Interim report
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Note : This document has been translated from a part of 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 . Consolidated Financial Results for the Three Months Ended June 30 , 2026 ( Under Japanese GAAP ) Company name : Nippon Paper Industries Co. , Ltd. Listing : Tokyo Stock Exchange Securities code : 3863 URL : https://www.nipponpapergroup.com/ Representative : Akira Sebe , President and Representative Director Inquiries : Ryo Koide , General Manager of Accounting & Budgeting Dept. Telephone : + 81-3-6665-1111 Scheduled date to commence dividend payments : - Preparation of supplementary material on financial results : Yes Holding of financial results briefing : Yes ( for institutional investors and investment analysts ) August 5 , 2026 FASE ( Yen amounts are rounded down to millions , unless otherwise noted . ) 1. Consolidated financial results for the three months ended June 30 , 2026 ( from April 1 , 2026 to June 30 , 2026 ) ( 1 ) Consolidated operating results ( cumulative ) ( Percentages indicate year - on - year changes . ) Three months ended June 30 , 2026 Net sales Millions of yen % 314,466 7.5 Operating profit Millions of yen 2,909 June 30 , 2025 Note : Comprehensive income 292,629 2.0 5,485 % ( 47.0 ) 32.6 Ordinary profit Millions of yen 2,509 5,551 % ( 54.8 ) 9.9 Profit attributable to owners of parent Millions of yen % ( 233 ) 1,905 For the three months ended June 30 , 2026 : For the three months ended June 30 , 2025 : ¥ 10,274 million [ - % ] ¥ ( 12,450 ) million [ - % ] Basic earnings per share Diluted earnings per share Three months ended June 30 , 2026 June 30 , 2025 Yen Yen ( 2.02 ) 16.50 ( 2 ) Consolidated financial position As of June 30 , 2026 March 31 , 2026 Reference : Equity As of June 30 , 2026 : Total assets Net assets Equity - to - asset ratio Millions of yen 1,759,255 1,738,479 Millions of yen % 547,597 29.3 540,507 29.2 ¥ 515,256 million ¥ 508,467 million As of March 31 , 2026 : —1—
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―2― 2. Cash dividends Annual dividends per share First quarter-end Second quarter-end Third quarter-end Fiscal year-end Total Yen Yen Yen Yen Yen Fiscal year ended - 5.00 - 10.00 15.00 March 31, 2026 Fiscal year ending - March 31, 2027 Fiscal year ending March 31, 2027 (Forecast) 5.00 - 10.00 15.00 Note: Revisions to the forecast of cash dividends most recently announced: None 3. Consolidated financial result forecasts for the fiscal year ending March 31, 2027 (from April 1, 2026 to March 31, 2027) (Percentages indicate year-on-year changes.) Net sales Operating profit Ordinary profit Profit attributable to owners of parent Basic earnings per share Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen Full year - - - - - - - - - Note: Revisions to the financial result forecast most recently announced: Yes The full year consolidated financial results forecast is currently undetermined, as it is difficult to reasonably calculate the forecast at this time. We will promptly disclose the forecast once a reasonable estimate becomes possible. For details, please refer to Sectio n 2 of the Appendices. * Notes (1) Significant changes in the scope of consolidation during the period: Yes Newly included: 2 companies( Diamond Trading Inc. and Nippon Paper Chemicals Europe Zrt. ) Excluded: - companies( ) (2) Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: None (3) Changes in accounting policies, changes in accounting estimates, and restatement (i) Changes in accounting policies due to revisions to accounting standards and other regulations: None (ii) Changes in accounting policies due to other reasons: None (iii) Changes in accounting estimates: None (iv) Restatement: None (4) Number of issued shares (common shares) (i) Total number of issued shares at the end of the period (including treasury shares) As of June 30, 2026 116,254,892 shares As of March 31, 2026 116,254,892 shares (ii) Number of treasury shares at the end of the period As of June 30, 2026 947,450 shares As of March 31, 2026 946,389 shares (iii) Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year) Three months ended June 30, 2026 115,307,880 shares Three months ended June 30, 2025 115,433,905 shares *We introduced the "Board Benefit Trust (BBT)", and have included our shares held by this trust in treasury stock, which is deducted from the calculation of the number of treasury shares at the end of the period and the average number of shares during the period. * Review of the Japanese-language originals of the attached consolidated quarterly financial statements by certified public accountants or an audit firm: None * Proper use of earnings forecasts, and other special matters
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―3― 1. Any statement in this document regarding future performance of the Company is based on the information available at the time of the announcement and certain assumptions judged to be reasonable. Actual performance may differ from forecasts due to a variety o f factors. 2. The support documentation will be posted on the following website. https://www.nipponpapergroup.com/english/ir/library/
