Financial Results for the First Half of
Fiscal Year Ending March 31, 2022

December 2021

KOKUSAI PULP & PAPER CO., LTD.
Tokyo Stock Exchange 1st Section

9274

Contents

１

Company Profile

２

First Half of the Fiscal Year Ending March 31, 2022

３

Progress of the Second Medium-Term Business Plan

４

Business Description and Strategy

5

Reference Materials

KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

1 1

Contents

１

Company Profile

２

First Half of the Fiscal Year Ending March 31, 2022

３

Progress of the Second Medium-Term Business Plan

４

Business Description and Strategy

5

Reference Materials

KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

2 2

Company Profile

Company Profile

Paper wholesale distributor with 97-year history
Company Name
Established
Representative
Head Office
Address
Capital
Employees

Kokusai Pulp & Paper Co., Ltd.
November 1924
Madoka Tanabe, Chairman & Chief Executive Officer
Tadashi Kurihara, President & Executive Officer
6-24 Akashi-cho, Chuo-ku, Tokyo

Principal
shareholders*（ End of Sep. 2021 ）

4,723 million yen
5,530（Consolidated）

Oji Holdings Corporation

17.3%

Nippon Paper Industries Co., Ltd.,The Master Trust Bank of Japan ,Ltd.
(trust account)
Mizuho Bank, Ltd.,
Kokusai Pulp & Paper Co., Ltd.

9.2%
6.4%
3.9%
3.8%

(stock ownership association)

MUFG Bank, Ltd.,

3.5%

Sumitomo Mitsui Banking Corporation

3.5%

The Norinchukin Bank

3.5%

Hokuetsu Corporation
Mitubishi UFJ Trust and Banking Corporation

3.4%
2.9%

* The shareholding ratio is calculated excluding treasury stock.

Major affiliated companies of our group(100 subsidiaries and 6 affiliated companies)
Domestic bases
Overseas bases
Wholesale business of pulp and paper, etc.
Wholesale business of pulp and paper, etc.
Consolidated subsidiaries

Equity-method affiliates

Consolidated subsidiaries

Narumiya Kami-shoji Co., Ltd.

Green Fujikawa Co., Ltd.

Spicers Limited * Consolidated subsidiary in July 2019

Daidou Paper Trading Co., Ltd.

Green Remake Co., Ltd.

Antalis S.A.S.

Kikyoya Kami-shoji Co., Ltd.

Takaoka Co., Ltd.

DaiEi Papers（USA）Corp.

Okayama Kami-shoji Co., Ltd

Mikasa Shikougyo Co., Ltd.

Keishin Papers Trade (Shanghai) Co., Ltd

Expansion status

45■Number of Countries* Consolidated subsidiary in July 2020

Kyushu Kami-shoji Co., Ltd.

DaiEi Papers（H.K.）Limited

Musashino Paper Recycling Co., Ltd.

DaiEi Papers Korea Co.,Ltd.

Green Sanai Co., Ltd.

DAIEI PAPERS TRADING INDIA PVT.LTD.

KPP Logistics Co., Ltd.

DAIEI PAPERS（S）PTE.LTD.

■Number of Cities

133■Number of Bases

150

KPP ASIA-PACIFIC PTE. LTD.

Equity-method affiliates
CHENGDU XINGUOFU PACKING MATERIAL CO., LTD* Number of subsidiaries, affiliates and countries of operation, etc. are all as of March 31, 2021.
KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

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Company Profile

KPP GROUP WAY （Management Philosophy・Action Guidelines・Management Vision）

Formed on “Management Philosophy,” “Group Corporate Action Guidelines,” and “Management Vision”.
－ Shared by all Group employees. A concept that forms the basis of all activities as a common set of values .

KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

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Company Profile

Sustainability and Materiality （Key Business Issues）

KPP Group Basic Policy on Sustainability
The KPP Group will contribute to the realization of a sustainable society through the operation of a totally
recycling-oriented enterprise based on the basic philosophy of the KPP Group Way.
Furthermore, we perceive the environment, society, and governance to be important aspects of management
and will engage in the resolution of material issues related to business activities.

