Open Up FY2026 Full Year: Revenue Down 10.9%, Yet Operating Profit Up 2.8%

For the fiscal year ended June 30, 2026, Open Up’s revenue declined 10.9% to ¥167,483 million, as the prior year’s sale of its UK operations weighed on the top line. However, a focus on high-value-added staffing services and cost controls lifted operating profit 2.8% to ¥16,695 million. The operating margin jumped 2.4 percentage points to 10.0%. Net income attributable to owners of the parent came to ¥11,829 million, down 5.8% year on year, owing to a higher effective tax rate after a one-time gain in the previous period. The company’s three domestic segments: Machinery/Electrical Engineering, IT, and Construction: delivered steady growth, with Machinery/Electrical Engineering posting a 10.7% revenue increase helped by M&A. For FY2027, Open Up forecasts revenue of ¥175,000 million (up 4.5%) and operating profit of ¥17,700 million (up 6.0%), targeting growth in all segments.

Starting this fiscal year, the segment classification was changed, splitting the former Machinery/Electrical & IT segment into separate Machinery/Electrical Engineering and IT segments. The segment results are as follows.

In Machinery/Electrical Engineering, solid demand for engineers in semiconductors, defense, and aircraft, together with stepped-up experienced hiring and M&A-driven headcount growth, drove higher revenue and profit. The IT segment saw higher contract prices from expanding DX and AI projects, but a decline in active headcount due to a sales reorganization led to a slight revenue dip, though cost cuts lifted profit. Construction posted modest revenue growth backed by resilient demand, while profit fell due to higher compensation costs to secure talent. The International segment shrank sharply after the UK divestiture and is now concentrated on China and other Asian markets. The Other segment, which includes programming learning services, slipped into a loss amid sluggish growth.

Total assets rose ¥6,698 million from the prior year-end to ¥129,401 million, mainly reflecting goodwill from acquisitions and higher cash and deposits. Liabilities increased 12.0% to ¥49,107 million, as non-current liabilities grew following corporate bond issuance. The equity ratio attributable to owners of the parent remained high at 62.0%.

Cash flows were solid, with operating cash flow of ¥17,878 million supported by working capital improvements. Investing cash flow saw an outflow of ¥2,810 million for M&A activities. Financing cash flow recorded a net outflow of ¥12,276 million, including share buybacks and dividend payments, partially offset by bond proceeds. Cash and cash equivalents rose to ¥23,191 million.

In shareholder returns, the annual dividend was raised by ¥10 to ¥85 per share, representing a payout ratio of 61.2%. For FY2027, the company plans a further increase to ¥90 per share.

Key risks and challenges include:

• IT structural reforms: The spread of generative AI is improving development efficiency and promoting insourcing, which may affect contract pricing and project volumes. A swift shift to high-value-added domains is essential.
• Construction labor shortages: An aging workforce and scarcity of young engineers pose structural constraints. Improving compensation and boosting productivity are urgent priorities.
• Geopolitical and economic risks: Demand in semiconductors and defense is susceptible to U.S.-China tensions and economic cycles.
• Foreign exchange risk: While overseas operations have shrunk, a new acquisition in Australia could re-expand currency exposure.
• Goodwill impairment risk: Goodwill from M&A stands at ¥59,368 million, warranting close monitoring for potential impairment.

For FY2027 (ending June 30, 2027), Open Up projects consolidated revenue of ¥175,000 million (up 4.5%), operating profit of ¥17,700 million (up 6.0%), and net profit attributable to owners of the parent of ¥12,300 million (up 4.0%). All segments are expected to deliver revenue and profit growth.

Machinery/Electrical Engineering will benefit from sustained semiconductor and defense demand. The IT segment is poised to capture expanding DX and AI projects. Construction will focus on enhanced recruitment to drive growth.