Deteriorating Sales Mix and Declining Profit Margins at the French Subsidiary

「As of the end of March 2026, the subsidiary had negative net worth of ¥4,605 million, and the Company recorded an additional ¥1,595 million as an allowance for doubtful accounts during the fiscal year. As a result, the impairment loss recorded by the Company on its shares in the associate totaled ¥1,820 million, while the allowance for doubtful accounts recorded against loans to the subsidiary totaled ¥4,605 million.」

「The Company has made a capital investment of €1 million in and provided loans of €32 million to its French subsidiary, NP ROLPIN SAS. However, the deviation from the earnings plan under the business restructuring plan has been greater than expected. As of the end of September 2025, the subsidiary had negative net worth of ¥3,577 million, and the Company recorded an additional ¥404 million as an allowance for doubtful accounts, bringing the total additional amount recorded during the fiscal year to ¥567 million. As a result, the allowance for doubtful accounts recorded against loans to the subsidiary totaled ¥3,577 million.」

「The Company has made a capital investment of €1 million in and provided loans of €25 million to its French subsidiary, NP ROLPIN SAS. However, the deviation from the earnings plan under the business restructuring plan has been greater than expected. As of the end of September 2024, the subsidiary had negative net worth of ¥2,013 million, and the Company recorded an additional ¥318 million as an allowance for doubtful accounts, bringing the total additional amount recorded during the fiscal year to ¥750 million. As a result, the allowance for doubtful accounts recorded against loans to the subsidiary totaled ¥2,013 million.」

「The Company has made a capital investment of €1 million in and provided loans of €22 million to its French subsidiary, NP ROLPIN SAS. However, the deviation from the earnings plan under the business restructuring plan has been greater than expected. As of the end of March 2024, the subsidiary had negative net worth of ¥1,263 million, and the Company recorded an additional ¥244 million as an allowance for doubtful accounts, bringing the total additional amount recorded during the fiscal year to ¥740 million.」

「The Company has made a capital investment of €1 million in and provided loans of €14 million to its French subsidiary, NP ROLPIN SAS. However, the deviation from the earnings plan under the business restructuring plan has been greater than expected. As of the end of December 2023, the subsidiary had negative net worth of ¥1,018 million, and the Company recorded an additional ¥216 million as an allowance for doubtful accounts, bringing the total additional amount recorded during the fiscal year to ¥495 million. As a result, the impairment loss recorded by the Company on its shares in the associate totaled ¥1,820 million, while the allowance for doubtful accounts recorded against loans to the subsidiary totaled ¥1,018 million.」

「The Company has made a capital investment of €1 million in and provided loans of €12 million to its French subsidiary, NP ROLPIN SAS. However, the deviation from the earnings plan under the business restructuring plan has been greater than expected. As of the end of September 2023, the subsidiary had negative net worth of ¥801 million, and the Company recorded an additional ¥230 million as an allowance for doubtful accounts, bringing the total additional amount recorded during the fiscal year to ¥279 million. As a result, the impairment loss recorded by the Company on its shares in the associate totaled ¥1,820 million, while the allowance for doubtful accounts recorded against loans to the subsidiary totaled ¥801 million.」

「As of the end of June 2023, the subsidiary had negative net worth of ¥571 million, and the Company recorded an additional ¥48 million as an allowance for doubtful accounts. As a result, the impairment loss recorded by the Company on its shares in the associate totaled ¥1,820 million, while the allowance for doubtful accounts recorded against loans to the subsidiary totaled ¥571 million.」

「As a result, although the subsidiary's net assets under French accounting standards had recovered as of the end of December 2022, it had negative net worth of ¥522 million as of the end of March 2023. The Company therefore recorded an additional ¥439 million as an allowance for doubtful accounts, bringing the total additional amount recorded after the above financial support to ¥522 million.」

「Accordingly, as of the end of December 2022, the subsidiary's net assets under French accounting standards had recovered, but its adjusted net assets remained negative by ¥83 million. As the difficult business environment continues, the Company newly recorded ¥83 million as an allowance for doubtful accounts.」

「The Company has made a capital investment of €14 million in and provided loans of €34 million to its French subsidiary, NP ROLPIN SAS. However, the deviation from the earnings plan under the business restructuring plan has been greater than expected. As of the end of September 2022, the subsidiary had negative net worth of ¥4,473 million, and the Company recorded an additional ¥359 million as an allowance for doubtful accounts, bringing the total additional amount recorded during the fiscal year to ¥948 million.」

「The company has made capital investments of €14 million in and provided loans of €32 million to NP ROLPIN SAS, its French subsidiary. However, the gap between the profit plan in the turnaround plan and actual performance had become wider than expected. As of the end of June 2022, the subsidiary had negative net assets of ¥4,113 million, so the company additionally recorded an expense for a provision for doubtful accounts of ¥588 million. As a result, the impairment loss on investment in an affiliated company recorded by the company for the subsidiary’s shares was ¥1,820 million, and the provision for loans to the subsidiary was ¥4,113 million.」

「As of the end of March 2022, the subsidiary had negative net assets of ¥3,524 million, so the company additionally recorded an expense for a provision for doubtful accounts of ¥1,083 million during the fiscal year.」