Material Issues of the KPP Group－ Shared with the entire KPP Group as a materiality

Global expansion

Climate change countermeasures

・ Creation of Group synergies
・ Internal communication

・ Development of solutions to prevent global warming

Response to DX

Diversity & Inclusion

・ Expansion of e-commerce
・ Development of new systems

・ Ensuring diversity

Implementation of green business

Enhancement of governance・ Resolution of the marine plastic pollution problem

・ Compliance・ Information security
・ Risk management

・ Recycling and waste reduction

・ Reduction of CO2 emissions

・ Utilization of diverse personnel

KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

5 5Contents

１

Company Profile

２

First Half of the Fiscal Year Ending March 31, 2022

３

Progress of the Second Medium-Term Business Plan

４

Business Description and Strategy

5

Reference Materials

KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

6 6

Fiscal year ending March 2022
Results of 2nd Quarter

Overview of Business Results

Impact of the Covid-19 infection on our business－ The business environment in overseas markets remained favorable.
Overseas market

Domestic market

・ Cumulative period for first and second quarter（From January to June 2021）

・ Cumulative period for first and second quarter（From April to September 2021）- Due to the multiple emergency declarations and priority
measures to prevent the spread of Covid-19, people refrained
from going out and events were cancelled, which affectedsales of graphic paper and folding box board.

- Europe experienced a third wave and expansion of Delta
variant, however economic activity resumed in Q2 (Apr-Jun).
- Australia experienced a lockdown in Q1 (Jan-Mar) due to the
expansion of Delta variant, but the impact was limited, and theeconomy was on a recovery track throughout.

Environment of our business
Domestic market
・ Compared to the previous year, which was the year most affected by the issuance of the emergency declaration, sales volume recovered significantly,
especially for graphic paper such as catalogs and flyers, however the recovery was limited due to the re-issuance of the emergency declaration in July.
・ Folding box board was on a recovery trend, but the recovery was limited due to the strong tendency to refrain from activities under the
emergency declaration.

Overseas market
・ Europe：The paper business expanded. In the packaging business, demand increased due to Covid-19.
Visual communication business was strong due to resumption of events.
・ Australia：Effects of M&A of Direct Paper and Rojo Pacific became apparent. Growth in the packaging business and Sign & display business*.

・ China: China's economy was strong as a result of early measures taken against Covid-19.
Sharp rise in market prices led to a rapid recovery in business performance.・* Sign & display business……In our business segment, it is aggregated as visual communications business.

KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

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Fiscal Year Ending March 2022
Results of 2nd Quarter

Summary of Business Results

Net sales JPY269.1 billion (+61.6%), operating income turned profitable
Sales

・ Antalis, which was acquired in the previous fiscal year and be consolidated in the Q3 of the previous fiscal year,
added to the results (+JPY110,501 million). Sales increased substantially.

Operating profit

・ The impact of the previous year‘s provision of allowance for doubtful accounts (-JPY8,130 million) in Hong Kong and China
disappeared and the business turned profitable.
・ In addition to the additional earnings of Antalis, strong performance of Australian business after Covid-19 andrising market prices led to a significant increase in earnings.

Ordinary profit

・ Ordinary profit was higher than operating profit due to a reversal of the allowance for doubtful accounts of JPY7.2 million andforeign exchange gains of JPY 362 million related to the above.

Fiscal Year Ended
March 2021

（JPY million）

Second quarter
cumulative results

Fiscal Year Ending March 2022

Second quarter
cumulative results

Amount of change
from the same periodof the previous year

Percentage change
from the same periodof the previous year

Full-year Forecast

Sales

166,594

269,133＋102,539＋61.6%

545,000

Gross profit

11,322

43,944＋32,622＋288.1%－

SG&A

18,88840,122＋21,233＋112.4%－

Operating profit(7,566)

3,822+11,388－

5,900

Ordinary profit(8,218)4,205+12,424－

5,000

Profit attributableto owners of parent(7,236)

3,485＋10,722－

4,200(Note) Since the Company will apply the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29), etc. from the beginning of the fiscal year ending March 31, 2022,
the above figures for the second quarter of the fiscal year ending March 31, 2022 are after the application of the said accounting standard, etc.

KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

8 8

Fiscal Year Ending March 2022
Results of 2nd Quarter

Results by Segment

Overseas sales increased significantly to JPY144.6 billion (+220.8%).
Domestic Bases・ The market showed a recovery from the same period last year, when it was most severely affected by the declaration of
the state of emergency. Base paper for cardboard continued to be strong.

Overseas Bases・ In addition to the increase in sales at Antalis, economic activity resumed steadily in Europe, Australia and other regions.

Real Estate Leasing

・ Although KPP Yaesu Building, one of the main property, continued to operate at full occupancy, profits declined due to rent accruals
associated with the sale of the building's land.

