Financial Results for Fiscal Year Ended
March 2022 andthe Third Medium-Term Plan
(Fiscal Year Ending March 2023 - March 2025)

Briefing Materials
13th June 2022

KOKUSAI PULP & PAPER CO., LTD.
Tokyo Stock Exchange Prime Market 9274

- Contents -Ⅰ Significant Changes through Large Scale M&A
Ⅱ

Summary of Financial Results for Fiscal Year Ended March 2022
Forecast for Fiscal Year Ending March 2023

Ⅲ

The Third Medium-Term Plan
(Fiscal Year March 2023 - March 2025)

Ⅳ Reference Materials

I Significant Changes through Large Scale M&A

Significant Changes throughLarge Scale M&A

Dramatic Changes in Business Structure, Scale and Performance

Regional strategy and portfolio reform through acquisition of overseas companies
Final year of the first medium-term plan

Final year of the second medium-term plan

March 2019

March 2022

563,400 (x1.46)
Consolidated subsidiary(July 2020)(JPY Million)

Antalis Spicers
Contribution

Consolidated subsidiary(July 2019)

384,900

9,300 (x4.11)

Overseas M&A drove growth

2,200

Sales

Operating profit

Sales

Operating profit by region

Sales by region

Operating profit

Sales by region

Operating profit by region
Oceania
15.5%

Northeast
Asia
96.4%

Northeast
Asia
98.7%

Europe38.1%

Northeast
Asia
53.7%

North andSouth America 1.0%

North andSouth America 1.7%

Oceania 0.9%

Oceania 5.1%

Southeast Asia and India 1.7%

Southeast Asia and India 5.0%
* Approximation

Northeast
Asia
20.5%

Europe60.7%

Southeast Asia and India 2.2%

North andSouth America 3.0%
Southeast Asia and India 0.3%

* Approximation

3

Significant Changes throughLarge Scale M&A

Changes in Sales by Segment

Capture new business and expand outside paper/ board segments
Final year of the first medium-term plan

Final year of the second medium-term plan

March 2019

March 2022

Sales by Segment

Sales by Segment

Chemical Products &Machinery
8.9%
VisualCommunication
5.5%

Chemical Products& Machinery
17.7%

Paper Materials
11.7%

Board
18.9%

Paper
51.7%

Packaging
13.8%

Paper
53.3%

Raw Materials
for Paper
7.8%
Board
10.7%

Significant changes in sales composition ratio by segment
Diversifying business portfolio by incorporating packaging and visual communication businesses4Significant Changes throughLarge Scale M&A

KPP Group Positioning in the WorldAs a result of aggressive overseas M&A in Australia and Europe, KPP Group have become
the third largest in the world in terms of business scale (* Based on our own research)(JPY Billion)

900
800

March 2022

563.4 billion
Operating profit JPY 9.3 billion
Sales JPY

700

600
500
400
300
200
100
0
SwedenGermany
Japan
Japan
Austria
SwedenJapan
Company B Company A Company C Company B Company A Company A Company A

USA
USA
KPP
当社
Company B Company A
Group* Net sales … Actual or forecast figures for the fiscal year ended/ending March 2022 are used.
* Paper trading companies … Trading company specializing in wholesale of pulp and paper products and packaging-related products.

5

Significant Changes throughLarge Scale M&A

Domestic Listed Companies (Wholesalers) Sales Ranking

Ranked 29th in the sales ranking of domestic listed companies in the wholesale industry
Security
Rank
code

Company Name

8058
8001
8031
8002
8015

Mitsubishi Corporation
ITOCHU Corporation
MITSUI & CO., LTD.
Marubeni Corporation
Toyota Tsusho Corporation

25
26
27
28

8098
2692
8097
3151

Inabata & Co., Ltd.
ITOCHU-SHOKUHIN Co.,Ltd.
SAN-AI OBBLI CO.,LTD.
VITAL KSK HOLDINGS, INC.

29

9274

KOKUSAI PULP&PAPER
CO.,LTD.

30
31
32
33

8060
3360
7130
8051

（100million JPY）

Operating
Profit（100million JPY）

Operating
Profit Ratio

Fiscal Year
Ended

（％）

（22.Mar）

172,648
122,933
117,575
85,08580,280

7,594
7,864
5,640
2,675
2,941

4.4
6.4
4.8
3.1
3.7

22.Mar
22.Mar
22.Mar
22.Mar
22.Mar

6,809
6,126
5,987
5,772

200
58
120
29

2.9
1.0
2.0
0.5

22.Mar
22.Mar
22.Mar
22.Mar

5,634

93

5,520
5,143
5,036
5,018

396
205
68
171

…

1
2
3
4
5

Net Sales

Canon Marketing Japan Inc.
SHIP HEALTHCARE HOLDINGS, INC
YAMAE GROUP HOLDINGS CO.,LTD.

