Pack CorporationTSE: 3950

Financial Results Briefing for the Fiscal Year Ended December 31, 2024

Mar 13, 2025 at 11:00 PM UTC · Issued by Pack Corporation

THE PACK CORPORATION

March 4, 2025

Event Summary

[Company Name]	THE PACK CORPORATION
[Company ID]	3950-QCODE
[Event Language]	JPN
[Event Type]	Earnings Announcement
[Event Name]	Financial Results Briefing for the Fiscal Year Ended December 31, 2024
[Fiscal Period]	FY2024 Q4
[Date]	March 4, 2025
[Number of Pages]	35
[Time]	13:30 - 14:15
	(Total: 45 minutes, Presentation: 32 minutes, Q&A: 13 minutes)
[Venue]	The Pack Corporation Tokyo Head Office and webcast
[Venue Size]
[Participants]
[Number of Speakers]	2
	Hideaki Yamashita	President & CEO
	Ikuo Shimomura	Director, Corporate General Manager

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Presentation

Moderator: We will now begin THE PACK CORPORATION's Business Results Briefing for the Fiscal Year Ended December 31, 2024. Thank you so much for taking the time from your busy schedules to attend today's briefing.

First, let me introduce our two speakers. To your left is President and CEO, Hideaki Yamashita.

Yamashita: My name is Yamashita. Thank you for attending today.

Moderator: To your right is Director and Corporate General Manager, Ikuo Shimomura.

Shimomura: My name is Shimomura. Thank you for taking time today to attend.

Moderator: We're pleased to share our business results with you today.

This briefing is being webcast in addition to the live presentation at a venue at our Tokyo Head Office. We expect it to take an hour. The speakers will explain the briefing materials on business results disclosed on our corporate website yesterday, March 3.

In keeping with the table of contents, the topics will be explained first by President Yamashita. Director Shimomura will then explain the business results for FY2024 and the forecasts of business results for FY2025. Thereafter, Mr. Yamashita will discuss our progress on sustainable management and the Medium- Term Management Plan. The Q&A session will follow.

Now, let's get started with the Topics portion, which President Yamashita will now address.

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Topics

The Japanese economy has gradually recovered due to spending by inbound tourists and robust capital investments. At the same time, it has been adversely affected by soaring prices attributable to rising energy costs and yen devaluation, creating lingering circumstances in which price increases outstrip wage growth. The outlook for consumer spending remains uncertain.
The Pack achieved record figures for net sales, operating profit, ordinary profit, and profit. Higher value added order-receiving activities based on proposal-based sales to solve customer issues increased sales of paper products, contributing significantly to net sales and profit.
Dividend per share grew to 118 yen (up by 28 yen from the previous fiscal year).
The progress toward achievement of numerical targets under the Medium-Term Management Plan (FY2023-2025) has been substantially as planned.

Yamashita: Thank you for taking time from your busy schedules to attend this briefing at the venue or online.

I'll dive right in.

The Japanese economy has trended toward gradual recovery due to spending by inbound tourists and robust capital investments. At the same time, it has been adversely affected by soaring prices, which can be attributed to rising energy costs and yen devaluation, a lingering situation in which price increases outstrip wage growth. The outlook for consumer spending remains uncertain.

The Pack achieved record-high figures for net sales, operating profit, ordinary profit, and profit. As a result of higher value added order-receiving activities backed by proposal-based sales to resolve customer problems, sales of paper products have grown, contributing significantly to net sales and profit.

We increased dividend per share by 28 yen from the previous fiscal year to 118 yen.

Progress toward achieving the numerical targets set in the Medium-Term Management Plan for the FY2023- 2025 period has proceeded substantially as planned. That's the bird's eye overview of the key topics.

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Moderator: Mr. Shimomura will explain the business results for FY2024.

Shimomura: My name is Shimomura. Allow me to go over the business results for FY2024.

Summary of Business Results

Consolidated net sales exceeded 100 billion yen, a new record high.

				(Million yen)

	Year ended		Year ended
	December 31, 2023		December 31, 2024

	Actual	Actual		YoY change
Net sales	97,714	101,461		3.8%

Operating profit	7,743	8,009		3.4%

Ordinary profit	8,063	8,285		2.8%

Profit attributable to	5,652	6,316		11.7%
owners of parent

Basic earnings per share	297.07	333.52		12.3%
(yen)

Dividend per share (yen)	90.00	118.00		31.1%

We achieved consolidated net sales of 100 billion yen by promoting proposal-based sales and cross-selling.
We absorbed cost increases by normalizing sales prices and strengthening high value added product sales.
We reduced cross-held shares.

First, let's take a look at the summary of business results on p. 5 of the materials.