Fiscal Year Ended
March 2021
Second quarter
cumulative results（JPY million）

Domestic locations
Wholesale pulp andpaperOverseas locations
Wholesale pulp andpaperReal estate leasing

Second quarter
cumulative results

120,879

Sales
Segment profit

1,640

Profit ratio

1.4％

Sales

45,090

Segment profit(8,202)－

Profit ratio
Sales

623

Segment profit

339
54.4％

Profit ratio

Total

Fiscal Year Ending March 2022

Sales

166,594

Operating profit(7,566)

Profit ratio－

Amount of change fromthe same period of theprevious year

Percentage change fromthe same period of theprevious year

＋2,983

＋2.5％

＋806

＋49.2％－＋45.6％＋99,557＋220.8％＋10,954

－

－

－

(1)

(0.3％)(253)(74.6％)－(74.5%)＋102,539＋61.6％＋11,388－－－

123,8632,447
2.0%
144,647
2,752
1.9%
622
86
13.9%
269,133
3,822
1.4%(Note) Since the Company will apply the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29), etc. from the beginning of the fiscal Year Ending March 2022,
the above figures for the second quarter of the fiscal Year Ending March 2022 are after the application of the said accounting standard, etc.
（

KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

9 9

Fiscal Year Ending March 2022
Results of 2nd Quarter（JPY million）

Ordinary Profit Change Analysis（Compared to previous period）①③②

Increase/Decrease Factors
Antalis, with its high profit margin, made a significant contribution.
（百万円）➀ ・ Gross profit 32,622- Sales increase effect 16,742* Amount of increase： Overseas locations 99,557（Antalis 110,501 Spicers 4,808 Hong Kong -19,993 etc）Domestic locations 2,984（KPP 3,808 etc）
- Effect of increased profit margin 15,880（Consolidated profit margin increased from 6.8% to 16.33% (+9.53%)
with the acquisition of Antalis, a high-margin company.）② ・ SG&A 21,233- Antalis 27,261、Provision of allowance for doubtful accounts -8,112 etc③ ・ Non-operating profit or loss 1,035- Non-operating profit 984
Interest income -278（Hong Kong -315 etc）, FX profit 332、Reversal of allowance for doubtful accounts 723（of “Keishin” 720 etc.）
KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

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Fiscal Year Ending March 2022
Results of 2nd Quarter

Analysis of Changes in the Balance Sheet（Compared to the end of the previous fiscal year）

End of fiscal year ended March 2021

Q2 end of fiscal year ending March 2022

（JPY million）（JPY million）
Current assets-2,999Fixed assets

Current assets

200,672

Current liabilities

190,993

Current liabilities

167,192

Current assets＋1,644

197,673
Current liabilities-23,800

Fixed liabilities
Fixed liabilities

57,035

Fixed assets

40,544

Fixed assets

74,447

Net assets

76,092

Net assets

49,53743,581
Total assets 275,119

Fixed liabilities＋16,490

Net assets＋5,955

Total assets 273,765

Points of change✓ Capital ratio
Improved from15.8% to 18.1%✓ D/E ratio （debt ratio）
Improved from 1.91to1.55

KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

11 11

Fiscal Year Ending March 2022
Results of 2nd Quarter

Progress of Business Performance

Percentage of progress toward full-year forecast （upwardly revised figures announced on August 11, 2021）（JPY million）

269,133

Sales

Operatingprofit545,000

49.4%

5,900

64.8%

5,000

84.1%

4,200

83.0%

3,822

Ordinary
profit

4,205

3,485

Net
income
0%

20%

40%

60%

【Percentage of progress】

80%

100%

Operating profit：Gross profit improved due to rising pulp and paper prices and strong performance ofoverseas high value-added businesses. The progress rate was 64.8%, exceeding 50%.
Ordinary profit ：Although the progress rate is high of 84.1%, the impact of the reversal of allowance for
doubtful accounts of JPY723 million and FX profit of JPY362 million is significant.
KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

12 12

Fiscal Year Ending March 2022
Results of 2nd Quarter

Dividend Policy
Actual dividends per share (the past 10 fiscal years)（ Forecast ）12
10Dividend in commemorationof listing: JPY 2

Year-end
dividend

8

JPY

７

6
4

Interimdividend

2

JPY

５

0
FY 2012

2013

2014

2015

August 2021

2016

2017

2018

2019

2020

2021

2022

Upward Revision of Dividend Forecast Announced

Acquisitions of Spicers and Antalis contributed significantly to the Group‘s earnings➡First interim dividend paid due to expected solid earnings base throughout the fiscal year,
and annual dividend forecast increased to 12 yen

Aiming to increase dividends as a result of profit growth whileconsidering a balance between investments and shareholder returns
KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

13 13

Contents

１

Company Profile

２

First Half of the Fiscal Year Ending March 31, 2022

３

Progress of the Second Medium-Term Business Plan

４

Business Description and Strategy

5

Reference Materials

KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

14 14

Progress of the Second
Medium-Term Business Plan

Long-Term Management Vision

Long-Term Management Vision 「GIFT+1 2024」－ The second phase of the long-term management vision “GIFT+1 2024,” which started in FY2016, will end this fiscal year.
The third phase will start next fiscal year. To the stage of global management.
Global Management Establishinga Total Recycling Company

