THE PACK CORPORATION
Business Results Briefing for the Second Quarter of the Year Ending December 31, 2024
September 3, 2024
Event Summary
[Company Name] | THE PACK CORPORATION | |
[Company ID] | 3950-QCODE | |
[Event Language] | JPN | |
[Event Type] | Earnings Announcement | |
[Event Name] | Business Results Briefing for the Second Quarter of the Year Ending | |
December 31, 2024 | ||
[Fiscal Period] | FY2024 Q2 | |
[Date] | September 3, 2024 | |
[Number of Pages] | 36 | |
[Time] | 10:00 - 10:41 | |
(Total: 41 minutes, Presentation: 32 minutes, Q&A: 9 minutes) | ||
[Venue] | Webcast | |
[Venue Size] | ||
[Participants] | ||
[Number of Speakers] | 2 | |
Hideaki Yamashita | President & CEO | |
Ikuo Shimomura | Director |
Support | ||
Japan | 050.5212.7790 North | North America 1.800.674.8375 |
Tollfree | 0120.966.744 | Email Support support@scriptsasia.com |
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Presentation
Moderator: We will now begin THE PACK CORPORATION's Business Results Briefing for the Second Quarter of the Year Ending December 31, 2024. Thank you so much for attending our briefing today despite your busy schedule.
First, let me introduce our speakers. To your left is President and CEO, Hideaki Yamashita. To the right is Director and Corporate General Manager, Ikuo Shimomura.
In addition to a venue within the building of our Tokyo Head Office, this briefing is being live- streamed online. It is expected to take an hour. The speakers will explain the briefing materials on business results disclosed on our corporate website yesterday, September 2.
Following the table of contents of the materials, the topics will be explained first by President Yamashita. Director Shimomura will explain the business results for 2Q of FY2024 and the forecasts of business results for FY2024. Yamashita will explain progress on sustainable management and the Medium-Term Management Plan. The Q&A session will follow thereafter.
Now, let's get started with the "Topics" portion, which will be discussed by President Yamashita.
Yamashita: My name is Yamashita. Thank you for taking the time from your busy schedules to attend this briefing at the venue or online.
Support | ||
Japan | 050.5212.7790 North | North America 1.800.674.8375 |
Tollfree | 0120.966.744 | Email Support support@scriptsasia.com |
2
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.
Copyright© 2024 The Pack Corporation. All Rights Reserved. | 2 |
I'll dive right into the topics.
While robust capital investment and strong spending by foreign visitors have supported the Japanese economy, the outlook for consumer consumption remains uncertain due to soaring energy costs, the rising cost of imported goods driven by yen devaluation, and a period during which prices outstripped wage growth.
We achieved record-high figures for net sales, operating profit, ordinary profit, and profit. Our eco- friendly high value added products, solutions proposals, and sales efforts boosted sales and profits, particularly for products targeting the food products market.
We published our first Integrated Report to deepen ties to and communications with our stakeholders.
That provides a bird's eye view of the key topics.
Moderator: Next, Shimomura will explain the business results for the second quarter of FY2024.
Support | ||
Japan | 050.5212.7790 North | North America 1.800.674.8375 |
Tollfree | 0120.966.744 | Email Support support@scriptsasia.com |
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Shimomura: My name is Shimomura, and I'm in charge of the Corporate Division. Thank you for your attendance. Allow me to review the business results for the semi-annual period under review.
Summary of Business Results | |||
Net sales, operating profit, ordinary profit, and profit all achieved record highs. | |||
(Million yen) | |||
Second quarter of | Second quarter of | ||
year ended | year ending | ||
December 31, 2023 | December 31, 2024 | ||
Actual | Actual | YoY change | |
Net sales | 44,878 | 46,617 | 3.9% |
Operating profit | 2,976 | 3,525 | 18.4% |
Ordinary profit | 3,147 | 3,662 | 16.3% |
Profit attributable to | 2,133 | 2,999 | 40.6% |
owners of parent | |||
Basic earnings per share | 112.16 | 157.69 | 40.6% |
(yen) | |||
Dividend per share (yen) | 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.
Copyright© 2024 The Pack Corporation. All Rights Reserved. | 4 |
First, please take a look at the summary of business results. For the semi-annual period, we had net sales of 46,617 million yen, up 3.9% YoY; operating profit of 3,525 million yen, up 18.4% YoY; and ordinary profit of 3,662 million yen, up 16.3% YoY.
All are record-highsemi-annual figures. In particular, the operating profit margin improved by 0.9 percentage points from 6.6% to 7.5%.
The economy has returned to normal after the COVID-19 pandemic. Our business performance has been steady. The improvements in profitability are attributable chiefly to the eco-friendliness of our products, proposals for products with high added value, and redoubled sales activities.
Support | ||
Japan | 050.5212.7790 North | North America 1.800.674.8375 |
Tollfree | 0120.966.744 | Email Support support@scriptsasia.com |
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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.
Copyright© 2024 The Pack Corporation. All Rights Reserved. | 5 |
The next page shows results by segment. We experienced notable growth in the Paper Products segment, which accounts for more than 70% of our overall sales. Paper bags and paper cartons showed especially high growth.
