Rengo (3941): FY2025 Results Summary — Sales Rise on Price Revisions; FY3/2027 Profit Rebound Forecast

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Rengo Co., Ltd. (TSE: 3941) reported consolidated results for the fiscal year ended March 2026 in its results presentation dated May 18, 2026. Net sales rose to 1,008.3 billion yen (101.5% year on year), while operating profit came in at 37.1 billion yen (99.1%) and profit attributable to owners of parent declined to 21.0 billion yen (72.5%). For the year ending March 2027, the company forecasts net sales of 1,090.0 billion yen and operating profit of 46.0 billion yen, with an annual dividend plan of ¥50 per share.

Note: Rengo’s presentation labels the fiscal year ended March 31, 2026 as FY3/2026 (its slide headers also use “FY2025”), and the year ending March 31, 2027 as FY3/2027. Tables in this article follow the company’s labels.

Consolidated Results (Full-Year Actual)

According to the presentation, the Japanese economy in FY3/2026 continued on a gradual trend toward recovery, supported by a pickup in personal consumption and capital investment, although the effects of U.S. trade policies persisted, and uncertainty increased following a conflict that arose in the Middle East at the end of February 2026. In response to changes in cost structures across the value chain — such as rising logistics and personnel expenses and capital investment for environmental measures — the Rengo Group revised prices for its paperboard, corrugated board, and folding carton products.

Item (billion yen)	FY3/2025	FY3/2026	Y/Y (%)	Diff.
Net sales	993.3	1,008.3	101.5	+ 15.0
Operating profit	37.4	37.1	99.1	– 0.3
Ordinary profit	39.2	37.4	95.5	– 1.8
Extraordinary gain/loss	3.6	5.0	138.3	+ 1.4
Profit attributable to owners of parent	29.0	21.0	72.5	– 8.0

Major extraordinary items in FY3/2026 included compensation income of 14.8 billion yen, gain on sales of investment securities of 11.8 billion yen, and subsidy income of 3.7 billion yen on the gain side, against an impairment loss of 19.1 billion yen and loss on reduction of noncurrent assets of 3.8 billion yen on the loss side.

Segment Results

In the Paperboard and Packaging-Related Business, sales and profit increased due to product price revisions, despite rising fixed costs and logistics expenses. The Flexible Packaging-Related Business posted higher sales and profit on product price revisions and an increase in sales volume, and the Heavy Duty Packaging-Related Business also grew sales and profit on price revisions. In the Overseas Business, net sales and profit decreased mainly due to worsening profitability in heavy duty corrugated packaging, affected by a sluggish automotive industry in Europe. In Other Businesses, net sales increased on price revisions in the transport business, but profit decreased due to rising personnel expenses and other factors.

Segment (billion yen)	Net sales FY3/2025	Net sales FY3/2026	Operating profit FY3/2025	Operating profit FY3/2026
Paper and Packaging-Related Business	514.7	521.9	23.4	25.7
Flexible Packaging-Related Business	181.6	191.5	5.1	9.4
Heavy Duty Packaging-Related Business	45.0	46.4	1.7	1.9
Overseas Business	213.1	209.1	4.9	-1.6
Other Businesses	38.9	39.4	2.3	1.7
Consolidated total	993.3	1,008.3	37.4	37.1

Paperboard production volume totaled 2,481 thousand tons (100.6% year on year), of which containerboard comprised 2,243 thousand tons (also 100.6%). Production volume totaled 4,231 million square meters for corrugated boards (a 0.1% year-on-year increase) and 3,597 million square meters for corrugated boxes (a 0.4% increase). In the Overseas Business, Tri-Wall Limited (Hong Kong) acquired 100% equity in Scart Imballaggi, a heavy duty packaging materials manufacturer in Italy, in July 2025, and in November 2025 a new plant of TRICOR Packaging & Logistics AG in Germany and a new plant of Fengyuan Tri-Wall Packaging (Shandong) Co., Ltd. in China commenced operations.

Cash Flows

Net cash provided by operating activities was 78.2 billion yen, and net cash used in investing activities was 70.7 billion yen. Free cash flow was 7.4 billion yen, an increase of ¥27.7 billion from the previous year (FY3/2025: -20.3 billion yen), due to an increase in cash inflows from operating activities and a reduction in cash outflows from investing activities. Net cash provided by financing activities was 8.8 billion yen, and cash and cash equivalents at end of period stood at 89.4 billion yen.

FY3/2027 Forecast

For the year ending March 2027, Rengo expects the Japanese economy to be supported by a gradual recovery due to improvements in employment and income conditions, while noting increasing uncertainty in the global economy, including the situation in the Middle East and impacts of U.S. policy trends. Increases in raw material, logistics, and labor costs are expected, but product price revisions agreed in the previous fiscal year are expected to support earnings.

Item	FY3/2026 results	FY3/2027 forecasts	Y/Y (%)	Difference
Net sales (bl. Yen)	1,008.3	1,090.0	108.1	+81.7 bl. Yen
Operating profit (bl. Yen)	37.1	46.0	124.0	+8.9
Ordinary profit (bl. Yen)	37.4	44.0	117.6	+6.6
Profit attributable to owners of parent (bl. Yen)	21.0	31.0	147.6	+10.0
EBITDA (bl. Yen)	99.8	113.0	113.2	+13.2
ROE	4.4 %	6.4 %	—	—

By segment, the Overseas Business is forecast to return to profitability with operating profit of 6.1 billion yen (a difference of + 7.7 billion yen from FY3/2026). ROE is projected at 6.4%, 2.0 percentage points higher than the previous year, and the D/E ratio is expected to remain below the financial soundness benchmark of 1.5 times, at 1.05 times.

Shareholder Returns

Rengo’s basic policy targets a payout ratio of 40% and a minimum DOE of 3%, aiming to ensure stable and earnings-linked shareholder returns, while considering and implementing flexible share buybacks as one option, taking into account free cash flow and investment opportunities. For the current fiscal year (FY3/2027), the company plans an interim dividend of ¥25 and a year-end dividend of ¥25, totaling ¥50 annually, with a projected payout ratio of 40.0%.

Medium-Term Plan / Topics

The Rengo Group has formulated its medium-term vision, Vision 120, covering the period through March 2030, in order to continue providing new and greater value into 2050 and beyond as “General Packaging Industry (GPI) Rengo,” offering innovative solutions that meet the packaging needs of various industries. Major capital investments planned for the current fiscal year include renovation of Rengo’s Takefu Plant, modification of the press section of the No. 1 containerboard machine at the Yashio Mill, facilities related to the bioethanol business at Taiko Paper Mfg., Ltd., and an LNG boiler at Marusan Paper Mfg. Co., Ltd.

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.