Focusing on Overseas Markets

Expansion of Raw Material
BusinessStrengthening profitability

Reorganization of business portfolio
Newly listed on theTokyo Stock Exchange(June 2018)

Completing the planfor the 100th anniversary

Investment in Growth Engines andfor Overseas Expansion
AntalisBecame a
Spicers
consolidated subsidiary
Became a（July 2020）
consolidated subsidiary(July 2019)

100th Anniversary
Third Medium-Term（2024）
Management Plan to be announced（June 2022）

Business development period

The current business plancompletion periodBusiness structurereform period
FY2016FY2017

1st phase

FY2018FY2019FY2020

FY2021

2nd phase

FY2022

FY2023

FY2024

3rd phase

Medium-Term Business Plan
KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

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Progress of the Second
Medium-Term Business Plan

Progress of the Second Medium-Term Business Plan

Medium-Term Business Plan
1st phase
FY2016FY2017

2nd phase
FY2018FY2019Sales（JPY100million）

FY2020

3rd phase
FY2021（JPY100million）

FY2022

FY2023

FY2024

Operating profit

70

7,000

5,450

6,000

59

60
50

5,000

4,300

4,000

40

＋26.7%

3,000

30

2,000

20

1,000

10

0

30

＋96.7%

0
Initial budget(Announced on December 5, 2019）

Forecast for the current fiscal year
(Announced on August 11, 2021)

Initial budget(Announced on December 5, 2019)＋115 billion yen•

Forecast for the current fiscal year
(Announced on August 11, 2021)＋2.9 billion yen

Regional strategies, business portfolio reforms, and profit structure reforms are progressing steadily, especially overseas.

ー Sales and profits of the overseas segment exceeded those of the domestic segment due to growth in global operations.
➣ As a result of the above-mentioned efforts made until the Second Medium-Term Business Plan,
the budget is expected to be significantly exceeded.
KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

16 16

Contents

１

Company Profile

２

First Half of the Fiscal Year Ending March 31, 2022

３

Progress of the Second Medium-Term Business Plan

４

Business Description and Strategy

5

Reference Materials

KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

17 17

Business Description andStrategy

Domestic and Overseas Business Models in the Paper BusinessHybrid and global development of three different business models in different regions（Our company models）（Overseas paper trading model）

Paper Trading

Paper Distribution

Paper MerchantOverseas model

Domestic modelOverseas business through M&As

MissionMissionMissionTrade business utilizing the global

Paper-related wholesale business thatHigh value-added business through cutting

network in paper, paperboard and paper

combines indent business (consignment

and processing and sales of own-brandmaterials

sales) with stock business (inventory

products with large-scale logistics andsales)

delivery functions

Gross nargin ratio

Gross margin ratio

Gross margin ratio

approx.

3%

approx.

6%

approx.

25%* Our company refers to Kokusai Pulp & Paper Co.,LTD

Maximizing profitability and efficiency by developing various business models appropriate on a local basis
KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

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Business Description andStrategy

KPP’s Unique Total Recycling Business Model

Building a Totally Recycling-oriented Business Model Contributing to the Realization of a Sustainable Society・Composed of both 「Material Recycling」 and 「Thermal Recycling」

Material Recycling

Thermal Recycling

Recovery of recycled resources

Supply of renewable energy through support for biomass power plant operation, etc.

Features & Services

Features & Services- Utilizing the collection network of used paper wholesalers throughout Japan.

- Power generation business using biomass resources such aswaste wood and unused wood, etc.

- Used paper collection solution business using our originally developed"Town ecomo" and "Office ecomo".

- Development of BMecomo, an operation support system forbiomass power plants using IoT technology- Closed recycling service that visualizes the entire process of "use, discard,and recycle".

pulp
manufacPulp
manufacturers
turer

ForestForests
森林

Paper Paper
Company
manufacturers

Offices/
Office・HomeHouseholds

Printing/
Printing andprocessing
Processing
companies
companies

PowerPowergeneration
Stations
facilities

Consumer
Consumers

KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

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Business Description andStrategy

Packaging Business

Provide integrated services to customers, from package design proposals to design and assembly－ Provide added value to ensure high profit margins
Wide range of customers, from industrial applications to food service and e-commerce

Antalis Package Design Center
Provide sophisticated order-made solutions to solve our customers' problems.

Standard products
Reliable and effective product range
to provide optimal packaging
solutions for customers

Customized package
Product and packaging processexperts provide solutions to meetcustomer specifications, ranging
from cut, size and packaging design.

