In FY 2025, the fourth year of the Mid-Term Business Plan, amid increasing uncertainty in the global economy such as the sluggish Chinese economy, the Group experienced a decline in orders, due to weak market conditions in the Toner Segment toward the end of the FY. Under these circumstances, net sales amounted to ¥34,432 million, up ¥739 million or +2.2% from the previous FY. This growth was driven by depreciation of yen, which boosted overseas-related sales and the successful bidding for overseas tender projects in the Coated Paper Business within the Functional Sheet Segment contributed significantly to the positive results.

In terms of profit, despite the positive effects of yen depreciation and price pass-through, the increases in profit was offset by labor costs due to improved compensation, higher prices for various raw materials, higher depreciation and repair costs due to aggressive capital expenditures, in addition to the effect of allowance for doubtful accounts for overseas customers in the fourth quarter. As a result, operating profit was ¥1,282 million, down ¥48 million from that of the previous FY. Ordinary profit was ¥1,566 million, down ¥76 million from that of the previous FY, due to lower operating profit, despite the continued contribution of equity earnings from an affiliated company that handles processing of optical film used for displays. Profit attributable to owners of parent was ¥749 million, up ¥155 million from that of the previous FY, thanks to a decrease in income taxes-deferred and profit attributable to non-controlling interests, despite lower ordinary profit.

With regard to a financial strength, although the Company acquired treasury shares in November 2024 for the purpose of improving capital efficiency and implementing a flexible capital policy, but continues to maintain a net assets ratio of 40%, which is the Company's current guideline.

In FY 2026, the last year of the 8th Mid-Term Business Plan, the Company expects an increase in both net sales and profit compared to the previous FY.

The business environment is expected to remain uncertain due to the sluggish Chinese economy, exchange rate fluctuations toward a stronger yen, increasing costs of raw materials and labor, and the U.S. tariff measures. Under these circumstances, in the Toner Segment, the Company will strengthen its development system and launch new products to expand its market share. In the Semiconductor and Display-related Segment, the Company will steadily launch Flexible Planner Heater, for which the necessary capital expenditures for mass production has been completed, and accelerate horizontal development. In the Functional Sheet Segment, the Company will steadily mass-produce new products in the Functional Non-woven Fabric unit and aim to grow the business.

In terms of profit, operating profit forecast is set at ¥1,400 million, up +9.2% from that of the previous FY and the Company aims to increase net sales despite the expected appreciation of yen. Despite the absence of special factors such as the allowance for doubtful accounts that was recorded in the fourth quarter of the previous FY, the Company expects an increase in the impact of price hikes for main raw materials in the Toner Segment, an increase in depreciation burden associated with investments to implement the DX strategy, and an increase in expenses to improve compensation and the competitiveness of recruitment.

The results for the FY 2026 are expected to be significantly lower than the revised 8th Mid-Term Business Plan, which was revised in May 2023. Although the 8th Mid-Term Business Plan had performed well for the first two years of the plan due to demand in reaction to the COVID-19 pandemic, and the revised plan was announced in anticipation of a business recovery as an extension of the plan, the subsequent economic slowdown in China and the lower-than-expected penetration of EVs have resulted in sluggish growth. In addition, new products were affected by changes in content and delays due to inadequate reading of uncertainties. On the other hand, structural reforms proceeded smoothly, and the Company is now in a position to secure double-digit billion yen operating income, despite increased investment in development, and the launch of new products such as Flexible Planner Heater, which will lead to next fiscal year and beyond, is considered a major achievement.

We look forward to your continued support in the future.