Hokuetsu Paper Mills Ltd., the target of a takeover bid by Japan's largest papermaker, Oji Paper Co., said Wednesday its group net profit fell to 746 million yen in the April-June quarter, down 33 percent from the same period a year ago.
Hokuetsu, Japan's sixth-largest paper firm, reported a pretax profit of 1.54 billion yen, down 40.1 percent, on sales of 37.41 billion yen, down 0.3 percent.
Hokuetsu said that although demand for paper and cardboard was solid during the quarter, a 1.5 billion yen increase in its raw materials costs, including crude oil and wood chips, led to the sharp decline in profits.
Looking ahead, Hokuetsu maintained its net profit forecast of 2 billion yen and sales estimate of 77 billion yen for the April-September first half of fiscal 2006.
Koichi Akagawa, a Hokuetsu board member, reiterated that the company plans to issue 50 million new shares to Mitsubishi Corp. as part of the company's effort to ward off Oji's takeover bid.
On Sunday, Oji proposed acquiring Hokuetsu on condition that the smaller firm call off its plan, announced July 21, to issue the new shares to Mitsubishi and form an alliance with the trading firm.