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―4― (Appendices) 1. Consolidated Operating Results for the Three Months Ended June 30, 2026 (April 1, 2026 to June 30, 2026) Operating results by business segment are as follows: Paper and Paperboard: (Millions of yen) (Percentages indicate year-on-year changes.) Consolidated net sales 153,312 10.9% Consolidated operating income (loss) (144) The same period of previous year: (920) Daily-life Products: Consolidated net sales 126,637 8.5% Consolidated operating income (loss) 279 (90.7) % Energy: Consolidated net sales 8,482 (19.9) % Consolidated operating income (loss) 13 (97.8) % Wood Products and Construction Related: Consolidated net sales 18,382 (6.2) % Consolidated operating income (loss) 2,019 (32.9) % Note: The numbers parenthesized represent minus figures. 2. Consolidated financial result forecasts for the fiscal year ending March 31, 2027 (from April 1, 2026 to March 31, 2027) 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 of these events 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. For further details, please refe r to the “Notice of Revision to Consolidated Financial Results Forecast” released today, August 5, 2026. (Reference information) Significant Subsequent Events 1. Incident at a Consolidated Subsidiary At approximately 7:00 a.m. local time on May 26, 2026, a chemical tank used in pulp production collapsed at our consolidated subsidiary, Nippon Dynawave Packaging (Washington, U.S.A.). The incident involved 11 fatalities and 8 injuries. Production at the subsidiary has been suspended following the incident. 2. Impact on Y atsushiro Mill Due to the 2026 Kumamoto Earthquake that occurred on July 28, 2026, 9 fatalities have been confirmed at our Yatsushiro Mill (Yatsushiro, Kumamoto). Operations at the mill have been suspended following the incident, and we are currently assessing its impact. 3. Domestic unsecured corporate bonds for subscription At the meeting of the Board of Directors of the Company held on August 5, 2026, the Company made the resolution in relation to domestic unsecured corporate bonds for subscription. The summary is as follows. President of the Company is authorized to decide necessary items within the scope described down below when the Company solicits persons who subscribe for the bonds. (1) Total amount of issue: maximum ¥50 billion (multiple issuances within this amount is allowed) (2) Interest rate: maximum 4.5% per annum (3) Maturity: from 2 years up to 10 years (4) Issue timing: from August 5, 2026 to August 1, 2027 (5) Method of redemption: bullet repayment (6) Application of funds: capital investment, repayment of loans payable, etc. 4. Transfer of Bag Manufacturing Business at Consolidated Subsidiary The Company decided on August 5, 2026 (today) to transfer the Bag Manufacturing Business (the “Business”) of its consolidated subsidiary, Paper Australia Pty Ltd. (“Opal”) to A.C.N. 700 735 575 Pty Ltd (the "Buyer"), an affiliate of The Magan Group, a U.S. family office exclusively focused on investing in corporate divestitures. (1) Overview of the Transferee ①Company name A.C.N. 700 735 575 Pty Ltd ②Overview of the Business Manufacture and sale of heavy -duty paper sacks for food products (including milk powder and flour) and industrial applications
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―5― (including cement), paper bags for sugar and other products, and retail paper bags ③Reasons for the Business Transfer In the Medium-Term Management Plan 2030 announced on May 28, 2026, the Company identified “Balance Sheet Optimization,” “Decisive Execution of Structural Reform,” and “Profitability Improvement” as its core strategies and has been implementing initiatives to improve capital efficiency and achieve sustainable growth. The reform of Opal is one of the key measures under “Decisive Execution of Structural Reform.” To achieve profitability at an early stage, Opal plans to concentrate its management resources on its integrated containerboard manufacturing and corrugated packaging converting business in Australia and New Zealand (the “Integrated Corrugated Packaging Business”). In these circumstances, the Buyer proposed acquiring the Business, which is a non -core business, and Opal has now reached an agreement with the Buyer on the Business Transfe r. Going forward, in line with the reform's core policy of business selection and concentration, Opal will continue to focus its management resources on the Integrated Corrugated Packaging Business. The Company will continue to implement the measures set out in the Medium-Term Management Plan 2030, including the reform of Opal, to enhance the corporate value of the Group. ④Scheduled date of the Business Transfer September 1, 2026 (scheduled) ⑤Legal form Business transfer where the consideration is limited to cash. (2) Applicable reporting segment Daily-life Products segment
