TOKYO PRINTING INK MFG.CO.,LTD. Q4 FY2025 earnings call

FY2025 March Term Core Financial Results

• Consolidated revenue grew 2.8 billion yen year-over-year to 46.6 billion yen, with 1.8 billion yen of growth coming from product price hikes and 800 million yen from volume increases. Operating profit grew 70.3% year-over-year, with sales operating margin improving 1 percentage point.
• A 800 million yen investment loss was recorded for goodwill impairment at a US-linked investee, pulling down ordinary income year-over-year. Net profit attributable to parent shareholders grew year-over-year on an 830 million yen gain from selling cross-held shares and a 180 million yen insurance payout for a prior-year subsidiary fire.
• Completed the succession of gravure ink-related business from T&K TOKA, marking the company's new entry into the pharmaceutical packaging sector; partial sales began in FY2025, with full contribution expected in FY2026.

New Medium-Term Management Plan "TOKYOink 2027"

• This 3-year plan (FY2026-FY2028) is the second phase toward the long-term "TOKYOink Vision 2030", targeting 48 billion yen in revenue, 2 billion yen in operating profit, and 5.5% ROE by the final fiscal year 2028. Long-term 2031 targets are 50 billion yen revenue, 2.8 billion yen operating profit, and 8.0%+ ROE.
• Core strategic priority: Shift product mix from general-purpose goods to high-value-added products, with portfolio review for Ink and Processed Products businesses to drive margin improvement.

Business-Specific Strategic Priorities

• Ink Business: Maintain offset ink sales scale by focusing resources on high-share web offset ink; expand gravure ink with functional ink/coatings and new pharmaceutical packaging; grow inkjet ink via improved contract responsiveness and in-house product development, and explore new mobility sector applications.
• Chemical Products Business: Grow in-house high-value-added functional masterbatch products; optimize low-margin contract product portfolios; expand sales from the company's established Thai production base in the ASEAN region; restructure production systems for long-term overall efficiency.
• Processed Products Business: Recover Netron profitability after production restructuring; expand geocell-based civil engineering materials against a backdrop of government national resilience initiatives; grow functional agricultural materials that support fuel reduction for farm greenhouses.

Capital Allocation and Sustainability

• Total 200 billion yen cash inflow planned over the plan period, allocated to 170 billion yen for investment (focused on growth, sustainability, R&D, and strategic M&A) and 30 billion yen for shareholder returns.
• Target to increase sustainable product sales to 50% of total revenue by 2031, and cut greenhouse gas emissions 50% from 2014 levels by 2031.
• Capital policy prioritizes maximizing equity utilization via balance sheet management (reducing cross-held shares, selling unused assets), maintaining a strong financial base, and expanding shareholder returns; targets 40%+ payout ratio and 1.0%+ DOE.

1. Ink Business: 16.3 billion yen in revenue, +12.5% year-over-year; segment profit of 560 million yen, +95.3% year-over-year. Contributes approximately 34.9% of total consolidated revenue. All product lines (offset ink, gravure ink, inkjet ink) grew revenue on price hikes and volume increases. 2. Chemical Products Business: 22.5 billion yen in revenue, +5.6% year-over-year; segment profit of 600 million yen, +217.7% year-over-year. Contributes approximately 48.2% of total consolidated revenue. Both in-house and contract products grew revenue following successful price adjustments. 3. Processed Products Business: 7.8 billion yen in revenue, -1.6% year-over-year; segment profit of 330 million yen, -35.1% year-over-year. Contributes approximately 16.7% of total consolidated revenue. While civil engineering materials performed strongly, Netron business suffered from temporary cost increases and lower orders that dragged down overall results.

• For FY2026 March Term (first year of TOKYOink 2027), management guides 46.0 billion yen in consolidated revenue, 1.3 billion yen in operating profit, 1.45 billion yen in ordinary profit, and 1.3 billion yen in net income, roughly flat with FY2025 results.
• Ink Business guidance: While offset ink faces market shrinkage, the company targets growth from functional products and the newly acquired gravure ink pharmaceutical packaging business.
• Chemical Products Business guidance: A full-scale review of low-margin products (including potential exits) will lead to temporary revenue and profit decline, which is factored into the guidance, with the long-term goal of improving overall profitability via shifting to high-margin products.
• Processed Products Business guidance: Management targets growth from Netron recovery and expanded civil engineering materials sales, resulting in expected year-over-year revenue and profit growth.

• The offset ink market is in a long-term contraction trend; management projects that by 2031, overall Ink Business revenue and profit will decline even with growth from gravure and inkjet ink, making new business development critical to hitting long-term targets.
• Low-margin product profitability correction in Chemical Products contract business is still incomplete, requiring further product portfolio rationalization.
• General consumer demand trends in Japan impact performance, as most of the company's products are intermediate goods used in wide-ranging consumer end products.
• Achieving the long-term 8% ROE target by 2031 depends on successfully completing time-consuming initiatives: low-margin product exit, shift to high-value products, and new business creation, with execution risk impacting the timing of target achievement.

No question and answer section is included in the provided transcript.