Nareru Group Inc.

Business Details

Centered on the Construction Engineer Staffing (World Corporation) business, this segment dispatches construction management engineers, CAD engineers, and others to general contractors and other construction companies. Through mass hiring focused on inexperienced hires and a proprietary training methodology, the segment provides a stable supply of young engineers. It also operates Construction DX Support Service and Skilled Construction Worker Referral businesses to diversify revenue opportunities. Revenue for the first half of FY2026 (ending March 2026) was ¥11,405 million, accounting for approximately 90% of overall group revenue.

Recent Overview

Revenue increased 8.1% year on year, but segment profit declined 15.9% due to increased upfront investment

In the first half of FY2026 (ending March 2026), the number of engineers on staff increased by 346 year on year to 3,840, and the average monthly number of engineers deployed increased by 252 to 3,301, while the average monthly contract unit price maintained an upward trend at ¥522 thousand (up ¥3 thousand year on year). Revenue reached ¥11,405 million (up 8.1% year on year). On the other hand, expenses increased due to continued personnel investment aimed at strengthening sales and recruiting capabilities in the first year of the medium-term management plan, along with ongoing upfront investment in growth areas, resulting in a significant decline in segment profit to ¥1,040 million (down 15.9% year on year). The utilization rate came in at 91.6% (down 2.9 percentage points year on year), below expectations, and optimizing staff placement and improving personnel retention remain ongoing challenges.

Key Products

Growth Drivers

• Continued expansion of demand for engineer staffing driven by the structural labor shortage in the construction industry (aging engineers and a shortage of young workers)
• Steady construction demand supported by resilient public investment and a recovery in private-sector capital expenditure
• Continued expansion of the number of engineers on staff and deployed through a mass hiring strategy centered on inexperienced hires and a proprietary training methodology
• Room for further increases in contract unit prices as engineers gain more years of experience (¥522 thousand in the first half of FY2026, ending March 2026, up ¥3 thousand year on year)
• Diversification of revenue opportunities through expansion of Construction DX support, the BPO domain, and the skilled worker referral business
• Investment in strengthening recruitment, sales, and training functions under the medium-term management plan "Change and Growth 2030"
• Building the foundation for the skilled worker referral business through expansion of the regional network via collaboration with regional financial institutions and others

Risks

• Risk of declining utilization rates: utilization rate of 91.6% in the first half of FY2026 (ending March 2026), down 2.9 percentage points year on year, and idle-time costs arising during a phase of supply-demand rebalancing
• Risk of persistently high turnover: personnel retention remains recognized as an important ongoing challenge, with rising turnover increasing recruitment and training costs
• Profit pressure from increased upfront investment: increased costs during the growth investment priority phase in the first year of the medium-term management plan (segment profit down 15.9% year on year)
• Medium- to long-term risk of declining demand for engineer staffing as labor-saving technologies become more widespread
• Costs of complying with the overtime work cap regulations (effective April 2024) and capacity constraints at client sites
• Impairment risk related to goodwill (¥14,075 million): potential impact on impairment testing amid a phase of declining profitability