Among products categorized under Others, gift wrapping materials in particular showed strong sales.
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5
Factors Underlying Changes in Operating Profit Sales volumes grew due to rising average sales prices
(Million yen)
Semi-annual | Lower sales | Higher | Higher raw | Higher other | Lower labor | Higher | Lower 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.
Copyright© 2024 The Pack Corporation. All Rights Reserved. | 6 |
This graph summarizes the various factors that underlie the changes in operating profit. First, let me go over the change attributable to sales volumes. We sell products ranging from individual packages for pieces of confectionery to large corrugated boxes. This product mix led to the results shown in this figure.
Average sales prices rose due to normalization of sales prices to reflect increased raw material prices, as well as stronger sales of high value added products.
Labor costs rose slightly. Selling, general and administrative expenses grew due to increases in cost for human resource development and in R&D expenses to enhance our capacity to propose solutions. However, the SGA ratio decreased by 0.6 percentage points YoY.
Support | ||
Japan | 050.5212.7790 North | North America 1.800.674.8375 |
Tollfree | 0120.966.744 | Email Support support@scriptsasia.com |
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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 | |
2,595 | 2,976 | 3,525 | 4,000 | ||||
2,044 | |||||||
3,000 | |||||||
1,229 | 1,459 | ||||||
50,000 | 46,617 | 2,000 | |||||
44,284 | 44,878 | 1,000 | |||||
0 | |||||||
40,000 | 7,073 | 39,617 | 6,489 | 6,947 | |||
36,046 | 36,589 | ||||||
6,347 | |||||||
5,950 | 6,396 | 6,654 | |||||
9,185 | 6,048 | ||||||
30,000 | 5,221 | ||||||
5,323 | |||||||
7,074 | |||||||
20,000 | |||||||
28,025 | 27,998 | 31,734 | 33,322 | ||||
22,923 | 25,315 | ||||||
10,000 | |||||||
0 | |||||||
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 | ||
Copyright© 2024 The Pack Corporation. All Rights Reserved. | 7 |
This graph summarizes trends by segment for the semi-annual periods since FY2019. As with the Group as a whole, the paper products segment posted record-highsemi-annual net sales and operating profit.
Support | ||
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Tollfree | 0120.966.744 | Email Support support@scriptsasia.com |
7
Sales Composition
Net sales by business
Second quarter | 1.3 | 2.9 | 0.4 | (Million yen) | ||||
of year ended | 27.1 | 15.8 | 4.8 | 5.8 | 5.0 | 2.1 3.8 | 4.1 | 27.0 |
December 31, | ||||||||
2023 | ||||||||
Second quarter | ||||||||
of year ending | 28.3 | 16.3 | 4.9 | 5.4 | 4.7 | 2.3 2.8 | 3.8 | 26.5 |
December 31, | ||||||||
2024 | 1.3 | 3.5 | 0.3 | |||||
Food products | Apparel | Department stores | Supermarkets and drug stores | |||||
Convenience stores | Pharmaceuticals and cosmetics | e-commerce | Sundries | |||||
Home electronics and home installations | Life care | 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 |
This table shows the breakdown of Group net sales by our customers' businesses. From the top to the bottom in this table, while the food, apparel, department store, convenience store, and e- commerce related sectors have grown steadily, the home electronics and home installations and life care sectors saw declining demand for packages destined for overseas markets.
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Tollfree | 0120.966.744 | Email Support support@scriptsasia.com |
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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 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 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 | |||||||||||||||||
10,000 | 1,952 | 2,000 | |||||||||||||||
1,416 | |||||||||||||||||
0 | 0 | ||||||||||||||||
FY21/12 semi- | FY22/12 semi- | FY23/12 semi- | FY24/12 semi- | ||||||||||||||
annual period | annual period | annual period | annual 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% | ||||||||||||||||
60% | 34.8% | 35.5% | Paper cartons, | ||||||||||||||
34.8% | 36.4% | ||||||||||||||||
40% | |||||||||||||||||
40.9% | Paper bags, 42.8% | ||||||||||||||||
20% | 38.2% | 40.2% | |||||||||||||||
0% | |||||||||||||||||
FY21/12 semi-annual | FY22/12 semi-annual FY23/12 semi-annual | FY24/12 semi-annual | |||||||||||||||
period | period | period | period |
Copyright© 2024 The Pack Corporation. All Rights Reserved. | 9 |
From here on, we will show various materials to explain the results by segment. The business environment is as presented.
Our current initiatives include improvements in manufacturing capacity and productivity, diversification of product lines, and proactive proposals of eco-friendly solutions.
In addition to these initiatives, we're driving forward aggressively with combined sales, one of our strengths and characteristics. These efforts involve proposals for total solutions involving various products, such as paper bags, boxes, delivery corrugated boxes, and various wrapping materials.
The operating gross margin in the Paper Products segment, which accounts for more than 70% of net sales, was 9.5%, as shown in the bottom-left graph.
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Tollfree | 0120.966.744 | Email Support support@scriptsasia.com |
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