■Relo Group ＜8876＞ Performance Trends

3. special factors

In the second quarter of the fiscal year ending 2025/3, the growth in interim profit before income taxes and interim profit attributable to owners of the parent company was abnormally high compared to the growth in operating profit, but this was due to special factors in a positive sense. In terms of performance, investment profit and loss profit from the equity method of 3577 million yen and profit from sale of investments using the equity method were temporarily generated under operating income, but even excluding this, it can be said that the main business is doing well, with an increase of 23.6% compared to the same period last year in interim profit before income taxes and a 26.8% increase in intermediate profit attributable to owners of the parent company.

As investment gains and losses due to the equity method, a return gain of 3 billion yen on exchange conversion adjustment accounts due to abandonment of claims occurred in the fiscal year 2024/3 in SIRVA-BGRS, which recorded impairment losses of 47.6 billion yen on investments and financial claims against companies applying the equity method in the 2024/3 fiscal year. The circumstances are as follows. The company, which was aiming to become the “No. 1 Global Relocation Company,” acquired shares of BGRS Limited, which is one of the world's largest global relocation companies, in 2019 and made it a subsidiary. However, immediately after that, due to the effects of the global spread of the novel coronavirus infection, the entire relocation industry was placed in a tough environment. For this reason, the restructuring of the business infrastructure proceeded by proceeding with restructuring and digitalization of BGRS, but as uncertainty due to the COVID-19 pandemic continued, momentum for restructuring increased in the relocation industry with the aim of expanding scale and improving efficiency, and in 2022/7, it was decided to integrate BGRS with SIRVA Holdings, Inc., which is one of the largest companies in the industry, and the company is a company applying the equity method by acquiring 23% (0% voting rights ownership ratio) of SIRVA-BGRS That's it. Since then, management has continued in collaboration with Global Relocation and Moving Services, LP, which is the largest shareholder of SIRVA-BGRS, but in addition to the fact that the relocation industry did not completely recover from the COVID-19 pandemic, second-hand housing sales in North America declined in response to a drastic rise in interest rates in the United States, so the number of cases of “mobility support involving housing sales,” which is one of SIRVA-BGRS's core businesses, declined sharply, plus Interest rate burdens on loans have increased drastically. Therefore, investments, financial claims, etc. related to SIRVA-BGRS were treated as impairment losses.

The profit from sale of equity method investments of 18.7 billion yen occurred because shares of Nippon Housing, a company applying the equity method, were sold in the fiscal year ending 2025/3. The circumstances are as follows. The company and Nippon Housing, which was listed on the Second Section of the Tokyo Stock Exchange at the time, concluded a business partnership agreement in 2008 with the aim of creating synergy in service areas related to housing and living environments, such as condominium management, etc., and have continued a good relationship as a company applying the company's equity method. Recently, however, there has been an offer from the founder of Nippon Housing to go private, and until now the synergy was not very large and there was sufficient economic rationality for the sale, and since it was necessary to reorganize investments for the Fourth Olympics operation, which is the next medium-term management plan, etc., it was decided to sell Nippon Housing shares in acceptance of the proposal. Japan Housing will be removed from the company's equity law applicable affiliates, but it is a policy to continue maintaining business partnership agreements and continuing business relationships as before.

The main business remained steady in the second half, and landed as predicted at the beginning of the fiscal year

4. Earnings forecast for the fiscal year ending 2025/3

Regarding the earnings forecast for the fiscal year ending 2025/3, the company anticipates sales revenue of 140000 million yen (up 5.6% from the previous fiscal year), operating income of 30000 million yen (up 8.7% from the same period), profit before income tax of 48,000 million yen (loss before income tax of 19404 million yen in the previous fiscal year), and net income of 33,000 (net loss of 27807 million yen for the previous fiscal year). As predicted at the beginning of the fiscal year, sales revenue and operating profit are expected to increase in response to the steady strength of the main business, and profit before income tax will change significantly to surplus due to the effects of SIRVA-BGRS processing and the sale of Nippon Housing.

The earnings forecast for the fiscal year ending 2025/3 is that sales revenue from the relocation business is 94700 million yen (up 2.4% from the previous fiscal year) and operating profit is expected to be 17400 million yen (up 3.7% from the same period). Of these, in the leased company housing management business, outsourcing needs for leased company housing are high, and management income is expected to increase in the second half of the fiscal year, sales revenue of 32000 million yen (up 10.7% from the previous fiscal year) and operating income of 6800 million yen (up 12.6% from the same period). The rental management business aims for sales revenue of 46700 million yen (down 4.6% from the previous fiscal year) and operating income of 7600 million yen (down 8.4% from the same period) by accumulating the number of managed units used as stock and strengthening rental brokerage. The overseas assignment support business is planning sales revenue of 16,000 million yen (up 9.8% from the previous fiscal year) and operating income of 3000 million yen (up 23.2% from the same period) since the number of households supporting assignment is on the rise. As for the welfare business, the CRM business is tough, but since multiple large projects and upsells are expected in the second half, sales revenue is 29,000 million yen (16 compared to the previous fiscal year. % increase) and operating profit of 13300 million yen (15.6% increase from the same period) are expected. In the tourism business, travel demand has partially shifted to fall due to intense summer heat, and the occupancy rate and reservation unit price are currently going well, and sales revenue of 15300 million yen (up 8.7% from the previous fiscal year) and operating income are expected to be 3900 million yen (up 25.4% from the same period). While there has been an overall steady trend, the CRM business, which is a welfare business, is showing a slight weakening trend, but in addition to catching up in the CRM business, it is a policy to cover it with construction earnings from the strong rental management business and the tourism business.

(Written by FISCO Visiting Analyst Miyata Hitomitsu)