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Japan-Update

Japan's Obic set to hike dividend on record profit

Software provider improves sales and margin as companies turn to cloud

TOKYO -- Business software provider Obic is likely to hike its annual dividend by 5 yen per share for fiscal 2016, anticipating a record profit for the year ending in March.

Obic initially planned to maintain last fiscal year's payout ratio. With the increase, its dividend for fiscal 2016 would climb to 90 yen a share for a payout ratio of 37%, beating the company's 30% benchmark. This raise would mark five straight years of dividend raises in real terms, taking into account a 2013 stock split.

Pretax profit for the April-December period is projected at just over 23 billion yen ($197 million), up 4% on the year, as the Tokyo-based company's big-business clients invested eagerly in their information technology systems.

Sales rose 4% to roughly 45 billion yen, according to projections. The company's Obic7 enterprise resource planning software suite attracted new customers from a range of sectors, including manufacturing, real estate and construction. Industry-tailored applications also sold well, including loan-handling systems for financial institutions and building administration software for real estate.  

More companies switched from running their own servers to using cloud-based services. As Obic's customer base widened, its system maintenance and management services grew in turn. Its system support services business -- of which cloud and maintenance-and-management services are pillars -- probably grew by double digits.

Operating profit apparently climbed 6% to roughly 20.5 billion yen. Growth in high-margin cloud and maintenance services boosted Obic's profit ratio, improving its operating income margin by about a percentage point to roughly 46%.

Obic's equity-method affiliate, Obic Business Consultants, developer of the "Bugyo" accounting software series, also performed well. A service for managing Japan residents' taxpayer identification numbers sold briskly.

For all of fiscal 2016, the company forecasts sales to climb 5% to around 61.5 billion yen, and pretax profit to rise 4% to roughly 30.7 billion yen. Obic is expected to maintain this guidance when it announces its three-quarter results Jan. 27.

(Nikkei)

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