7811.T

Overall Financial Results

• For the 2026 February fiscal year, the company achieved all-time record high revenue of 49.635 billion yen, operating profit of 2.961 billion yen, and ordinary profit of 3.054 billion yen, with 1-5% YoY slight growth across all metrics. Parent company net income attributable to shareholders reached 2.175 billion yen, an increase of 0.165 billion yen YoY. The fourth quarter achieved an all-time record high profit for the second consecutive year.
• Capital structure remains healthy: equity ratio is 51.9% (over 50%), and ROE is 10.8%.

Previous Medium-Term Management Plan (to 2024) Review

• M&A: Rated excellent (◎). Multiple completed M&A/partnerships delivered strong results: RN Smart Packaging joint venture reached break-even in its third year, the acquired Nissei food container business turned profitable in its first year and is now a core facility, and fully acquired Nakamoto Advanced Film (formerly MICS Chemical) is already delivering strong profit contributions.
• Overseas Business Expansion: Rated good (〇). Nakamoto Packs USA achieved profitability and eliminated accumulated deficits, Vietnam factory achieved operating profitability. The 10% overseas revenue target was not maintained after the sale of Chinese operations, which reduced overseas revenue share to 6%.
• Environmental Management: Rated good (〇). Biomass ink usage exceeds 50%, multiple environmentally friendly products (RESC biodegradable paper barrier packaging, NAK-A-PET PET reduction solution) were commercialized, and non-toluene conversion and energy efficiency upgrades were advanced.
• Electronic & Industrial Materials R&D: Rated good (〇). The R&D team was expanded with additional staff and equipment.
• Manufacturing Cost Reduction: Rated needs improvement (△). Progress was limited to some subsidiaries, and full optimization is just beginning with the new SCM department.

Capital and Shareholder Return

• Over the 3 years of the new Mid-Term Management Plan 2027, the company expects 110 billion yen in operating cash flow. It will allocate ~200 billion yen total (combining operating cash flow, debt, and cash on hand) to growth investment (180 billion yen) and shareholder return (25 billion yen).
• The company plans a 3 yen per share dividend increase to 74 yen annual dividend for the 2027 February fiscal year, marking 11 consecutive years of progressive dividends, maintaining a target 30% payout ratio.

New Operational Initiatives for Mid-Term Management Plan 2027

• Infrastructure for growth: A new test coater for next-generation battery materials will start operation in June 2026 at the new Saitama facility, completing a product line-up of small, medium, and mass production coater equipment that supports rapid development from prototyping to low-volume production. A new dedicated R&D Center will be established at the Saitama site to enable faster, more efficient in-house development, moving beyond historical contract manufacturing/subcontracting models. A new in-house brand nbass was launched to increase brand awareness for the company's own original products. A dedicated SCM department was established to optimize production costs, BCP resilience, and delivery speed across the company's 24/7 production network.
• Accelerated environmental management: The company is advancing raw material thinning, biomass conversion, biodegradable materials, monomaterial recycling, and conversion to paper-based packaging to address supply chain risks. Nearly all food packaging inks are already non-toluene, and the company is developing formulations to cut toluene usage by 50% for IT/industrial material applications, with a long-term goal of full water-based coating that eliminates reliance on petrochemical solvents. The company's new high-value packaging product Sumarenji, which extends shelf life and enables convenient microwave heating, has begun customer rollout for the large market of microwavable food products, and label-less thermal packaging is expanding to additional convenience store chains.

• 2027 February Fiscal Year Full-Year Guidance: The company expects revenue of 52 billion yen, operating profit of 3.265 billion yen, ordinary profit of 3.45 billion yen, and parent net income of 2.183 billion yen. Excluding one-time gains from share sales in the prior year, core profitability is projected to grow steadily.
• Mid-Term (2029 February Fiscal Year) Targets: Revenue of 60 billion yen, ordinary profit of 4.75 billion yen, ROE of 12% or higher.
• Long-Term Targets: Revenue of 70 billion yen, ordinary profit of 6 billion yen, ROE of 13% or higher, with a target of 10 billion yen in revenue from the next-generation battery materials business.
• The company confirms continued progress in growing IT & Industrial Materials, expects continued strong demand from semiconductor-related customers, and is targeting ongoing gross margin expansion for the segment.
• If the Middle East situation causes material changes to the operating environment, the company will promptly revise and disclose updated earnings guidance.

