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NIPPON PAPER Q1 FY2027 / 3 FINANCIAL REVIEW August 5 , 2026 NIPPON PAPER INDUSTRIES CO . , LTD . TSE 3863
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Copyright © NIPPON PAPER INDUSTRIES CO., LTD. All rights reserved 2 Executive Summary Key Points of Q1 FY2027/3 Results Net sales Operating profit 314.5 〔Y on Y changes: +7.5%〕 2.9 〔Y on Y changes: -47.0%〕 FY2027/3 Forecast ◼ Q1 performance was generally in line with our plan. ◼ Net sales increased year-on-year, driven by the addition of consolidated subsidiaries and the positive impact of foreign exchange translation due to the yen's depreciation. ◼ Operating profit decreased overall, as the year-on-year profit growth in the Domestic business was offset by a decline in the Overseas business*. ◼ We have revised our full-year financial forecast for the fiscal year ending March 31, 2027, and designated it as undetermined. This decision follows an assessment of the circumstances relating to the tank collapse at the Nippon Dynawave Packaging (NDP) on May 26, 2026, and the extent of damage to the Nippon Paper Yatsushiro Mill due to the 2026 Kumamoto Earthquake on July 28, 2026. （¥billion ） * Our overseas consolidated subsidiaries have a fiscal year-end of December 31. Accordingly, the results for the first quarter of fiscal year 2026 reflect their performance from January to March.
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Consolidated Statement * Profit attributable to owners of parent ◼ Net sales increased year-on-year, driven by the addition of consolidated subsidiaries and the positive impact of foreign exchange translation resulting from the yen's depreciation. ◼ Operating profit declined overall. While the Domestic business achieved year-on-year profit growth due to cost reductions and price revisions implemented since the previous fiscal year, the Overseas business was negatively impacted by earnings declines at Opal and NDP. ◼ Despite recording a gain on the sale of investment securities, we reported a net loss of 0.2 billion yen Copyright © NIPPON PAPER INDUSTRIES CO., LTD. All rights reserved 3 Q1 FY2027/3 Results （¥billion ） Q1 FY2026/3 Results Q1 FY2027/3 Results Y on Y changes Amount % Net sales 292.6 314.5 21.9 7.5% Operating profit 5.5 2.9 -2.6 -47.0% Ordinary profit 5.6 2.5 -3.1 -54.8% Net income * 1.9 -0.2 -2.1 －
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Results by Business Segment Net sales Operating profit Q1 FY2026/3 Results Q1 FY2027/3 Results Y on Y changes Q1 FY2026/3 Results Q1 FY2027/3 Results Y on Y changes Paper and Paperboard 138.2 153.3 15.1 -0.9 -0.1 0.8 Daily-Life Products 116.7 126.6 9.9 3.0 0.3 -2.7 Energy 10.6 8.5 -2.1 0.6 0.0 -0.6 Wood Products and Construction -Related 19.6 18.4 -1.2 3.0 2.0 -1.0 Other 7.5 7.7 0.2 -0.2 0.7 0.9 Total 292.6 314.5 21.9 5.5 2.9 -2.6 Domestic 225.3 238.5 13.2 3.4 5.8 2.4 Overseas 67.3 76.0 8.7 4 2.1 -2.9 -5.0 Copyright © NIPPON PAPER INDUSTRIES CO., LTD. All rights reserved 4 Q1 FY2027/3 Results ◼ The Daily-Life Products Business, Energy Business, and Wood Products and Construction-Related Business saw decrease in profit. （¥billion ）
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Paper and Paperboard Business Daily-Life Products Business Volume, Sales Price 4.2 3.4 － 0.8 － Raw material and fuel prices -2.3 -1.5 Wood Chips -1.0, Wastepaper 0.5, Pulp 0.0, Oil -0.3, Coal 0.0, LNG 0.1, Chemicals, etc. -0.8 (Price 0.4, FOREX -1.9) -0.8 Wood Chips 0.0, Pulp 0.1, Coal -0.1, Chemicals, etc. -0.8 Cost reductions, etc. 0.2 0.6 Cost reductions 0.6、Permanent machines’ shutdown at the Shiraoi Mill and the Yatsushiro Mill 0.2, Labor costs -0.6, Logistics costs 0.4 -0.4 Cost reductions -0.1, Labor costs -0.3, Logistics costs 0.0 Others -4.0 -1.7 Overseas business 0.0, Depreciation 0.2, Retirement benefit expenses 0.1, Inventory value adjustment, etc. -2.0 -2.3 Overseas business -4.1, （Opal -1.7, NDP -2.3, TSP 0.1, NPCE -0.2）, Inventory value adjustment, etc. 1.8 Total -1.9 0.8 Domestic business 0.8, Overseas business 0.0 -2.7 Domestic business 1.4, Overseas business -4.1 Other businesses -0.7 Energy -0.6, Wood Products and Construction Related -1.0, Others 0.9 operating profit -2.6 Factors for Changes Copyright © NIPPON PAPER INDUSTRIES CO., LTD. All rights reserved 5 (¥billion) Q1 FY2027/3 Results
