Nareru Group Inc. · TSE:9163
Nareru — FY2023.10 Earnings Presentation
46 slides from Nareru's earnings presentation, Dec 12, 2023
Slide 1: FY2023.10 Financial Results Briefing
FY2023.10 Financial Results Briefing Dec. 12, 2023 Nareru Group Inc TSE Growth 9163 Note: This material has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.
Slide 2: Financial Results
1 FY2023.10 Financial Results Nareru Group Inc. ・ TSE Growth：9163 © Nareru Group Inc. 1
Slide 3: Summary of Financial Results for FY2023.10
Summary of Financial Results for FY2023.10 Earnings Summary for FY2023.10 • Both the number of employees and contract unit price increased steadily, and we achieved increases in sales and profits YoY. Revenue Operating Profit Profit Attributable to Owners of Parent JPY 17,994MM JPY 2,469MM JPY 1,741
Slide 4: Financial Results for FY2023.10
Financial Results for FY2023.10 • Revenue in Q4 increased by 24.2% YoY, and profits at each stage also increased significantly YoY. • For the full year, sales and profits increased significantly YoY, exceeding earnings forecasts. Earnings Q4 Full Year Forecasts *1 Achieve FY2022.10 FY2023.10 YoY FY2
Slide 5: Trends in Quarterly Results
Trends in Quarterly Results • Quarterly revenue has continuously increased from the previous fiscal year • Quarterly gross profit and operating profit decreased slightly QoQ due to cost increase factors such as measures to reduce turnover rate. Quarterly Revenue Quarterly GP/OP JPYMM Revenue JPYMM G
Slide 6: Trends in Engineers and Utilization Ratio (World Corporation)
Trends in Engineers and Utilization Ratio (World Corporation) • The number of active engineers in Q4 increased slightly QoQ and increased by over 400 YoY due to active recruitment and steady sales activities. Trends in total engineers, active engineers and utilization ratio Number of people Total en
Slide 7: Trends in Contract Unit Price (World Corporation)
Trends in Contract Unit Price (World Corporation) The contract unit price increased by JPY29,000 YoY due to a shortage of human resources in the construction industry and our sales efforts, including price increase negotiations. Trends in contract unit price JPY thousands JPY +29,000 YoY 510 498 491
Slide 8: Trends in New Hires, Job Leavers and Turnover (World Corporation)
Trends in New Hires, Job Leavers and Turnover (World Corporation) • We achieved a high level of recruitment in Q4 same as Q3, reaching a record high of 1,559 people for the full year. • The turnover rate has worsened to over 30%. Trends by Quarter Number of people New hires Job leavers Turnover rate
Slide 9: Results by Segment
Results by Segment • In the construction solutions business, both sales revenue and operating profit increased steadily YoY. • In the IT solutions business, sales revenue grew rapidly by 29.4% YoY, but operating profit only increased slightly by 6.8% YoY due to increased hiring and training costs as
Slide 10: Consolidated Financial Position
Consolidated Financial Position • Net debt steadily decreased by securing cash and repaying loans. • Goodwill ratio decreased due to accumulation of retained earnings. As of Oct. 2022 As of Oct. 2023 As of Oct. 2022 As of Oct. 2023 Millions of Yen Millions of Yen Cash and Cash Equivalents 2,283 4,08
Slide 11: Consolidated Cash Flows
Consolidated Cash Flows • Free cash flows increased YoY, and debt repayments were also on track. • Secure growth funds through public offering in conjunction with listing on the TSE Growth Market in July 2023. Millions of Yen FY2022.10 FY2023.10 Profit before Tax 1,852 2,475 Incl. depreciation of ri
Slide 12: Business Plan & Earnings Forecasts FY2024.10
2 FY2024.10 Business Plan & Earnings Forecasts Nareru Group Inc. ・ TSE Growth：9163 © Nareru Group Inc. 11
Slide 13: Priority initiatives for FY2024.10 at World Corporation
Priority initiatives for FY2024.10 at World Corporation • In FY2024.10, we will focus on increasing the number of employees and reducing the turnover rate for further growth. Initiatives to increase the number of employees Improving recruitment conversion rate of candidates via New Hires recruitme
Slide 14: Forecasts of KPIs (World Corporation)
Forecasts of KPIs (World Corporation) • Through initiatives in the previous page, the number of employees and new hires is expected to continue to grow at a high rate, while the turnover rate is expected to decrease to 27.5%. Forecasts of total engineers Forecasts of new hires, job leavers and turno
Slide 15: Forecasts of KPI (ATJC)
Forecasts of KPI (ATJC) • ATJC will focus on strengthening its sales structure this fiscal year, so the number of new hires is expected to decrease YoY, but the number of total engineers is expected to be 392, an increase of 28 YoY. Forecasts of total engineers Forecasts of new hires, job leavers an
Slide 16: Full-year Earnings Forecasts
Full-year Earnings Forecasts • Revenue is expected to increase by more than 20% YoY, same as the previous fiscal year. • In H1, the GP margin is expected to decline due to efforts to reduce the turnover rate (including salary revisions), and OP is expected to decline slightly. • In H2, the GP margin
