HAGIHARA INDUSTRIES INC.

Business Details

The core segment accounting for approximately 85% of the Group's net sales. The company manufactures and sells film, Genshi, cloth, Lamicloth, and their secondary products (Blue Sheets and Sandbags, flexible container bags, artificial turf yarn, Baruchip (Concrete Reinforcement Fiber), etc.). In addition to domestic manufacturing sites, the business operates globally through its Indonesian subsidiary (Hagihara West Java Industries), U.S. subsidiary, Brazilian subsidiary, and domestic subsidiary (Toyo Heisei Polymer Co., Ltd.), among others.

Recent Overview

Driven by agricultural materials, flexible container bags, and Baruchip, H1 results showed higher sales and higher profit

In the Synthetic Resin Processed Products Business for H1 FY2026 (ending October 2026) (November 2025 to April 2026), net sales were ¥13,344 million (up 1.7% year on year) and operating income was ¥652 million (up 3.4% year on year). While Genshi for agricultural materials that captured heat-shielding demand, flexible container bag-related products, and Baruchip performed well, Blue Sheets and Sandbags for construction and civil engineering remained weak, and Lamicloth saw a decrease in sales due to the lingering effects of U.S. tariff issues. The absence of the core system update expense burden recorded in the prior period also contributed to the profit increase.

Key Products

Growth Drivers

• Growing demand for heat-shielding Genshi and heat-shielding sheets for agricultural materials (shift to high-performance sheets driven by record heat)
• Revival of Baruchip sales to overseas mining customers and increased sales at the Indonesian subsidiary
• Development of the North American market through the ramp-up of Meltack production at the U.S. subsidiary (Hagihara Industries McAllen)
• Continued capture of demand for flexible container bag-related products following the revival of large customer transactions
• Expansion into the environmental field through commercialization of the horizontal blue sheet recycling initiative "Re VALUE+"
• Expansion of high-performance products and environmental business under the new medium-term management plan (FY2026-FY2028, ending October 2028)

Risks

• Continued weak demand related to construction and civil engineering leading to sluggish sales of Blue Sheets and Sandbags, etc.
• Decline in demand and buying restraint for Lamicloth and Meltack destined for North America due to U.S. trade policy (tariff issues)
• Deterioration in Baruchip profitability due to intensifying overseas price competition
• Decline in domestic demand associated with rising prices and labor shortages
• Profit pressure from increased depreciation expenses associated with the operation of new equipment
• Increased costs due to rising raw material prices caused by yen depreciation

Business Details

The company, together with Hagihara Machinery Technology (Shanghai) Co., Ltd. and Hagihara Industries (Thailand) Co., Ltd., manufactures, sells, installs, and provides after-sales service for various industrial machinery, including Slitters (Film, Paper, Metal Foil), Winders, and Extrusion-related Equipment (Screen Changers, etc.). Main customers include packaging material manufacturers, film manufacturers, and secondary battery-related manufacturers. The business is mainly a build-to-order model that captures capital investment demand from domestic and overseas manufacturers, and is also expanding into new areas such as the environmental and recycling fields.

Recent Overview

Net sales decreased 27.5% due to weakness in the Chinese market and a rebound decline from large-scale projects, while operating income decreased only 2.5%

In the Machinery Products Business for H1 FY2026 (ending October 2026) (November 2025 to April 2026), net sales were ¥2,376 million (down 27.5% year on year) and operating income was ¥262 million (down 2.5% year on year). The main causes were weak capital investment demand in the Chinese display and flexible packaging materials markets for film slitters, and a rebound decline following a large-scale project in the prior period for paper slitters. Meanwhile, slitters equipped with automation functions and extrusion-related equipment for secondary battery material manufacturers performed well. One unit of metal foil slitter was sold. While some orders are currently being deferred due to investment postponements related to the situation in the Middle East, many requests for trial operation demonstrations have been received in the recycling-related area.

Key Products

Growth Drivers

• Expansion of orders for metal foil slitters (technology-transferred products from IHI Logistics & Machinery Corporation, with additional orders received following delivery of the first unit)
• Continued demand for extrusion-related equipment from secondary battery material manufacturers
• Capture of new demand related to plastic recycling (numerous requests for trial operation demonstrations)
• Market development for cleaning equipment applying horizontal blue sheet recycling technology
• Order acquisition driven by the competitive advantage of slitter models with automation functions
• Sales and profit growth targets for the Machinery Products Business under the new medium-term management plan (FY2026-FY2028, ending October 2028)

Risks

• Prolonged weakness in capital investment demand in the Chinese display market and flexible packaging materials market affecting film slitters
• Risk of timing mismatches in sales recognition due to the build-to-order business model (rebound decline from large-scale projects)
• Risk of customers postponing capital investment due to the impact of the situation in the Middle East
• Decline in customers' capital investment appetite due to the impact of U.S. trade policy (tariff issues), etc.
• Prolonged demand weakness due to capital investment restraint by film manufacturers and packaging material manufacturers
• Structural decline in demand for extrusion-related equipment due to saturation of the screen changer market