NAKAMOTO PACKS CO.,LTD. H1 FY2027 Financial Results: Record-High Profits Driven by IT/Industrial Materials Growth and Full-Scale Operation of "PD Coater"
Sentiment Analysis
Overview: Record-High Sales and Operating Profit Achieved with Significant Growth
NAKAMOTO PACKS CO.,LTD. reported its consolidated financial results for the first half of the fiscal year ending February 2027 (March 2026 – August 2026). Net sales increased by 12.3% year-on-year to 28.068 billion yen , operating profit rose by 52.4% to 2.454 billion yen , ordinary profit grew by 59.4% to 2.499 billion yen , and net income attributable to owners of the parent climbed by 54.8% to 1.641 billion yen . All sales and profit metrics significantly exceeded initial forecasts, marking the highest performance for a first-half period on record.
Despite a challenging external environment characterized by persistently high prices for raw materials, ink, energy, and logistics, performance was bolstered by successful price pass-throughs and the growth of high-value-added products in the core food-related segment. Furthermore, a rapid recovery in demand for IT and industrial materials, driven by smartphone and semiconductor-related applications, further accelerated growth. The company also made steady progress in building its medium-to-long-term growth foundation, including the commencement of operations of the " PD Coater (Process Development Coater)" at the new Saitama plant in September 2026 for the development of next-generation materials.
1. H1 FY2027 Consolidated Financial Highlights
The key performance indicators for the first half compared to the previous year and the initial plan are as follows:
- Net Sales : 28.068 billion yen (+12.3% YoY, +10.1% vs. initial plan)
- Gross Profit : 5.579 billion yen (+19.6% YoY, +18.0% vs. initial plan, Gross Profit Margin 19.9%)
- Selling, General and Administrative (SG&A) Expenses : 3.124 billion yen (+2.4% YoY, -1.8% vs. initial plan, SG&A Ratio 11.1%)
- Operating Profit : 2.454 billion yen (+52.4% YoY, +58.6% vs. initial plan, Operating Profit Margin 8.7%)
- Ordinary Profit : 2.499 billion yen (+59.4% YoY, +51.3% vs. initial plan, Ordinary Profit Margin 8.9%)
- Net Income Attributable to Owners of the Parent : 1.641 billion yen (+54.8% YoY, +54.5% vs. initial plan, Net Profit Margin 5.8%)
- Capital Expenditures : 307 million yen (1.040 billion yen in the same period last year)
- Depreciation : 631 million yen (+4.8% YoY)
While the gross profit margin improved by 1.2 percentage points from 18.7% in the same period last year to 19.9% , the growth rate of SG&A expenses was limited to 2.4%, causing the SG&A ratio to decline from 12.2% to 11.1% . As a result, the operating profit margin expanded significantly from 6.4% in the same period last year to 8.7% .
2. Analysis of Operating Profit Variance
The detailed breakdown of the 843 million yen increase (+52.4%) in operating profit, from 1.611 billion yen in the previous year to 2.454 billion yen in the current period, is shown in the figure below.
Background and Analysis of Factors
As shown in the waterfall chart on Slide 4, the structure is such that the positive factors supporting profit growth significantly outweighed the negative factors of rising costs.
- Increase in Manufacturing Costs (-264 million yen) : Persistently high prices for raw materials, ink, utilities, and logistics weighed on profits.
- Sales Activities for New Acquisitions and Price Pass-throughs (+344 million yen) : Successful negotiations to correct selling prices in response to cost increases generated profit improvements that exceeded the cost hikes.
- Improvement in Production Efficiency (+339 million yen) : Optimization of factory operations and process improvements contributed to significant cost reductions.
- Profit Increase in IT/Industrial Materials (+401 million yen) : Increased shipment volumes of high-margin IT and industrial material products were the strongest drivers of company-wide profit.
- Effect of Optimizing Product Procurement (+93 million yen) : Reviews of procurement routes and optimization of purchasing terms proved successful.
- Increase in SG&A Expenses (-72 million yen) : Limited to a slight increase in administrative costs associated with business expansion, which did not hinder profit growth.
