World Holdings Co., Ltd. (Ticker: 2429) FY2026 Q2 Earnings Deep Dive Report

World Holdings Co., Ltd. (Ticker: 2429) delivered a robust performance in the second quarter (Q2) of the fiscal year ending December 2026. Driven by its core Product HR business , the company exceeded its initial internal targets across all top-line and profit metrics. While year-on-year (YoY) profit declined due to the structural concentration of real estate property handovers in the second half of the year, progress toward the full-year guidance (which forecasts both revenue and profit growth) remains firmly on track. This report provides a comprehensive analysis of the earnings summary, segment-specific performance, the strategic acquisition of nms Holdings as a wholly-owned subsidiary, the full-year outlook, and the company's shareholder return and cost-of-capital strategies.

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1. Consolidated Earnings Summary: Significant Outperformance Against Plan

For the first half of the fiscal year ending December 2026, consolidated results were as follows: Net Sales of ¥138.366 billion (+5.0% YoY, +2.2% vs. plan), Operating Profit of ¥4.249 billion (-14.6% YoY, +20.4% vs. plan), Ordinary Profit of ¥4.094 billion (-15.1% YoY, +19.7% vs. plan), and Quarterly Net Income attributable to owners of the parent of ¥1.903 billion (-28.2% YoY, +27.1% vs. plan).

Background and Significance of the Earnings Overview Slide

The slide above provides a snapshot comparing current quarterly performance against initial plans and the previous year's figures. The essential takeaway is that the YoY profit decline was fully anticipated in the plan, and actual progress against the plan was strong, with operating profit exceeding targets by 20.4%.

The primary reason for the YoY profit decline is the real estate business, a key profit pillar, where property handovers are scheduled to concentrate in the second half (particularly Q4). Conversely, the core Human Resources business (Product HR) captured strong demand, significantly outperforming expectations. Coupled with cost optimization across all business units, the underlying earnings power is stronger than initially projected.

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2. Detailed Segment Performance Analysis

World Holdings’ strength lies in its portfolio management, which provides "resilience against economic fluctuations." Key developments by segment are as follows:

① Human Resources Business (Product HR / Service HR)

As the group's growth engine, the HR business achieved revenue of ¥113.656 billion (+14.8% YoY, +5.4% vs. plan) and segment profit of ¥2.543 billion (+6.0% YoY, +25.7% vs. plan), marking both revenue and profit growth while exceeding targets.

The Product HR business was the primary driver.

Commentary on the Product HR Business Slide

The Product HR business provides personnel for manufacturing, technology, and R&D sectors. As shown in the slide, revenue reached ¥67.233 billion (+15.1% YoY, +7.9% vs. plan), segment profit hit ¥1.856 billion (+8.2% YoY, +49.5% vs. plan), and the average number of registered personnel grew to 25,270 (+14.5% YoY), demonstrating impressive growth.

This is underpinned by surging demand in the semiconductor sector, particularly for AI and data centers , alongside robust orders from the automotive, electrical/electronic, and machinery manufacturing industries. Efforts to improve recruitment efficiency and optimize costs through proprietary job portals have borne fruit. The company is successfully executing a cycle of increasing profit margins while simultaneously investing in training systems and infrastructure to support further expansion in the second half.

Meanwhile, the Service HR business (logistics, retail, etc.) also grew steadily, with revenue of ¥46.422 billion (+14.3% YoY). Operations for e-commerce contract warehouses and Yamato Staff Supply Co., Ltd. are expanding. Although segment profit of ¥687 million (-12.1% vs. plan) fell short of targets due to upfront costs for new business investments, it maintained profit growth on a YoY basis.

② Real Estate Business

Revenue was ¥16.674 billion (-32.8% YoY, -12.6% vs. plan), and segment profit was ¥963 million (-53.9% YoY, +4.5% vs. plan). While revenue and profit declined YoY due to the second-half weighting of handovers and delayed property sales, the company’s focus on "profitability-oriented sales" resulted in segment profit exceeding the plan. The balance of real estate for sale has accumulated to ¥72.903 billion (+14.8% from the end of the previous fiscal year), setting the stage for a major recovery in the second half (especially Q4).

