Review of WILL-being 2023, the Medium-Term Management Plan

General Overview

Compared with the beginning of the previous Medium-Term Management Plan in March 2020, we have seen consistent growth in both revenue and operating profit. Although revenue growth was supported by favorable exchange rates, operating profit fell slightly short of our target due to slowness in the Domestic Working business segment.

In the context of our key strategies I to III —to utilize a portfolio shift to improve profitability, utilize a digital shift to improve productivity, and search for the next strategic investment domain —we faced some delays in implementing the plan that required strategic adjustments, leading to some unmet objectives. However, in the case of the key strategy IV, our financial strategy, we achieved significant results with a percentage of equity attributable to owners of parent to total assets of 26.6% and a total dividend payout of 31.2%.

Key strategies Details Assessment
Strategy Ⅰ Utilize a portfolio shift to improve profitability
  • Growth occurred in the permanent placement area, what we call perm, and in temporary staffing for highly specialized fields. We will focus on the areas of nursing care, construction management engineers, and HR support for startups.

Indicators

  • Strategic investment: Revenue growth rate
  • Profit maximization: Operating margin
Unsatisfactory Strategic investment domain
  • Construction: Unsatisfactory (Although the number of new hires steadily increased, we are one year behind our original plan)
  • Nursing care: Poor (We changed our strategy for temporary-to-permanent placements during the period due to lower-than-expected growth in hiring)
  • HR support for startups: Good (Favorable performance despite adjustments to prior fiscal year financial results)
Unsatisfactory Profit maximization area
  • Domestic Working business segment: Poor (The number of people on assignment decreased amid a higher number of COVID-19 cases, fewer orders from existing clients and fewer people being recruited. The operating margin also weakened due to a decline in the gross margin.)
  • Overseas Working business segment: Good (Although the sharp increase in demand for permanent placements post-COVID has run its course, the base steadily increased, even after excluding impact of forex.)
Strategy Ⅱ Utilize a digital shift to improve productivity
  • Improve productivity per capita through a digital shift (DX)
 Poor
  • Despite continued improvement in the functionality of the WILLOF smartphone app (signing up online, etc.) and integrated core systems (temporary staffing management) for construction engineers into existing systems, these moves have not yet led to higher productivity per person
Strategy Ⅲ Utilize a digital shift to improve productivity
  • Expand services for non-Japanese workers in Japan
  • Expand services for IT personnel
  • In HR Tech, explore opportunities in industry sectors related to our main business
 Poor
  • In May 2022, even though the Japanese market reopened for technical interns and specified skilled workers from overseas, services for overseas residents in Japan fell below our expectations
  • In services for IT personnel, both temporary staffing and permanent placement grew steadily
  • In March 2023, we withdrew from some existing HR Tech products (an app for management of visa and lifestyle support services for people from overseas). Product development is underway for services in the construction management engineer field, etc.
Strategy Ⅳ Financial strategy
  • Percentage of equity attributable to owners of parent: 20% or higher
  • ROIC: 20% or higher (cost of capital at around 10%)
  • Total annual dividend payout (return): 30% or higher
 Good
  • Ratio of equity attributable to owners of parent was 26.6% at the end of FY2023
  • ROIC was 16.6%, falling short of the target due to the unmet goal for operating profit
  • Total annual dividend payout (return) for FY2023: 31.2%

Revenue and Operating Profit by Business Segment

Ongoing Challenges for the New Medium-Term Management Plan

The persistent challenges to be addressed in the new Medium-Term Management Plan include the operating margin, which remains stagnant in the 3% range due to a challenging hiring environment in the core sectors of the Domestic Working business segment (sales, call centers, and factories), a strategic shift in the temp-to-hire placement model in the nursing care sector, and a focus on financial stability that has resulted in a suspension of new M&As.

Challenges
Common Stagnant operating margin, hovering around the 3% mark
(FY2020: 3.4% to FY2023: 3.7%)
Domestic Working Business segment In the construction management engineer areas, hiring is not progressing as expected and we are one year behind our plan.
The hiring environment is slowing in the focus areas of the Domestic Working business segment: sales, call centers, and factories.
Due to the strategic shift in the placement of people hired in the temp-to-hire category in nursing care, our growth drivers have declined.
The hiring environment in Japan is expected to slow even more.
By focusing on financial stability and not conducting M&As, growth has slowed over the past three years.
Overseas Working Business Segment Acceleration of growth in the Overseas Working business segment.