YAMAZEN CORPORATION

1.7 22.Mar
7.2
4.0
1.4
3.4

22.Mar
22.Mar
22.Mar
22.Mar

Source : Weekly Toyo Keizai (4th June 2022, Toyo Keizai)

6

Ⅱ

Summary of Financial Results for Fiscal Year
Ended March 2022
Forecast for Fiscal Year Ending March 2023

Contents

1

Summary of Financial Results for Fiscal Year
Ended March 20228

Summary of Financial Results for
Fiscal Year Ended March 2022

Financial Highlights and Performance Summary

Achieved the highest sales and profits ever. Operating profit increased remarkably (JPY +18.4 billion).
Sales
OperatingprofitOrdinary profit

・ Antalis, acquired in the previous fiscal year, contributed to the full-year results (JPY +133,010 million).
Significant increase in sales.
・ The impact of the provision of allowance for doubtful accounts in Hong Kong and China (JPY -11,475 million),
which occurred in the previous fiscal year, was eliminated, and the business turned profitable.
・ In addition to the full-year contribution from Antalis, a sharp recovery in demand and higher sales prices
in the Australian/ New Zealand markets led to a significant increase in profit.
・ The net increase from the previous year exceeded operating profit partly due to a positive factor of
JPY 937 million in reversal of allowance for doubtful accounts in Hong Kong and China.

March 2022

March 2021

Variance inamountFull-year results

Full-year results

Sales

430,404

563,414+133,010+30.9%

Gross profit

51,91592,951+41,036+79.0%

Selling, general andadministrative expenses

60,95083,571+22,621+37.1%

Operating profit(9,035)

9,379+18,414-

Ordinary profit(12,041)

8,844+20,885

-

1,416

7,497

+6,080+429.3%(JPY Million)

Profit attributable toowners of parent

Variance in %9

Summary of Financial Results for
Fiscal Year Ended March 2022

Results by Segment

Overseas sales increased dramatically to JPY 305 billion (+72.8%)
Domestic
bases

・ Sales of paper increased from the previous fiscal year which was largely affected by the spread of Covid-19,
however failed to recover to the pre-corona disaster level.
・ Sales of paperboard increased from the previous year due to firm demand and higher prices for used paper and pulp.

Overseasbases

・ Significant increases in sales and profit due to the full-year contribution of Antalis acquisition andthe strong performance brought by the new normal policy in Europe, Australia and New Zealand.

Real estateleasing・ Although one of the main property, KPP Yaesu Building continued to operate at fully occupancy,
profits decreased due to lower rental revenues from the redevelopment of owned properties.
March 2021
Full-year results(JPY Million)

Domestic basepaper and pulp
wholesale business
Overseas bases
paper and pulp
wholesale business

Sales

Total

Full-year results

252,104

Segment profit

3,710

Profit ratio

1.5%

Sales

177,052

Segment profit(10,557)

Profit ratio
Sales

Real estate leasing
business

March 2022

Segment profit

1,247
629

Profit ratio

50.5%

Sales * 1

430,404

Operating profit * 2(9,035)

Profit ratio-

256,282
4,982
1.9%
305,901
7,160
2.3%
1,230
176
14.3%
563,414
9,379
1.7%

Variance in amount

Variance in %+4,178+1.7%+1,272+34.3%-+0.5 pp+128,848+72.8%+17,718

-

-

-

(16)

(1.3%)(453)(72.0%)-(36.2 pp)

+133,010+30.9%+18,414---* 1 Internal and inter-company sales in the segments are deducted.
* 2 Corporate expenses: general administrative expenses in the administrative divisions of the head office that do not belong to the above segments.

10Summary of Financial Results for
Fiscal Year Ended March 2022

Analysis of Changes in Operating Profit (Year on Year)(JPY Million)②
19,092①(22,621)(Year on Year)

9,379+18,414③
21,943(9,035)(Increase in sales)(Profit margin improvement)

Increase/ Decrease Factors in Operating Profits (year on year)
Antalis contributed to both sales and profit margins remarkably.
① Gross profit (effect of sales increase) +21,943- (Increase in net sales) Domestic operations +4,178 (Change: 1.7%) / Overseas operations +128,849 (+72.8%)：Antalis +132,084, Spicers +8,440, etc.
② Gross profit (effect of improved gross margin) + 19,092- Consolidated gross margin increased from 12.1% to 16.5% (+4.4 pp) thanks to the full-year contribution of Antalis which have a high gross margin ratio (26.8%).
* Increase gross margin rate from 5.7% to 16.5% (+10.8 pp) from the start of the second medium-term plan (fiscal year ended March 2019).
Changed to a highly gross margin structure.
③ SG&A +22,621 (Increase in SG&A due to changes in profit structure and business model resulting from M&A).
- Salaries and benefits +13,742 (Antalis +14,105 and Spicers +615), Freight +5,957 (Antalis +5,574), Other Antalis SG&A +11,180,
Provision of allowance for doubtful accounts -11,371 (Hong Kong Daiei -8,358, Keishin -3,132 and others) and etc.