The combination of internal efforts in price pass-throughs and production efficiency, alongside the rapid growth in the high-value-added IT and industrial materials sector, was the primary driver behind the 50% increase in operating profit.
3. Rapid Profitability Growth Observed in Quarterly Trends
Looking at the quarterly trends, the performance growth in the second quarter (June–August) is particularly notable.
Background to Achieving Double-Digit Profit Margins in Q2
As evident from the quarterly graph on Slide 6, NAKAMOTO PACKS CO.,LTD. recorded record-high levels of sales and profit in both the first and second quarters of the fiscal year ending February 2027. Of particular note is the performance in the second quarter (2Q). Net sales reached 15.3 billion yen and operating profit reached 1.654 billion yen , with an operating profit margin of 10.8% , a sharp rise well above the range of the past few years (4%–7%). This was driven by the full-scale shipment of components for mobile devices such as smartphones and semiconductor-related products, as well as an increased sales mix of environmentally friendly and functional packaging materials, such as top seals and paper-based products. Profit margins improved dramatically from the first quarter (operating profit of 799 million yen, 6.3% margin) to the second quarter, confirming that the increased sales ratio of high-value-added products contributed to the boost in operating profit margin.
4. Details by Application (Segment)
The trends in net sales and gross profit by application for the first half are as follows:
(1) Food-Related (Largest Sales Composition)
- Net Sales : 18.146 billion yen (15.859 billion yen in the same period last year, +2.287 billion yen)
- Gross Profit : 2.692 billion yen (2.295 billion yen in the same period last year, Gross Profit Margin 14.8%)
- Trends : Existing packaging for dairy products such as yogurt and cheese, tofu packaging, packaging for processed meat products like sausages, and packaging for frozen foods performed steadily. Furthermore, food packs for agricultural products and packaging for marine processed products performed well, and container molding for convenience stores also progressed smoothly. From May to July, some front-loaded demand occurred due to supply concerns, supporting the increase in sales and profit.
(2) IT/Industrial Materials (High-Profit Driver)
- Net Sales : 5.234 billion yen (4.615 billion yen in the same period last year, +619 million yen)
- Gross Profit : 1.504 billion yen (1.035 billion yen in the same period last year, Gross Profit Margin 28.7% )
- Trends : The gross profit margin rose significantly from 22.4% in the same period last year to 28.7%. Mobile device-related products centered on smartphone applications (28.1% of composition), semiconductor-related products such as electronic component packaging materials (17.6% of composition), and industrial materials such as e-commerce-related supplies (32.8% of composition) all performed well. Although automotive-related products (interior materials) declined, the growth in high-margin electronic materials pushed segment profit up by 468 million yen compared to the same period last year.
(3) Living Materials
- Net Sales : 2.185 billion yen (2.365 billion yen in the same period last year, -179 million yen)
- Gross Profit : 916 million yen (977 million yen in the same period last year, Gross Profit Margin 41.9%)
- Trends : Due to a reduction in TV shopping airtime, sales of clothing compression bags, storage-related goods, and anti-mite products declined. Additionally, continued competition with Chinese manufacturers against the backdrop of the domestic economic downturn, the weak yen, and U.S. tariffs led to a decrease in both sales and profit (a decrease of 60 million yen on an operating profit basis). On the other hand, kitchen and hygiene-related goods such as kitchen mats and in-house brand products maintained steady performance.
(4) Building Materials
- Net Sales : 1.197 billion yen (889 million yen in the same period last year, +307 million yen)
- Gross Profit : 191 million yen (121 million yen in the same period last year, Gross Profit Margin 16.0%)
- Trends : High-value-added building materials featuring wallpaper printing and surface functional coatings increased, and the receipt of new orders contributed to a significant increase in sales and profit (an increase of 70 million yen on an operating profit basis).
(5) Medical/Pharmaceutical
- Net Sales : 812 million yen (807 million yen in the same period last year, +5 million yen)
- Gross Profit : 188 million yen (176 million yen in the same period last year, Gross Profit Margin 23.2%)
- Trends : While packaging for infusion solutions and over-the-counter drugs performed steadily, there were some raw material price hikes and declines in high-priced adhesive patch packaging and certain medical packaging bags, resulting in flat performance.