Slide 17: Shareholder Returns
Shareholder Returns • Annual dividend for FY2024.10 is planned to be JPY 110 per share, including an interim dividend of JPY50 and a year-end dividend of JPY60 . (JPY+15 YoY) • Dividend payout ratio based on basic earnings per share (on earnings forecasts basis) is 48.3%. Interim dividend Year-end d
Slide 18: Company Profile
3 Appendix 1 Company Profile Nareru Group Inc. ・ TSE Growth：9163 © Nareru Group Inc. 17
Slide 19: Company Profile
Company Profile Established in May. • Holding company Company Name Nareru Group Inc. 2019 Established in Nov. • Dispatch of construction 2008 Head Office 3rd Floor, Kojimachi Mitsuba Building, 3-5 engineers*1 Address Number of • Dispatch of CAD Nibancho, Chiyoda, Tokyo engineers: 2,601 operators *2
Slide 20: Group Overview
Group Overview Holding Company Nareru Group Inc. Construction Solution Business Revenue： JPY16,044MM World Corporation Revenue：JPY15,899MM Hire Engineer dispatch Contraft Zenken *1 Revenue ：JPY145MM Recruit Provision of information of Employment Job craft worker job seekers Placement Clients Seekers
Slide 21: Mission and Vision
Business efficiency support Challenges facing the construction industry Mission Chronic shortage of Aging of engineers Delay in IT and DX adoption engineers To solve the increasingly severe shortage of skilled professionals*1 and make Japan an “advanced problem-solving nation” Market is growing
Slide 22: Business Model①: World Corporation
Business Model①: World Corporation • We mainly dispatch construction managers called site supervisors. They plays an important role in connecting the client, the construction company, and the on-site workers, the craftsmen. Business model Job Description of Construction Manager Orderer (National, lo
Slide 23: Business Model②: World Corporation
Business Model②: World Corporation • Dispatching engineers to various areas of the construction industry • Supplying human resources for the increasing number of civil engineering and construction investments in Japan Main target Examples of Dispatching Sites Projects such as office buildings, high-
Slide 24: Company Highlights
Company Highlights 1 2 3 High growth potential Industry’s top class*3 growth High growth potential of the market for dispatching rates and profitability backed as a construction human construction engineers due by our inexperienced worker resources platform company to labor shortage recruitment stra
Slide 25: Chronic Shortage of Construction Engineers
Chronic Shortage of Construction Engineers • The labor shortage in the construction industry is becoming more serious than in other industries. Ratio of job openings to job seekers in the construction industry Times 5.86 5.51 Architectural, civil, 5.07 5.18 5.23 5.51 and surveying engineers 4.36 3.6
Slide 26: Industry-leading Profitability and Growth Rate
Industry-leading Profitability and Growth Rate • Nareru Group boasts high growth potential and profitability as an engineer dispatch companies *1 Sales Growth Rate and Operating Profit Margin of Engineer Dispatch Companies Median 10.7 % 16% Operating margin (in the last three years) Sales growth rat
Slide 27: Nareru's Structure to make High Growth and Profitability
Nareru’s Structure to make High Growth and Profitability 1 2 Recruitment Room for improvement in Unit Price Increase the number of engineers through inexperienced Realized continuous improvement of worker recruitment strategy contract unit price by continuing to supply young engineers who are in hig
Slide 28: Nareru's Inexperienced Worker Recruitment Strategy
1 ナレルの未経験者採用戦略 • Nareru’s Inexperienced Worker Recruitment Strategy Hiring Inexperienced Worker Model Hiring Experienced Worker Model Growth Lower than hiring inexperienced worker Extremely high model Supply Number of active job seekers in all industries: 1.92 Recruitment Number of active job se
Slide 29: High Recruitment Capability with Inexperienced Worker Recruitment Strategy
1 High Recruitment Capability with Inexperienced Worker Recruitment Strategy • Secure human resources stably even in the midst of intensifying recruitment competition Number of job seekers looking for architectural, civil, and surveying engineer Number of recruits by World Corporation*1 The number o
Slide 30: Age Composition Centered On Young Engineers
2 Age Composition Centered On Young Engineers • It is possible to provide a stable supply of young human resources, which is particularly lacking in the construction industry, and has high price bargaining power Number of construction workers by age group Age composition of World Accelerating aging
Slide 31: Nareru's Training Methods
2 Nareru’s Training Methods • By establishing a training method for young engineers, the number of active engineers having two years or more of experience has increased, and the contract unit price has steadily increased over the last three years Unit prices per person & Active engineers Career plan
