OUTSOURCING Inc.JASDAQ: 2427

Corporate Information

When was OUTSOURCING Inc. established?

Before founding the Company, Chairman Haruhiko Doi established several other firms in several regions as a provider of outsourced production contracting services. He integrated these companies in Jan. 1997 to centralize management and administrative operations by establishing OUTSOURCING Inc. in Shizuoka City, Shizuoka Prefecture.

What is the latest on the Company's business activities?

In recent years, the need among manufacturers for comprehensive outsourcing services that range from second-tier research and development to volume production is growing. Yet only a handful of outsourcing providers can meet such complex needs today.
To reinforce its outsourced R&D business, the OUTSOURCING Group launched a subsidiary, ELZEX CO., LTD. (hereinafter ELZEX), on December 25, 2009. ELZEX aims to facilitate the merger and acquisition of outsourced R&D providers, as well as manage these acquired firms and enhance their synergies with the Group. The Company believes ELZEX can help create a broader spectrum of business opportunities for the entire Group, beginning with outsourced R&D and extending on to volume production, and accelerate OUTSOURCING's transition to an integrated, one-stop outsourcing service provider. Moreover, ELZEX itself acquired REVSONIC-ES CO., LTD. (hereinafter REVSONIC-ES) as a subsidiary on December 28, 2009. REVSONIC-ES provides consultancy services to recruit engineers and engages in the placement of highly skilled engineering professionals for advanced development projects. With these acquisitions, the Company has enhanced its outsourced R&D business capabilities and further broadened its service lineup.
OUTSOURCING aims to leverage its assets and knowledge base to maximum advantage in an outsourced R&D market projected to grow to ¥700 billion, and by establishing linkages to its volume production business expand its business base as a comprehensive outsourcing service provider.

The Company's Vision and Business Strategy

What is outsourced production contracting?

Outsourced production contracting is a service conducted on behalf of the client-manufacturer to improve production efficiency. With 31 offices nationwide, including requruitment centers, we provide "an outsourced contracting model integrating improved business results with enhanced personal values and better compensation for our workers." In achieving higher production efficiency for the client-manufacturer, the Company not only prevents the hollowing out of Japanese industry, but also secures labor needs for companies and creates employment stability.

Business Results /Financial Data

What is the Company's earnings forecast for FY12/09?

OUTSOURCING expects a gradual economic recovery over the next several years as domestic demand continues to improve and exports grow as a result of a weakening yen. In addition, manufacturers have, from the previous fiscal year, begun hiring seasonal workers directly rather than relying on temporary placement workers, an evolution in client needs that we believe ORJ—as a pioneer in integrated outsourced administrative service contracts—can fully meet and therefore post growth in both sales and profits.
At the same time, the Company is pushing forward a strategy in which the production processes operated by seasonal workers—who are hired directly by manufacturers, but who outsource their administration to ORJ in turn—will be converted to outsourced contracting contracts. Through such strategies, we are confident of expanding our share of the production outsourcing pie.
In addition, OUTSOURCING is also spearheading the development of a new business field, one created as manufacturers are forced to concentrate their energies and resources on leading-edge R&D. In doing so, makers are looking to farm out second-tier R&D—that requiring evolutionary advances and upgrades of existing products—as well as the manufacture of such products to outsourcing providers. Because OUTSOURCING offers an integrated outsourced contracting service covering second-tier R&D to production, we are an industry leader in this field and intend to exploit the opportunities it offers in the current fiscal year.
As such, our consolidated earnings forecast for FY12/10 is as follows: 26 billion yen in net sales, 1.6 billion yen in operating income, and 1 billion yen in net income.

Stock Information

What is the Company's policy on dividends?

Shareholder return is an issue that management fully recognizes as being vital. The Company is therefore committed to securing the earnings required to make the strategic investments needed to enhance corporate value and deliver dividends that are both stable and significant.
The outsourcing industry today is in the midst of a period of transition, hit hard by the global economic crisis. Since the second half of 2008, our Company has moved to develop a framework to not only provide the service lineup that fully meets the demands of manufacturers created at a time when the entire industry is undergoing a shakeout and restructurings, but also deliver continued growth and profitability.
Given the situation, the lower limit of our dividend target is 644 yen, or the sum actually paid out in FY12/08. In addition, should our EPS at the current term’s end surpass 6,440 yen, the possibility of increasing our dividend payment by 10% will be examined. The dividend for FY12/09 was 644 yen per share, while we expect to pay out 721 yen per share for FY12/10.