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• Market Conditions & Core Profit Drivers

  • Raw material prices remain elevated compared to historical levels but have come down slightly and are tracking below management's initial full-year forecast, a trend expected to continue in the second half.
  • First half unit sales declined 1.9% year-over-year, driven by 90-95% year-over-year sales at large convenience store chains, but October 2025 sales reached 103.2% of prior year, and management expects full second half unit sales to exceed prior year levels following new customer wins from the April 2025 FPCO Fair.
  • Price pass-through from recent price adjustments added 4.5 billion yen to ordinary profit, fully offsetting 1.67 billion yen in negative impacts from higher raw material and labor costs, with productivity gains and cost rationalization delivering additional upside.

• Growth Market Expansion: Frozen & Healthcare Food Service

  • Aging demographics and labor shortages are driving a shift to frozen pre-prepared meals for hospital and nursing home food service, creating a new fast-growing market for frozen-resistant packaging.
  • FPCO has developed two proprietary technologies for this market: 1) PPiP-talc blending technology that improves drop resistance for frozen containers while reducing plastic use, requiring a newly built masterbatch manufacturing facility, and 2) high-speed fixed-position printing via vacuum-pressure molding that doubles production speed for hospital place-setting printed containers, giving FPCO a first-mover advantage.
  • Supermarkets are also adding in-store frozen prepared food sections beyond traditional frozen groceries, with adoption just starting and rapid growth expected.

• Environmental & Sustainability Strategy

  • FPCO's "Store to Store" closed-loop recycling program, which collects used food trays and PET bottles from partner stores to recycle into new packaging, has grown to 130 partner retail chains with 4,434 stores, on track to exceed 5,000 stores by the end of the calendar year.
  • Eco-products cut CO2 emissions by 37% for PSP containers and 30% for APET/OPET containers versus virgin plastic production. Annual CO2 reductions from FPCO eco-product sales now exceed 200,000 tons, which is higher than the 179,000 tons of CO2 emitted from FPCO's own Scope 1 and Scope 2 operations, a rare achievement globally.
  • FPCO processes 90,000 tons of post-consumer plastic annually, equal to 42% of the total plastic weight the company sells. A new de-inking plant for color trays, using DIC technology, started operations in September 2025 (delayed from April 2025) and is expected to add 7,000 tons of recycled eco-material annually starting next year.

• Infrastructure & M&A Strategy

  • Completion of a new Kansai distribution center has finished FPCO's national logistics network, which now covers 85% of Japan's population within a 100km radius from a distribution hub.
  • FPCO has acquired 5 packaging distributors to integrate into its group distribution network, most recently Maebashi Packaging in 2025. The first acquired distributor, FPCO Interpack, has grown from 17.5 billion yen in sales to over 30 billion yen while improving labor productivity to 167% of pre-acquisition levels, demonstrating the group's integration model and encouraging more succession-motivated M&A opportunities.
  • Overseas, FPCO jointly acquired Malaysia's LSSPI with Mitsui & Co (40% FPCO stake), and is executing a 3-year plan to double productivity via equipment upgrades. Productivity is improving as planned, with sales growing ~15% year-over-year, and the business is now positioned to maintain output with reduced headcount.

• New Product Development: New OPP Sheet

  • Building on FPCO's unique world-only OPET stretched PET sheet technology (which delivers 80°C heat resistance and -40°C cold resistance, and is currently sold out at 99.9% of production capacity amid frozen food demand growth), FPCO has developed 150-300 micron biaxially stretched polypropylene (OPP) sheet technology, plus a method to laminate sheets into high-strength OPP plates.
  • A new 2-line production factory is being designed for construction in Bandō, Ibaraki, with final investment expected to exceed the initial 45 billion yen estimate due to higher construction costs. Lamination equipment will be installed first, with laminated OPP plates launching first, and full sheet production starting after the new factory is completed.
  • Potential applications extend beyond food packaging to automotive interior components (light-transmitting decorative films for center clusters and bumpers, enabling paint-free production that meets automotive sustainability and recycling regulations) and construction materials. Construction applications are expected to launch first, with automotive applications launching 3-4 years after full production starts. Management will prioritize allocating OPP production to the highest value-added uses.

• Competitive Position & Financial Strategy

  • 68% of FPCO's current sales are proprietary products that competitors cannot produce, a share expected to rise to 72-75% after OPP commercialization, driven by growing eco-product demand and technical investment gaps versus peers. FPCO's scale and technical capabilities allow it to respond quickly to customer requests, such as the recent 80+ mold investment to downsize sushi containers after rice price increases, a capability no peer can match.
  • Management will maintain annual investment of approximately 20 billion yen from 2026 to 2028, with the 45-50 billion yen OPP factory investment spread over 3 years to fit within this range. ROE is expected to exceed 9% after the full-year earnings upgrade, recovering from recent lower levels.

• Management upgraded full-year 2026 March fiscal year ordinary profit guidance from the initial 19.6 billion yen to 21.5 billion yen, an upward revision of 1.9 billion yen. First half ordinary profit came in 1.75 billion yen above plan, with second half ordinary profit expected to be 150 million yen above initial plan.
  • The upward revision reflects the completion of price adjustment effects in the first half, raw material prices tracking below initial forecast, and ongoing gradual recovery in retail sales.
  • Full-year capital expenditure guidance remains unchanged at 9.2 billion yen, with 7.885 billion yen spent in the first half.
  • Management raised the interim dividend by 10 yen to 31.5 yen per share, with a planned 40 yen per share end-of-year dividend bringing full-year dividend to 71.5 yen per share. The company maintains its target 40% consolidated payout ratio and progressive dividend policy of no dividend cuts in principle.
  • ROE is expected to exceed 9% for the full year if the revised earnings target is met.

Only aggregate company-wide performance is reported: Total consolidated net sales reached 119.46 billion yen (104% of prior year), marking 11 consecutive years of revenue growth. The company's own manufactured product sales reached 91.648 billion yen, 104.6% of prior year, driven by industry-wide price pass-through after company-led price adjustments. Total unit sales volume came in at 98.1% of prior year, pressured by broad food price inflation reducing customer purchase volumes, particularly at convenience stores. Operating profit was 9.296 billion yen (143.6% of prior year, 121.8% of plan), ordinary profit was 9.346 billion yen (143.3% of prior year, 123% of plan), and net profit was 6.425 billion yen (148.1% of prior year, 128.3% of plan). All profit metrics hit all-time records, returning to growth after two years of declines.

• Broad food price inflation has reduced consumer purchase volumes at retail, pressuring packaging sales volume, particularly at convenience stores where sales have been in the low 90% range versus prior year.
  • Raw material prices remain at elevated historical levels, even though they are currently tracking below initial forecast.
  • The 45-50 billion yen OPP factory project faces construction cost inflation that will increase total investment above the initial estimate, and project execution carries construction complexity risk.
  • The new de-inking plant for color recycled plastic experienced a 5-month launch delay, though operations have now started.
  • While LSSPI productivity is improving as planned, sales growth of 15% has not kept pace with the doubling of productive capacity, requiring continued sales expansion efforts.
  • Commercialization of new OPP sheet applications is still in early stages, with final market adoption and product mix (and thus profitability) still to be determined.

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