Pack CorporationTSE: 3950

Briefing Materials on Business Results for the Second Quarter of the Year Ending December 31, 2024

Sep 18, 2024 at 4:54 AM UTC · Issued by Pack Corporation

THE PACK CORPORATION

September 2, 2024

Contents

Topics	P. 2
1.	Business Results for the Second	P. 3
	Quarter of the Year Ending
	December 31, 2024
2.	Forecasts of Business Results for the Year	P. 18
	Ending December 31, 2024
3.	Progress on Sustainable Management	P. 22
4.	Progress on the Medium-Term	P. 27
	Management Plan
5.	Reference Materials	P. 35

Topics

Recovering domestic consumption, robust capital investments, and strong spending by foreign visitors have been key factors supporting the Japanese economy. However, the outlook for consumer consumption remains uncertain for several reasons, including soaring energy costs, the rising cost of imported goods driven by yen devaluation, and a period during which prices outstripped wage growth.

◆The Pack achieved record-high figures for net sales, operating profit, ordinary profit, and profit. Its eco-friendly high value added products, solutions proposals, and sales efforts boosted sales and profits, particularly for products targeting the food products market.

◆The Pack undertook various capital investments and sales expansion initiatives while enhancing DX training and other human resource development programs.

◆The Pack published its first Integrated Report to deepen communications with stakeholders.

1. Business Results for the Second Quarter of the Year Ending December 31, 2024

Summary of Business Results

Net sales, operating profit, ordinary profit, and profit all achieved record highs.

Net sales

Operating profit

Ordinary profit

Profit attributable to owners of parent

Basic earnings per share (yen)

Dividend per share (yen)

(Million yen)

Second quarter of		Second quarter of
year ended		year ending
December 31, 2023		December 31, 2024

Actual	Actual		YoY change

44,878	46,617		3.9%

2,976	3,525		18.4%

3,147	3,662		16.3%

2,133	2,999		40.6%

112.16	157.69		40.6%

35.0	52.0		48.6%

Proposals of high value added products featuring both eco-friendly and functional advantages resulted in significantly better profit margins.
Paper products, paper bags and paper cartons in particular, showed growth, driving up sales and profit.
We recorded extraordinary income on the sale of certain cross-held shares.

Results by Segment

							(Million yen)

			Second quarter of year ended	Second quarter of year ending
			December 31, 2023		December 31, 2024
			Actual	Share	Actual	Share	YoY change

Net sales	44,878	100.0%	46,617	100.0%	3.9%
	Paper	31,734	70.7%	33,322	71.5%	5.0%
	Products

		Paper bags	12,993	29.0%	14,279	30.6%	9.9%
		Paper	11,262	25.1%	12,120	26.0%	7.6%
		cartons

		Corrugated	6,343	14.1%	5,926	12.7%	-6.6%
		boxes

		Printing	1,135	2.5%	995	2.2%	-12.3%
	Film	6,654	14.8%	6,347	13.6%	-4.6%
	Packaging

	Others	6,489	14.5%	6,947	14.9%	7.1%
Operating profit	2,976	100.0%	3,525	100.0%	18.4%
	Paper	2,715	91.2%	3,164	89.8%	16.5%
	Products

	Film	288	9.7%	403	11.5%	39.7%
	Packaging

	Others	485	16.3%	519	14.7%	7.1%
	Adjustments	-513	-17.2%	-562	-16.0%	-

The Paper Products segment posted growth in both net sales and profit based on strong sales of products for the food products market, particularly paper bags and paper cartons.
Corrugated boxes posted lower net sales due to production adjustments for products for overseas markets and revised package specifications for the e-commerce sector.
In other businesses, sales of premium products such as gift-wrapping materials showed a steady trend.

Factors Underlying Changes in Operating Profit

Sales volumes grew due to rising average sales prices

(Million yen)

Semi-annual	Lower sales	Higher	Lower raw	Lower other	Higher labor	Lower	Higher other	Semi-annual
period of year	period of year
volumes	average sales	material costs	manufactur-	costs	logistics	selling,
ended December	ending
	prices		ing		costs	general and
31, 2023				December 31,
			expenses			administrative
Operating profit						2024
							expenses	Operating profit

2,976	-263	+796	+17	+78	-30	+82	-132	3,525

Sales volumes of products like film packaging decreased slightly.
Average sales prices rose due to normalization of sales prices and efforts to promote sales of high value added products. Sales prices were up by 9.5% for paper bags, 2.7% for paper cartons, 8.9% for corrugated boxes, and 2.0% for plastic bags.
Logistics costs fell due to improved transportation efficiency.
Other selling, general and administrative expenses grew due to the growing cost of human resource development and sales promotions such as R&D.