Net sales grew 3.8% to 101,461 million yen; operating profit 3.4% to 8,009 million yen; and ordinary profit

2.8% to 8,285 million yen. We achieved consolidated net sales of 100 billion yen for the first time due to efforts to promote proposal-based sales and cross-selling. We also achieved record highs in all aspects of profit.

We absorbed cost increases by normalizing sales prices and through efforts to sell high value added products. We've reduced some cross-held shares and posted extraordinary income from the corresponding sales.

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Results by Segment

										(Million yen)

						Year ended December 31, 2023	Year ended December 31, 2024

						Actual	Share	Actual	Share	YoY change

Net sales		97,714	100.0%	101,461	100.0%	3.8%
	Paper		69,399	71.0%	73,114	72.1%	5.4%
	Products
		Paper bags			29,653	30.3%	32,214	31.8%	8.6%
		Paper	25,000	25.6%	25,882	25.5%	3.5%
		cartons
		Corrugated		12,419	12.7%	13,027	12.8%	4.9%
		boxes
		Printing	2,325	2.4%	1,990	2.0%	-14.4%
	Film		13,798	14.1%	13,499	13.3%	-2.2%
	Packaging
	Others	14,516	14.9%	14,846	14.6%	2.3%
Operating profit	7,743	100.0%	8,009	100.0%	3.4%
	Paper		6,858	88.6%	7,168	89.5%	4.5%
	Products
	Film	856	11.0%	933	11.7%	9.0%
	Packaging
	Others	1,267	16.4%	1,261	15.7%	-0.5%
	Adjustments	-1,239	-16.0%	-1,354	-16.9%	-

The Paper Products segment posted growth in both net sales and profit due to strong sales of paper cartons for the food products market and paper bags for retail businesses, attributable in turn to spending by inbound tourists and recovering personal consumption.
Sales of corrugated boxes grew due to recovery in sales of packing materials for transportation.
Profits for film packaging products grew due to productivity improvements. However, the volume of such products consumed declined in line with

growing environmental awareness.

The next page shows results by segment.

In the Paper Products segment, which accounts for more than 70% of our overall sales, sales of paper bags and paper cartons were strong thanks to recovery in personal consumption. Sales of corrugated boxes grew due to recovering sales of packing materials for transportation.

Profits for film packaging products grew due to productivity improvements. This was despite the adverse conditions created by the shift to paper materials, which we attribute to growing environmental awareness.

Sales of the diverse and various products categorized under Other, including sewn products mainly made of nonwoven fabric and gift wrapping materials, were also strong.

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Factors Underlying Changes in Operating Profit

Sales volumes grew due to rising average sales prices

(Million yen)

Year ended

December

31,

December

31,

2023

Higher

Higher raw

Higher

Higher other

2024

Operating

sales

average

material

manufac-

labor costs

logistics

selling,

volumes

sale prices

costs

turing

costs

general and

Operating

profit

expenses,

administrative

profit

7,743

other

expenses

8,009

+361

+1,023

-477

+30

-236

-22

-413

Sales volumes increased thanks to strong consumer spending.
Average sales prices rose due to normalization of sales prices and efforts to promote sales of high value added products.
Capital investments intended to improve production efficiency increased.

This graph summarizes the various factors that underlie the changes in operating profit.

First, let me go over the growth in both sales volumes and average sales prices. While we sell a wide range of products, the graph shows only the overall results for the product mix. But it does show that factors like the shift to paper products and normalization of sales prices contributed significantly to profit growth.

At the same time, we successfully absorbed the growing cost of raw materials and labor. Selling, general and administrative expenses rose due to higher expenditures not just for capital investments, but also human resource development and R&D expenses to enhance our capacity to propose solutions. However, the SGA ratio fell by 0.1 percentage points YoY.

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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

				7,743	8,009	8,000
			5,972
					6,000
		4,144			101,461
	3,275		97,714	4,000
100,000
		89,060		14,846
			14,516	2,000
		79,690
80,000	78,445	14,138		13,499	0
	13,798
	13,008
	13,574
	11,988

60,000	13,484	11,184

40,000				69,399	73,114
			62,932
		55,498
	51,386

20,000

0	Year ended	Year ended	Year ended	Year ended	Year ended

	December 31, 2020	December 31, 2021	December 31, 2022	December 31, 2023	December 31, 2024
		Copyright© 2025 The Pack Corporation. All Rights Reserved.		8

This graph summarizes trends in business results by segment since FY2020.

The Paper Products segment, our main segment, posted record highs for both net sales and operating profit.

