Japan’s Honyaku Center Posts 15% Revenue Growth in Fiscal Q3

Honayku Center, Japan’s largest language service provider (LSP), reported results for its fiscal year’s third quarter on February 9, 2017. Honyaku’s fiscal year ends March 31, 2017.

Revenues for the first nine months (April 1 to December 31, 2016) came in at JPY 7.75bn (USD 68.7m), up a solid 15.3% from the same period in 2015. Operating income was up 64% to JPY 570m (USD 5m) from the same period the previous year.

Driving growth was a standout performance by Honyaku’s convention business, where sales nearly tripled, reaching JPY 1.07bn (USD 9.5m) on the back of a number of large conferences in 2016.

Growth in Honyaku’s core language services business was more modest. Translation services generated revenues of JPY 513m (USD 45.5m) over the first three quarters, up 4.4% compared to the same period a year ago.

In terms of verticals, financial and legal was up 21.6% followed by life sciences and manufacturing with 4.5% and 4.1%; while patents was down 1.1%.

The interpretation division, meanwhile, grew by a strong 19.7% and contributed JPY 588m (USD 5.2m). Honyaku’s remaining staffing and language teaching divisions reported unchanged revenues over the same period.

In sum, the Tokyo-based LSP is well on track to meet management guidance for full-year revenues of JPY 9.95bn (USD 81.3m) and operating income of JPY 720m (USD 6.3m).

The reaction from the market to the results has been muted. Shares in Honyaku were flat for the past week, but have gained more than 20% over the last 12 months. Honyaku’s market capitalization currently stands at JPY 6.14bn (USD 54.4m) with a P/E ratio just north of 10x.

As with many other language service providers in Japan, Honyaku should get a boost from the country’s hosting of the Summer Olympics in 2020.