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Japan-Update

Secom poised for record profit on commercial security services

Japan's fight against overtime helps spur installation of employee time clock systems

TOKYO -- Security services provider Secom's net profit likely rose 3% on the year in the half ended in September, topping the company's forecast thanks to growth in commercial contracts and strong sales of new residential services.

Group net profit is seen coming at around 42 billion yen ($367 million), compared with a forecast 8% drop to 37.4 billion yen. That gain would mark Tokyo-based Secom's first record profit for the half in three years. 

Sales apparently grew to a sixth consecutive record for the half, edging up 1% to about 445 billion yen. Secom had roughly 3 million contracts in its mainstay security business at the end of September, about a 5% increase on the year. Commercial contracts grew around 2% as companies sought to eliminate unpaid overtime through better attendance management. Secom saw growth in employee time clock systems using smart cards as well as cameras and other security equipment.

Residential contracts climbed about 6%, led by the Secom Home Security Neo service started in July. The new service captures demand from increasingly crime-conscious homeowners thanks to convenient features such as the ability to disarm the security system remotely with a smartphone.

More businesses used Secom-operated data centers, benefiting the company's information and communication services segment.

Operating profit likely fell just 2% to 61 billion yen, beating an estimated a 7% decrease to 57.9 billion yen. Profitability improved thanks to growth in high-value-added services such as the time clock systems. The operating profit margin is seen at just under 14%, topping the forecast of 13%.

But higher profitability could not fill the gap in operating profit left by the completion of a major fire suppression project for highway tunnels in the year-earlier period.

Secom also is seen booking a one-off gain of several hundred million yen on the sale of real estate by a subsidiary. Lighter tax burdens for some subsidiaries also lifted net profit.

Sales for the year ending in March are expected to increase 1% to 940 billion yen. Net profit also is projected to rise 1% to 84.8 billion yen for a sixth straight annual record. Secom likely will maintain this full-year forecast when announcing earnings for the half Thursday.

(Nikkei)

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