Custom-made solutions
Innovative and sophisticatedpackaging solutions, from packaging
process optimization to productprotection, designed by packaging
engineers.

KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

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Business Description andStrategy

Packaging Business （Market Size）

Packaging market size and value chain ratio
ー Europe has the largest market size. China and Japan follow.
ー In Japan, the distribution market accounts for 20% of the market size.
ー The market size in Europe is approx. JPY9 trillion.
(equivalent to or larger than the total of 9 countries in Asia).
The distribution market accounts for 10% of the market size.
Country

Market Size Amount（JPY billion）

Ratio of
Manufacturers

Distributor ratio(wholesalers)Intermediary ratio

Europe

9,660

80%

10%

10%

Japan

1,051

70%

20%

10%

China

5,851

70%

15%

15%

Korea

597

70%

10%

20%

Thailand

108

70%

17%

13%

Vietnam

73

75%

18%

7%

Malaysia

71

80%

15%

5%

Indonesia

315

75%

20%

5%

Australia

192

60%

25%

15%

* 9 Asian countries* According to our own research. Market size is calculated at 115 yen to US dollar.

KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

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Business Description andStrategy

Visual Communication Business

Collaboration with visually appealing (i.e., visual communication) businesses such as in-store advertising,
signage, wrapping, and buildings. The demand is growing in Europe and Australia.
Consistent supply coordination of consumables such as ink large format inkjet printers (LFPs) and,as well as supply of media for signage, interior decoration, and car wrapping. Securing high profit margins
Outdoor Advertisements

Vehicle graphics

A view of the work

RetailHome textiles

Restaurant

RetailHospitalHotel

Nursing home

* Projects created by architects, interior designers, printers or advertising agencies, using at least one product from the Antalis Visual Communication range as part of the Antalis Interior design award.”

KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

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Business Description andStrategy

Visual Communication Business （Examples of installations）

Various examples of introduction in visual communication business

1

COALA STICKY
WALL S

2

COALA
ROLL-UP ECO

3COALA ROLL-UP
PET S

4

COALA ORGANZA5COALA INTERIOR
FILM

6STADUR SIGNEASYPRINT BLACK

7

COALA FLOOR& WALL R

8

DIBOND

KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

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Business Description andStrategy

Adhesive Label Business* * Adhesive label business is in the paper business in our business segment.

Adhesive Label Business in Oceania
・ Providing services in all fields, including daily necessities, food and beverage, medical and pharmaceutical, logistics and distribution, and industrial-related fields
ー Propose customers the best combination of surface materials, adhesives, release paper and release film for various different applications.
ー Wide range of supply sources, especially in Asia and Europe
ー A large selection of approx. 100 different products.
ー In-house slitting process provides added value, responding flexibly to customer specifications.

Daily Necessities

Logistics

Food & Beverage

Others

KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

Medical Care

24 24

Business Description andStrategy

KPP Group Business Portfolio （by Region）
Business segment
Paper

Paper
manufacturing
materials(pulp / recycling
paper)

Packaging

VisualCommunicati
on（100 million yen）
Chemicals &Machinerysales etc.

Total

Five business segments
Japan (TW / HK / KR
/ US)

958

202

－

17

238

1,415

634

－

310

151

－

1,096

Kokusai Pulp & Paper

Europe / SouthAmerica（Antalis）

Area

Oceania・ Acquire Antalis and Spicers（Spicers）

78

－

31

35

－

144

Southeast Asia・India（KPP AP）

51

1

－

－

1

53

88

－

－

－

7

95

1,809

203

341

204

246

2,803

China (Keishin Papers
Trade)

１. Paper２. Paper manufacturing materials（pulp, recycling paper）
３. Package 4. Visual communication
５. Chemical products & machinery sales, etc.

・ Diversification of business segment【Sales by business segment】
Chemical products ＆machinery sales, etc.

8.8%
Total

* Net cumulative sales for the first half of fiscal Year Ending March 2022 (simple sum of individual companies)【Sales by region】

Five regional expansions【Operating Profit by region】

Visualcommunication

7.3%

Paper

64.4%

Package

12.2%
１. Japan / Taiwan / Hong Kong /Korea / U.S.A
２. Europe / South America ３. Oceania
４. Southeast Asia / India ５. China

・ Development of global business・ Gaining market share

China
China

3.4%
Southeast
Asia / India

1.9%
Oceania

5.1%

Japan
and others
Europe/South America

39.1%

7.1%

Japan
and others

24.2%

Paper
manufacturing
materials

7.3%

50.5%
Oceania

13.7%

Europe/South America

54.9%* approximation

KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

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Business Description andStrategy