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―6― Consolidated Financial Statements Consolidated Balance Sheet (Millions of yen) As of March 31, 2026 As of June 30, 2026 Assets Current assets Cash and deposits 207,411 160,132 Notes and accounts receivable - trade 181,228 212,280 Merchandise and finished goods 119,966 119,784 Work in process 21,542 23,582 Raw materials and supplies 95,755 102,812 Other 40,221 42,304 Allowance for doubtful accounts (1,056) (1,135) Total current assets 665,069 659,760 Non-current assets Property, plant and equipment Buildings and structures 574,323 581,652 Accumulated depreciation (427,837) (431,702) Buildings and structures, net 146,486 149,950 Machinery, equipment and vehicles 2,254,128 2,269,801 Accumulated depreciation (1,919,540) (1,929,947) Machinery, equipment and vehicles, net 334,588 339,854 Land 209,404 211,198 Construction in progress 42,321 52,050 Other 121,966 133,896 Accumulated depreciation (65,849) (69,026) Other, net 56,116 64,869 Total property, plant and equipment 788,917 817,922 Intangible assets 11,647 11,805 Investments and other assets Investment securities 179,647 176,230 Other 93,455 93,794 Allowance for doubtful accounts (258) (258) Total investments and other assets 272,844 269,766 Total non-current assets 1,073,409 1,099,494 Total assets 1,738,479 1,759,255
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―7― (Millions of yen) As of March 31, 2026 As of June 30, 2026 Liabilities Current liabilities Notes and accounts payable - trade 135,711 155,368 Short-term borrowings 192,341 210,688 Current portion of bonds payable 30,000 - Income taxes payable 5,319 3,190 Other 99,169 105,476 Total current liabilities 462,541 474,722 Non-current liabilities Bonds payable 25,000 25,000 Long-term borrowings 610,911 606,567 Provision for environmental measures 5,905 4,719 Retirement benefit liability 7,921 8,057 Other 85,691 92,590 Total non-current liabilities 735,429 736,935 Total liabilities 1,197,971 1,211,658 Net assets Shareholders' equity Share capital 104,873 104,873 Capital surplus 216,393 216,393 Retained earnings 21,554 18,567 Treasury shares (1,972) (1,974) Total shareholders' equity 340,848 337,859 Accumulated other comprehensive income Valuation difference on available-for-sale securities 16,059 15,882 Deferred gains or losses on hedges 15,142 15,114 Foreign currency translation adjustment 102,866 113,528 Remeasurements of defined benefit plans 33,550 32,871 Total accumulated other comprehensive income 167,618 177,396 Non-controlling interests 32,040 32,341 Total net assets 540,507 547,597 Total liabilities and net assets 1,738,479 1,759,255
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―8― Consolidated Statements of Income and Comprehensive Income Consolidated Statement of Income (Millions of yen) For the three months ended June 30, 2025 For the three months ended June 30, 2026 Net sales 292,629 314,466 Cost of sales 243,519 265,370 Gross profit 49,110 49,095 Selling, general and administrative expenses Freight and incidental costs 20,066 21,008 Direct and indirect selling expenses 3,495 3,452 Salaries and allowances 11,497 12,518 Other 8,566 9,206 Total selling, general and administrative expenses 43,624 46,186 Operating profit 5,485 2,909 Non-operating income Interest income 337 443 Dividend income 1,053 1,166 Share of profit of entities accounted for using equity method 2,554 1,381 Foreign exchange gains 458 1,029 Other 740 598 Total non-operating income 5,144 4,619 Non-operating expenses Interest expenses 2,462 3,115 Long-term borrowings related expenses 1,165 - Other 1,450 1,904 Total non-operating expenses 5,078 5,019 Ordinary profit 5,551 2,509 Extraordinary income Gain on sale of investment securities 463 1,759 Insurance claim income 2,469 - Other 156 665 Total extraordinary income 3,090 2,424 Extraordinary losses Loss on retirement of non-current assets 137 981 Loss on suspension of operations 1,959 - Other 921 1,068 Total extraordinary losses 3,019 2,050 Profit before income taxes 5,622 2,883 Income taxes - current 1,764 1,170 Income taxes - deferred 1,233 1,350 Total income taxes 2,997 2,520 Profit 2,624 363 Profit attributable to non-controlling interests 719 596 Profit (loss) attributable to owners of parent 1,905 (233)
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―9― Consolidated Statement of Comprehensive Income (Millions of yen) For the three months ended June 30, 2025 For the three months ended June 30, 2026 Profit 2,624 363 Other comprehensive income Valuation difference on available-for-sale securities 1,547 (199) Deferred gains or losses on hedges (3,094) 120 Foreign currency translation adjustment (11,198) 11,258 Remeasurements of defined benefit plans, net of tax (721) (688) Share of other comprehensive income of entities accounted for using equity method (1,607) (579) Total other comprehensive income (15,075) 9,911 Comprehensive income (12,450) 10,274 Comprehensive income attributable to Comprehensive income attributable to owners of parent (12,140) 9,544 Comprehensive income attributable to non-controlling interests (310) 730