OHISHI SANGYO CO.,LTD. Q4 FY2025 earnings call

Company Overview & Milestone

• Oishi Sangyo is a comprehensive packaging materials manufacturer headquartered in Kitakyushu, Fukuoka, Japan, that celebrated its 100th founding anniversary on April 1, 2025. It has never recorded an annual net loss in its history.
• The company operates production and sales locations across Japan from Hokkaido to Kyushu, with additional overseas operations in Malaysia, and maintains two core business segments split roughly 50/50 by revenue.

Previous Mid-Term Management Plan Review

• The prior plan targeted 23.8 billion yen in revenue, with a revised target set in May 2024. Revenue met plan, but profit missed targets due to new product launch delays, delayed price adjustments, and rising operating costs.
• Planned capital investment of 4.3 billion yen was nearly achieved at 4.2 billion yen actual, with investments focused on new equipment for pulp molded, film, and corrugated cardboard products, solar power installations, and facility upgrades. These investments improved productivity, quality, added higher-value product capacity, reduced CO2 emissions, and improved workplace environments.

Long-Term Vision & New 8th Mid-Term Management Plan

• The company set a 10-year long-term vision New Challenge Vision 2035 centered on three pillars: providing optimal packaging solutions for a circular economy, business reform, and sustainability, targeting 30 billion yen in revenue and 2 billion yen in ordinary profit by 2035.
• The 8th Mid-Term Management Plan (the first 3-year phase of the 10-year vision) targets 25 billion yen in revenue and 1.5 billion yen in ordinary profit by the final plan year. It adds sustainability initiatives and DX promotion as core management priorities to drive sustained corporate value growth, alongside traditional business growth.

Segment Strategic Priorities

• Buffer Functional Materials: The pulp molded business will expand production capacity and develop new products, targeting growth in the underpenetrated industrial sector, while advancing DX-enabled operational reform. The corrugated cardboard business will focus on high-value product development and optimal production structure to improve profitability. The molded products business will prioritize the strawberry container Yurikago product line, aiming to become an independent division, with broad reforms across sustainable product development, marketing, and order systems.
• Packaging Functional Materials: The film business will grow its core business, develop functional films, and improve production efficiency to build a sustainable operating base. The heavy packaging bag business will expand through development of eco-friendly products and productivity improvements. The newly established FUSIONS TRADING MALAYSIA will work to establish its brand as a supply chain circulation business connecting producers and consumers.

Capital Allocation & Shareholder Returns

• The 3-year mid-term plan plans 80 billion yen in total capital investment, prioritizing growth investment for future expansion, including new mass production equipment for pulp molded products, additional solar installations, existing facility upgrades, and IT/DX investment. A new IT/DX Strategy Preparation Office was established to drive incremental operational reform.
• Starting in FY2026 (ending March 2026), the dividend policy was raised to target a DOE of 2.0% or higher. The company will continue stable dividend payouts and maintain its shareholder QUO card reward program based on shareholding volume and tenure.
• To improve capital efficiency and valuations, the company will pursue policy holding share reduction, and expand IR activities to engage with both individual and institutional investors.

1. Buffer Functional Materials Segment: Revenue increased year-over-year driven primarily by higher sales of pulp molded products, however profit decreased due to rising labor costs, higher depreciation expenses from capital investment, and lower fruit/vegetable harvests from adverse weather that reduced packaging demand. The segment contributes approximately 50% of total company revenue. 2. Packaging Functional Materials Segment: Revenue increased across all sub-segments, and profit rose driven by higher sales from the overseas division. The film sub-segment remained solid for food applications (despite some impact from consumer frugality) and maintained growth for electronic material applications; the heavy packaging bag sub-segment achieved higher sales despite shrinking domestic demand, thanks to expanded sales efforts. This segment also contributes approximately 50% of total company revenue.

• FY2026 (ending March 2026) Full-Year Guidance: Revenue is projected at 24.232 billion yen, a 3.2% increase year-over-year. While the company expects lower overseas sales, it projects growth from price adjustments and new product development, centered on the high-growth pulp molded and film business lines.
• Profit guidance for FY2026 projects operating profit of 901 million yen (a 0.4% decrease year-over-year) and ordinary profit of 1.134 billion yen (a 0.3% increase year-over-year), meaning profit will stay roughly flat year-over-year. This flat profile reflects that revenue growth will be offset by higher depreciation from ongoing aggressive capital investment and higher human capital investment for staff expansion, talent development, and compensation improvements.
• The annual dividend for FY2025 is set at 51 yen per share (including a 15 yen per share 100th anniversary special dividend), and the planned annual dividend for FY2026 is 52 yen per share, consistent with the new 2.0% DOE target.

• Rising raw material, energy, and general operating costs have put downward pressure on profitability in recent years, and delayed price adjustments to pass through these higher costs contributed to missed profit targets in FY2025.
• New product launch delays contributed to FY2025 profit miss, and execution risk remains for the new product development roadmap central to the company's growth plan.
• Adverse weather conditions (such as the 2024 extreme heatwave) can reduce agricultural harvest volumes, lowering demand for agricultural packaging products in the buffer functional materials segment.
• A slowdown in overseas business starting in Q4 FY2025 contributed to missed annual targets, and continued global economic uncertainty creates downside risk for overseas sales in coming periods.
• Domestic demand for heavy packaging bags is in a long-term structural decline, requiring continued sales expansion efforts to offset this trend.

No Question and Answer section was included in the provided transcript.