Trends by Segment

Net sales and operating profit reached record highs

(compared to the semi-annual period of the preceding fiscal year)

(Million yen)

Net sales (Paper Products segment)		Net sales (Film Packaging segment)		Net sales (other segments)		Operating profit

50,000

40,000

30,000

20,000

10,000

2,595				2,976	3,525	4,000
		2,044
				3,000
	1,229	1,459
			46,617	2,000
				44,878	1,000
44,284
				0
7,073		36,589	39,617	6,489	6,947
36,046

			6,347
		5,950	6,396	6,654
9,185	6,048
5,221
		5,323
	7,074

28,025			27,998	31,734	33,322

22,923	25,315

Semi-annual period	Semi-annual period	Semi-annual period	Semi-annual period	Semi-annual period	Semi-annual period
of year ended	of year ended	of year ended	of year ended	of year ended	of year ending
December 31, 2019	December 31, 2020	December 31, 2021	December 31, 2022	December 31, 2023	December 31, 2024

Sales Composition

Net sales by business

Second quarter

of year ended December 31, 2023

Second quarter of year ending December 31, 2024

27.1

28.3

15.8

16.3

		1.3
4.8	5.8	5.0

4.9	5.4	4.7
		1.3

2.90.4

2.1 3.8 4.1

2.3 2.8 3.8

3.50.3

27.0

26.5

(Million yen)

Food products		Apparel


Convenience stores		Pharmaceuticals and cosmetics

Home electronics and home installations		Life care

	Department stores		Supermarkets and drug stores


	e-commerce		Sundries

	Automotive		Other

	Second quarter of		Second quarter of
	year ended			year ending
(Million yen)	December 31, 2023		December 31, 2024
	Actual	Share	Actual		Share	YoY change
Food products	12,156	27.1%	13,201		28.3%	8.6%
Apparel	7,087	15.8%	7,620		16.3%	7.5%
Department stores	2,159	4.8%	2,292		4.9%	6.2%
Supermarkets and drug	2,617	5.8%	2,507		5.4%	-4.2%
stores

Convenience stores	564	1.3%	597		1.3%	5.9%
Pharmaceuticals and	2,237	5.0%	2,203		4.7%	-1.5%
cosmetics

e-commerce *	1,300	2.9%	1,616		3.5%	24.3%
Sundries	926	2.1%	1,058		2.3%	14.3%
Home electronics and	1,701	3.8%	1,291		2.8%	-24.1%
home installations

Life care	1,859	4.1%	1,755		3.8%	-5.6%
Automotive	164	0.4%	144		0.3%	-12.2%
Other	12,102	27.0%	12,333		26.5%	1.9%

In the food products sector, sales of packages for the food service industry and for the souvenir market were strong.
In the apparel sector, sales of packages for brick-and- mortar shops and for e-commerce deliveries were strong.
Sales to department stores trended positive, with recovering consumer spending and inbound tourism demand.
In the convenience store sector, sales of packages for food products were strong.
Sales to the e-commerce sector were strong due to new orders for delivery packages, including paper delivery bags.
In the sundries sector, sales of gifting packages were strong.
The life care and the home electronics and home installations sectors saw declining demand for packages intended for overseas market sales.

* e-commerce refers to the e-commerce platform segment. e-commerce sales on vendor sites are counted as part of their individual business segments.
Copyright© 2024 The Pack Corporation. All Rights Reserved.	8

Paper Products Segment

Business environment

By the end of the semi-annual period, department store sales had climbed nationwide for 28 consecutive months.
Sales for inbound tourists (tax-free sales) and sales of high value added products were robust.
Sales in the apparel, personal care products, and sundries sectors are currently major growth drivers.
In the food products sector, confectionery sales grew as well due to growth in gifting and inbound demand.
(Source: Japan Department Stores Association)
In each month from January to June, the monthly on-line shopping expenditure per two-or-more-person household increased year on year, setting a record for the month.
Expenditures in June rose 5.1% year on year. (Source: "Family Income and Expenditure Survey," Statistics Bureau of Japan)

Initiatives

Capital investments in machinery and improvements in productivity
Diversification of the line of products to cover a wider range of market needs
Proactive proposals of eco-friendly materials and processing methods
Strengthening combined sales

Trends in net sales and operating profits

		Net sales (left axis)			Operating profit (right axis)	(Million yen)
40,000						8,000


							33,322	New

							31,734	record

									set
30,000	25,315	27,998							6,000

20,000											4,000
							3,164

							2,715
				1,952
10,000	1,416									2,000
0											0
FY21/12 semi-	FY22/12 semi-	FY23/12 semi-	FY24/12 semi-

		annual period	annual period	annual period	annual period

Trends in operating profit margins

12.0%
	Paper Products segment		Film Packaging segment	9.5%



10.0%		Other segments

		8.6%

8.0%		7.0%	7.5%	7.5%
		6.8%
6.0%	6.4%		6.4%


4.0%	5.6%	3.8%	4.3%
3.1%

2.0%

FY21/12 semi-annual	FY22/12 semi-annual	FY23/12 semi-annual	FY24/12 semi-annual
period	period	period	period

Trends in sales composition in the Paper Products Segment

100%	4.2%			3.8%			3.6%		Printing, 3.0%

				20.0%		Corrugated
	22.8%		21.2%
80%				boxes,17.8%

								Paper cartons,
60%			34.8%		35.5%
34.8%				36.4%
40%
								Paper bags, 42.8%
20%	38.2%		40.2%		40.9%
0%
FY21/12 semi-annual	FY22/12 semi-annual	FY23/12 semi-annual	FY24/12 semi-annual

	period		period		period		period