Dynapac Co.,Ltd.

Business Details

Composed of Dynapack Corporation's business sites and domestic/overseas consolidated subsidiaries. Manufactures and sells a wide variety of packaging materials, including Corrugated Board (Sheets & Cases) (mainstay), Printed Paper Containers & Decorative Corrugated Board, Flexible Packaging Materials (gravure-printed film, etc.), and paper cushioning materials (Himole). Domestically, processed foods and fruits/vegetables makers are the main customer base. Overseas, the company has production sites in Vietnam, China, Malaysia, and the Philippines, providing an integrated service from product development to manufacturing and sales as a "total packaging solution provider."

Recent Overview

Domestic sales volume rose 106.9% year-on-year, exceeding the industry average; overseas business also achieved higher sales and profit aided by newly consolidated entities

In the first quarter of the fiscal year ending December 2026 (January-March), sales in the Packaging Materials Business were ¥17,841 million (112.7% year-on-year), and segment profit was ¥730 million (111.5% year-on-year). Domestically, despite an increase in the goodwill amortization burden from companies grouped in the prior year and rising labor costs and material prices, the company secured earnings by curbing cost increases through the effect of the previous period's product price revisions and productivity improvements. Overseas, the earnings contribution from Hoang Hai Vietnam Packaging Joint Stock Company, acquired in August 2025, added to the profit increase. Goodwill amortization expense increased to ¥148 million, approximately 2.7 times the amount in the same period of the prior year.

Key Products

Growth Drivers

• Hoang Hai Vietnam Packaging Joint Stock Company, acquired in August 2025, was newly consolidated and contributed to sales and profit in the Vietnam overseas business
• Domestic sales volume achieved 106.9% year-on-year, exceeding the corrugated board industry average (101.5% year-on-year), maintaining a stable order volume
• The effect of product price revisions implemented in the previous period continued, absorbing rising labor costs and material prices to secure profitability
• Cost increase containment through productivity improvement measures succeeded, achieving higher sales and profit
• Expansion of the domestic and overseas business foundation through M&A, including Vietnam TKT Plastic Packaging Joint Stock Company and Marunaka Shiko Co., Ltd.

Risks

• The goodwill amortization burden from companies grouped in the prior year has increased (¥148 million cumulative in Q1, approximately 2.7 times year-on-year), and there is a risk of impairment materializing if the performance of acquired companies deteriorates
• Rising labor costs and material prices continue, posing a risk of pressure on earnings if the effect of price revisions fails to keep pace
• Uncertainty in U.S. trade policy and tariff trends poses a risk of impact on exports and overseas business
• Because the earnings structure depends on overseas sites in Vietnam, China, Malaysia, and other locations, geopolitical risk, foreign exchange fluctuations, and slowdowns in local economies could affect performance
• Weakness in some areas of personal consumption due to price increases poses a risk of dampening domestic demand for processed foods and fruits/vegetables
• Prolonged tensions in the Russia-Ukraine situation and continued geopolitical tensions in the Middle East could affect the cost structure through sustained high energy and food prices

Business Details

A segment developed to make effective use of the substantial real estate holdings of the Group. It primarily consists of land leasing to commercial facilities, etc., and building leasing of apartments, etc., conducting real estate leasing and management. The business entity is Dynapack Corporation (the parent company on a non-consolidated basis), and within the consolidated Group it is positioned as the second reporting segment after the Packaging Materials Business. Although the scale of sales is small, it is an extremely high-profitability segment with an operating profit margin exceeding 84%.

Recent Overview

In Q1 of the fiscal year ending December 2026, both sales and profit increased year-on-year

In the cumulative first quarter of the fiscal year ending December 2026 (January-March 2026), sales in the Real Estate Leasing Business were ¥92 million (104.2% year-on-year), and segment profit (operating profit) was ¥86 million (107.8% year-on-year). Both sales and profit exceeded the same period of the prior year, continuing to make a stable contribution to earnings. The operating profit margin remained at an extremely high level of approximately 93.4%.

Key Products

Growth Drivers

• Improvement in lease terms (rent revisions) upon renewal of some lease contracts
• A stable rental income base leveraging the substantial real estate assets held by the Group
• A high-profitability structure with minimal capital expenditure requirements and high cash generation efficiency

Risks

• Risk of declining occupancy rates due to lease cancellations or refusals to renew
• Risk of asset value decline due to fluctuations in the real estate market
• Impact on real estate valuations in a rising interest rate environment
• The segment scale is small (full-year sales of around ¥400 million), so its contribution to the Group as a whole is limited