Paper & Packaging Industry (Japan): Improving profitability in existing businesses an urgent issue

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Paper & Packaging Industry (Japan): Improving profitability in existing businesses an urgent issue

J P M O R G A N Asia Pacific Equity Research

17 June 2026

Paper & Packaging Industry

(Japan)

Improving profitability in existing businesses an urgent

issue

Paper & packaging companies have actively raised product prices to respond to the Japan Equity Research

rise in raw material prices from the worsening Middle Eastern situation. Still, the

Cosmetics and Personal Care /

Middle Eastern situation keeps changing. Given differences between supply- Paper and Packaging

demand balances and cost transfer systems, being able to pass on prices should AC Akiko Kuwahara

differ by product. We think structural reforms are needed for a fundamental

(81-3) 6736-8617

improvement in profitability. Thus, we recommend selective investment in paper akiko.kuwahara@jpmorgan.com

& packaging industry stocks. We remain Overweight on Rengo as its main business JPMorgan Securities Japan Co., Ltd.

is corrugated cardboard, where the establishment of a cost transfer system is

advancing, and it announced a new capital policy. We raise our price target from

¥1,450 to ¥1,650, but we lower our price targets for the other companies we cover.

• Lower operating profit estimates for paper & packaging companies due

to cost deterioration: We expect the four companies we cover to have

combined operating profit of ¥146.0 billion in FY2026, ¥179.6 billion in

FY2027, and ¥184.9 billion in FY2028 (Figure 1). These are downward

revisions of ¥44.0 billion, ¥22.1 billion, and ¥16.1 billion, respectively, from

our previous estimates. We still think the profit trajectory will turn up in

FY2026, but we expect deteriorating raw material costs to weigh on earnings

more than we expected (Figure3).