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Paper and Paperboard Business Net sales Operating profit Q1 FY2026/3 Results Q1 FY2027/3 Results Y on Y changes Q1 FY2026/3 Results Q1 FY2027/3 Results Y on Y changes 138.2 153.3 15.1 -0.9 -0.1 0.8 • Net sales increased due to the addition of consolidated subsidiaries. • Operating profit increased, despite headwinds from higher raw material and fuel costs due to the weak yen and rising labor costs, driven by cost reductions and the realized benefits of price revisions. Domestic • JTOy saw a slight year-on-year decline in profit, despite a recovery trend in sales volume, due to factors such as rising electricity costs caused by the cold wave. Copyright © NIPPON PAPER INDUSTRIES CO., LTD. All rights reserved 6 Q1 FY2027/3 Results Overseas (¥billion)
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Daily-Life Products Business 7 Q1 FY2027/3 Results • Household paper & Healthcare achieved growth in both revenue and profit, driven by solid sales volume and the realized benefits of price revisions. • The Packaging Processing and Chemicals reported a decline in revenue due to lower sales volume. Domestic Overseas • Net sales increased, primarily due to the positive impact of foreign exchange translation resulting from the yen's depreciation. • Opal experienced a decline in profit, as rising costs for raw materials, fuel, and labor outpaced the initial benefits of the price revisions that were implemented. • NDP reported a decline in profit due to the deteriorating supply-demand balance in the North American market. Operating profit (overseas) Volume & price 0.5 Raw material & fuel -0.8 Cost reduction 0.2 Fixed costs -1.2 Other -0.4 Volume & price -1.0 Raw material & fuel -0.2 Fixed costs -0.7 Other -0.4 Operating profit (domestic) Packaging processing 0.2 Chemical 0.3 Household paper & Healthcare 0.9 Y on Y changes: 1.4 Y on Y changes: -4.1 Opal -1.7 NDP -2.3 TSP 0.1 NPCE* -0.2 Net sales operating profit Q1 FY2026/3 Results Q1 FY2027/3 Results Y on Y changes Q1 FY2026/3 Results Q1 FY2027/3 Results Y on Y changes Domestic 58.5 58.8 0.3 2.4 3.8 1.4 Overseas 58.2 67.8 9.6 0.6 -3.5 -4.1 Total 116.7 126.6 9.9 3.0 0.3 -2.7 (¥billion) * Nippon Paper Chemicals Europe
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Net sales Operating profit Q1 FY2026/3 Results Q1 FY2027/3 Results Y on Y changes Q1 FY2026/3 Results Q1 FY2027/3 Results Y on Y changes 19.6 18.4 -1.2 3.0 2.0 -1.0 Energy Business / Wood Products and Construction Related Business Energy Business • Revenue and profit declined due to the early maitenance shutdown of the Nippon Paper Ishinomaki Energy Center. Wood Products and Construction Related Business • Revenue and profit declined due to fluctuations in vessel deployment at AMCEL. Net sales Operating profit Q1 FY2026/3 Results Q1 FY2027/3 Results Y on Y changes Q1 FY2026/3 Results Q1 FY2027/3 Results Y on Y changes 10.6 8.5 -2.1 0.6 0.0 -0.6 Copyright © NIPPON PAPER INDUSTRIES CO., LTD. All rights reserved 8 Q1 FY2027/3 Results (¥billion) (¥billion)
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Consolidated Statement Copyright © NIPPON PAPER INDUSTRIES CO., LTD. All rights reserved 9 FY2027/3 Forecast ⚫ We are currently assessing the circumstances relating to the collapse of a tank at Nippon Dynawave Packaging on May 26, 2026, and the extent of damage to our Yatsushiro Mill as a result of the 2026 Kumamoto Earthquake on July 28, 2026. However, as it is currently difficult to reasonably estimate the impact on the Group’s financial results, we have revised our full-year financial forecast for the fiscal year ending March 31, 2027, and designated it as undetermined. ⚫ We will promptly disclose an updated forecast once a reasonable estimate becomes possible.