③ Information & Communications and Agricultural Park Businesses

• Information & Communications : Revenue was ¥5.040 billion (-9.1% vs. plan) due to inventory shortages of core products (mobile devices, etc.). However, segment profit reached ¥198 million (+31.6% vs. plan), significantly exceeding targets due to the resolution of inventory issues from Q2 and rigorous cost optimization.
• Agricultural Park Business : Driven by strong leisure demand during Golden Week and successful events, revenue reached ¥2.994 billion (+4.3% YoY), and segment profit doubled to ¥131 million (+112.1% YoY). The operation and preparation of new contracted facilities (such as the Chiba Zoological Park) are proceeding smoothly.

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3. Strategic Topics: Making nms Holdings a Wholly-Owned Subsidiary

The most significant management action this period was the Takeover Bid (TOB) and subsequent acquisition of nms Holdings Co., Ltd., which was previously an equity-method affiliate.

Strategic Significance of the nms Holdings Slide

The slide above illustrates the impact of this M&A on the future of the World Holdings Group. Following a successful tender offer that significantly exceeded the minimum threshold (reaching a 94.5% ownership ratio), nms Holdings is scheduled to become a wholly-owned subsidiary effective September 1st.

nms Holdings specializes in EMS (Electronics Manufacturing Services) , including PCB assembly and press/resin molding, as well as a Power Supply (PS) business . It possesses a global network with 65% of its revenue generated overseas (China, Hong Kong, Malaysia, Vietnam, Thailand, the U.S., etc.).

By combining World Holdings' traditional strengths in "personnel supply," "maintenance," and "conceptual design" with nmsHD's "manufacturing lines" and "mass production systems," the group will complete a "one-stop system providing the entire manufacturing value chain." This is expected to accelerate the company's evolution into a "Comprehensive Manufacturing Assistance Company" that transcends traditional HR services and drives rapid global expansion. (Note: The impact on full-year consolidated earnings will be announced once the assessment is complete.)

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4. Full-Year Outlook and Quarterly Structural Characteristics

The full-year consolidated earnings forecast for the fiscal year ending December 2026 remains unchanged:

• Net Sales : ¥300.326 billion (+5.6% YoY)
• Operating Profit : ¥12.500 billion (+15.5% YoY)
• Ordinary Profit : ¥11.799 billion (+8.6% YoY)
• Net Income attributable to owners of the parent : ¥6.966 billion (+5.2% YoY)

World Holdings' quarterly performance is characterized by a "profit structure heavily weighted toward the fourth quarter (Q4)." This is due to the concentration of real estate property handovers in Q4 and the fact that upfront recruitment and training investments in the HR business during the first half enter the recovery phase in the second half. While the Q2 operating profit of ¥4.249 billion may appear to be only 34% of the ¥12.5 billion full-year target, this follows the typical annual pattern. Exceeding the Q2 plan by over 20% provides a strong tailwind for achieving the full-year goal.

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5. Shareholder Return Policy and Capital Efficiency (ROE and Cost of Capital)

World Holdings is committed to management that prioritizes capital efficiency and proactive shareholder returns to achieve sustainable growth and enhance shareholder value.

Expansion of Shareholder Returns

As part of its shareholder return policy, the company raised its dividend payout ratio target from 30% to 35% starting from the fiscal year ending December 2025. For the fiscal year ending December 2026, the company plans a dividend of ¥136.30 per share (forecast), an increase of ¥6.80 YoY, clearly demonstrating a commitment to continuous dividend growth linked to earnings performance.

Management Conscious of Cost of Capital

The company aims to maintain an ROE (Return on Equity) level that consistently exceeds its cost of shareholders' equity (estimated at 9–11% via CAPM, etc.). Specifically, it is working to enhance corporate value through three pillars:

1. Improvement in Net Profit Margin : Expanding high-value-added (upstream) projects in Product HR and improving gross margins in Service HR through the utilization of company-operated warehouses.
2. Maintenance and Improvement of Total Asset Turnover : Increasing the proportion of the high-asset-efficiency HR business while ensuring strict inventory turnover management in the real estate business.
3. Sound Financial Leverage : Maintaining an equity ratio of approximately 25–30% and executing growth investments under appropriate financial risk management, considering the D/E ratio.

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Summary

The Q2 earnings for the fiscal year ending December 2026 were highly disciplined, driven by the strong growth of the Product HR business, which captured demand related to semiconductors and AI , and prudent, profitability-focused management in the real estate business . Furthermore, measures to enhance medium- to long-term corporate value are being steadily executed, including the expansion of business domains and global reach through the acquisition of nms Holdings, and the increase in the dividend payout ratio to 35%.