Strategies for acquiring external management resources （M&A, alliances）

To achieve sustainable growth by capturing growth through acquisition of external management resources(inorganic) in addition to growth through internal management resources (organic)✓Organic growth✓In-organic growth

Expansion of recycling-oriented
business model
1. Further expansion of recycling-oriented

Expansion of business fields through acquisitionof external management resources➢ Target markets for M&As

business by balancing used paper business andVisualCommunication
Business

product sale
2. Strengthen pulp business
3. Maximize profits by expanding market share in

PackageBusiness➢ Management resources to be acquired

the paper and paperboard wholesale business,promoting e-commerce, and reducing costs

Other
Processing
Business

Portfolio

Human
Resources

Management
Know-howBases
andFacilities

4. Expansion of solution businessToward Sustainable Growth
KOKUSAI PULP&PAPER CO.,LTD. ALL RIGHTS RESERVED 2021

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Business Description andStrategy

KPP Group Positioning in the WorldKPP Group is expected to become the world's third largest paper trading company（* Based on our own research）
in terms of sales this fiscal year
（ JPY Billion ）

800

700
（Forecast for the current fiscal year）

600

Sales

545 Billion yen

500

400

300

200

100

0

SwedenCompany B

Germany
Company A

Austria
Company A

Japan
Company C

Japan
Company B

SwedenCompany A

Japan
Company A

Our
KPP
CompanyUSA
Company B

USA
Company A* Sales…Forecast for the current fiscal year for the Company, Japan A and Japan B. For other companies, results of the most recent fiscal year.
* Paper Trading Company…Trading company specializing in wholesale of pulp and paper products and packaging-related products.
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Business Description andStrategy

Business Expansions in Growing Markets

Expansion of business in growth markets based on Japan, Europe and ANZ markets
Global paper and paperboard market size （based on our own research）
Market Size

Europe97 million tons

China
110 million tonsJapan
25 million tons

ASEAN
25 million tons

✓ In the mature markets of Japan,
Europe, and the ANZ region,
maximizing profits throughportfolio reforms✓ In China, the world's largest
market, and ASEAN, a rapidly
growing market, businessexpansions through reorganizationof group companies based on
Keishin Paper (China) and KPP-AP(ASEAN)ANZ
4 million tons
* ANZ・・・Australia and New Zealand

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Business Description andStrategy

Transition to a holding Company Structure

Resolution to begin consideration of transition to a holding company structure【Background】
Past Activities【Purpose】-

Aggressive overseas M&A aimed at expanding global market share andmaximizing profits through business portfolio reforms-

Restructuring of group companies to maximize synergies in ASEAN,
where potential demand growth is expected

1.

Strengthen global governance in line withbusiness scale expansion

2.

Business portfolio reform and new
business expansions

3.

Promoting sustainability management

Status quo-

Overseas sales to exceed the majority of total sales
in the fiscal year ending March 2022
- In terms of business scale, to be one of the world's three largest
paper trading companies. ** According to our own research (Paper trading company: a specialized trading company whose main business isthe wholesale of paper, pulp products and packaging-related products)

Expected Structure after
becoming a holding company
Business area

KPP Group(Holding company)
Business area

Business area

Northeast Asia andNorth America

KOKUSAI PULP &PAPER Co.,LTD(Japan, Taiwan, Hong Kong,
Korea, U.S.A)

Europe andSouth America

Keishin Papers(China)AntalisAsia Pacific

Spicers

KPP AP(Oceania)(Southeast Asia)* For details, please refer to the "Notice Concerning Commencement of Consideration of Transition to a Holding Company Structure" (disclosed on October 22, 2021)

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Business Description andStrategyMarket Restructuring （Tokyo Stock Exchange）

Currently working to transition to the Prime Market－ Based on the current situation and outlook, we plan to make a resolution on the selection of Tokyo Stock Exchange’s new market segment at theBoard of Directors meeting to be held before the end of this year and disclose the results.
－ Compliance with the revised Corporate Governance Code is also underway（Disclosure based on a framework equivalent to TCFD (Task Force on Climate Related Financial Disclosure), disclosure of sustainability initiatives , etc.)

Supplementary Information（Current Situation）（ prime market ）“Status of compliance with listing maintenance standards for new market segments”
Standard

Judgment *Number of shares in circulation
Market capitalization of shares in circulation✓

The aggregate market value of tradable sharescalculated based on today's closing price of theCompany's common stock in regular trading on
the Tokyo Stock Exchange and the average daily
trading value from July 1, 2021 to today satisfy
the criteria for maintaining the listing on thePrime Market.
※1

Ratio of shares in circulation※2

Average daily trading value✓* Items that did not meet the listing maintenance criteria forthe new market category are marked with "✓".
* Received from Tokyo Stock Exchange as of June 30, 2021,
the transition record date.