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Revitalizing Opal Copyright © NIPPON PAPER INDUSTRIES CO., LTD. All rights reserved 10 Decisive Execution of Structural Reforms • Decided to exit the non-core bag business through a divestiture. ① Rationalization of Low-Profitability Businesses • The decision was made and implementation began in March 2026. • As part of a company-wide organizational restructuring, Opal is evaluating and implementing workforce reductions totaling approximately 60 positions, with completion targeted by the end of 2026. • As of June 30, 2026, 50 employees had departed. ③ Workforce Restructuring Across Opal • On July 30, 2026, Opal announced its intention to undertake an organizational restructuring at the Maryvale Mill. • Under the applicable enterprise agreement, consultations have begun with unions and affected employees on the proposed reduction of 84 positions. • The related employee departures are expected by December 2026. ② Workforce Restructuring at the Maryvale Mill Progress on Key Initiatives to Accelerate Opal’s Return to Profitability Overview of the Bag Business Business Activities Manufacture and sale of heavy-duty paper sacks and other paper bags used to package milk powder, flour, cement and other products, as well as retail paper bags Net sales Approx. AUD 55 million (FY2025/12) Operating profit Approx. AUD -8 million (FY2025/12) • Accelerate the allocation of resources to the integrated corrugated packaging business. • This restructuring is expected to generate annual fixed-cost savings of approximately AUD 12 million.*1 • This restructuring is expected to generate annual fixed-cost savings of approximately AUD 12 million.*1 *1 Excludes one -time costs and expenditures, including severance payments.
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Reference Materials
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Sales Volume (Paper & Paperboard) * Copyright © NIPPON PAPER INDUSTRIES CO., LTD. All rights reserved 12 * Sales Volume Total of Nippon Paper Industries Co., Ltd., Nippon Paper Papylia Co., Ltd., Nippon Paper Crecia Co., Ltd., and Shin Tokai Paper Co., Ltd. (excluding sanitary paper) volume: ’000 tonnes Newsprint 127 120 -6.1% Printing paper 216 202 -6.4% Business communication paper 88 84 -4.3% Others 76 79 3.9% Domestic sales (paper) 507 484 -4.4% Export (paper) 43 41 -4.8% Paper total 549 525 -4.4% Container board 378 395 4.5% Paperboard for paper container and others 78 76 -2.6% Domestic sales (paperboard) 456 471 3.3% Export (paperboard) 28 40 41.0% Paperboard total 484 511 5.5% Grand total (paper and paperboard) 1,034 1,036 0.2% FY2026/3 1Q FY2027/3 1Q Against FY26/3 1Q
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58.7 63.4 66.5 66.3 64.2 66.6 63.2 2019 2020 2021 2022 2023 2024 2025 1Q 2025 2026 1Q 2026 Forecast 16.0 70.6 57.9 58.1 86.0 60.7 52.4 60.6 2019 2020 2021 2022 2023 2024 2025 Q1 2025 2026 1Q 2026 Forecast Capital expenditure, Depreciation 13 Capital expenditure* Depreciation （FY） Copyright © NIPPON PAPER INDUSTRIES CO., LTD. All rights reserved * Including construction in progress. (¥billion) (¥billion) （FY） TBD12.3 27.1 15.9 TBD
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Net Sales Trends by Business Segment Copyright © NIPPON PAPER INDUSTRIES CO., LTD. All rights reserved 14 FY2026/3 FY2027/3 Q1 Q2 Q3 Q4 Q1 Paper and Paperboard 138.2 136.0 144.5 139.2 153.3 Daily-Life Products 116.7 122.5 121.2 121.6 126.6 Energy 10.6 12.2 8.6 11.8 8.5 Wood Products and Construction Related 19.6 18.3 17.8 20.8 18.4 Others 7.5 7.6 8.2 9.7 7.7 Total 292.6 296.6 300.3 303.1 314.5 (¥billion)
