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Japan – Recruit Holdings full year revenue up 16%, plans further acquisitions

12 May 2017

Japanese staffing firm Recruit Holdings (6098: JP) reported revenue for the full year ended 31 March 2017 of JPY 1.84 trillion (USD 16.1 billion), an increase of 15.8% compared with the same period last year.

(JPY millions) FY 2017 FY 2016 Change FY 2017 (USD millions)
Revenue 1,839,987 1,588,623 15.8% 16,187
Operating Income 127,207 114,023 11.6% 1,118
Net Income 85,422 64,535 32.4% 751
EBITDA 230,835 202,250 14.1% 2,030

Recruit Holdings posted a record high EBITDA of JPY 230,835 million (USD 2.0 billion) for the full year 2017, up 14.1% on the year.

The group made a number of acquisitions in 2016, including major European staffing firm, USG People, and job board, SimplyHired. The company does not publish organic growth numbers which makes it difficult to assess the underlying performance of its business.

According to Recruit Holdings, during the year ended 31 March 2017, the group continued to focus on strengthening operations in Japan as well as moving forward with further global expansion.

Recruit reports in four business lines; Marketing Media (life events/lifestyle), HR Media (job boards and other online recruitment services), Staffing and Other.

Within the Marketing Media segment, revenue was JPY 376.3 billion (USD 3.3 billion), an increase of 7.7% year-on-year.

“In the Marketing Media segment, we made efforts to improve convenience to our users through measures such as increasing our client base and expanding our reservation services through the use of information technologies, mainly in the dining and beauty businesses,” the company stated.

Within the Marketing Media segment, Life Event operations revenue was JPY 197.4 billion (USD 1.7 billion), an increase of 10.2% year on year. Lifestyle operations revenue was at JPY 171.7 billion (USD 1.5 billion), an increase of 2.7% year on year.

Recruit Holdings’ HR Media segment which includes Indeed and a number of other job boards, revenue was JPY 405.3 billion (USD 3.5 billion), an increase of 12.8% year on year.

“In the HR Media segment, we focused on further strengthening the competitiveness of our Domestic Recruiting operations, where employment demand has stabilised at a favourable level,” the company stated. “In our Overseas Recruiting operations, we undertook initiatives to increase the number of users and clients, mainly through efforts to promote brand awareness and develop our salesforce.

Revenue in the Staffing segment was JPY 1.06 trillion (USD 9.3 billion), an increase of 20.1% year on year.

“In the Staffing segment, we focused on improving the efficiency of our business operations, and made efforts to expand our global operational footprint through measures such as mergers and acquisitions,” the company stated.

Within the Staffing segment, Domestic Staffing revenue was JPY 463.4 billion (USD 4.0 billion), an increase of 11.9% year on year. In the Overseas Staffing operations, Chandler Macleod Group Limited and Atterro, Inc., etc., whose shares were acquired in the previous fiscal year, have been contributors since the beginning of the year ended 31 March 2017. Earnings from USG People, whose shares were acquired in the first quarter ended 30 June 2016, have also contributed to the segment earnings from the third quarter ended 31 December 2016. Revenue in the Overseas Staffing operations was JPY 605.2 billion (USD 5.3 billion), an increase of 27.2% year on year.

Revenue in the Other segment was JPY 5.3 billion (USD 46.6 million), an increase of 4.4% year on year.

Recruit Holdings stated that it aggressively seeks to strengthen and expand its business foundation by using mergers and acquisitions. The group forecasted annual revenue of JPY 2.08 trillion (USD 18.3 billion) for the financial year ending 31 March 2018.

In trading today, Recruit Holdings shares closed at JPY 5,960.0 (USD 52.4), up 0.34% on the day and 1.16% below its 52-week high of 6,030.0 (USD 53.0), set on 9 May 2017. Based on its current share price the company has a market value of JPY 3.36 trillion (USD 29.5 billion).

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