Earnings Briefing for the Fiscal Year Ending June 2026 (Transcript) | ENVIPRO HOLDINGS Inc. (5698) timely disclosure

Worth reading

58In focus

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Direction

Mixed performance

Direction inferred from the company’s description.

Scale

16.3

% (year-on-year decline in operating profit for the fiscal year ending June 2027)

Wording

Conditional

How definitive the wording is.

Contents of this document

Earnings briefing transcriptFull fiscal year ended June 202612 items taken from the company’s own explanation

Financial Results Figures (The key points of this material are explained below)

Net Sales¥44.43 billion-9.5%

Operating profit¥3.224 billion+231.6%

Ordinary income¥3.582 billion+194.6%

Net income¥2.423 billion+106.2%

Full-year earnings forecast

Handling volume

550,000 tonnes

Net Sales

¥49.0 billion

Operating profit

¥2.7 billion

Ordinary income

¥3.1 billion

Profit attributable to owners of the parent

¥2.1 billion

ROE

11.1 %

What the company explained in this material

Key points of the Q&AKey questions raised by investors at the briefing and the company's answers

Profit growth was driven by more advanced sorting technology and the tailwind from higher metal prices. The company has jointly developed AI-enabled equipment with Earth Technica for approximately 4 years.
The fire at the battery recycling business resulted in inventory losses and other impacts, and the company recognized an extraordinary loss of ¥130 million. Production capacity constraints and disaster insurance proceeds have been incorporated into the current fiscal year's forecast. The timing of restoration and alternative processing contractors are under discussion.
The projected cut in dividends so soon after the upward revision to the previous fiscal year's earnings forecast and dividend increase reflects the incorporation of production capacity constraints and other impacts from the fire into the current fiscal year's forecast.
The new battery recycling plant is planned to have processing capacity of more than 7,000 tonnes, compared with current capacity of approximately 2,400-2,700 tonnes. The equipment has been largely determined, while land negotiations are ongoing.

Breakdown of Factors Affecting the ChangeReasons cited by the Company for the change in the figures.

Variance in buying and selling pricesPlus ¥2.335 billion
Variance in equity-method investment gainsPlus ¥123 million
Personnel expense variance (forecast for the fiscal year ending June 2027)Minus ¥340 million
Equipment expense variance (forecast for the fiscal year ending June 2027)Minus ¥224 million

Assumptions Underlying the Business OutlookThe assumptions used by the company in preparing its forecast.

Market conditions are assumed to remain at a certain level. No specific assumptions are stated in the source text.

New initiatives

Improve the productivity and black mass recovery rate of existing equipment in the lithium-ion battery recycling business
Plan for a new plant targeting processing capacity of more than 7,000 tonnes
Expand the battery collection network through group companies and external partners
Increase production capacity for rubber mats made with waste tire chips and waste rubber
Launch colored rubber chips for artificial turf incorporating recycled plastic
Joint development of AI-enabled equipment with Earth Technica

Key KPIsA metric the company considers important as a management benchmark.

Consolidated handling volume491,000 tonnes
Year on year against the same period last yearDown 19.6%
Contribution margin¥12.268 billion
Year on year against the same period last yearUp 24.2%
EBITDA¥4.624 billion
Year on year against the same period last yearUp 97.2%
ROE (forecast for the fiscal year ending June 2027)11.1 %

Unit price and quantity metricsThese figures show sales broken down by price and volume.

Handling volume491,000 tonnes
Year on year against the same period last yearDown 19.6%
Average steel scrap price¥45,616/tonne
Prior-year period¥42,732/tonne

Segment results

Resource-Circulation Business
Handling volume239,000 tonnes
Net Sales¥23.94 billion
Segment profit¥2.627 billion
Profit in the previous fiscal year¥1.159 billion
Year on year against the same period last yearMore than 2x
Global-trading business
Handling volume344,000 tonnes
Net Sales¥24.73 billion
Segment profit¥703 million
Profit in the previous fiscal year¥269 million
Year on year against the same period last yearImproved substantially
Lithium-ion Battery Recycling Business
Net Sales¥2.641 billion
Segment profit¥704 million
Year on year against the same period last yearMore than tripled from the previous fiscal year
Other businesses
Net Sales¥450 million
Segment profit¥40 million

Financial targets

ROE

Forecast for the fiscal year ending June 202711.1 %

DOE floor

2.5 %

Risk amount incorporated into the outlookThe amount representing the range of variation the company expects in its forecast.

Disaster insurance proceeds have been estimated approximately and incorporated into the forecast, but the amount is Not disclosed. The continued production capacity constraints have also been incorporated.