1. Food-related: Revenue of 31.607 billion yen, gross profit of 4.465 billion yen, 1% year-over-year (YoY) revenue growth and 2.3% YoY gross profit growth. It contributes 64% of total company revenue and 49% of total gross profit. Growth was driven by strong demand for packaging for cheese, frozen foods, seafood processed products, tofu, and agricultural products.
2. IT & Industrial Materials: Revenue of 9.329 billion yen, gross profit of 2.209 billion yen, 3.8% YoY revenue growth and 24.6% YoY gross profit growth. It contributes 19% of total company revenue, and has a higher gross profit margin than food-related products. Growth was driven by solid demand for functional materials for electronics, smartphone components, semiconductor-related products, and automotive interior materials.
3. Daily Living Materials: Revenue of 4.284 billion yen, gross profit of 1.749 billion yen, 0.6% YoY revenue growth and 3.5% YoY gross profit growth. It contributes 9% of total company revenue. Growth was driven by strong sales of high-margin in-house products, and increased sales of high value-added products including storage-related and mite-proof products.
4. Construction Materials: Revenue of 1.995 billion yen, gross profit of 0.27 billion yen, 4.5% YoY revenue growth and 0.9% YoY gross profit growth. New project orders offset declining orders for surface-coated construction materials, offsetting results.
5. Medical & Pharmaceutical: Revenue of 1.554 billion yen, gross profit of 0.325 billion yen, 0.9% YoY revenue decline and 1.6% YoY gross profit decline. Growth in higher-priced patch-related products was offset by declining demand for infusion-related packaging materials for hospitals.

• Global supply chain disruptions driven by Middle East geopolitical tensions have already caused shortages of key organic solvents (toluene and MEK), and future raw material shortages are a major concern. Solvent supply has been tight since mid-March 2026, creating ongoing supply chain instability.
• The company missed its original full-year plan for 2026 February fiscal year, as some domestic and overseas subsidiaries missed budget targets significantly, partly driven by higher SG&A expenses from EC sales expansion at one subsidiary and negative foreign exchange impacts.
• The construction material industry continues to face low overall market demand, requiring intensified sales efforts.
• Rising energy costs increased manufacturing costs by 0.151 billion yen YoY in 2026 February fiscal year, pressuring margins.
• There is continued room for improvement in company-wide manufacturing cost reduction, and the SCM optimization initiative is still in early stages.

Q: IT & Industrial materials gross margin improved significantly this year after previously sitting in the 25-30% range. What drove this improvement, and can margin continue to rise under the new mid-term plan? / A: Management cited two core drivers of margin improvement: first, internal manufacturing improvements including process redesign, switching to lower-cost solvents, increasing production speed, and adjusting utilization rates, all of which delivered strong results amid difficult market conditions. Second, steadily growing demand for IT & industrial materials has lifted overall factory and equipment utilization rates, which also boosted margins. The exit of lower-margin legacy industrial product lines also contributed to the improvement. Management expects continued investment in the segment and ongoing demand growth, so further gross margin increases are achievable going forward.

Q: How does the product mix of IT & Industrial materials look, given that smartphone demand appears strong but overall segment revenue growth is moderate? / A: Management confirmed that smartphone-related products have posted strong growth over the past two years. The moderate overall revenue growth reflects the exit of lower-margin industrial material product lines, which has had the side benefit of lifting the segment's overall gross margin, aligned with the company's strategic focus on higher-value products.

Q: What actions is the company taking to address rising raw material costs and supply shortages, and how have customers reacted to price pass-through? / A: [Partially complete in provided transcript] The company has already advanced non-toluene conversion for food packaging inks, eliminating near-term risk for that segment, and is working to reduce solvent usage for industrial products. The current market environment has allowed the company to secure customer approval for price increases that was difficult to obtain in prior periods, helping offset rising input costs.