LTS, the Tokyo-listed consultancy (6560), cut its full-year forecast on 13 November. It now expects revenue of ¥17.0bn to ¥17.5bn, from ¥18.3bn, and operating profit of ¥1.35bn to ¥1.45bn, from ¥1.6bn. The notice puts the operating-profit cut at 9.4% to 15.6% and the revenue cut at 4.4% to 7.1%.
Where the shortfall sits
The notice says growth and margin gains slowed from the third quarter and that a strong fourth-quarter recovery looks unlikely. DX consulting kept growing on strong demand. The weaker units are the problem.
In DX engineering, the company says engineers' total working time keeps falling because of structural reform and delays in reskilling. It says generative AI has also weakened orders for conventional system development. The move toward higher-value work has taken longer than expected to turn into billable projects.
In strategic consulting, a large success-fee deal that looked likely to close did not, and senior consultants assigned to service development left fewer on paying work. LTS says it will tighten discipline on that spending.
The staffing market
In the platform and agent unit, the company says generative AI and tighter commercial-flow restrictions have worsened supply and demand for partner SES, with fewer deals closing. It is prioritising orders for employee SES, which it describes as steady. The notice does not say which restrictions it means.
The earnings presentation shows nine-month operating profit of ¥972mn, up 10.0% from a year earlier but 60.8% of the original full-year target. It also says engineer hiring is being restrained to allow for generative AI use.
What stays
The year-end dividend forecast is unchanged. The new range's low end assumes conservative order and margin assumptions. The high end assumes a partial recovery in engineering and platform units. LTS says it is considering reorganising its structure and business portfolio, and the presentation says next year's targets are under review, with details due at full-year results.