Q&A at the Briefing of the Financial Results of the 2nd Quarter Ended
September 30, 2023
Questioner 1:
Please tell me about the situation of Staffing SBU in the period up to the secondquarter.
Page 19 of the presentation slides says that revenue increased 6% year on year.
This gives the impression of being somewhat delayed because you are believedto assume year-on-year growth of around 9% in the full-year forecast of thecompany. I would like to ask you to tell us how you view the current revenue andhow you will accelerate the progress toward the 2nd Half.
I would like to ask you about another point. Regarding the profit margin, theexplanation about the increases in social insurance cost is quite understandable.
However, I think that you actually wanted to go further with the price passthrough, or that the price pass-through is slightly delayed. Could you explain thecurrent situation and your 2nd-Half initiatives about this?
CEO Wada:
As the slide shows, Staffing SBU is a little behind the forecast. Regarding the rate
revision, we wanted to increase it by slightly more than 1 percentage point. Partlyreflecting this, we will continue to pursue initiatives for this purpose toward the2nd Half. In addition, we feel that additional orders from major companies andbulk orders declined more than we expected. We are taking steps to offset this,such as activities for finding new customers including small and medium
enterprises. This inevitably increases man-hours per salesperson. We will
therefore back these up by improving the productivity of the coordinator side.
The profit margin is attributed in part to increases in costs including social
insurance cost as we explained. As you pointed out, however, we understand thattaking one or two additional steps in rate revisions is an important point for therecovery.
Questioner 1:
You said that you wanted to revise the rate by another 1 percentage point. Could
you tell me what factors made it impossible to do so and how the bottleneck will
be eliminated reflecting the factors as you implement another rate revision in the
2nd Half?

CEO Wada:
Major companies were relatively less reluctant to accept the rate revision. Thereis also a manufacturer that began to apply the revised rates in October this year.
There are cases like these.
On the other hand, there are relatively many small and medium-sized enterprises
which have yet to increase the wages of their own employees. Continuing toapproach such companies is an important point. We also understand that weshould repeat the process of receiving approval for new rates by setting themwhen human resources are replaced.
Questioner 2:
Please tell me about Career SBU.
You said that you will pay close attention to business confidence. I think that you
somewhat implied this point when you took time for the sell side the other day.
Please tell me about the trends in top line, that is, whether the sign was alreadyseen in the financial results for the second quarter or you will need to pay
attention to it going forward.
In addition, I remember that the CFO told us earlier today that you will also
control costs. On the other hand, I believe that you made up-front investmentsin this period of the Mid-term Management Plan for supporting career change forhigh-end workers. I therefore believe that there are costs that can be reduced
and those that cannot.
In this respect, please also tell me to what extent you can reduce costs and, inaddition, whether we can assume that there will basically be no major change inyour direction under the current Mid-term Management Plan.
CEO Wada:First, I will give an answer about the perceived market conditions of theplacement business.
To tell you what the situation is like, we understand that the placement businessmarket was somewhat overheated in a sense in the past year. In particular,
companies that had stopped recruitment due to the COVID-19 pandemic resumed
the activities all at once last year. The recruitment activities have been put tobed. In addition, recruitment by human resources companies, for example, andrecruitment for outsourcing also seem to have come to a halt. Frankly, we feelthat bulk orders for the same job type are at an end. However, there continue tobe many job openings in the media part. Our position now is that we need tokeep a steady eye on the market to a certain extent, rather than that the market
itself will contract significantly.
And regarding costs, as Mr. Tokunaga will tell you later, we have not at all changed
strategies on doda, including dodaX. We are currently in a period of building thedatabase for doda and dodaX. We aim to complete this fully.
CFO Tokunaga:
I would like to make some comments about cost control in the 2nd Half. As amatter of course, we have a KPI, or indicator, for cost control per one registeredcustomer. While keeping our eye on this, we will also look at the strategy on longterm investment for dodaX, thus controlling the costs in a balanced manner.
Questioner 2:
Let me ask you a supplementary question. Do you have anything to tell us about
what operating margin you would like to secure, for example, or something elsefrom that perspective?
CFO Tokunaga:
As shown in the Mid-term Management Plan, we have a major goal of achieving
20% toward FY2025. We would therefore like to aim for this goal in the medium
term while implementing short-term cost control. This is our policy.
Questioner 3:
Regarding the progress against the forecast for the overall company, you
explained today that the progress rate of both revenue and profit is 48%, which
is below the 50% of the forecast. Can I interpret that you are a little behind theforecast?
In relation to this, as you explained, the up-down balance of how profit isgenerated has been changing. You also told us that you will control the costs
while making a profit in the 2nd Half. Please tell me how you intend to control
the costs to achieve the full-year forecast for the overall consolidated financial
results.
CFO Tokunaga:Marketing investment constitutes a large part of our strategic investments.
Therefore, in the 2nd Half, we plan to carefully check the effects of investments,
one by one, with a focus on Career or Staffing.

Regarding the progress rate that you asked about, the figure for Staffing has
already exceeded 50% slightly while BPO and Technology have a structure whereprofits increase in the 2nd Half, as I explained at the start.
On the other hand, regarding Career, we believe that a large part of it depends
on the market and business confidence. We will therefore keep paying attention
to the market conditions, and if the conditions become difficult, we will properly
control the costs, aiming to achieve the full-year projections.
Questioner 3:
Regarding Career SBU, am I right in having the impression that the performance
was slightly weak compared to the forecast in the 1st Half and that you
will manage it in the 2nd Half while keeping an eye on future business confidence
trends?
CFO Tokunaga: Yes However, we think that the rate of progress in the 2nd Halfmay be equivalent to that in the 1st Half depending on business confidence.
Questioner 3:
Does "equivalent" mean that progress may be slightly below the forecast?
CFO Tokunaga:
We think that it could be less than 50%.
CEO Wada:
As we explained, we would like to achieve major growth in Career SBU and madethe forecast accordingly, and the result was 29% while the forecast value was
30% or higher. We would therefore like to properly deal with the market while
maintaining this growth rate.
One point that we are not sure about with regard to the perceived market
conditions is whether they have just been resolved or whether the market
will slow a little more. We understand that we will have to determine this point.
We aim to properly deal with the market without being overly optimistic.