「The company has made capital investments of €14 million in and provided loans of €24 million to NP ROLPIN SAS, its French subsidiary. However, the gap between the profit plan in the turnaround plan and actual performance had become wider than expected. As of the end of December 2021, the subsidiary had negative net assets of ¥3,099 million, so the company additionally recorded an expense for a provision for doubtful accounts of ¥174 million, bringing the total additional provision recorded during the fiscal year to ¥658 million.」

「The company has made capital investments of €14 million in and provided loans of €23 million to NP ROLPIN SAS, its French subsidiary. However, the gap between the profit plan in the turnaround plan and actual performance had become wider than expected. As of the end of September 2021, the subsidiary had negative net assets of ¥2,925 million, so the company additionally recorded an expense for a provision for doubtful accounts of ¥224 million, bringing the total additional provision recorded during the fiscal year to ¥484 million. As a result, the impairment loss on investment in an affiliated company recorded by the company for the subsidiary’s shares was ¥1,820 million, and the provision for loans to the subsidiary was ¥2,925 million.」

「The company has made capital investments of €14 million in and provided loans of €23 million to NP ROLPIN SAS, its French subsidiary. However, the gap between the profit plan in the turnaround plan and actual performance had become wider than expected. As of the end of June 2021, the subsidiary had negative net assets of ¥2,701 million, so the company additionally recorded an expense for a provision for doubtful accounts of ¥260 million. As a result, the impairment loss on investment in an affiliated company recorded by the company for the subsidiary’s shares was ¥1,820 million, and the provision for loans to the subsidiary was ¥2,701 million.」

「The gap between the profit plan in the turnaround plan and actual performance had become wider than expected. As of the end of March 2021, the subsidiary had negative net assets of ¥2,440 million, so the company additionally recorded an expense for a provision for doubtful accounts of ¥847 million, bringing the total additional provision recorded during the fiscal year to ¥1,372 million.」

「The gap between the profit plan in the turnaround plan and actual performance had become wider than expected. As of the end of December 2020, the subsidiary had negative net assets of ¥1,593 million, so the company additionally recorded an expense for a provision for doubtful accounts of ¥170 million, bringing the total additional provision recorded during the fiscal year to ¥525 million. As a result, the impairment loss on investment in an affiliated company recorded by the company for the subsidiary’s shares was ¥1,820 million, and the provision for loans to the subsidiary was ¥1,593 million.」

「The company has made capital investments of €14 million in and provided loans of €19 million to NP ROLPIN SAS, its French subsidiary. However, the gap between the profit plan in the turnaround plan and actual performance had become wider than expected. As of the end of September 2020, the subsidiary had negative net assets of ¥1,422 million, so the company additionally recorded an expense for a provision for doubtful accounts of ¥192 million, bringing the total additional provision recorded during the fiscal year to ¥354 million.」

「The company has made capital investments of €14 million in and provided loans of €19 million to NP ROLPIN SAS, its French subsidiary. However, the gap between the profit plan in the turnaround plan and actual performance had become wider than expected. As of the end of June 2020, the subsidiary had negative net assets of ¥1,230 million, so the company additionally recorded an expense for a provision for doubtful accounts of ¥161 million. As a result, the impairment loss on investment in an affiliated company recorded by the company for the subsidiary’s shares was ¥1,820 million, and the provision for loans to the subsidiary was ¥1,230 million.」

「As of the end of March 2020, the subsidiary had negative net assets of ¥1,068 million, so the company additionally recorded an expense for a provision for doubtful accounts of ¥292 million, bringing the total additional provision recorded during the fiscal year to ¥615 million.」

「The company has made capital investments of €14 million in and provided loans of €19 million to NP ROLPIN SAS, its French subsidiary. However, the gap between the profit plan in the turnaround plan and actual performance had become wider than expected. As of the end of December 2019, the subsidiary had negative net assets of ¥776 million, so the company additionally recorded an expense for a provision for doubtful accounts of ¥144 million. As a result, the impairment loss on investment in an affiliated company recorded by the company for the subsidiary’s shares was ¥1,820 million, and the provision for loans to the subsidiary was ¥776 million.」

「The company has made capital investments of €14 million in and provided loans of €19 million to NP ROLPIN SAS, its French subsidiary. However, the gap between the profit plan in the turnaround plan and actual performance had become wider than expected. As of the end of September 2019, the subsidiary had negative net assets of ¥632 million, so the company additionally recorded an expense for a provision for doubtful accounts of ¥179 million. As a result, the impairment loss on investment in an affiliated company recorded by the company for the subsidiary’s shares was ¥1,820 million, and the provision for loans to the subsidiary was ¥632 million.」

「The company has made capital investments of €14 million in and provided loans of €14 million to NP ROLPIN SAS, its French subsidiary. However, the gap between the profit plan in the turnaround plan and actual performance had become wider than expected. As of the end of June 2019, the subsidiary had negative net assets of ¥501 million, so the company additionally recorded an expense for a provision for doubtful accounts of ¥48 million. As a result, the impairment loss on investment in an affiliated company recorded by the company for the subsidiary’s shares was ¥1,820 million, and the provision for loans to the subsidiary was ¥501 million.」

