Nippon Paper Industries has decided to cease operations at its Hungarian subsidiary, Nippon Paper Chemicals Europe Zrt. (NPCE), by December 31, 2026, after the plant began local production in 2025. The company will book roughly ¥5bn in special losses, mainly fixed-asset impairment, in the fiscal year ending March 2027, though it warns the figure is a current estimate that could still move as accounting procedures continue.
NPCE was set up in Hungary in September 2022 with capital of €14mn to make and sell CMC (carboxymethyl cellulose), a chemical Nippon Paper sells under the brand SUNROSE MAC for use in lithium-ion EV batteries. Nippon Paper owns 100% of the subsidiary's voting rights and has debt-guarantee arrangements tied to it. Local production started only in 2025, and the plant employed 24 people as of the end of August 2026.
| Metric | Value |
|---|---|
| Capital | €14mn |
| Established | September 27, 2022 |
| Employees (end-August 2026) | 24 |
| Sales, year to December 2025 | €74,000 |
| Operating loss, year to December 2025 | approx. €5.98mn |
| Operations to cease | December 31, 2026 |
| Estimated special loss (year to March 2027) | approx. ¥5bn |
The subsidiary's scale shows why the numbers didn't work: sales of just €74,000 against an operating loss of nearly €6mn in the year to December 2025. Nippon Paper attributes the collapse to a fast-moving retreat in Western EV policy around the time local output began, including revisions to environmental regulation, changes to adoption incentives, and altered subsidy schemes in Europe and the United States. The company says this has slowed EV market growth in both regions and left it facing unusually intense global competition, making stable profitability unattainable for the foreseeable future and the investment no longer worth its returns.
Rather than let losses and cash burn widen, Nippon Paper is folding CMC production back into an existing plant in Japan, framing the move as part of the balance-sheet optimization, structural reform and profitability push set out in its Medium-Term Management Plan 2030, published May 28, 2026. The company says its consolidated earnings forecast for the year ending March 2027, which will need to account for this charge and any other effects, is still being finalized, and it will disclose updates as they become available. For a plant built to serve rising EV demand, the wind-down is a concession that Western demand did not arrive on the schedule Nippon Paper anticipated when it opened production in Hungary.