■Relo Group ＜8876＞ Performance Trends

1. Earnings trends for the 2nd quarter of the fiscal year ending March 31, 2025

Financial results for the second quarter of the fiscal year ending 2025/3 were sales revenue of 70073 million yen (up 10.9% from the same period last year), operating income of 15664 million yen (up 25.1% from the same period), interim profit before income taxes of 37899 million yen (up 190.6% from the same period), and intermediate profit attributable to owners of the parent company of 32972 million yen (up 273.6% from the same period). In addition to focusing on building up stock as before, sales of facilities in the tourism business were brought ahead of schedule, resulting in strong growth exceeding sales revenue. Furthermore, the occurrence of exchange conversion adjustment return gains due to the abandonment of debts by SIRVA-BGRS Holdings, Inc. and sales gains etc. of investments using the equity method occurred due to execution of capital reorganization such as the sale of Nippon Housing Co., Ltd., and interim income before income taxes and intermediate income attributable to owners of parent companies increased above operating income.

In an environment where overseas expansion of Japanese companies is becoming more active and global competition among companies intensifies, the company has set a vision of “creating a 'comprehensive lifestyle support service industry' that develops on a global scale” and “No. 1 Global Relocation Company” based on its corporate mission. In order to realize this vision, we are working to further strengthen our domestic business for the No. 1 domestic market share in the medium-term management plan “New Third Olympic Operation,” which has the fiscal year ending 2025/3 as the final year. As a result, sales revenue increased by 2 digits due to a steady accumulation of stock infrastructure such as the number of units managed in the leased company housing management business and the number of members in the welfare business, etc., and since profit from facility sales was recorded as other income in the tourism business, operating profit grew by more than 20%. As a temporary factor, exchange conversion adjustment return gains occurred due to abandonment of preferential equity-related claims, so equity method investment profit and loss of about 3 billion yen, and profit from sale of equity method investments associated with the sale of shares of Nippon Housing and 18.7 billion yen occurred, and interim profit attributable to owners of parent companies increased nearly 4 times. Note, the progress rate against the initial forecast was 50.1% in terms of sales revenue and 52.2% in operating profit, and it seems that overall performance is generally moving along the planned line.

Sales and profit increased in all segments

2. Segment trends

Segment results for the 2nd quarter of the fiscal year ending March 31, 2025 include sales revenue of 48408 million yen (up 10.6% from the same period last year), operating profit of 8834 million yen (up 14.3% from the same period), welfare business sales revenue of 13384 million yen (up 9.6% year), operating income 5952 million yen (up 7.6% year), tourism business sales revenue of 7720 million yen (up 14.9% from same period), and operating profit It was 2899 million yen (up 146.3% from the same period), resulting in an increase in sales and profit in almost all businesses.

(1) Relocation business

The leased company housing management business, rental management business, and overseas assignment support business, which make up the relocation business, were all strong, and there was a 2-digit increase in sales and profit throughout the business. Note, due to changes in recording methods for some transactions, there was a flow of numerical values within the relocation business. When the performance figures for the 2nd quarter of the fiscal year ending 2024/3 are adjusted in accordance with the changes, sales revenue for the entire relocation business will be 44745 million yen, operating income will remain unchanged, sales revenue from the leased company housing management business will be 14050 million yen, operating income will be 3091 million yen, sales revenue from the rental management business will be 23421 million yen, and operating income will be 3318 million yen, which will have a big impact on how to look at performance trends I don't think it's standard.

Sales revenue from the leased corporate housing management business for the second quarter of the fiscal year ending March 31, 2025 was 15822 million yen (19.6% increase from the same period last year/12.6% increase from the same period of the previous year after adjustment), and operating income was 3518 million yen (up 8.1% from the same period, up 13.8% from the same period). The number of units managed in the leased company housing management business increased to 267,113 units (up 9.3% from the same period last year), and management fee income grew as the stock base steadily expanded. As for home management, which is also the ancestral business, it has been sluggish in recent years, so leverage has been successful, such as separating it from overseas assignments in the 2020/3 fiscal year and integrating it with company housing management, and the number of managed units has increased to 9,687 units (3.4% increase from the same period). The number of uses of relocation support services such as property searches has increased, and income from moving and rental brokerage associated with transfers has also increased. Also, such management businesses are basically single-family houses or one-room units, but there are cases where 1 building is subleased and the entire company uses it as leased company housing, and since there was an owner change in such a property this time, a profit of about 0.1 billion yen was recorded at the spot.

Sales revenue from the rental management business was 24085 million yen (3.6% increase from the same period last year/2.8% increase from the same period of the previous year after adjustment), and operating profit was 3604 million yen (14.2% increase, 8.6% increase). The number of rental management units was 121,204 units (up 3.7% from the same period last year), and in addition to the steady accumulation of a stock base with a high occupancy rate, gross profit from real estate sales grew to 1773 million yen (up 6.6% from the same period). The reason why the growth in the number of rental management units remained in the first half of the 1-digit period was due to the fact that M&A was low, but since the company is the only listed company that is doing continuous M&A, it has become easier for information to enter as market share expands, so it can be said that it was temporary. Meanwhile, construction earnings seem to be growing more than expected.

Sales revenue from the overseas assignment support business was 8501 million yen (up 16.9% from the same period last year), and operating profit was 1711 million yen (up 30.0% from the same period). As for the number of overseas assignment support households, it declined because the number of households supporting assignment to China, which is the highest number after North America, was sluggish, but there is an upward trend in other areas. Nevertheless, the reason for the 2-digit increase in sales and profit is due to the fact that the operation of serviced apartments in North America remained strong, growth in inbound (foreign nationals assigned to the country) support and partial price reviews.

(2) Welfare business

In the welfare business, in addition to the fact that the acquisition of new members progressed, there was an increase in sales and profit due to strong housing rush services. Demand was strong, and the number of members was 7.42 million (up 7.1% from the same period last year), and the number of contract companies also steadily increased to 13,191 companies, and membership fee revenue used as stock remained strong, with an 11.4% increase from the same period last year. The acquisition of contracts continued to be strong as new acquisitions of small, medium, and regional companies, which had strengths, progressed, and switching from major companies to other companies progressed. The impact of industry-leading companies being M&A by major life insurance companies is also thought to be one of the factors, so it seems that this trend will continue in the future. Also, upsells due to HR (human resources) related services gradually increased. As a result, operating profit increased 7.6% compared to the same period last year, but considering that there was a transient profit of approximately 0.1 billion yen in the same period last year, it actually increased 9.6%. However, while benefits were doing well, the CRM business, which supports customer marketing, did not reach expectations against the backdrop of continued reviews of corporate marketing budgets after the COVID-19 pandemic.

(3) Tourism business

In the tourism business, there was a significant increase in sales and profit due to an increase in the average guest room unit price of hotels and facility sales in addition to profit contributions from newly opened facilities. The company has 20 to 30 properties owned and operated in anticipation of sale, and the one that sold some of these facilities is the current facility sale. This is revenue that is regularly generated from normal business activities in the tourism business, and should be recorded as real estate for sale in BS and sales revenue in PL according to Japanese standards, but due to IFRS standards, it is recorded as tangible fixed assets in BS and other income in PL. The impact of facility sales on business results was significant, but in addition to strong summer operations, there was also a contribution from new facilities, and operating profit grew extremely large, up 35.6% from the same period last year, even if the impact of facility sales was excluded. It seems that the current fall operation will continue to be strong.

(Written by FISCO Visiting Analyst Miyata Hitomitsu)