※1 Total market value of shares in circulation is over 10 billion yen※2 Average daily trading value is over 20 million yen

In order to stably meet the criteria for maintaining the listing on the “Prime market”
in terms of total market value of shares in circulation and trading value,
the Company conducted a secondary offering of shares.
* For details, please refer to "Notice Concerning Secondary Offering of Shares" (disclosed on November 19, 2021).
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Contents

１

Company Profile

２

First Half of the Fiscal Year Ending March 31, 2022

３

Progress of the Second Medium-Term Management Plan

４

Business Description and Strategy

5

Reference Materials

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Reference Materials

Paper Business （Domestic）

Paper
Deals in newsprint, printing paper, and information-related paper.
There is a wide range of paper types, and we make proposals that match the properties andcharacteristics of each type of paper depending on the application.

Paperboard
Paperboard is mainly classified into “container board”, “folding box board” and is widely used for packaging.
“Container board” is the base paper used to make corrugated boxes, and accounts for about 80%
of all paperboard.
“Folding box board” is the base paper for paper boxes such as candy, tissue, cards, etc.

Paper manufacturers

Users
Printing companies/
Newspaper companies

Publishers/Stationery
manufacturers

Paper
Merchant（secondary
trading）

Consumers
Products

Wrapping Paper manufacturers
Packaging paper manufacturers

Our Company
・ Independent common distributors- Primary paper distribution is mainly classified into paper manufacturer affiliates, general trading company affiliates, and independent common distributors
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Reference Materials

Paper Manufacturing Materials（Pulp, used paper）Business（Domestic）

Paper manufacturing materials
Currently, approximately 40% of the raw material consumed by the entire paper industry is pulp, and theremaining 60% is recycling paper.
We use our domestic and international network to procure pulp and used paper, and to sell them to paper

manufactures .

Artery Business（ Product Sales ）Paper・
Paperboard◆

Secondarywholesaler/user◆

Purchase paper
and paperboard◆◆

Processing/sales
companies
Products

Inventory anddelivery functions
Financial Functions
Information
function

Paper
Business
Final users

Paper manufacturer

Companies Home◆

Used Paper◆◆

Collect used paper

Deliver to paper manufacturers
Informational functions

Vein Business（ Collecting used paper ）Used Paper

Collection

旅行
Wholesaler ofused paper

Paper rawmaterials
Business

Government ・ Group collection /Collection agency
KPP's collection system(Town ecomo, Office ecomo)

・ Recycling industry through recycling of used paper－ The Japan's paper industry is characterized by the recycling of used paper.
－ Our company plays an important function in this process, and we have been working for many years toward the realization of a sustainable society.
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Reference Materials

External Environment

・ Packaging paper and sanitary paper are growing markets, accounting for more than 2/3 of the world’s paper
and paperboard production volume. Market growth in this area is linked to GDP growth.
・ Japan, Europe and ANZ are expected to turn to positive GDP growth after 2021.
China will continue to grow.
GDP Growth Rate in Japan, Europe,**

MaturemarketANZ and China

Other

Newsprint
paper

26.3%

Japan

Europe

ANZ
8.4%

4.5%
4.4%

Printing andCommunication
paper

2.3%

3.3%

China

5.6%
3.8%
2.5% 2.8%

Packaging
paper

2020年
Sanitary
paper

2021年

2022年

（Forecast）（Forecast）-2.5%
Growing
market71.3%（ Source: “FUTURE #13”, issued in April 2021 ）

-4.8%
-6.6%
（ Source: IMF “World Economic Outlook (WEO), April 2021” ）* FY2019 Production Volume

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* ANZ：Australia and New Zealand

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Reference Materials

Green Products / Green Solutions

KPP Group’s Green Products
Promotion ofpaper
solutionsDue to the marine plastic pollution problem, moves to restrict disposable plastic are accelerating in countries
around the globe, and demand for paper as an alternative material is rising.
In recent years, research and development has been progressed mainly by paper manufacturers, and there has
been an increase in examples of food packaging and daily necessities.
Examples: Paper-based clear folders, snack packages, shopping bags

Green
Products

Reduction ofplastic use

These products reduce the use of oil-derived plastic by innovating manufacturing technologies and mixing inbiomass-derived pulp and paper to an extent that does not detract from plastic characteristics such as barrier
properties and processing suitability.
Examples: Store POP film, face covers for trying on apparel, cutlery

Biomass
materials

As it is often difficult to switch plastic to other materials due to its various characteristics, research is being
conducted with the aim of reducing the environmental impact. Biomass plastic manufactured using biomass
materials and biodegradable plastic that is broken down by bacteria are some examples.
Examples: Checkout bags, food trays, straws

