating profit decline, led by weak performance in the call center outsourcing segment.
2. Overseas Working Segment: Revenue of 42.78 billion yen, +1.7% YoY (with positive foreign exchange impact). Segment profit of 1.5 billion yen, -8.5% YoY, despite Singapore government subsidies. Weakness stems from stagnant labor mobility in both Australia and Singapore, particularly in the recruitment business.

• Full-year 2025 March fiscal year earnings guidance is maintained despite slight delays in Overseas Working performance; cumulative revenue progress is 75%, operating profit progress 78%, and net income attributable to parent shareholders progress 68%, with overall performance on track.
• Full-year dividend per share is maintained at 44 yen, unchanged from prior year, with expected total payout ratio of 61.9% and dividend yield of 4.4%. The shareholder dividend program will be continued.
• Management expects the construction technician segment to at least double in size over the next 3 years.

• Extremely tight hiring competition across all skilled technical segments, with job openings remaining at high levels, which puts pressure on hiring volume and retention for the construction technician segment.
• Sustained weak market conditions for call center outsourcing (domestic) and recruitment (overseas), leading to continued profit pressure in these segments.
• Inflation-driven wage growth and stagnant labor mobility in Australia and Singapore have depressed recruitment activity, with no near-term market recovery expected.
• Retention in the construction technician segment has softened slightly amid rapid hiring volume growth, as scaling has created incremental matching quality challenges.

Q: What are your solutions to the ongoing weak performance of Overseas Working, and do you have plans to exit to refocus on domestic? / A: Management confirms the difficult market environment but has no plans to exit. The long-term rationale for overseas expansion remains intact: Japan’s shrinking working age population limits long-term domestic growth, while faster-growing overseas markets will serve as a future growth engine for Will Group. To improve performance, management has implemented 0.8-0.9 billion yen in annual SG&A cuts from low-ROI areas, and paused new market expansion to refocus each subsidiary on their core strength niches, where they already hold leading market positions. Since January 2025, CEO Yuichi Kaku has personally taken over leadership of Overseas Working, making monthly visits to Australia to monitor performance and engage with the market.

Q: What is Will Group’s competitive advantage in the construction technician segment, and what growth do you expect over the next 3 years? / A: Management expects at minimum 2x growth over the next 3 years. The overall Japanese construction technician market is growing rapidly, with a severe labor shortage and effective job openings ratio over 5x, meaning strong underlying demand that will persist through 2030. Will Group’s main advantage is its ability to scale rapidly: unlike specialist competitors that only focus on construction, Will Group can reallocate experienced staff from existing domestic businesses to quickly build out the construction segment, allowing it to secure critical talent faster than pure-play competitors. Will Group also has a proven strength in new graduate hiring for the segment.

Q: Will you maintain current promotion spending levels for the WILLOF brand next year? / A: Final plans are not yet finalized, but management expects to continue brand promotion at similar scale for the next year. Higher brand awareness increases branded search volume, which improves search algorithm rankings and drives higher conversion for recruiting activity, which is a core strategic priority. Management is still testing the optimal level of promotion spending to reach target awareness, but will continue investment while refining the approach over time.

Q: What is your approach to hiring for the construction technician segment given the softening retention rate? / A: Management may moderate hiring volume growth temporarily to focus on improving retention, but expects to maintain annual hiring of 1,200 to 1,500 people even during this period. After improving retention to a more controllable level, management will gradually increase hiring volume towards the market peak of 2,000 to 2,500 new hires per year, and will not cut annual hiring below 1,000 people.

Q: What is your long-term strategic outlook for new growth areas? / A: Management agrees that continued investment in high-potential new segments is a priority, following the successful expansion of construction technicians. The two core focus areas for future growth and potential M&A are: 1) engineering segments including IT engineers and manufacturing electrical/mechanical engineers; 2) expanded foreign worker employment support. Both segments address structural labor shortage social issues in Japan, with strong and growing long-term demand, and M&A activity for targets in these areas is ongoing.