Nippon Paper Industries Co.,Ltd. Q1 FY2026 earnings call

• Overall Consolidated Performance

  • Consolidated net sales reached 292.6 billion yen, an increase of 5.6 billion yen year-over-year. Top-line growth was driven by full-quarter contribution from the 2024-launched Crecia Miyagi Factory expanding domestic life-related business sales, which offset lower paper/paperboard export volume and lower energy segment revenue.
  • Consolidated operating profit reached 5.5 billion yen, an increase of 1.4 billion yen year-over-year. Profit growth was driven entirely by improved profitability at Opal and NDP.
  • Consolidated ordinary profit was 5.6 billion yen, and net income attributable to parent was 1.9 billion yen. Special items included gains from selling policy-held shares and received insurance proceeds counted as special income, with shutdown losses from the Opal Maryvale mill labor dispute counted as special loss.
  • Domestic operations overall achieved increased revenue but decreased profit, while overseas operations achieved increased revenue and increased profit.

• Operational Progress

  • The newly launched Crecia Miyagi Factory has delivered full-quarter top-line contribution to domestic life-related business growth.
  • Opal has delivered targeted operational improvements: stabilized operations at the Maryvale mill improved unit production efficiency, headcount reduction cut fixed costs, and pricing adjustments for packaging have been implemented successfully.
  • NDP has recovered from prior-year operational disruptions and returned to stable full operations.
  • The energy segment is progressing broadly in line with management's original plan, despite revenue headwinds from grid output curtailment.

1. Paper and Paperboard Segment: Decreased revenue and decreased operating profit year-over-year, with a 3.3 billion yen total decline in profit. This segment saw 0.9 billion yen of profit decline from lower sales volume and selling prices, 0.2 billion yen of profit decline from higher recycled paper costs, and 2.5 billion yen of profit decline from negative cost improvement impacts from the boiler outage at the Yatsushiro mill and rising labor and logistics costs. Domestic domestic printing paper sales volume increased due to competitor exit, but export volume for both printing paper and paperboard fell on soft Asian market conditions. Overseas subsidiary Jujo Thermal (JTOy) saw lower profit from ongoing weak thermal paper demand in Europe.

2. Life-related Business Segment: Increased revenue year-over-year, with a 5.0 billion yen total increase in operating profit. Domestic operations achieved higher sales volume for functional films and toilet rolls, with ongoing price adjustment impacts for packaging and household paper/healthcare, but could not fully offset rising raw material, labor, and logistics costs, resulting in higher revenue but lower profit domestically. Overseas, Opal achieved a 3.5 billion yen year-over-year profit increase from improved production efficiency at the Maryvale mill, fixed cost cuts via headcount reduction, and packaging price adjustments. North America-based Nippon Dynawave Packaging (NDP) achieved a 2.1 billion yen year-over-year profit increase, recovering from prior year cold wave-related operational disruptions to return to stable operations and increased sales volume. This segment contributed 100% of the quarter's total operating profit growth.

3. Energy Business: Decreased revenue year-over-year due to lower power generation output from grid curtailment orders, but increased operating profit by 0.1 billion yen year-over-year, with overall performance broadly in line with plan.

4. Wood, Building Materials, and Civil Construction-related Business: Increased revenue and operating profit by 0.8 billion yen year-over-year, driven by higher year-over-year Amsel sales to Europe. Revenue contribution is temporarily elevated due to shipping scheduling, with full-year performance expected to match original plans.

5. Other Business: Decreased operating profit by 1.2 billion yen year-over-year, driven primarily by inter-segment transaction elimination adjustments.

• Full-year 2025 fiscal year (ending March 2026) consolidated performance guidance remains unchanged from the announcement released on May 15, with no upward or downward revision made.

• Weak market conditions in Asia for paper and paperboard exports have driven lower export sales volumes, pressuring the paper and paperboard segment profitability.
• Ongoiing soft demand for thermal paper in Europe has pressured the profitability of Jujo Thermal.
• Rising raw material (especially recycled paper), labor, and logistics costs are pressuring profitability across multiple domestic business segments, which have not been fully offset by price adjustments to date.
• A labor dispute at Opal's Maryvale mill caused a production shutdown, and nearly the full amount of related losses (mostly from higher fixed unit costs due to lower production volume) was recorded as a special loss in the quarter.
• Operational incidents (the boiler outage at the Yatsushiro mill and prior-year cold wave disruption at NDP) create negative short-term cost and profit impacts.

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