5. Financial Position and Cash Flows
Financial Position (As of the end of August 2026)
- Total Assets : 43.776 billion yen (+3.253 billion yen from the end of the previous fiscal year)
- Current assets were 27.794 billion yen (+2.553 billion yen from the end of the previous fiscal year). Cash and deposits (+870 million yen), trade receivables (+1.156 billion yen in total for notes and accounts receivable, etc.), and inventories (+793 million yen) increased.
- Non-current assets were 15.982 billion yen (+699 million yen from the end of the previous fiscal year). Acquisition of property, plant, and equipment is progressing.
- Total Liabilities : 20.126 billion yen (+1.696 billion yen from the end of the previous fiscal year)
- Short-term borrowings (+1.291 billion yen) and notes and accounts payable (+564 million yen) increased.
- Total Net Assets : 23.650 billion yen (+1.556 billion yen from the end of the previous fiscal year)
- Retained earnings increased by 1.311 billion yen due to the recording of interim net income, and foreign currency translation adjustments increased by 203 million yen.
- Net Interest-Bearing Debt : 460 million yen (+368 million yen from the end of the previous fiscal year)
Cash Flows (H1 FY2027 Cumulative)
- Cash flows from operating activities : +829 million yen (+949 million yen in the same period last year). Despite recording 2.499 billion yen in profit before income taxes, the increase in trade receivables (-1.134 billion yen) and inventories (-746 million yen) associated with business expansion created funding requirements.
- Cash flows from investing activities : -958 million yen (-720 million yen in the same period last year). The primary factor was expenditures for the acquisition of property, plant, and equipment (-1.181 billion yen).
- Free Cash Flow : -128 million yen (+228 million yen in the same period last year).
- Cash flows from financing activities : +902 million yen (-423 million yen in the same period last year). The company is flexibly funding growth investments and working capital through a net increase in short-term borrowings (+1.291 billion yen).
- Cash and Cash Equivalents at the end of the period : 8.421 billion yen (an increase of 851 million yen from the beginning of the period), ensuring sufficient liquidity.
6. Introduction of New "PD Coater" and Expansion into Next-Generation Batteries and Electronic Materials
The biggest highlight in the medium-to-long-term growth strategy of NAKAMOTO PACKS CO.,LTD. is the operation of the " PD Coater (Process Development Coater) ," with an eye toward R&D and mass production.
Importance and Background in Growth Strategy
As shown on Slide 26, the company is moving beyond the framework of conventional contract processing and is entering advanced industrial fields in earnest.
- Positioning of the PD Coater : It is positioned not merely for basic research, but as equipment for process development, such as coating methods, with an eye toward mass production. It serves as intermediate equipment (coating volume from 2kg, speed 1–20m/min, capable of intermittent coating) that bridges the gap between small-scale prototypes (multi-coater: coating volume from 0.1kg) and mass production machines (mass production coater: coating volume from 10kg, speed 10–250m/min), playing a role in significantly lowering the hurdles for customer mass production.
- Expansion of Entry Areas :
- Secondary Batteries : Functional coatings for all-solid-state batteries, lithium-ion batteries, sodium-ion batteries, and battery components.
- Semiconductors/Electronic Materials : Functional coatings, insulating materials, conductive materials, circuit formation, and fine pattern printing.
- Environment/Decarbonization : PFAS alternative materials, biomass materials, and recycling-compatible materials.
- Medical/Healthcare : Medical films, diagnostic materials, and materials for wearable devices.
- Roadmap and Numerical Targets : Operations began at the new Saitama plant at the end of September 2026 (STEP 1), promoting commissioned prototyping and in-house development. The company will proceed to actual machine verification (STEP 2) and then to mass production transfer (STEP 3). NAKAMOTO PACKS CO.,LTD. aims to be "No. 1 in Functional Material Contract Processing" and has set an ambitious goal of reaching 10 billion yen in sales in the next-generation battery business . The company also plans to open an R&D center within the new Saitama plant, targeting the fiscal year ending February 2027.
