Will margin improvement continue in the first half despite lower sales?

In the first quarter from April to June 2026, consolidated revenue was ¥4,062 million, down 4.6% from ¥4,259 million a year earlier. Operating profit was ¥20 million, an improvement of ¥18 million from ¥2 million a year earlier. Based on a simple calculation, the operating margin was approximately 0.49% in the current quarter versus approximately 0.05% a year earlier, meaning that the margin increased even as the sales base contracted.

The company identified lower demand for printing and information paper due to the digitalisation of businesses and government agencies, as well as higher procurement and logistics costs, as negative factors. At the same time, it said it worked to maintain stable supply and sell at appropriate prices while improving margins. However, the company did not disclose actual sales volumes in the first quarter or the extent to which price maintenance and margin improvement contributed to the ¥20 million in operating profit, so it is not yet possible to determine whether the improvement is sustainable.

By business, the core paper wholesale business generated revenue of ¥4,038 million and segment profit of ¥105 million. Revenue fell 4.6% year on year, but profit increased 25.9%. The logistics business generated revenue of ¥78 million and segment profit of ¥6 million, with revenue up 7.4% and profit up 50.4%. In contrast, the real estate leasing business generated revenue of ¥19 million and segment profit of ¥6 million, with revenue down 26.7% and profit down 38.6%.

In the next first-half results, we will first check whether the decline in consolidated revenue narrows from the 4.6% recorded in the first quarter and whether profit growth in the paper wholesale business continues. In particular, whether the first-half cumulative operating margin can remain at approximately 0.49%, and whether the company can explain in monetary terms the increase in procurement and logistics costs and the effects of higher selling prices and margin improvement, will be key to assessing the quality of the profit improvement.