Annual Dividend

Current fiscal year forecast¥22 per share

Previous fiscal year year-end¥25 per share

Payout ratio

Current fiscal year forecast29.9%

Previous period29.4%

DOE

Current fiscal year forecast3.1%

Previous period3.8%

Acquisition of treasury shares

Conducted in the previous fiscal year¥172 million

Contents of this document
Item	Details
Document type	Earnings briefing transcript
Fiscal Period Covered	Full fiscal year ended June 2026
Net Sales	¥44.43 billion (YoY -9.5%)
Operating profit	¥3.224 billion (YoY +231.6%)
Ordinary income	¥3.582 billion (YoY +194.6%)
Net income	¥2.423 billion (YoY +106.2%)
Full-year earnings forecast	Handling volume 550,000 tonnes / Net Sales ¥49.0 billion / Operating profit ¥2.7 billion / Ordinary income ¥3.1 billion / Profit attributable to owners of the parent ¥2.1 billion / ROE 11.1 %
Segment results	Segment Resource-Circulation Business / Handling volume 239,000 tonnes / Net Sales ¥23.94 billion / Segment profit ¥2.627 billion / Profit in the previous fiscal year ¥1.159 billion / Year on year against the same period last year More than 2x, Segment Global-trading business / Handling volume 344,000 tonnes / Net Sales ¥24.73 billion / Segment profit ¥703 million / Profit in the previous fiscal year ¥269 million / Year on year against the same period last year Improved substantially, Segment Lithium-ion Battery Recycling Business / Net Sales ¥2.641 billion / Segment profit ¥704 million / Year on year against the same period last year More than tripled from the previous fiscal year, Segment Other businesses / Net Sales ¥450 million / Segment profit ¥40 million
Breakdown of Factors Affecting the Change	Factors Variance in buying and selling prices / Amount Plus ¥2.335 billion, Factors Variance in equity-method investment gains / Amount Plus ¥123 million, Factors Personnel expense variance (forecast for the fiscal year ending June 2027) / Amount Minus ¥340 million, Factors Equipment expense variance (forecast for the fiscal year ending June 2027) / Amount Minus ¥224 million
Key KPIs	Indicator Consolidated handling volume / Value 491,000 tonnes / Year on year against the same period last year Down 19.6%, Indicator Contribution margin / Value ¥12.268 billion / Year on year against the same period last year Up 24.2%, Indicator EBITDA / Value ¥4.624 billion / Year on year against the same period last year Up 97.2%, Indicator ROE (forecast for the fiscal year ending June 2027) / Value 11.1 %
Unit price and quantity metrics	Indicator Handling volume / Value 491,000 tonnes / Year on year against the same period last year Down 19.6%, Indicator Average steel scrap price / Value ¥45,616/tonne / Prior-year period ¥42,732/tonne
Assumptions Underlying the Business Outlook	Market conditions are assumed to remain at a certain level. No specific assumptions are stated in the source text.
Risk amount incorporated into the outlook	Disaster insurance proceeds have been estimated approximately and incorporated into the forecast, but the amount is Not disclosed. The continued production capacity constraints have also been incorporated.
Financial targets	ROE 11.1 % / DOE floor 2.5 %
Annual Dividend	Current fiscal year forecast ¥22 per share / Previous fiscal year year-end ¥25 per share / Interim and Year-End Breakdown Not disclosed
Payout ratio	Current fiscal year forecast 29.9% / Previous period 29.4% / DOE Current fiscal year forecast 3.1% / Previous period 3.8%
Acquisition of treasury shares	Amount ¥172 million / Number of Shares Not disclosed / Period Not disclosed / Subject Conducted in the previous fiscal year
Key points of the Q&A	Profit growth was driven by more advanced sorting technology and the tailwind from higher metal prices. The company has jointly developed AI-enabled equipment with Earth Technica for approximately 4 years., The fire at the battery recycling business resulted in inventory losses and other impacts, and the company recognized an extraordinary loss of ¥130 million. Production capacity constraints and disaster insurance proceeds have been incorporated into the current fiscal year's forecast. The timing of restoration and alternative processing contractors are under discussion., The projected cut in dividends so soon after the upward revision to the previous fiscal year's earnings forecast and dividend increase reflects the incorporation of production capacity constraints and other impacts from the fire into the current fiscal year's forecast., The new battery recycling plant is planned to have processing capacity of more than 7,000 tonnes, compared with current capacity of approximately 2,400-2,700 tonnes. The equipment has been largely determined, while land negotiations are ongoing.
New initiatives	Improve the productivity and black mass recovery rate of existing equipment in the lithium-ion battery recycling business, Plan for a new plant targeting processing capacity of more than 7,000 tonnes, Expand the battery collection network through group companies and external partners, Increase production capacity for rubber mats made with waste tire chips and waste rubber, Launch colored rubber chips for artificial turf incorporating recycled plastic, Joint development of AI-enabled equipment with Earth Technica

Items this document does not state (12)

Gross Profit MarginOperating profit marginSelling, general and administrative expensesResults for the three months of the current quarterProgress against full-year forecastSelf-assessment against the planNumber of stores and locationsNumber of employeesMedium-term management plan targetsCapital expendituresOrders received and order backlogMarket Size / Share

These are items the company does not state in this document. We do not leave them blank, nor fill them in from other sources or by inference.

The reasons the company gives

The company's own explanation, not something inferred from the numbers.

The decline in revenue for the fiscal year ended June 2026 resulted from the application of revised revenue recognition standards following changes to certain transaction structures. The increase in profit was driven by structural reforms, advances in sorting technology, stronger recovery and sales of high-value-added products, and higher prices for key metals. Factors behind the projected decline in profit for the fiscal year ending June 2027 include continued production capacity constraints caused by a fire at a processing contractor in the lithium-ion battery recycling business, and the assumption that margins will not expand from higher metal prices as they did in the previous fiscal year.

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