7. Key Initiatives: Environmental Management and SCM Reform
As a business structural reform for sustainable growth, the following key measures are being promoted:
(1) Promotion of Environmental Management and Monetization of RNSP
The company is promoting the monetization of RN Smart Packaging Co., Ltd. (RNSP) , a joint venture with Ricoh Company, Ltd.
- Label-less Thermal : Eliminates the need for labels by printing directly onto film, reducing plastic usage and SKU/inventory management tasks. Adoption is expanding for top-seal applications in convenience stores and frozen bento boxes.
- Sumarenji® : A proprietary packaging material that automatically steams during microwave heating by applying a special ink. It has been adopted for frozen bento boxes by Acca, Inc.
- Barrier Coated Paper "RESC®" : A high-performance barrier paper material that promotes the shift away from plastic and toward paper, with adoption progressing in cardboard for fruits and vegetables.
(2) Logistics Optimization and Cost Reduction through the Establishment of the SCM Department
In response to the "Logistics Efficiency Act" and the "2030 Logistics Problem," the company has established an SCM Department to promote changes in production processes and supply chain restructuring.
- Reduction of waiting and loading/unloading times through the introduction of a truck reservation system.
- Optimization of logistics "volume, distance, frequency, and loading rate" through the reorganization of production bases.
- The plan is to improve logistics productivity in stages, from legal compliance and base reorganization in 2026 (Step 1), to the introduction of a transport management system in 2027 (Step 2), the centralization of order-to-dispatch in 2028 (Step 3), and the redesign of hub-and-spoke bases in 2030 (Step 5).
8. Full-Year Earnings Forecast and Progress of Medium-Term Management Plan
FY2027 Full-Year Consolidated Earnings Forecast (Upward Revision Disclosed on September 14, 2026)
Based on the strong progress in the first half, the full-year earnings forecast has been revised upward from the initial plan.
- Net Sales : 55.0 billion yen (+10.8% YoY)
- Gross Profit : 10.274 billion yen (+12.4% YoY, Gross Profit Margin 18.7%)
- Operating Profit : 3.874 billion yen (+30.8% YoY, Operating Profit Margin 7.0%)
- Ordinary Profit : 4.0 billion yen (+31.0% YoY, Ordinary Profit Margin 7.3%)
- Full-Year Forecast for Net Income Attributable to Owners of the Parent : 2.566 billion yen (+17.9% YoY, Net Profit Margin 4.7%)
- Capital Expenditures (Plan) : 1.56 billion yen (+6.0% YoY)
- Depreciation (Plan) : 1.373 billion yen (+9.0% YoY)
- Assumed Exchange Rates : 142.0 yen/dollar, 20.1 yen/yuan
Points to Note and Outlook for the Second Half
In the second half, the company anticipates risks of additional increases in raw material and ink prices due to escalating tensions in the Middle East, as well as a reactionary decline in the front-loaded demand for food packaging seen in the first half. On the other hand, the company expects to achieve increased sales and profit by continuing steady orders for smartphone and semiconductor-related products, transitioning from prototyping to mass production through the operation of the PD Coater, and promoting the adoption of environmentally friendly packaging materials.
Medium-Term Management Plan 2027 and Long-Term Vision
In the "Medium-Term Plan 2027 (FY2027–FY2029)" promoted by the company, it has set a target of an ROE of 13% or higher .
- FY2027 (Revised Forecast): Net Sales 55 billion yen / Ordinary Profit 4.0 billion yen
- FY2028 (Target): Net Sales 56 billion yen / Ordinary Profit 4.0 billion yen
- FY2029 (Target): Net Sales 60 billion yen / Ordinary Profit 4.75 billion yen
- Long-Term Target : Net Sales 70 billion yen / Ordinary Profit 6.0 billion yen
NAKAMOTO PACKS CO.,LTD. is steadily generating cash from its stable revenue base, such as food-related products, while accelerating its shift to high-value-added areas such as next-generation batteries and semiconductor materials, leveraged by the PD Coater, and is steadily making progress toward achieving its medium-term plan targets.
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