Paper-based clear folders

Try-on face cover for clothes shop

Paper straws

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Reduced plastic cutlery

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Reference Materials

ecomo Closed Recycle Service•

Our recycling brand, the "ECOMO" series•

Provides closed recycling from proposal to construction•

Centralized management of data for used paper collection anddelivery (=visualization)

Special Site ：https://ecomo.closedrecycle.jp/
Delivery ofused paper

Collection ofused paper

Our Company

Paper manufacturers
Purchase of products

Data Analysis

Business partners
Sales ofproducts

Visualization of recycling
Improving operational efficiency

Integrated platform

Strengthen profitability by providing customers with added value such as realtime visualization of their recycling and convenience.

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Reference Materials

BM ecomo

An operation support system that aims to support biomass power plant operation management, facility management, andbusiness management by utilizing the latest technologies such as big data analysis, AI, and IoT.
・ Biomass power plant operation support systemdeveloped by our company
・ September 2018: Announcement on development
・ October 2019: Start of demonstration operation
・ November 2021: Conclude agreement on service use

Special Site ： https://bmecomo.com/about_en.html

Features of BMecomo①

Information sharing and visualization
through remote monitoring②

Equipment maintenance③

Improving combustion efficiency(inheriting operating expertise)

Optimization and rationalizationof operation technology

×

Optimize revenues and costs

Maximizing revenue of biomass
power plant

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Reference Materials

PAPER MALL（EC site for paper-related products）

https://www.kpps.jp/papermall/Our website "Paper Mall" offers approx. 1,000 types of general paper, specialty paper and paper
products, which can be purchased from a single sheet of paper.
Samples and sample books can be ordered free of charge, and we also offer a processing service to cut
general paper into desired sizes to meet a wide range of customer needs.
We have strengthened the lineup of our "Green Products" series of environmentally friendly products(see below) to help all stakeholders who are working on SDGs.
This is a comprehensive paper-related website that makes the most of the strengths of our company,a paper specialist, such as the ability to make prompt deliveries through the network of KOKUSAI PULP
& PAPER CO., LTD, the ability to check the latest paper-related information such as paper industry
news, and the ability to receive questions and consultations about paper.

■ Green Products ～Environmentally friendly products～

・ Change to Papers
Microplastics are a cause of marine pollution. There is a need to develop materials
that can replace plastic. We are working on a "change to paper", switching to
products made from paper.

・ Plastic Reduction
We will reduce the amount of plastic used by mixing other materials while
maintaining the properties of the plastic. We are developing materials andproducts to reduce the amount of plastic used.

・ Bioplastics
https://www.kpps.jp/papermall/greenproducts/

Plastics that return to the soil as compost and do not remain after being decomposed by
microorganisms and other natural elements. We are developing materials and products insearch of the possibilities of biodegradable plastics and biomass plastics.

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Reference Materials

Integrated Report / TSUNAGU（Public Relations Magazine）

Integrated Report （published in October 2021）

TSUNAGU（published in October 2021）

A report that integrates our financial and non-financial information,with a wealth of information on ESG and sustainability strategies.

In addition to our company‘s news, we will introduce various topics
related to paper, such as artists and traditional crafts that use paper,to show you the appeal of paper.

https://www.kppc.co.jp/en/ir/report.html

https://www.kppc.co.jp/en/tsunagu.html－CONTACT－Corporate Communications Office
KOKUSAI PULP & PAPER CO.,LTD.
Phone +81(0)3-3542-4169

URL：https://cloud.swcms.net/kppcPublic/ja/contact/inquiry1.html

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Disclaimer
⚫

⚫

⚫

⚫

⚫

This document contains forward-looking statements, future plans, and management targets related to theCompany. These forward-looking statements are based on current assumptions regarding future eventsand trends and are not guaranteed to be accurate. Actual results may differ materially from thosepresented herein due to various factors.
Unless otherwise stated, the financial data presented herein are presented in accordance with accounting
principles generally accepted in Japan.
The Company does not necessarily make any revisions to the forward-looking statements it has made,regardless of the occurrence of future events, etc., except when required by the Disclosure Rules.
Information relating to other companies is based on publicly known information.
This document contains information on solicitation of offers to acquire, offer to sell, or offer to buy any
securities (hereinafter referred to as "solicitation"). It is not intended to constitute conduct solicitation
activities, nor can it be the basis for any contract or obligation.

Contact
Corporate Planning Section
KOKUSAI PULP & PAPER CO., LTD.

E-Mail：kpp_ir＠kpp-gr.com
URL：https://cloud.swcms.net/kppcPublic/ja/contact/inquiry1.html

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A Paper Trailfor Creating the Future.