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Sales Composition

Year ended	28.1		16.6
December 31,
2023
Year ended	28.7		17.1
December 31,
2024

Food products		Apparel
Convenience stores		Pharmaceuticals and cosmetics
Home electronics and home installations	Life care

		1.2	2.9		0.3

5.0	5.6	4.9	2.03.0		3.8	26.6

5.0	5.0	4.6	2.12.7 3.4		26.2
		1.3	3.6		0.3

Department stores			Supermarkets and drug stores
e-commerce				Sundries
Automotive				Other

(Unit: %)

			Year ended			Year ended
			December 31, 2023		December 31, 2024
(Million yen)			Actual	Share	Actual		Share	YoY change
Food products		27,438	28.1%	29,160		28.7%	6.3%
Apparel	16,187	16.6%	17,390		17.1%	7.4%
Department stores	4,910	5.0%	5,103		5.0%	4.0%
Supermarkets and drug		5,502	5.6%	5,089		5.0%	-7.5%
stores
Convenience stores	1,184	1.2%	1,158		1.3%	-2.2%
Pharmaceuticals and	4,743	4.9%	4,632		4.6%	-2.3%
cosmetics
e-commerce *	2,834	2.9%	3,663		3.6%	29.3%
Sundries	1,939	2.0%	2,151		2.1%	10.9%
Home electronics and	2,888	3.0%	2,778		2.7%	-3.8%
home installations
Life care	3,744	3.8%	3,454		3.4%	-7.7%
Automotive	330	0.3%	298		0.3%	-9.7%
Other	26,014	26.6%	26,578		26.2%	2.2%

In the food products market, sales of packages for the food service industry and for the souvenir market were strong.
In the apparel market, sales of paper bags for brick-and-mortar shops and high value added paper bags were strong.
Sales to department stores trended positive, driven by robust consumer spending and inbound tourism demand.
Sales to the e-commerce market were strong due to new orders for delivery packages, including paper delivery bags.
In the sundries market, sales of gifting packages were strong.
Sales to the life care market declined as a proportion of total sales due to weak sales to specific users of products for overseas markets.

* e-commerce refers to the e-commerce platform segment. e-commerce sales on vendor sites are counted as part of their individual business segments.

This table gives a breakdown of Group net sales by our customer businesses.

Despite steady growth in the food products, apparel, department store, e-commerce-related, and sundries sectors, sales declined in the supermarket and drug store and life care sectors, as well as the automotive sector, which accounts for a small portion of sales.

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Paper Products Segment

Business environment

Nationwide department store sales for 2024 were up 6.8% year on year, marking year-on-year increases for four consecutive years. The number of tax-free buyers was up 74.3%, a new record high. These buyers were the largest contributor to sales of high value added products. In the food products market, while pullbacks in consumer spending were noted in part due to soaring prices, confectionery sales grew slightly thanks to gifting and inbound demand. (Source: Japan Department Store Association "Preliminary Reports on Department Store Sales in Japan" for January to December, 2024)
The monthly on-line shopping expenditure per two-or-more-person household increased year on year for the twelfth consecutive month, marking a record high. (Source: "Family Income and Expenditure Survey," Statistics Bureau of Japan)

Initiatives

Promoting productivity improvement through capital investments
Diversifying the line of products to cover a wider range of market needs
Putting in more efforts for products and services that are eco- friendly or serve as solutions to problems such as labor shortages
Strengthening cross-selling

Trends in net sales and operating profits

	Net sales (left axis)		Operating profit (right axis)	(Million yen)


							69,399		73,114			14,000

70,000										New

			62,932
										record	12,000
60,000													set
55,498

50,000															10,000
														8,000
								6,858	7,168
40,000

				5,333						6,000
30,000
3,958											4,000
20,000

														2,000
10,000

0		FY21/12	FY22/12	FY23/12	FY24/12	0

Trends in operating profit margins

	Paper Products segment	Film Packaging segment
12.0%	Other segments	9.9%
10.0%			9.8%
	8.5%

	7.1%		8.5%
8.0%		8.7%
		7.5%
6.0%	6.8%		6.9%
	6.2%
		4.9%
4.0%	3.6%
2.0%
FY21/12	FY22/12	FY23/12	FY24/12

Trends in sales composition in the Paper Products Segment

100	%	3.8%	3.5%	3.4%	Printing, 2.7%
21.4%	19.4%	17.9%	Corrugated

80			boxes, 12.8%

				36.0%	Paper cartons,
60			35.1%	35.4%
		35.4%
40
						Paper

20			39.7%	41.7%	42.7%		bags,
						44.1%
0			FY21/12	FY22/12	FY23/12		FY24/12

From this point on, we'll show various materials to explain the results by segment.

The business environment is as presented. In this environment, we're improving manufacturing capacity and productivity, diversifying product lines, and putting more effort into offering proposals that respond to growing environmental awareness.

We're also moving aggressively forward with cross-selling, one of our strengths and characteristics. Specifically, this means proposing total solutions involving various products-paper cartons, paper bags, corrugated boxes, and various others. The most recent operating gross margin in the Paper Products segment as a whole was 9.8%.

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