The Company has two business segments: the business solutions segment, which provides outsourcing service; and the human resources solutions segment, offering temporary staffing service. We generate 84% of consolidated net sales from three core services—temporary staffing service, logistics outsourcing service and special needs employment service.
In this segment, S-Pool Logistics, Inc. provides logistics outsourcing services, S-Pool Plus, Inc. provides special needs employment services and associated farm operation services, S-Pool Engineering, Inc. provides field marketing services for smart meter installation operations, and S-Pool Sales Support Inc. provides merchandising, sales promotion, and other services. In the fiscal year ended November 30, 2016, sales declined in logistics outsourcing services as logistic center operation services where heavily scaled back. However, the smart meter installation operation, sales support operations, and special needs employment service all expanded, helping to absorb the decline in sales of logistics outsourcing services. In the special needs employment service, we opened two new farms and sold around 1.5 times more farm equipment than in the previous fiscal year. Meanwhile, on the profit front, operating income increased markedly, reflecting the impact of increased sales in the special needs employment service, improved sales in smart meter installation operations due to operational improvements, and the achievement of profitability in contracts received for ad hoc services following the liberalization of retail electricity sales to households. Consequently, this segment achieved increases in both sales and profit, with sales of ¥3,440 million, up 14.6% year on year, and operating income of ¥583 million, up 256.7%.
For the fiscal year ending November 30, 2017, we are forecasting continued increases in sales and profit, with segment sales to rise 15.9% to ¥3,986 million, and operating income to grow 13.5% to ¥662 million.
In this segment, S-Pool Human Solutions, Inc. provides human resource-related services such as temporary staffing and personnel placement services. In the fiscal year ended November 30, 2016, companies continued to experience personnel shortages, and there was buoyant demand for the core call center operations, particularly for call centers in Hokkaido and other regions. On the profit front, our gross profit ratio declined slightly due to an increase in the burden of social insurance and employment insurance payments; however, we succeeded in suppressing the increase in selling, general and administrative expenses by making efforts to ensure efficient operations at our offices. This resulted in increases in both sales and profit for the segment, with segment sales of ¥5,832 million, up 35.6% year on year, and operating income of ¥529 million, up 46.6%.
For the fiscal year ending November 30, 2017, we forecast consecutive increases in sales and profit, with segment sales to rise 19.3% to ¥6,958 million, and operating income to increase 13.1% to ¥598 million.
[Net sales for the fiscal year ended November 30, 2016] 5,832 million yen (up 36% year on year)
Our temporary staffing services are different from general temporary staffing services that seek to alleviate corporate personnel shortages in that we work to resolve the problems our client companies are experiencing. When selecting organizations to which personnel will be dispatched, we conduct a character analysis and employ a proprietary matching system to prevent quick turnover. We also typically employ a group-type staffing approach and assign certain employees at organizations to which personnel will be dispatched as leaders, who handle staff follow-up, education and training. This method has proven effective at boosting retention rates and increasing skills. By providing a temporary staffing service targeting their successes, we create solid partnerships with our corporate customers and endeavor to obtain long-term agreements.
[Net sales for the fiscal year ended November 30, 2016] 1,046 million yen (down 39% year on year)
Logistics outsourcing service specializes in distribution of products sold over the Internet. We currently operate three logistics centers serving approximately 80 customers. Our dispatch service has strengths in curtailing transport costs as well as high quality dispatches that help to enhance purchaser satisfaction. We have strengths in handling small products that require care, such as cosmetics, health foods, and sundries, and our client companies are mainly small-scale start-up companies that find it difficult to compete with large companies. Recently, we have been focusing on offering support in response to the rapidly expanding market for border-crossing e-commerce (mail-order services to overseas destinations).
[Net sales for the fiscal year ended November 30, 2016] 1,217 million yen (up 56% year on year)
For companies seeking to employ people with disabilities, we operate the Work Happiness Farm, which rents out farms to companies to employ people with disabilities. We also offer a work support service that provides job training to facilitate the transition of job-seekers with disabilities to jobs at companies using our farms. Our farms provide an environment where people with disabilities can enjoy stable, long-term employment. We provide excellent support to enable even companies that have no agricultural experience to employ people with disabilities on the farms. In the six years since we started the service, the number of people with disabilities that have been employed on farms has increased to 450, and the turnover rate has been exceptionally low at under 5%. The scheme has been well-received, with the number of companies using the farms rising to 100, mainly listed companies, with only one company discontinuing its contract. This business model is not only unique in Japan, it also provides an extremely high level of social contribution.
The introduction of electronic electric power meters is being seen as an essential means of preparing society as a whole for a shift to energy conservation. Plans are in place to convert some 82 million electric power meters across Japan to smart meters by the end of fiscal 2024. Of this figure, around 27 million meters are scheduled for installation in the area served by Tokyo Electric Power Company, and we have the high share of the market for providing these installations. As the regular changing of electric power meters is mandated by law, we expect business in this field to remain constant. A shift to smart meters on infrastructure other than electricity, such as gas and water, is also being planned, and we see this as a significantly potential market. By joining the public infrastructure business, we aim to create a new pillar of earnings.