Latest of our Financial Results

(Million yen)

FY2022 2Q

FY2023 2Q

YoY change

YoY rate of change

Net sales

7,386

8,526

+1,140

+15.4%

Operating profit

(43)

(41)

+1

Profit attributable to owners of parent

(134)

(627)

△493

In the second quarter of the fiscal year ending in June 2024, the Japanese economy initially showed a gradual recovery in personal consumption to the pre-COVID-19 crisis level as the economy normalized. However, combined with the persistently weak yen, geopolitical risks, such as the protracted U.S.-China conflict and the Russia-Ukraine War and the tense situation in the Middle East, continue to cause uncertainty affect in the global economy, causing prices to rise in Japan. At the same time, real wages, which have not been able to keep up with wage growth, remain negative, and consumers are beginning to show increasing awareness of the need to protect their lives.
Consumers in Japan have an even stronger desire to economize and seek low prices because of rapid inflation. However, this is not the only defining characteristic of consumer spending. Purchasing activity by consumers in Japan is becoming more diverse as the range of ways people spend their money expands to reflect the different values and preferences of consumers. These trends are most pronounced regarding purchases made using the Internet. In this social environment, activities of the Market Enterprise Group are guided by the “optimized trading company” vision that reflects the growing diversity of consumption behavior, and the increasing interest in smart consumption has the goal of giving everyone the best options for purchasing products and services. Another goal is to use business operations to play a role in the creation of the circular economy, an economic activity aimed at the realization of SDGs, which have become a global trend in recent years.
The Market Enterprise Group’s vision is to operate as an “optimized trading company for the creation of a sustainable society.” Group companies are dedicated to providing products and services that match the increasingly diverse range of consumption behaviors and styles of people and, for some products and services, business operators and companies. Activities include the use of the Internet to give customers a selection of purchasing channels to match their needs.
Based on the latest changes and trends in the external and internal environment, we announced a new rolling medium-term management plan on August 14, 2023. To achieve its performance goals (net sales of 30 billion yen and operating income of 2 billion yen) for the final year of the plan (fiscal year ending June 30, 2026), we are currently aiming to establish a presence in the ever-expanding reuse market by increasing investments mainly in our second-hand business for individuals. The following is a summary of the initiatives taken in the second quarter of the fiscal year ending in June 2024 to realize this plan.

Second-hand Online Business
(Second-hand business for individuals)
・Opening of the Hiroshima Purchasing Base and Osaka Higashisumiyoshi Purchasing Base (September 2023) for expanding operations to more areas
・Opening of the Kinshicho branch office to increase contact center capacity (November 2023)
・More buyers and reallocation of sales personnel for purchasing second-hand items at customers’ homes for the growth of these purchases
・Review of the optimal purchase channel according to merchandise and quantities
・Serious consulting sales activities for the purchase of second-hand items at the customers’ homes
・Expansion of product categories through the launch of the preowned vehicle dealer business
(Agricultural equipment)
・Further expand overseas sales channels, streamline operations and increase the scale of transactions with domestic corporations to increase the transaction volume of used agricultural equipment
(Oikura)
・IT system investments to increase the earnings of Oikura as a second-hand distribution platform
・Cooperation with local governments for public-private sector initiatives that contribute to accomplishing the SDGs (increase the second-hand distribution of consumer products to reduce the amount of second-hand products in the trash and the environmental impact of these products)
・Conduct sales activities focused on acquiring new franchisees

Media Business
・Maintenance activities for articles in this business to accommodate updated search engine algorithms
・Expand the categories of products and services used to send customers to other Market Enterprise businesses

Mobile & Telecommunications Business
・New rate plans that match customers’ needs and make 5G communications easier for increasing new service subscriptions
・Service agreements with longer terms as customers ask to change from 4G to 5G and activities to decrease cancellation

As a result, net sales were 8.526 billion yen, 15.4% higher than in the second quarter of the previous fiscal year. Operating loss was 41 million yen, compared with a loss of 43 million yen one year earlier; and ordinary loss was 282 million yen, compared with a loss of 73 million yen one year earlier, mainly due to a loss on valuation of derivatives under non-operating expenses. Loss attributable to owners of parent was 407 million yen, compared with a loss of 134 million yen one year earlier, mainly due to impairment loss under extraordinary losses.

