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Meitec Corporation - Results for the First Quarter ended June 30, 2011

Meitec Corporation - Results for the First Quarter ended June 30, 2011

Japan’s Meitec Corporation has announced its Q1 Figures showing net sales of Y15,557M or  &pound123M up by 10% on the previous year. Net income was down by 45% to Y486,000,000 or &pound3.8 million.

Consolidated financial summary

1. Results for the First Quarter (April 1, 2011 to June 30, 2011)

(1)Consolidated Operating Results

During the first quarter (from April 1, 2011, to June 30, 2011), disrupted supply chains and restricted power supply due to the Great East Japan Earthquake led to a significant decrease in production among leading manufacturers, which are the major customers of the Company. However, their investments in technological development continue to be active on the whole.

Under these circumstances, the Group’s core business—temporary engineer staffing—maintained a high utilization ratio, which had been improved during the previous fiscal year, leading to a significant year-on-year gain in operating results. Primarily for this reason, consolidated net sales for the period under review increased &yen1,416 million compared with the same period in the previous fiscal year to &yen15,557 million. The consolidated cost of sales advanced &yen347 million to &yen11,761 million, chiefly due to higher labor costs.

Selling, general and administrative expenses went up &yen266 million to &yen2,829 million mainly because of a rise in strategic investments. As a result, consolidated operating income rose &yen803 million to &yen966 million.

However, consolidated ordinary income declined &yen25 million to &yen986 million due to a significant decrease in subsidies for the temporary staffing business as a result of the expiry of employment adjustment subsidies.

Consolidated net income for the period under review decreased &yen407 million to &yen486 million, reflecting a year-on-year decline in extraordinary income and a climb in tax expenses.

(1)-2. Operating Results by Business Segment

1)-2. i Temporary Staffing

The Temporary Staffing Business accounts for more than 90% of consolidated net sales. Within the temporary engineer staffing, the core business of this segment, the Company’s non-consolidated working hours declined from 8.79 hours/day a year earlier to 8.75 hours/day, mostly affected by the Great East Japan Earthquake. The number of completed contracts in April 2011 was higher compared with the same month of the previous year, resulting in a 0.8% decline in the utilization ratio from the fourth quarter of the

previous fiscal year. However, the Company achieved a significant improvement in the non-consolidated average utilization ratio from 78.1% a year earlier to 90.0% in the period under review, due to efforts to acquire new customers and to propose customers unassigned engineers, who have in the meantime continued their vocational training, as well as aggressive marketing efforts aimed at existing customers.

Mainly for this reason, consolidated net sales in the Temporary Staffing Business segment for the period under review increased &yen1,515 million from a year earlier to &yen14,919 million.

The rise in net sales raised operating income by &yen839 million to &yen933 million.

1)-2. ii Engineering SolutionIn the Engineering Solutions Business, the Company provides engineering services related to analytical technologies, prototype production, casting/metal mold production and technology support for printed-circuit boards.

Consolidated net sales in the Engineering Solutions Business segment for the period under review fell &yen101 million from a year earlier to &yen594 million, and an operating loss of &yen12 million was recorded.

Meitec CAE posted profitability despite a decrease in income due to a reduced number of orders received as a result of the Japanese earthquake and other reasons. Apollo Giken Group recorded an operating loss, reflecting a decrease in orders and provision for bad debt expenses.

1)-2. iii Global

In the Global Business segment, the Company engages in vocational training and job placement in China. In vocational training, efforts were made to optimize the size of staff and facilities for human resource development. As a result, the Global Business segment’s operating loss remained at the same level as a year earlier at &yen16 million, despite a &yen13 million decline in consolidated net sales to &yen5 million.

1)-2. iv Recruiting & Placement

Effective from April 1, 2011, this segment was renamed the Recruiting & Placement Business, instead of the Career Support Business. The Recruiting & Placement Business segment involves the job placement and an information portal site business intended for engineers.

Consolidated net sales of the Recruiting & Placement Business segment advanced &yen50 million from a year earlier to &yen153 million, and operating income grew &yen31 million to &yen59 million.

Meitec Next Corporation achieved revenue and profit growth due to a higher number of job openings, reflecting the recovery of market conditions, and increasingly active mid-career employment.

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