Frontier Management (7038): FY2025 Results Summary — Sales Rise to 146% on HobbyLink Consolidation, Operating Loss Narrows

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Frontier Management Inc. (FMI), which operates Consulting-based Businesses (management consulting and revitalization support), an M&A Advisory Business and an Investment Business, reported FY2025 (fiscal year ended December 31, 2025) consolidated net sales of 13,489 million yen, 146% of the level a year earlier, driven by the consolidation of HobbyLink Japan Ltd., an investee of its investment subsidiary Frontier Capital Inc. (FCI). Operating income was -335 million yen (compared with -632 million yen in the previous year), narrowing the deficit as structural reform effects began to materialize from the fourth quarter. One-time costs associated with structural reforms (extraordinary losses) and commission expenses related to the acquisition of Hobbylink Japan Ltd. resulted in a net loss attributable to owners of parent of 1,106 million yen.

Consolidated Results (Full-Year Actual)

Consolidated net sales for the entire Group increased 4.2 billion yen year on year to 13,489 million yen (146% of the prior-year level). Operating expenses were 13,824 million yen (140%), within which personnel expenses declined to 5,932 million yen (97%) and recruiting expenses to 330 million yen (71%) following the completion of fixed cost reductions through optimization of non-consolidated personnel. EBITDA turned positive at 52 million yen (a 579 million yen improvement). On an “Excluding FCI” basis, net sales were 8,504 million yen (93% of a year earlier) and operating income was -152 million yen (+3 million yen year on year).

Item (JPY Mil., Entire Group)	FY2025	FY2024	YoY change
Net sales	13,489	9,265	+4,224 (146%)
Operating expenses	13,824	9,897	+3,927 (140%)
Operating income	-335	-632	+297
Ordinary income	-664	-710	+46
Net income (loss) before tax	-966	-710	-255
Net income (loss) attributable to owners of parent	-1,106	-694	-412
EBITDA	52	-527	+579

Results by Business

In Consulting-based Businesses (Management Consulting Business, Revitalization Support Business and Other Business), net sales were 6,893 million yen, 89% of the level a year earlier, as sales shrank due to the replacement of senior team members in the personnel optimization and the discontinuities in large projects. The M&A Advisory Business posted net sales of 1,578 million yen (109% of a year earlier), and its order backlog at the end of FY2025 4Q rose to 2,014 million yen from 1,351 million yen at the end of FY2024 4Q, with the percentage of domestic projects remaining high. In the Investment Business, investment in 4 projects was completed during the fiscal year, including the consolidation of HobbyLink Japan, bringing cumulative investments since the 2022 launch to 8 projects.

Business (JPY Mil.)	Metric	FY2025	FY2024
Consulting-based Businesses (total)	Net sales	6,893	7,714
— Management consulting business	Net sales	5,570	6,345
— Revitalization support business	Net sales	1,217	1,246
— Other businesses	Net sales	106	124
M&A Advisory Business	Net sales	1,578	1,451
M&A Advisory Business	Order backlog (4Q-end)	2,014	1,351

FY2026 Forecast

For FY2026, the company forecasts that both net sales and income will rise year on year: net sales of 15,000 million yen (111% of FY2025), operating income of 610 million yen (a 945 million yen improvement), ordinary income of 430 million yen and net income attributable to owners of parent of 50 million yen, with consolidated operating income expected to move into the black. Note: page 17 of the English presentation prints the operating income forecast as 625; this article uses 610 million yen, the figure consistent with the year-on-year change (+945 million yen) shown on the same page, the waterfall chart on page 19 (6.1 hundred million yen) and the company’s consolidated financial results announcement. The forecast is premised on operation with fixed costs reduced through the structural reforms, productivity improvement in the Consulting-based Business and the M&A Advisory Business, and incorporation of full-year earnings of HobbyLink Japan Ltd. (reflected for nine months in FY2025). On an “Excluding FCI” basis, the company forecasts net sales of 9,100 million yen, operating income of 580 million yen and net income attributable to owners of parent of 330 million yen.

Item (JPY Mil., Entire Group)	FY2026 Forecast	FY2025 (Actual)
Net sales	15,000	13,489
Operating income	610	-335
Ordinary income	430	-664
Net income attributable to owners of parent	50	-1,106

Shareholder Returns

The company discloses figures on an “Excluding FCI” basis, which exclude the impact of the highly volatile Investment Business, with the intention of clarifying the source of dividends, and states that it is driving business growth and internal structural reforms with a view to resuming the payment of dividends in the future. FMI has announced that it will pay a dividend at a payout ratio of 40% of net income attributable to owners of parent on an “Excluding FCI” basis.

Structural Reforms and Personnel

The review of structural reform measures notes that organizational restructuring has been implemented and lean operations achieved, with the productivity of the consulting divisions improving to around 34 million yen/year per front-office person in December on a single-month basis. The order backlog at fiscal year-end increased 660 million yen year on year (+49%), and the number of corporate divisions was reduced from 4 to 3 with personnel reduced by around 10% through operational reforms. Group personnel (excluding HobbyLink Japan) stood at 387 at the end of FY2025 4Q, down 11% year on year due to personnel optimization, and the company plans to expand its workforce to 411 (+24 people) in FY2026. At FCI, the company aims to raise additional capital of 5.5 billion yen (making total capital of 15.0 billion yen) from investors and plans to exit 1 investment project each fiscal year.

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.