Honyaku Center Q1 Revenues Down as Conference Business Takes a Hit

Japan’s largest language service provider (LSP) Honyaku Center made good on projections from its full year earnings report for 2016. The company had anticipated a decline in its conference services business, while expecting the overall business, which includes a large language services unit, would remain fairly stable.

Results for the company’s first fiscal quarter (Japan’s fiscal year starts April 1, 2017) showed overall revenues declining by 6.6% to JPY 2.42bn (USD 22.1m). As expected, a solid performance from the core translation business helped counter a sharp decline in the conference services business division. Operating profit was down, too, falling 28.9% year-on-year to JPY 123m (USD 1.124m) for the quarter.

Honyaku Center divides its business into six units: translation, interpretation, language education, temporary staffing, conventions, and others.

The translation business proved to be a bright spot, posting 12.2% growth year-on-year and generating JPY 1.818bn (USD 16.6m) in revenue. In terms of translation verticals, manufacturing grew by 15.5%, followed by 13.3% in financial and legal translation. Patent translation and life sciences grew by 11.1% and 10.4%, respectively.

The interpretation division also fared well: Orders from major information and telecommunications companies and financial affiliates were strong, leading to 29.8% growth year-on-year and JPY 226m (USD 2.06m) in revenue.

Honyaku Center’s Language Education arm almost managed to keep flat, with a minor 5% decline in revenues compared to the same period last year, to JPY 54m (USD 0.49m).

Meanwhile, sales for Temporary Staffing increased by 24% to JPY 271m (USD 2.5m) year-on-year.

Honyaku’s Convention business was the hardest hit, with net sales plummeting by 97.5% compared with the same period last year to JPY 11m (USD 0.1m).

Lastly, Honyaku Center’s other business segments also declined by 15.4% to JPY 37m (USD 0.33m).

Shares in Honyaku retreated slightly on the Toyko Stock Exchange in the days following the August 8, 2017 release of the Q1 results. Over the past 12 months, however, the stock is still up by about 20%. Honyaku’s market capitalization currently stands at JPY 6.2bn (USD 55.7m).

Honyaku tends to rebound come Q3 and Q4 but it remains to be seen if the company can make up for the lackluster Q1.