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Account Closing Review

Consolidated Performance for the March 2019

(Units: millions of yen)

  Current period
results
Prior period
results
Year-on-year
comparison (%)
Net sales 284,696 266,645 6.8
Gross profit 47,202 47,267 -0.1
Selling, General & Administrative Expenses 41,846 41,175 1.6
Operating income 5,355 6,092 -12.1
Ordinary income 5,394 1,802 199.3
Net income attributable to shareholders of transcosmos inc. 4,433 -2,176 -

Qualitative Information Regarding Consolidated Operating Results

In general, the Japanese economy in the current consolidated fiscal year has been on a moderate recovery trend with improvement in the employment and income environment, a high level of corporate profits, and capital investment on the rise, although some sluggishness was seen toward the end of the fiscal year. On the other hand, the outlook remains uncertain due to issues including concerns about the impact on the global economy of intensified trade friction between the US and China, Slowdown of Chinese economy & Issue of United Kingdom EU withdrawal.
In the environment surrounding the services offered by our group, there is expanding demand for outsourcing services related to improvements such as increased business efficiency, enhanced cost competitiveness, and sales expansion for businesses facing a backdrop that includes a declining labor force, the globalization of businesses, and advances in digital technology such as IoT and AI. Against this setting, in addition to existing services, our group has actively expanded new services that we have been developing for future growth in Asian markets, with a focus on Japan, China and Korea, and as a result, sales have increased. On the other hand, in each business area of DEC services and BPO Services, we are continuing to strengthen our efforts aimed at objectives such as developing and providing competitive proprietary services and services that utilize digital technologies, as well as accelerating overseas expansion. Due to the impact of these efforts, costs as well as selling, general and administrative expenses have increased and profitability has declined, but we will continue to improve profitability in the future by steadily promoting these efforts.
In the business area of DEC services that provide one-stop support for marketing, sales and customer communication, which are the points of contact between client companies and customers, we have focused on initiatives to promote digital transformation and support sales expansion by developing services that anticipate the needs of client companies. Specifically, we have promoted the development and deployment of services that use LINE as a platform that can seamlessly support marketing, sales, and customer communication. We will continue to focus on services that utilize LINE, not only for private businesses, but also for the purpose of improving the convenience of services for government offices and local governments where there is a growing demand. Also for initiatives in new areas, we have focused on fields such as “Connected Stadium” business aimed at ICT adaptation for stadiums starting with “Quick Ticket,” which is an electronic ticket with international patents, and the development of “Gotcha!mall,” which is a platform that guides consumers to stores from smartphones to connect consumers with products and stores. Furthermore, in terms of services that utilize digital technology, we have started offering services such as the speech recognition solution “transpeech,” which provides one-stop support for contact centers that ranges from the introduction to operation of a voice recognition environment; services that utilize “Amazon Connect,” the Cloud-based contact center of Amazon Web Services Japan; and ad operation services using a retargeting ad optimization AI that combines the cutting edge AI “DataRobot,” which automates machine learning, with “transcosmos decode,” our proprietary DMP (Data Management Platform).
Moreover, in the BPO services business area, which optimizes operations by conducting them simply, speedily and accurately through the application of digital technology to the client company’s business processes, we are focused on the development and provision of services that bring about business process streamlining and cost optimization by integrating digital technology with human operations. Specifically, we have enhanced our center-based services that lead to improved productivity in operations. At BPO Center Kumamoto, we are developing services that can provide common industry-wide ordering operations through a shared system, and we will continue improving productivity by implementing automation techniques that include our own platform and RPA. In addition, we will continue to focus on the enhancement and development of center-based services, including establishment of the new BPO Center Sasebo in Nagasaki Prefecture, and the previously established BPO Center Kameido going into full-scale operation. Furthermore, demand is expanding for services from shared services companies that are entrusted with corporate operations such as accounting and human resources within client companies, and we are strengthening efforts to meet these demands. Also, we have started to provide services such as facility management and one-stop services based on ICT for building owners and building management companies, which are services that utilize digital technology, and a platform to streamline the acquisition of technical certifications, primarily as business support for manufacturers.
Our group is strengthening its efforts to be a good digital transformation partner for client companies that seamlessly connects DEC services and BPO services to support customer-focused digitization.
On the other hand, in efforts aimed at overseas expansion we have strengthened our global deployment of services and our service provision systems in each local market, with a focus on Asia. Specifically, we have begun overseas expansion of our “Connected Stadium” business and “Gotcha!mall,” which were originally launched in Japan. In addition, for new overseas service bases, we have established the “Koshisui Center,” which is our first contact center in Taiwan, and in Indonesia we set up a subsidiary called “PT. transcosmos Commerce” that supports EC related operations in Indonesia, along with the “Semarang Center” operation base and “Jakarta Center No.4” that focus on contact center services. Furthermore, we have expanded our operation bases to strengthen our service systems in North America. Through these efforts, we have now established an organization that can provide services at 109 locations in 30 countries overseas, and we will continue reinforcing our efforts to accelerate overseas expansion.

Business Conditions by Segment Category

1. Parent company

As a result of factors such as increased demand for outsourcing services at our company, sales volume reached ¥210.224 billion, resulting in a revenue increase of 3.5% compared with the previous period. Segment profit decreased by 24.3% compared with the previous period to ¥4.415 billion due to the impact of factors including a decline in large-scale short-term projects and upfront investment implemented in the previous period.

2. Domestic subsidiaries

With respect to affiliated companies in Japan, sales volume increased 11.9% compared with the previous period to ¥21.030 billion due to strong orders, including those at listed subsidiaries, and the impact of new consolidated subsidiaries. Segment profits increased by 143.0% compared with the previous period to ¥624 million due factors such as improved profitability at listed subsidiaries and increased profitability resulting from business restructuring of some subsidiaries.

3. Overseas subsidiaries

With respect to affiliated companies overseas, orders for services in Korea and China were favorable and sales volume reached ¥61.974 billion, resulting in earnings growth of 17.6% compared with the previous period. Segment profit amounted to ¥313 million (there was a segment loss of ¥24 million in the previous period) due to the impact of factors including improved profitability at Korean subsidiaries and business restructuring at European subsidiaries.

Net sales per segment for Consolidated Performance for the year March 2019

Business Conditions by Segment Category

*Note: Elimination of inter-segment transactions of ¥-8,533 million is not included.

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