On May 14, Nippon Paint Holdings Co., Ltd. (hereinafter "Nippon Paint Holdings" or "Nippon Paint") released its business performance report for the first quarter of fiscal year 2025. In Q1 this year, the group achieved sales of 405.724 billion yen (approximately USD 2.6834 billion), a year-on-year increase of 5.6%, mainly due to increased sales volume and the effect of new consolidation (acquisition of American company AOC); operating profit was 51.432 billion yen, up 24.7% year-on-year, mainly due to improvement in raw material cost rates and the impact of new consolidation; EBITDA was 67.7 billion yen, up 21.5%; profit before tax was 48.193 billion yen, up 20.7%; and net profit attributable to parent company was 36.998 billion yen, up 25.7%. (Exchange rate: 1 USD = 151.2 JPY).
Sales revenue of automotive coatings was higher than the same period last year due to a rebound in automotive production following last year's decline. Industrial coatings sales revenue also exceeded last year's, despite a weak market, due to price increases. General coatings sales were basically flat compared to last year; although price hikes slowed renovation projects, measures to expand sales volume were implemented. As a result, this division's consolidated sales revenue was 48.368 billion yen, up 4.1% year-on-year; operating profit was 4.421 billion yen, up 19.2% due to increased revenue and reduced sales expense ratio.
Automotive coatings sales revenue was higher than last year, with automotive production in Thailand lower year-on-year but production in China higher. General coatings sales were flat year-on-year despite political unrest in Turkey and a decline in sales activities in the previous quarter, helped by increased volume in major markets like Malaysia, Singapore, and Indonesia. The division's consolidated sales revenue was 221.878 billion yen, up 2.6%; consolidated operating profit was 34.77 billion yen, up 15.9% year-on-year.
General coatings sales revenue was lower than last year due to penetration of price increases and market share gains in the Pacific region but offset by weak markets in Europe (mainly France). Other peripheral businesses’ sales were below last year due to weak demand in the Pacific home renovation market and Europe ETICS (insulation materials). The division's consolidated sales revenue was 89.815 billion yen, down 3.5%; consolidated operating profit was 7.297 billion yen, up 1.6% due to cost reductions.
Automotive coatings sales revenue declined mainly due to reduced automobile production. However, general coatings sales exceeded last year driven by price increases and strong sales in Northern California. The division's consolidated sales revenue was 28.912 billion yen, up 1.4%; operating profit was 1.072 billion yen, down 10.3%, partly due to increased general coatings investment in Northern California.
From March 2025, profit and loss of AOC have been reflected in the group's consolidated results. In other peripheral businesses, market demand slightly decreased mainly due to worsening macroeconomic conditions. This division’s consolidated sales revenue was 16.75 billion yen, with operating profit of 5.958 billion yen.
According to the quarterly report, Nippon Paint Holdings’ coatings division recorded sales of 351.931 billion yen in Q1 2025, up 2.46% year-on-year. Among them, automotive coatings sales were 48.235 billion yen, up 7.74%; architectural coatings sales were 250.92 billion yen, up 0.3%; industrial coatings sales were 24.338 billion yen, up 11.57%; fine chemicals sales were 5.081 billion yen, down 2.44%; other coatings sales were 23.355 billion yen, up 8.69%. Peripheral coatings business revenue was 53.793 billion yen, up 31.76%.
Compared to the end of the previous consolidated fiscal year, total assets at the end of Q1 increased by 587.072 billion yen to 3,658.451 billion yen. Current assets increased by 55.664 billion yen, mainly due to increases in accounts receivable and other receivables. Liabilities increased by 690.240 billion yen to 2,151.391 billion yen, mainly due to increased borrowings.
The group will further strengthen the growth foundation of existing businesses under the "asset assembler" management model, and increase revenue by actively acquiring talent and brands through mergers and acquisitions to consolidate sustainable growth. Specifically, besides continuing growth of the general business through expansion of sales networks and brand strengthening in each region, the group will also promote reinforcement of peripheral coatings businesses such as adhesives. Additionally, it will promote autonomous management of domestic and overseas group companies and seek to expand market share in various regions and business sectors. Accordingly, Nippon Paint forecasts full-year fiscal 2025 sales of 18.2 trillion yen (approx. USD 12.3 billion), up 11.1%; operating profit of 244 billion yen, up 30.0%; profit before tax of 226 billion yen, up 24.5%; and net profit attributable to parent of 162 billion yen, up 27.2%.
Nippon entered the Chinese market in 1992. Its business covers architectural coatings, automotive coatings, commercial wood coatings, general industrial coatings, powder coatings, coil coatings, protective coatings, energy-saving insulation, refurbishment services, and substrates (putty powder/mortar/tile adhesive/grout, etc.). Currently, Nippon has built more than 74 production bases in mainland China, employs over 11,000 staff, and has more than 50,000 exclusive stores nationwide. Over 32 years of deep cultivation in China, Nippon has consecutively held the top sales position in China’s coatings market for 27 years.
The financial report shows Nippon China achieved sales of 127.6 billion yen in Q1 2025, down 2.1% year-on-year. Nippon Paint noted that sales revenue of TUB declined due to a weak real estate market; however, TUC sales revenue increased with volume growth across all regions. Operating profit was 19.3 billion yen, up 12.6%, with reduced revenue impact due to review of general trade business transaction formats offset by improvement in raw material cost ratio.
Nippon Paint said that overall sales revenue in China declined 1.9% year-on-year, but assuming the review of general trade business transaction format for Q1 2024, sales revenue would have increased 3.8%. On a short message basis, sales would have grown 7.6%, and on an actual basis, 1.6%.
According to disclosed performance notes, the decline in architectural coatings revenue was mainly due to a drop in project business income and the review of general trade business transaction format.
Regarding automotive coatings, despite an overall increase in automotive production in China, Japanese automakers' output was weak, but sales to Chinese manufacturers were strong, increasing volume. For architectural coatings, TUC sales revenue grew 5% year-on-year due to increased volume in all regions; TUB sales revenue dropped 10% year-on-year due to continued weakness in the real estate market. For industrial coatings, coil coatings performed poorly, leading to a decline in sales revenue.
Nippon Paint stated that in Q1 this year, raw material prices in China rose slightly as many suppliers with thin profit margins faced pressure to raise prices or reduce output. Looking ahead to Q2, due to tariff impacts reducing demand, raw material prices are expected to remain stable or slightly decline.
For 2025, Nippon Paint previously forecasted around 15% growth in TUC business sales revenue in China by expanding and strengthening sales channels and customer networks, especially in tier 3 to 6 cities. TUB business sales revenue is expected to grow 0-5% year-on-year through expanding market share in renovations, infrastructure, low-cost housing, and government-related projects. Additionally, automotive coatings business sales revenue in China is expected to grow around 10% due to expansion in auto parts and EV key parts business and strengthened relationships with strategic customers.