Overview by Business Segment
・Second-Hand Online Business
This business, which is the core business of the Market Enterprise Group, buys and sells second-hand merchandise using only the Internet and operating no brick-and-mortar stores.
To purchase second-hand merchandise, this business operates the takakuureru.com comprehensive purchasing website for all types of merchandise and other purchasing websites for specific categories of merchandise. Second-hand merchandise is sold by posting goods simultaneously on many websites, including Yahoo! Auctions, Rakuten, Amazon, Mercari, ReRe, our e-commerce site, and others. The main targets of this business are large or expensive merchandise and merchandise in large quantities. These types of merchandise are not suitable for C2C transactions because of the difficulty of packaging and sending these items. Using the C2B2C structure instead gives people confidence about the quality of merchandise and other aspects of these transactions due to the inclusion of a reputable company as an intermediary. During the past few years, we have used the knowledge acquired by operating this business to start a second-hand agricultural equipment business. In addition to operating this business in Japan, we plan to diversify this business using synergies with other group businesses, such as exporting used agricultural equipment. There are also numerous initiatives underway for enlarging the base of operations for Oikura, an Internet platform that matches sellers of second-hand items, which are ordinary consumers, with buyers, which are second-hand stores.
Results by category during the second quarter are as follows.

 (Second-hand business for individuals)
Operations started at the Hiroshima Purchasing Base and Osaka Higashisumiyoshi Purchasing Base in September 2023 to support the expansion of operations to more areas and increase the volume of purchases to meet the very strong demand of consumers for services for purchasing second-hand items, and at the Kinshicho branch office in November 2023 to increase contact center capacity. We also hired and trained buyers who visit customers for this purchasing service. Various resources were prepared as a result of these investments, and the volume of goods handled increased as a result of continued efforts to develop a full-scale consulting business for purchasing second-hand items at customers’ homes, as well as optimization of purchasing channels and a review of sales personnel assignments including contact centers, which serve as important touch points with customers. In addition, in September 2023, we began dealing preowned vehicles in earnest as a new merchandise item.
However, in the second quarter, improvements in productivity per sales person, were achieved, but were not enough to make up for the delay in the first quarter in terms of profit and loss. Hence, we were unable to secure sufficient purchase and sales volume to achieve our sales and profit targets.

 (Agricultural equipment)
As a result of efforts to strengthen purchasing of used agricultural equipment from domestic corporations and to expand overseas sales channels for the equipment, both purchases and sales remained steady, despite a decline in gross profit margin due in part to the impact of the overseas uncertain situation.

 (Oikura)
In the Oikura business, we kept investing in IT systems as a second-hand platform to build a larger and more powerful base for long-term earnings. Public-private sector collaboration involving the SDGs is another major theme of this business. We are establishing partnerships with local governments to increase the utilization of markets for used consumer goods to reduce the volume of waste materials and the environmental impact of discarded items. At the end of December 2023, there were 94 of these partnerships, 30 more than at the end of September 2023, and the population coverage ratio (ratio of the total population of the local governments with the partnership to the total population of Japan) was 26.7%. These efforts to increase the number of purchase requests and measures taken to acquire franchisees through our own owned media resulted in steady growth in both the number of franchisees and net sales.

Sales increased 25.5% to 5.111 billion yen, and segment profit increased 25.7% to 153 million yen.

・Media Business
The media business uses the Internet to distribute useful information concerning purchasing activities to people interested in smart consumption. This business operates nine Internet media in five categories.

 ・iPhone Kakuyasu SIM Tsushin, SIMCHANGE and KASHI・ONE, which have information about mobile phones and services
 ・Takakuureru.com Magazine and Oikura Magazine, which have information about selling and disposing of items
 ・Beginners and Outlet Japan, which have information about buying items
 ・Saiyasu-Syuuri.com, which has information about repairing items
 ・UMM (Used Machine Market), a platform for buying and selling used agricultural equipment

In the second quarter, although we have been taking risk measures, such as diversifying our article contents and to maintain them in response to search engine algorithms, search rankings of major media fluctuated mainly due to an update in Google's core search engine algorithm and the overall number of page views remained sluggish.
As a result, sales decreased by 16.0% to 330 million yen, and segment profit decreased by 33.1% to 154 million yen.

・Mobile & Telecommunications Business
Consolidated subsidiary MEmobile Co., Ltd. is the primary component of this business. This company provides telecommunication services that are less expensive, simpler, and easier to understand. The main service, which uses the Kashimo brand (an abbreviation for the words “smart mobile” in Japanese), is an Internet connection service that uses a mobile Wi-Fi router.
During the second quarter, a large number of customers were sent to this business from our mobile phone and services media as collaboration with the media business increased. In addition, this business increased its exposure to media operated by other companies. As of June 30, 2023, we had approximately 83,000 contract lines, and we will continue to increase revenues by securing recurring income (income recorded monthly over the term of the user’s contract) by accumulating the number of contract lines and one-time income (income recorded all at once when a new line is acquired).

Because of these numerous marketing initiatives, sales increased by 3.9% to 3.113 billion yen and segment profit increased by 103.2% to 176 million yen.