Nippon Paint (4612) Investor Day 2025 summary

Strategic Business Updates

• Focus on maximizing shareholder value through a balanced approach of organic and inorganic growth, using a disciplined M&A strategy and asset assembler model prioritizing EPS accretion, ROIC, and capital efficiency.

• China business expects a 1% revenue drop in TUC and 20% in TUB for 2025, but targets margin growth, increased operating profits, and robust profitability through cost optimization and risk management.

• Expansion in China leverages asset-light models, color and texture innovation, premiumization, and deeper penetration into tier 3-6 cities, targeting 2,000+ community stores by 2026.

• Turkey group, including Betek Boya and Alina, achieved strong revenue and profit growth, increasing market share in decorative paints and ETICS, and serves as a regional hub for expansion into Central Asia, North Africa, and the Middle East.

• AOC acquisition strengthens the portfolio with custom formulations, robust business systems, and exposure to market tailwinds, targeting mid-single-digit growth and post-acquisition ROIC above 6% from year one.

Financial Guidance and Performance

• Adjusted EPS guidance for 2025 is JPY 74.1, reflecting a 15.3% CAGR since 2018, with a continued focus on high cash conversion and deleveraging of 0.6-0.8 turns to EBITDA per year.

• Turkey group’s revenue reached $735 million in 2024 with a 15.6% operating profit margin; Betek Boya’s market share in Turkey is expected to reach 36% in 2025.

• China’s auto business grew at a 7.6% CAGR over the last four years, with new wins in international markets.

• M&A remains the primary use of capital, with buybacks as a secondary option; dividend policy remains unchanged, and strong cash generation supports ongoing M&A.

• Organic EPS growth target is 10%+, with inorganic growth from reinvestment in sizable, high-return companies, and an EPS CAGR of 15% from 2018–2025.

Competitive Advantages and Business Strategy

• Focus on highly customized CASE and colorant solutions, serving fragmented customer bases with over 3,200 SKUs and 1,000+ customers.

• Strong market presence in North America, leveraging local manufacturing and technical service sites for rapid, tailored delivery.

• Differentiated by proprietary formulation expertise, eco-friendly technologies, and a high percentage of customized products.

• Robust business systems drive value creation through process, people, and performance management, enabling repeatable outcomes.

• Positioned to benefit from secular trends such as lightweighting, energy transition, infrastructure growth, and sustainability.