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Operating profit Trends by Business Segment Copyright © NIPPON PAPER INDUSTRIES CO., LTD. All rights reserved 15 FY2026/3 FY2027/3 Q1 Q2 Q3 Q4 Q1 Paper and Paperboard -0.9 -0.6 1.3 0.8 -0.1 Daily-Life Products 3.0 -0.6 1.8 3.0 0.3 Energy 0.6 1.1 0.1 1.5 0.0 Wood Products and Construction Related 3.0 2.3 1.6 3.1 2.0 Others -0.2 1.3 1.2 1.8 0.7 Total 5.5 3.5 6.0 10.2 2.9 (¥billion)
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Copyright © NIPPON PAPER INDUSTRIES CO., LTD. All rights reserved 16 * "Bitoko-shi" paper is included in coated paper. Domestic Shipment and Import / Export Volume(Paper& Paperboard, Q1 FY2027/3 Results) Reference (Domestic) Source: Japan Paper Association, Current Survey of Production by the Ministry of Economy, Trade Statistics of Japan
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Reference (Domestic) Copyright © NIPPON PAPER INDUSTRIES CO., LTD. All rights reserved 17 80% 90% 100% 110% 120% 23/10 24/4 24/10 25/4 25/10 26/4 Paper Paperboard Imports of Coated Paper 80% 90% 100% 110% 120% 23/10 24/4 24/10 25/4 25/10 26/4 Household tissue Toilet paper rolls Towel paper Production of sanitary paper (YOY) 0 5 10 15 20 23/10 24/4 24/10 25/4 25/10 26/4 (‘000 tons) Domestic shipment of paper industry (YOY) Source: Japan Paper Association, Current Survey of Production by the Ministry of Economy, Trade Statistics of Japan
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90 100 110 120 130 140 150 160 23/10 24/4 24/10 25/4 25/10 26/4 Coated paper Linerboard Household tissue (CY2020＝100) Reference (Domestic) Copyright © NIPPON PAPER INDUSTRIES CO., LTD. All rights reserved 18 0 150 300 450 600 23/10 24/4 24/10 25/4 25/10 26/4 Merchants Manufacturers (‘000 tons) 0 200 400 600 800 23/10 24/4 24/10 25/4 25/10 26/4 Manufacturers (‘000 tons) Source: Japan Paper Association, Bank of Japan(Corporate Goods Price Index) Containerboard inventoryCoated paper inventoryPrice trends by products
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0 10 20 30 40 50 20/4 21/4 22/4 23/4 24/4 25/4 26/4 (¥/kg) Source: Wastepaper Revitalization Promotion Centre, Trade Statistics of Japan, Nihon Keizai Shimbun Copyright © NIPPON PAPER INDUSTRIES CO., LTD. All rights reserved 19 ONP(Export) 0 10 20 30 40 50 20/4 21/4 22/4 23/4 24/4 25/4 26/4 (¥/kg) OCC (Export) 0 30 60 90 120 150 20/4 21/4 22/4 23/4 24/4 25/4 26/4 (US$/BL) Crude oil Reference
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Copyright © NIPPON PAPER INDUSTRIES CO., LTD. All rights reserved 20Copyright © NIPPON PAPER INDUSTRIES CO., LTD. All rights reserved 20 〈Disclaimer〉 Any statements in this presentation document, other than those of historical fact, are forward-looking statements about the future performance of Nippon Paper Industries Co., Ltd., and its Group companies. These statements are based on management's assumptions and beliefs in light of information currently available and involve risks and uncertainties. Actual results may differ materially from these forecasts. This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. The NIPPON PAPER GROUP aims to contribute to better living and cultural progress everywhere it does business.