Oji Holdings Corporation Q4 FY2025 earnings call

Key 2024 Operational Drivers

• Growth Drivers:
  • M&A of Walki Group added substantial new consolidated revenue, and increased the number of consolidated subsidiaries significantly
  • Post-disaster recovery at PanPac drove higher pulp sales volume, while higher global pulp market prices lifted CENIBRA revenue, driving all 2024 operating profit growth in the Resource and Environment segment from overseas operations
  • Sensitized paper sales volume at overseas functional material operations grew 208 million square meters YoY, with three new corrugated cardboard plants starting operations in Southeast Asia, offsetting local market price declines with higher volume
• Profit Pressures:
  • Sustained increases in domestic personnel and logistics costs, plus allocated head office expenses, drove double-digit billion yen profit declines across domestic segments; price increases implemented did not fully offset rising input costs
  • A fire at the Tomioka plant and production cuts at the Tomakomai plant weighed heavily on 2024 profit for the Printing and Information Media segment
  • Southeast Asian market price declines pressured overseas profit for the Living Industrial Materials segment, while selling price declines at KANZAN offset volume growth for overseas functional materials
• The mid-term management plan update will be presented at a separate meeting on May 30, so this call focused exclusively on fiscal year results and near-term guidance

2024 Actual Performance (vs 2023)

1. 生活産業資材 (Living Industrial Materials): +34.0 billion yen revenue, -12.7 billion yen operating profit
2. 機能材 (Functional Materials): +8.9 billion yen revenue, +0.5 billion yen operating profit
3. 資源環境ビジネス (Resource and Environment Business): +32.7 billion yen revenue, +10.9 billion yen operating profit
4. 印刷情報メディア (Printing and Information Media): -6.2 billion yen revenue, -8.2 billion yen operating profit
5. その他 (Others): +83.5 billion yen revenue, +4.6 billion yen operating profit (includes newly consolidated Walki Group from M&A)

Overall consolidated 2024 revenue: 1.8493 trillion yen (+153.0 billion yen YoY), operating profit: 67.7 billion yen (-4.9 billion yen YoY). Domestic: 47.6 billion yen operating profit (-17.2 billion yen YoY); Overseas: 20.1 billion yen operating profit (+12.3 billion yen YoY). Overseas revenue share hit 40.8%, meeting the mid-term target of 40%.

2025 Forecast Performance (restated segment structure, vs 2024 restated)

1. 生活産業資材 (Living Industrial Materials): +48.2 billion yen revenue, +8.6 billion yen operating profit (Walki and IPI moved here from Others starting 2025)
2. 機能材 (Functional Materials): +3.6 billion yen revenue, +1.6 billion yen operating profit
3. 資源環境ビジネス (Resource and Environment Business): +20.7 billion yen revenue, -5.3 billion yen operating profit
4. 印刷情報メディア (Printing and Information Media): -0.2 billion yen revenue, +7.7 billion yen operating profit
5. その他 (Others): -21.6 billion yen revenue, -5.3 billion yen operating profit (now includes all Oji Holdings head office expenses previously allocated to other segments)

• Overall 2025 consolidated guidance: 1.9 trillion yen revenue (+50.7 billion yen YoY), 75.0 billion yen operating profit (+7.3 billion yen YoY, +10%+ YoY increase), 60.0 billion yen ordinary profit (-8.6 billion yen YoY), 65.0 billion yen net profit (+18.8 billion yen YoY, +40%+ YoY increase)
• Domestic operations are forecast to deliver 56.0 billion yen operating profit (+8.4 billion yen YoY), while overseas operations are forecast to deliver 19.0 billion yen operating profit (-1.1 billion yen YoY)
• Forecast ROE for 2025 is 6.1%, recovering from 4.3% in 2024, with overseas revenue forecast to hold at 40.0%
• Dividend policy is updated to target a 50% payout ratio (up from the previous 30% target); 2025 full-year dividend is planned at 36 yen per share, a 12 yen per share increase from the prior year, for a forecast payout ratio of 51.8%
• 2025 base assumptions: USD/JPY exchange rate of 145 yen, coal price of $100 per ton, heavy fuel oil price of $67 per barrel
• Net interest-bearing debt is expected to stay roughly flat at end-2025 compared to end-2024, after increasing sharply in 2024 due to the Walki M&A and forest land acquisition in Uruguay

• Commodity price volatility: LBKP pulp prices are forecast to fall 55 USD per ton in 2025 from 2024 levels, which will drive a 7.1 billion yen operating profit decline in overseas Resource and Environment operations
• Sustained cost inflation: Domestic personnel and logistics costs are expected to continue rising in 2025, creating 6.0 billion yen in incremental profit headwinds
• Exchange rate volatility: Changes in USD/JPY rates impact procurement costs for imported raw materials and translation of overseas profit, with pre-disclosed sensitivity analysis provided in earnings materials
• Operational disruptions: Past disasters, factory fires, and temporary production disruptions have negatively impacted recent results, and unplanned operational issues can continue to affect performance

No Question and Answer section is included in the provided earnings call transcript.