「The company has made capital investments of €14 million in and provided loans of €14 million to NP ROLPIN SAS, its French subsidiary. However, the gap between the profit plan in the turnaround plan and actual performance had become wider than expected. As of the end of March 2019, the subsidiary had negative net assets of ¥453 million, so the company additionally recorded an expense for a provision for doubtful accounts of ¥95 million.」

「As of the end of December 2018, the subsidiary had negative net assets of ¥357 million, so the company additionally recorded an expense for a provision for doubtful accounts of ¥134 million. As a result, the impairment loss on investment in an affiliated company recorded by the company for the subsidiary’s shares was ¥1,820 million, and the provision for loans to the subsidiary was ¥357 million.」

「The company has made capital investments of €14 million in and provided loans of €10 million to NP ROLPIN SAS, its French subsidiary. However, the gap between the profit plan in the turnaround plan and actual performance had become wider than expected. As of the end of September 2018, the subsidiary had negative net assets of ¥223 million, so the company additionally recorded an expense for a provision for doubtful accounts of ¥152 million. As a result, the impairment loss on investment in an affiliated company recorded by the company for the subsidiary’s shares was ¥1,820 million, and the provision for loans to the subsidiary was ¥223 million.」

「The company has made capital investments of €14 million in and provided loans of €10 million to NP ROLPIN SAS, its French subsidiary. However, the gap between the profit plan in the turnaround plan and actual performance had become wider than expected. As of the end of June 2018, the subsidiary had negative net assets of ¥71 million, so the company recorded an impairment loss on investment in an affiliated company of ¥81 million and newly recorded a provision for doubtful accounts of ¥71 million. As a result, the cumulative impairment loss on the subsidiary’s shares recorded by the company was ¥1,820 million, and the provision for loans to the subsidiary was ¥71 million.」

「As of the end of March 2018, the gap between the profit plan in the turnaround plan and actual performance had become wider than expected, and the subsidiary had not achieved profitability. Accordingly, in its non-consolidated financial statements, the company impaired the carrying value of its investment in the French subsidiary to the subsidiary’s net asset value and recorded an impairment loss on investment in an affiliated company of ¥1,739 million. However, if the subsidiary’s performance does not recover and its net asset value continues to deteriorate, there is a risk of additional losses being recorded.」

「The company has made capital investments of €14 million in and provided loans of €9 million to NP ROLPIN SAS, its French subsidiary. However, as of the end of December 2017, the gap between the profit plan in the turnaround plan and actual performance had become wider than expected, and the subsidiary had not achieved profitability. If a recovery in performance can no longer be reasonably expected, the company may record an impairment loss on its investment in the subsidiary of ¥1,820 million and provisions, including a ¥1,151 million provision for loans, in its non-consolidated financial statements.」

「The company has made capital investments of €14 million in and provided loans of €9 million to NP ROLPIN SAS, its French subsidiary. However, as of the end of September 2017, the gap between the profit plan in the turnaround plan and actual performance had become wider than expected, and the subsidiary had not achieved profitability. If a recovery in performance can no longer be reasonably expected, the company may record an impairment loss on its investment in the subsidiary of ¥1,820 million and a provision for its loans of ¥1,151 million in its non-consolidated financial statements.」

「Although there is steady demand for FILM plywood, which has relatively strong profitability, amid severe price competition in the mature plywood market, production of FILM plywood failed to keep pace with demand due to issues including low yields mainly attributable to raw-material quality and delays in process improvements, and performance did not recover.」

「NP ROLPIN SAS is primarily engaged in the manufacture and sale of plywood. As its performance has remained sluggish since its acquisition in 2014, the company has formulated a turnaround plan, including active management support across its operations, to restore performance. However, if the company’s performance does not recover, this could affect the performance and financial condition of the Group.」

「Meanwhile, in overseas markets, the French subsidiary’s plywood manufacturing and sales business has been pursuing cost-reduction initiatives, including reviews of its manufacturing processes. However, profitability has remained weak due to intensified price competition resulting from market maturity, making it an urgent priority to restructure the business model, including by developing new markets.」

「At the French subsidiary, we focused on strengthening the sales structure by actively participating in local trade shows and expanding the sales workforce to develop markets outside France, but profitability did not improve. As a result, net sales were ¥7,541 million, up 7.1% from the same quarter of the previous year, and segment profit was ¥9 million, compared with a segment loss of ¥131 million in the same quarter of the previous year.」

「At the French subsidiary, we worked to improve profitability by strengthening the sales structure through active participation in local trade shows and expansion of the sales workforce, as well as by implementing rigorous cost and quality management. However, the order environment remained challenging. As a result, net sales were ¥3,615 million, up 7.5% from the same quarter of the previous year, and the segment loss was ¥162 million, compared with segment profit of ¥21 million in the same quarter of the previous year.」

「In overseas markets, the French subsidiary recorded a segment loss due in part to a decline in its profit margin resulting from a greater-than-expected deterioration in its sales mix.」