NISSO HOLDINGS Co.,Ltd. Q1 FY2026 earnings call

• Overall Consolidated Performance

  • Consolidated revenue declined 0.8% YoY, and consolidated operating profit declined 51.1% YoY. The negative results were largely driven by calendar effects (fewer working days from Golden Week calendar shifts, creating a 199 million yen negative impact) and accelerated 2026 fiscal year new graduate hiring, which pulled 155 million yen of hiring costs forward into the first quarter. Despite the year-over-year decline, overall performance remains in line with original budget plans. The company is currently in an active investment phase focused on hiring and training.
  • Two new group companies, Man to Man Holdings and All Japan Guard, will have their results consolidated starting from the second quarter, which impacts the first quarter/second half profit split for the full year.

• Industry Segment Trends

  • Automotive (automobile & EV-related): U.S. tariffs have had only limited direct impact on production, but client wait-and-see sentiment has led to a slight decline in registered employee counts. Rising billing rates have partially offset this enrollment decline, leading to a 2.7% YoY revenue drop (275 million yen lower than the prior year).
  • Semiconductor (semiconductors & semiconductor manufacturing equipment): Revenue grew 12.2% YoY, driven by both unit price increases and growth in registered employee counts. Despite some variation across product segments, overall operations are strong, and the segment is trending toward gradual headcount growth.
  • Electronics (telecommunications equipment & electronic components): Revenue saw a slight decline as overall enrollment fell even as operational activity increased.

• Talent Development & Expansion Initiatives

  • The company targets opening the new Nisso Technical Center Aichi in Toyota City, Aichi Prefecture by the end of October 2025. The new facility will focus on training production and equipment engineers for manufacturing clients, and will also develop AI and IT technicians to meet growing industry demand.
  • The company has been contracted to operate all training programs at Iwate Prefecture's newly opened I-SPARK semiconductor talent development facility, which will be leveraged to grow semiconductor-focused talent training in the Tohoku region.
  • External corporate training (NISSO HR Development Service) saw first-quarter participation grow to 325 trainees from 139 trainees YoY, reflecting growing client trust and expansion of the company's training business. Internal engineer training volume dipped slightly to 477 trainees from 534 trainees YoY, which management plans to improve to support continued engineer headcount growth.
  • An XR training system using mixed reality (MR) technology has been launched, which simulates hands-on equipment interaction to improve trainee comprehension and skill development speed, and increase training capacity and efficiency.

1. Manufacturing Production Human Resources Services: Revenue declined 3.1% YoY, with 794 fewer registered employees (a 5.3% YoY drop in enrollment). This segment contributed 76% of total revenue (down 1 percentage point YoY, from 77% previously). Gross margin was 17.0% (down 0.2 percentage points YoY), and average monthly revenue per employee increased by 13 thousand yen YoY due to successful unit price negotiations. Turnover remains at a stable low level.
2. Engineer Human Resources Services: Revenue increased by 449 million yen (17.2% YoY), with 363 more registered employees YoY. This segment contributed 12% of total revenue (up 1 percentage point YoY, from 11% previously). Gross margin was temporarily pressured by fewer working days and on-the-job training (OJT) costs for new engineers bound for new semiconductor factories. Average monthly revenue per employee declined due to the training period for new hires.
3. Clerical & Other Human Resources Services: This segment has underperformed due to ongoing technological replacement of clerical roles. Employment of senior and disabled workers remained steady at prior year levels.
4. Other (Nursing Care & Welfare Services): Revenue increased 3.1% YoY, and gross profit increased 15.2% YoY. Overall facility occupancy holds at a high 94.5%.

• Full-year 2026 March fiscal year consolidated earnings guidance is unchanged from the initial announcement. The first quarter's year-over-year decline in revenue and profit was already largely incorporated into initial plans, and performance is tracking close to budget, so no revision is needed at this stage.
• The planned full-year profit distribution has an expected ratio of 26.4% in the first half and 73.6% in the second half (a 1-to-2.8 split), which accounts for the calendar impact and the delayed consolidation of the two newly acquired group companies.
• The company maintains its basic shareholder return policy of targeting a consolidated dividend payout ratio of 30% or higher, with steady growth in dividends over time. A note has been added to reflect changes in the company's financial position from recent acquisition activity.

• U.S. tariffs on automotive products have not had large direct production impacts, but client wait-and-see sentiment has led to a slight drop in enrollment, creating negative pressure on automotive segment revenue. This uncertainty also creates a headwind for broader headcount growth across the sector.
• Early front-loading of new graduate hiring has pulled significant hiring and training costs forward into the first quarter, creating a large drag on near-term operating profit.
• OJT training for new engineers assigned to upcoming semiconductor factories has temporarily pressured the engineer segment's gross margin and pulled down average revenue per employee during the training period.
• Clerical human resources services continue to face structural headwinds from technological replacement, leading to ongoing underperformance of the segment.

No formal question and answer section is included in the provided earnings call transcript.