RECOMM CO.,LTD.

Business Details

A core domestic business that sells LED lighting and other decarbonization products, business phones, digital MFPs (Multifunction Printers), ReSPR, and other IT equipment through three channels: directly-operated stores, franchise (FC) member stores, and agencies. The business aims to stabilize earnings by expanding proposal-based sales leveraging its customer database and stock-type revenue such as maintenance services. Revenue for the six months ended March 2026 (FY2026, ending March 2026) was ¥2,134 million (external customer basis), accounting for approximately 30.6% of consolidated revenue.

Recent Overview

Profit margin improved significantly due to SG&A cost reductions; FC member stores achieved double-digit revenue growth

In the Domestic Solutions Business for the six months ended March 2026 (FY2026, ending March 2026; October 2025 to March 2026), revenue increased 5.1% year on year to ¥2,134 million. Directly-operated stores grew 5.2%, driven by efficient sales activities leveraging the customer database and successful proposals of proprietary MFP plans and environmental products. FC member stores performed strongly, up 16.3%, due to the horizontal deployment of directly-operated store sales methods and the development of new franchisees. Meanwhile, the agency channel declined 4.3% as the downward trend in security product sales continued. Segment profit improved substantially to ¥163 million (up 119.3% year on year) due to a decrease in SG&A expenses, with the profit margin rising from 3.6% to 7.6%.

Key Products

Growth Drivers

• Efficient proposal-based sales to existing customers leveraging the customer database (cross-selling of proprietary MFP plans and environmental products)
• Development of new FC member stores and horizontal deployment of directly-operated store sales methods (up 16.3% year on year in the six months ended March 2026, FY2026 ending March 2026)
• Expansion of sales of LED lighting, air conditioners, and other decarbonization products against the backdrop of corporate carbon-neutrality demand
• Stabilization of earnings through the accumulation of stock-type revenue such as maintenance services
• Profitability improvement through SG&A expense reductions (segment profit for the six months ended March 2026, FY2026 ending March 2026, increased 119.3% year on year)

Risks

• Continued decline in price competitiveness and downward sales trend for security products in the agency channel
• Risk of a decrease in the number of FC member stores due to business transfers, etc.
• Increasing difficulty in acquiring new customers amid slowing growth in the information/communication and office equipment markets
• Risk of reduced capital expenditure by customers due to rising prices and interest rates
• Reduced comparability due to structural reclassification of revenue resulting from segment classification changes (transfer of RPA services and AI agents to the DX Business)

Business Details

Sells LED lighting and other decarbonization products, commercial air conditioners, SpaceCool, information/communication equipment, and ReSPR in China, India, and the ASEAN region. The segment's main customers are companies pursuing carbon neutrality, and it operates primarily around energy-saving solution proposals. In January 2026, the company acquired a Singapore-based LED lighting sales company (Lumitron Pte. Limited), expanding its product and regional lineup. This is the group's largest segment, accounting for approximately 65.8% of consolidated revenue.

Recent Overview

Revenue up 7.5% year on year, but profit down 9.8%, reflecting a revenue increase alongside a profit decline

In the Overseas Solutions Business for the six months ended March 2026 (FY2026, ending March 2026; October 2025 to March 2026), revenue increased 7.5% year on year to ¥4,581 million. In January 2026, the company acquired Lumitron Pte. Limited, a Singapore-based LED lighting sales company, and added it to the scope of consolidation. Meanwhile, segment profit decreased 9.8% year on year to ¥214 million, as temporary expenses related to the M&A pressured profit. At overseas subsidiaries, inventories increased substantially (up ¥885 million on a consolidated basis) due to advance purchases of goods ahead of price increases.

Key Products

Growth Drivers

• Expansion of the sales network and product lineup through Lumitron Pte. Limited, a Singapore subsidiary acquired in January 2026
• Growing demand for energy-saving solutions such as LED lighting and commercial air conditioners against the backdrop of carbon-neutrality demand
• Diversification of products through continued full-scale sales of SpaceCool
• Expansion of direct sales and agency channels to Japanese-affiliated companies and local companies in ASEAN, China, and India
• Promotion of business expansion into local markets utilizing M&A and alliances

Risks

• Risk of profit pressure from temporary expenses related to M&A (materialized in the current interim period)
• Uncertainty in the overseas business environment due to heightened geopolitical risk and U.S. tariff policy, among other factors
• Foreign exchange risk (fluctuations in ASEAN, Chinese, and Indian currencies affect performance; a positive translation gain of ¥505 million contributed in the current interim period)
• Inventory risk associated with a sharp increase in inventories at overseas subsidiaries (e.g., advance purchases ahead of price increases)
• Impairment risk on non-financial assets (goodwill increased to ¥3,087 million)
• Risk of intensifying competition and price competition in the development of local markets

Business Details

The DX Business centers on the sale of RPA services and AI agents, the outsourcing of intra-group administrative tasks, outsourcing services for customers outside the group, and consulting proposals for business process reform. The BPO center promotes business automation and efficiency through the use of RPA and AI. The segment name was changed from the former "BPR Business" to the "DX Business" in the current period, integrating the RPA services and AI agent sales business of Recomm DX Solutions Co., Ltd. This is a small-scale segment, accounting for approximately 3.6% of consolidated revenue.

Recent Overview

Revenue declined sharply by 23.2% year on year due to a decrease in spot projects and a decline in work volume

Revenue in the DX Business for the six months ended March 2026 (FY2026, ending March 2026; October 2025 to March 2026) was ¥248 million (down 23.2% year on year). The main causes were a decrease in spot project sales and a decline in the volume of data entry and other work. The segment loss narrowed to ¥9 million from ¥16 million in the same period of the prior year, but the decrease in revenue could not be fully offset by operational efficiency improvements. In addition, from the current period, the company integrated the RPA services and AI agent sales business of Recomm DX Solutions Co., Ltd., and changed the segment name from "BPR Business" to "DX Business."

Key Products

Growth Drivers

• Capturing business automation demand and developing new customers through the use of RPA and AI
• Creating synergies between the RPA services business and the BPO business through the integration of Recomm DX Solutions
• Developing new demand utilizing generative AI and expanding transactions with existing clients
• Achieving low-cost operations by embedding RPA and AI into the BPO center
• Expanding the acquisition of BPO spot projects through industry-specialized sales activities

Risks

• Revenue volatility risk due to dependence on spot projects (a decline in spot project sales continued in the current interim period)
• Risk of declining utilization rates due to a decrease in the volume of data entry and other work
• Cost structure risk in which declines in revenue cannot be offset by operational efficiency improvements
• Transition risk in business operations and management structure associated with segment reorganization (integration into the DX Business)
• Geopolitical and foreign exchange risk in the operation of overseas BPO centers
• Risk of difficulty differentiating from competitors due to delays in capturing DX demand