NISSO HOLDINGS Co.,Ltd. Q4 FY2025 earnings call

Overall Financial Results

• Full-year 2025 March fiscal year consolidated revenue grew 4.9% year-over-year, and consolidated operating profit grew 16.3% year-over-year, reaching the highest profit in the company's listed history
• Selling, general and administrative (SG&A) expenses increased 180 million yen year-over-year, driven by 70 million yen in M&A due diligence costs and 70 million yen in early recruitment spending for 2026 April entry new graduates, amid a tight new graduate hiring market
• A special loss was recorded for an investment in APB Co., Ltd. (which could not continue operations), leading to a year-over-year decrease in net income
• Q4 performance was pressured by supply chain disruptions that reduced average monthly working hours per employee by approximately 10 hours, leading to lower-than-expected revenue and profit to end the year
• Overall total workforce headcount was roughly flat year-over-year, as 510 new engineer roles largely offset the 575 headcount reduction in automotive production roles
• Turnover overall improved 0.1 percentage points year-over-year and held at 4%; engineer turnover is 2 percentage points lower than production roles, with temporary volatility from ongoing on-the-job training (OJT) programs

Strategic Growth Initiatives & M&A

• Acquired Man to Man Holdings, a firm with a strong presence in the Central Tokai region serving automotive and semiconductor device clients, to strengthen the company's regional footprint
• Co-founded a joint venture HR service firm, SUBARU nw Sight, with SUBARU and World Intelli Tech to address major automakers' challenges accessing external labor
• Acquired All Japan Guard Co., Ltd., a security services firm with an average employee age of 72.7, to expand employment opportunities for senior workers aligned with the company's mission of creating work opportunities
• Reached a basic agreement with Vietnam's largest IT firm FPT IS and Mitsubishi Research Institute's Vietnamese subsidiary to promote cross-border semiconductor talent flow between Japan and Vietnam, selected as an official initiative at the Japan-Vietnam Forum
• Won a contract to operate all training and practical programs at I-SPARK, a new semiconductor talent development facility in Iwate Prefecture, to support the region's growing semiconductor industry cluster

Talent Development Strategy

• The company is expanding training facilities and technical centers to prepare for the 2026-2027 startup of new semiconductor and battery factories, to develop the required skilled talent in advance
• Engineer training volume grew to 1,852 trainees, up 482 year-over-year; external corporate training for client employees grew to 534 trainees from 187 year-over-year, demonstrating growing client trust in the company's training capabilities
• The company has expanded partnerships including a semiconductor talent development agreement with Kumamoto Prefectural College of Technology, and continues to participate in industry-government-academia consortia to align training with local demand
• The company is developing new VR-based training curricula to adapt to evolving technology needs, and is actively expanding recruitment of foreign engineer talent ahead of 2027 immigration law revisions

Sustainability & Target Updates

• Updated long-term sustainability targets: the company now targets raising the share of specialized engineer talent from 12.6% (2025 actual) to at least 30% by the 2031 March fiscal year, and increasing diversity headcount share from 31.9% (2025 actual) to 40% by 2031

1. Automotive Industry (Automotive & EV-related): In-line with uneven demand across manufacturers, talent needs were stagnant, but successful price adjustments delivered a slight year-over-year revenue increase of 2%.
2. Semiconductor Industry (Semiconductors & semiconductor manufacturing equipment-related): Driven by strong performance at key targeted clients, engineer demand rose, resulting in a year-over-year revenue increase. Engineer headcount in this segment was a core contributor to overall growth.
3. Electronics Industry (Communication equipment & electronic components): Expansion with key focused manufacturers led to a year-over-year revenue increase, though performance has flattened in the most recent period.
4. Engineer-focused HR Services: Revenue grew 27.3% year-over-year, gross margin is 2.9 percentage points higher than production-focused manufacturing HR services. Revenue per employee increased 3.9% year-over-year, and total headcount rose 510 year-over-year, pushing total engineer headcount over 2,000. Engineers now represent 12.6% of total active workforce, up 3.1 percentage points year-over-year.
5. Production-focused Manufacturing HR Services: The Automotive segment drag led to a 575 year-over-year reduction in headcount. Revenue grew due to billing rate increases, and gross margin improved 0.8 percentage points, with revenue per employee up 3.2% year-over-year.
6. Clerical & Other HR Services: Clerical revenue fell 1.3% year-over-year with a 12-person headcount reduction, as roles are increasingly displaced by AI. Other segments (including senior worker employment, disabled worker employment) remained broadly stable with 707 senior workers and 237 disabled workers at period end.
7. Caregiving & Welfare Services: Revenue was flat with a minor increase, while gross margin fell 1.6 percentage points due to higher utility costs. Occupancy remains high at 94.8%.

• For the 2026 March fiscal year, management expects revenue and profit growth year-over-year, driven by M&A-led group expansion and increased hiring from new corporate promotion efforts
• Automotive industry: While U.S. tariff impacts are possible, client feedback indicates domestic production volumes will not see large changes, so no major downward adjustment to segment expectations is made
• The semiconductor industry is expected to continue steady performance, while the outlook for the electronics industry remains uncertain, so the company is taking a cautious approach to segment guidance
• Operating profit margin is expected to remain flat year-over-year, due to increased talent development investment and goodwill amortization from recent M&A activity
• The company targets expanding total engineer headcount to 2,700, and will continue price adjustments driven by employee compensation improvements
• The company plans to increase the annual dividend to 25 yen per share, representing a dividend payout ratio of 33.8%, marking an increase from prior periods; the company maintains a long-term target payout ratio of at least 30%

• Overall market talent demand was lower than management's initial expectations at the start of the 2025 fiscal year, and mismatches between job applicants' preferred location/role and client needs reduced hiring efficiency
• The automotive industry sees large performance gaps between strong and weak manufacturers, and U.S. trade policy creates heightened uncertainty for future production and talent demand
• Supply chain disruptions at the end of 2025 fiscal year created meaningful downward pressure on Q4 revenue and profitability, reducing full-year performance below initial expectations
• Clerical roles face ongoing displacement pressure from AI, limiting future growth potential for the segment
• New graduate hiring markets remain very tight, increasing recruitment costs and requiring earlier annual planning
• Caregiving profitability is pressured by rising utility and input costs, even with stable occupancy

No public question and answer section is included in the provided transcript.