Slide 32: Group Growth Strategy
Group Growth Strategy 売上 Consulting support by 3 Expanding into construction ICT consulting (Mid term) construction ICT advisors and construction support staff We have already established an in-house training system and plan to 3 educate ICT personnel through in-house training in the future. 2 Exp
Slide 33: Expand Dispatching Services
1 Dispatching Expand Dispatching Services • Expect an increase in the number of engineers by hiring inexperienced and experienced people Target Market Plan Expected Results Transfer of recruitment and training know-how IT Expansion into new dispatching Inexperienced people Plant BIM market Recruitme
Slide 34: Success stories in the IT dispatch field (1/2)
1 Dispatching Success stories in the IT dispatch field(1/2) • ATJC, an IT engineer dispatch company with major IT companies as clients, joined the group in December 2020. Active investment will support the growth of the Nareru Group Company-wide sales ratio (before adjustment)*1 IT Solution Business
Slide 35: Success stories in the IT dispatch field (2/2)
1 Dispatching Success stories in the IT dispatch field(2/2) • Growth exceeding that of construction solutions due to upfront investment in adoption • Aiming for low-cost hiring and higher unit prices by utilizing know-how in hiring and training inexperienced people ATJC: the number of recruits Sales
Slide 36: Improving the dispatch unit price by utilizing In-house media
1 Dispatching Improving the dispatch unit price by utilizing In-house media • By utilizing in-house media, low-cost hiring of experienced worker recruitment and higher unit prices are expected Strengths of SEKOKAN Next Number of SEKOKAN Next registrants *1 The number of registrants is growing steadi
Slide 37: Growing Demand for BIM Specialists at Construction Sites
1 Dispatching Growing Demand for BIM Specialists at Construction Sites • Demand for BIM specialists is expected to increase as the MLIT promotes BIM/CIM *1 Number of business and construction projects using BIM/CIM Number of projects using BIM/CIM is dramatically increasing, demand for BIM specialis
Slide 38: Focusing on BIM specialist training
1 Dispatching Demand for BIM specialists is expected to increase as the MLIT promotes BIM/CIM • Focusing on BIM specialist training with an established training system Nareru’s BIM specialist training process Site supervisors Training capability Train to be BIM Conventional construction specialists
Slide 39: Expanding into recruitment services
2 Recruitment Expanding into recruitment services • Aiming to expand the scope of construction human resources services by expanding into the recruitment services Size of construction job market Aiming to be the one and only company that can provide services to all companies suffering from labor sho
Slide 40: Recruitment KPI Transition of the Craftsman Platform
2 Recruitment KPI Transition of the Craftsman Platform • Since the establishment of CONTRAFT, the number of job seekers and membership on the platform has increased steadily. Monthly cumulative number Monthly cumulative number of of job seekers on platform registered member companies Number of membe
Slide 41: Other KPIs
4 Appendix 2 Other KPIs Nareru Group Inc. ・ TSE Growth：9163 © Nareru Group Inc. 40
Slide 42: KPI Structure and Definition
KPI Structure and Definition • The Group discloses the following major KPIs related to dispatch sales. KPI Structure Definition of KPI Legend Dispatch Active Engineers who were dispatched for at least one Disclosed KPI Sales *1 Engineers day during the month Other Engineers who were employed for at
Slide 43: Trends in Engineers and Utilization Ratio (ATJC)
Trends in Engineers and Utilization Ratio (ATJC) • Although the number of total engineers decreased in Q4 due to hiring restrictions, we focused on improving the utilization rate, and the number of active engineers increased by 14 QoQ. • For the full year, the number of employees increased significa
Slide 44: Trends in Contract Unit Price (ATJC)
Trends in Contract Unit Price (ATJC) • Since we started hiring inexperienced people, the percentage of inexperienced people has increased and the contract unit price has been on the decline, but it has stopped falling. Trends in contract unit price JPY thousands 550 531 524 522 520 510 501 501 504 4
Slide 45: Trends in New Hires, Job Leavers and Turnover (ATJC)
Trends in New Hires, Job Leavers and Turnover (ATJC) • Due to hiring restrictions in the first half, the number of job leavers exceeded the number of new hires. • For the full year, we hired 186 people, which is more than the previous fiscal year. Trends by Quarter Number of people New hires Job lea
Slide 46: Disclaimer
Disclaimer This material has been prepared by Nareru Group Inc. (the “Company”) solely for information purpose only. This material does not constitute a solicitation of an offer to buy or sell securities in the United States, Japan, or any other jurisdiction. The information on companies other than