Account Closing Review

Consolidated Performance for FY2021/3

(Units: millions of yen)

  Prior period
results
Current period
results
Year-on-year
comparison (%)
Net sales 311,871 336,405 7.9
Gross profit 54,608 65,887 20.7
Selling, General & Administrative Expenses 43,918 48,135 9.6
Operating income 10,689 17,752 66.1
Ordinary income 8,954 18,012 101.2
Net income attributable to shareholders of transcosmos inc. 6,279 10,022 59.6

Qualitative Information Regarding Consolidated Business Results

In the business environment where our Group operates, demands for outsourcing services that lead to higher productivity, stronger cost competitiveness, and higher sales remain solid. At the same time, under the COVID-19 crisis, there is a growing need for services that support new workstyle options. Such services include ones that enable companies to promote digitalization, build up e-commerce and other contactless sales channels, and apply a teleworking model, which is quickly taking hold.
Given the government agencies’ stay-home and self-restraint requests for events and campaigns, and our Group putting highest priority on preventing the spread of infections and ensuring our employees’ safety, we suffered some setbacks such as a decrease in new projects, downsizing of some existing projects, and a temporal drop in center utilization rate. Despite these challenges, we have proactively offered the government agencies and other businesses services that assist them in taking COVID-19 countermeasures. At the same time, as the digital transformation partner of our clients, our Group continued to take an energetic approach, and delivered both Digital Marketing • E-Commerce • Contact Center (DEC) services and Business Process Outsourcing (BPO) services that assist our clients in managing and transforming their businesses. As a result, we successfully increased the number of orders under such a difficult environment. In addition, although the selling, general and administrative cost has increased as we took a range of COVID-19 preventive measures, we achieved higher profitability primarily due to a healthier profitability from order management services, and receiving high-profit projects. We have also worked on our initiatives for our future growth. More specifically, with the aim of strengthening our service competitiveness in Japan and abroad, and meeting emerging demands and needs, we retained our focus on initiatives for enhancing the service and organizational framework to serve our clients in promoting their digital transformation (DX).
In the DEC services business sector, where we offer services that support all touchpoints between our clients and their customers including marketing, selling, and customer communication at one-stop, we focused on initiatives that help clients drive their digitalization efforts and expand sales. More specifically, we have enhanced services powered by digital technologies. To that end, we have introduced additional features to our speech recognition solution “transpeech,” and released two services. One is “AI-powered voice assistant service” that connects cloud contact center services by Amazon Web Services Japan with AI-powered conversation services, thereby enabling our clients to launch the service quicker, at a lower cost. The other is “Chatbot AI-IQ Diagnostics,” a service that surveys the quality of AI-chatbot. In terms of contact center services, we have released and actively marketed “Home-based Contact Center Services” that help contact center operators strengthen their business continuity plans, and optimize costs by reducing facilities. In addition, as part of our initiative for bolstering our service competitiveness and strengthening our service framework, we have enhanced our e-commerce services framework based on “Shopify,” the world’s top share e-commerce platform. Moreover, we have opened “Shibuya First Tower” assembling the entire digital marketing teams including the website development/operations services team, the development and operations team for LINE, Instagram, Twitter and other social media platforms, and the internet advertising team. By doing so, we have bolstered the service framework so that the combined team can actively create new digital marketing services, make proposals for integrated services that leverage the strength of each team, thereby contributing to our clients in expanding their sales more than ever before.
In the BPO services sector where we perform operations on behalf of clients simply, speedily, and accurately in order to optimize their business operations with the power of digital technology, we enhanced our service framework primarily through the formation of alliances. More specifically, we have signed an outsourcing partnership agreement with Concur Japan Ltd. for its “SAP Concur,” the leading business travel/expense management solution. Under the partnership, we will help drive our clients’ efforts in digitalizing their expense management processes to achieve the greater operational efficiency. We also have formed a partnership with Works Human Intelligence Co., Ltd. for BPO services designed for the human resources department. Leveraging the partnership, we will help businesses transform their HR operations with our BPO services powered by “COMPANY,” the integrated HR system. We have been offering our BPO services to FUJITSU LIMITED, Toshiba Corporation, and TOSHIBA DIGITAL SOLUTIONS CORPORATION by investing in their respective shared services companies or making them into our subsidiaries. Going forward, we will bolster our initiatives for investments, and merger and acquisitions in addition to forming alliances. Our Group will continue to enhance our initiatives to become the digital transformation partner of our clients and assists them in digitalizing their operations with a customer-first mindset by seamlessly connecting our DEC and BPO services.
With regard to our global business, we have focused on expanding our service offerings and enhancing the service delivery framework in each local market with a focus on Asia. More specifically, we have released home-based contact center services in China and Taiwan. In other countries where we operate, we have developed operational structures that enable our agents to work from home in order to secure our employees’ safety, and ensure business continuity under the COVID-19 crisis. Currently, we are making necessary preparations to launch our home-based services in other markets. At the same time, we have enhanced our operational bases to accommodate growing business. In South Korea, we have expanded “Busan Center 1” and “Namyeong Center,” and opened a new “Euljiro Center.” As the leading independent BPO company in South Korea, we now have a service network with 16 bases and about 5,000 workstations (8,100 workstations including onsite locations) in the country. In South East Asia, we have reorganized and enhanced our service framework for the Malaysian local market by opening the second location in Kuala Lumpur, which is equipped with an operations center. In Malaysia, we are making the most of the multiethnic nature of the country, with its population consisting primarily of Malays, Chinese, and Indians, and offering various services including contact centers, and digital marketing not only for the Malaysian local market but also to the global market as a multilingual operations base. Through the execution of such initiatives, we now have an established service network of 101 bases across 29 countries and regions outside Japan. We will continue to enhance our initiatives to accelerate our global expansion.

Business Results by Segment

1. Parent Company

The Parent Company achieved sales of 240,763 million yen, a 5.8% increase compared to last year, primarily due to increased demand for our outsourcing services. The segment income resulted in 11,237 million yen, a 42.0% increase compared to last year, mainly due to higher profitability in existing large-scale projects, and new large-scale public projects.

2. Domestic Affiliates

Domestic affiliates’ sales increased by 42.5% from last year to 39,483 million yen primarily due to solid orders for listed subsidiaries, and a positive impact from newly consolidated subsidiaries that are included in our consolidated financial statements from the third quarterly consolidated accounting period of last year. The segment income was 3,603 million yen, a 164.5% increase compared to last year due to healthier profitability in some listed subsidiaries.

3. Overseas Affiliates

Overseas affiliates’ sales increased by 4.6% compared to last year to 69,105 million yen, primarily due to an increase in service orders for our subsidiaries in South East Asia, China and South Korea. The segment income was 2,914 million yen, a 106.2% increase compared to last year, due to enhanced profitability primarily in subsidiaries in China and South Korea.

Net sales per segment for Consolidated Performance for FY2021/3

Business Results by Segment

*Note: Elimination of inter-segment transactions of ¥-12,946million is not included.

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