CNS Co (4076) Q4 2024 earnings summary

Executive summary

• FY24 revenue rose 11.1% YoY to ¥6,657M; operating income increased 10.9% to ¥619M and net income rose 6.5% to ¥461M, led by Digital Innovation and Systems Integration.

• Full-year plans were missed partly because of weak CNS Hokkaido results and a delayed consulting ramp-up.

• Strategic priorities include strengthening business foundations, expanding the customer base and enhancing solution offerings.

Financial highlights

• FY24 gross profit increased 8.9% to ¥1,639M; SG&A rose 7.7% to ¥1,019M, with the SG&A ratio down 0.5 points to 15.3%.

• Operating income was ¥619M, up ¥60M as gross profit added ¥133M and SG&A increased ¥72M; lower recruitment costs helped limit expenses.

• Ordinary income reached ¥650M, up 10.6%; EPS was ¥158.75, up from ¥149.04, and net income attributable to owners was ¥461M, up 6.5%.

• Gross margin was 24.6%, down from 25.1%; operating margin was 9.3%, unchanged, and net margin was 6.9%, versus 7.2%.

Outlook and guidance

• FY25 forecast: revenue ¥7,562M (+13.6%), gross profit ¥1,834M (+11.9%), operating income ¥660M (+6.6%), ordinary income ¥676M (+4.0%) and net income ¥489M (+6.2%).

• FY25 plans include wage increases of ~11%, including an 8% base-pay increase, and investment in innovation; these investments are expected to moderate profit growth.

• Growth drivers include ServiceNow implementation support and U-Way expansion; consulting plans to rebuild its operating structure after a slower-than-planned ramp-up.

• FY27 targets: revenue ¥10B, operating margin of at least 10%, U-Way revenue ¥2B and prime-contract revenue ratio of 60%.