3861.T

Financial Strategy & Shareholder Returns

• Maintained planned shareholder returns despite downward earnings revision: 36 yen per share annual dividend retained, for a 66.4% payout ratio.
• On-track for the Mid-Term Management Plan 2027 150 billion yen total share repurchase target: 47 billion yen completed as of October 2025 (30% of total target), 94% progress against the 2025 full-year 5 billion yen repurchase target, no changes to the plan.
• 47.5% progress on the 120 billion yen policy-held share reduction target by 2030, with 57 billion yen completed as of Q2 2025. Real estate asset sales are currently in negotiation.

Business Structural Reform

• Overseas: Completed exit from unprofitable paperboard operations in Australia/New Zealand, approved sale of Australian packaging business targeted for H2 2025, will refocus on New Zealand pulp and corrugated box businesses.
• Domestic: Restructuring personal care and household paper production: closing Fujiomi, Edogawa, and Tomakomai mills, consolidating production to Nagoya and Tokushima mills.

Growth Strategy

• Building woody biomass business as a core segment: Completed acquisition agreement for Austrian biorefinery firm AustroCel, closing in progress.
• Gained Australian regulatory approval for manufacturing and export of active pharmaceutical ingredient for equine arthritis treatment, moving to commercialization.
• New capacity expansion: Building a new liquid paper container factory in Vietnam (following IPI acquisition to expand Southeast Asian presence), expanding pressboard production capacity for transformers in Japan, while idling the N-4 machine at Oji Paper's Tomakomai mill to align capacity with demand.
• Expanding sustainable product lines: Including agricultural covering film OJI Susta Multi and sustainable paper lids for food packaging.

Sustainability Strategy

• On track to hit the 400,000 hectare production forest acquisition target for carbon neutrality goals. Launched biochar pilot trials at Vietnamese plantations, and参与 in natural capital accounting standard-setting initiatives. Launched the Renewa brand to advance circular economy efforts focused on enabling recycling of previously hard-to-recycle paper packaging.

• Full-year 2025 (fiscal year ending March 2026) guidance has been downward revised across all metrics: connected operating profit is now guided at 45.0 billion yen, a 30.0 billion yen reduction from the original forecast. Net income is guided at 50.0 billion yen, a 15.0 billion yen reduction from original guidance, with ROE now forecast at 4.7%.
• Domestic operating profit is revised down 11.0 billion yen from original guidance, driven by 3.5 billion yen in selling price shortfalls (1.5 billion from dissolving pulp, 2.0 billion from paper exports) and 9.0 billion yen in volume shortfalls across all paper product segments (5.0 billion from Printing and Information Media alone, driven by lingering volume impacts from prior production disruptions and continued demand decline).
• Overseas operating profit is revised down 19.0 billion yen from original guidance, pushing full-year projected overseas operating profit to near zero. The largest drag is 18.0 billion yen in selling price shortfalls across all segments, including 2.5 billion yen from competitive pressure in Brazilian functional materials and 8.0 billion yen from lower pulp prices at CENIBRA and Jiangsu Oji Paper.
• Management maintained its commitment to prioritizing price increases for domestic paper products over volume, consistent with prior stated strategy, and reports price hike negotiations are progressing as planned.

For the 2025 cumulative 2nd Quarter (year-over-year comparison):

1. 生活産業資材 (Life Industry Materials) Segment: 3.4 billion yen decrease in operating profit, total 340 million yen decline year-over-year. Domestic operations contributed 2.9 billion yen of the decline, driven by 4.9 billion yen in cost increases (3.0 billion yen from labor and logistics costs), partially offset by 1.5 billion yen in net sales gains (3.0 billion yen from prior year price hikes, partially offset by 1.5 billion yen in volume declines, two-thirds of which came from tissue paper due to earlier operational disruptions). Overseas operations contributed 0.5 billion yen decline, driven by 1.0 billion yen in raw material cost increases after exiting paperboard operations at Oji Fibre Solutions.
2. 機能材 (Functional Materials) Segment: 2.5 billion yen decrease in operating profit year-over-year. Domestic operations were flat overall: 1.0 billion yen in gains from price hikes were offset by 1.0 billion yen in cost increases (half from labor/logistics, half from depreciation for the new Shiga No. 8 film machine). Overseas operations had a 2.5 billion yen decline, entirely from selling price pressure, two-thirds of which came from price competition with Korean manufacturers at Brazil's Oji Papéis Especiais.
3. 資源環境ビジネス (Resource and Environment Business) Segment: 12.5 billion yen decrease in operating profit year-over-year, 13.1 billion yen of which came from overseas operations. 14.5 billion yen in selling price declines driven by a $140 per ton drop in average LBKP pulp export prices to China (from $690 to $550 per ton), partially offset by 2.4 billion yen in positive currency impacts at Brazil's CENIBRA.
4. 印刷情報メディア (Printing and Information Media) Segment: 2.7 billion yen decrease in operating profit year-over-year. Domestic operations had a 3.6 billion yen decline, with 2.0 billion yen from raw material cost increases and 1.5 billion yen from sales declines (2.0 billion yen from volume decreases driven by long-term demand decline, partially offset by 0.5 billion yen from price hikes). Overseas operations had a 0.9 billion yen profit increase, driven by 2.0 billion yen in lower costs from falling pulp prices, partially offset by 1.0 billion yen in sales declines from slow Chinese economic recovery.

• Weak global pulp market conditions, particularly falling prices for hardwood pulp exports to China, have driven large profit declines in the resource environment business segment.
• Sustained cost inflation for raw materials, logistics, and labor across all segments has outpaced initial forecasts, pressuring margins.
• Persistent demand decline for domestic printing and newspaper paper, and slow recovery from Chinese economic downturn, have created larger-than-expected volume shortfalls.
• Intense price competition from overseas manufacturers (specifically Korean players in the Brazilian specialty paper market) has pressured selling prices and margins for the functional materials segment.
• Operational disruptions (including early-year tissue production disruptions, prior production trouble and fire at the Kasugai mill, and planned capacity exits) have created lingering volume shortfalls that will not be recovered in the current fiscal year.
• Foreign exchange volatility has created foreign exchange losses on foreign currency-denominated receivables and payables, adding to non-operating losses.

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