11

Summary of Financial Results for
Fiscal Year Ended March 2022

Change in Balance Sheet (Year on Year)End of March
2021

End of March
2022

Variationin amount

200,672

210,523

9,851

30,546

22,634(7,912)

125,710

126,965

1,254

Short-term borrowing

40,012

51,250

11,238

Tangible fixed
assets34,84534,196

Intangible fixed
assets8,777

Investments andother assets

Total assets(JPY Million)

Current assets
Cash and cash
equivalents

End of March
2021

End of March
2022

Variationin amount

190,993

170,164(20,829)

85,224

94,5039,279

67,99937,615(30,384)

Merchandise andmanufactured goods

Fixed liabilities

40,54464,167

23,622(649)

Long-term debt

15,272

42,622

27,3499,248

470

Total liabilities

231,537

234,332

2,794

30,82436,738

5,913

Total net assets

43,581

56,374

12,792

275,119

290,707

15,587

Total liabilities
and net assets

275,119

290,707

15,587

Current liabilities
Accounts payable

Accounts receivable(Notes and accounts receivable,
electronically recordedmonetary claims)(JPY Million)■ Main factors for increase/ decrease・ Inventory: 11,238 increase ➣ Increase due to growing market condition(Spicers 5,910, KPP 1,998, Antalis 1,518, etc.).
・ Investments and other assets: 5,913 increase➣ Antalis net defined benefit asset 7,418, etc.
・ Net assets: 12,792 increase ➣ Net income 7,497
Accumulated adjustments for Antalis net defined benefit 6,481, etc.

(Notes and accounts payable trade, electronically recorded
obligations - operating)(including commercial paper)■ Improvement of financial position
・ D/E ratio*1

Improved from 1.9 to 1.4✓ Net D/E ration* 2 improved from 1.2 to 1.0

・ Capital adequacy ratio
improved from

15.8% to 19.4%* 1 DE ratio : Interest-bearing debt/ net assets* 2 Net DE ratio : (Interest-bearing debt - cash and deposits) / Net assets

12Summary of Financial Results for
Fiscal Year Ended March 2022

Cash Flows Increase/ Decrease(JPY Million)

Cash flows from operating
activities

March 2021

(6,472)

March 2022

4,821

Main factors for change
・ Income before income taxes +9,227
・ Depreciation +7,226
・ Increase (decrease) in inventories (9,982)
・ Increase (decrease) in trade payables +7,498
・ Corporate income taxes paid (9,950)* Increase in income taxes paid in the fiscal year ended March 2022 due tothe sale of real estate and gain on debt waiver in the fiscal year ended March 2021.

Cash flows from investing
activities

23,046(2,678)・ Acquisition of tangible and intangible fixed assets (3,182)
・ Sale of tangible and intangible fixed assets +1,795
・ Purchase of shares of subsidiaries resulting in change
in scope of consolidation (1,247)
・ Net change in short-term loans payable (44,357)
・ Net change in commercial paper +11,000
・ Proceeds from long-term loan payable +28,310
・ Repayments of lease obligations (4,783)

Cash flows from financing
activities

6,597

Translation difference for cash
and cash equivalents(403)

currency translation adjustments of cash and
1,748 ・ Foreign
parent-child loans

Increase (decrease) in cash
and cash equivalents

22,768(7,912)－

Cash and cash equivalents
at the beginning of the year

7,775

30,543－

Cash and cash equivalents
at the end of the year

30,543

22,631－(11,803)13

Contents

2

Forecast for Fiscal Year Ending March 2023

14

Forecast for Fiscal YearEnding March 2023

Assumptions of the Forecast for Fiscal Year Ending March 2023

External environment✓ The impact of Covid-19 will continue in some areas, and the emergence of the new variants has been taken into consideration.
✓ Disruptions in the global logistics network (lack of containers and workers at ports) will continue.
✓ Raw material and fuel prices will continue to rise due to the rebound of economical activities and the influence of the situation in Ukraine, etc.
Possible increase in pulp and paper prices.

✓ Depreciation of JPY will remain at a certain level (our assumed exchange rates : USD ¥117, EUR ¥128, AUD ¥85).

Domestic bases

Overseas bases【 Paper 】【 Paper 】

The demand expected to drop by 2.8% compared with the previous year.

(1st half) Demand remains steady, and prices are maintained.
(2nd half) Supply and demand are improved, and prices are stable.

【 Paperboard 】
The demand to increase due to the growth of e-commerce market andrecovery of human mobility in Japan.

【 Used paper 】
Prices to remain flat due to a decrease in the amount of used paper
generated.

【 Packaging 】
The market is revitalized by the further recovery of human mobility.
Sales increase both in Europe and Australia/New Zealand.

【 Visual Communication 】
The same as packaging.

【 Pulp 】【 In-Organic 】

Global supply chain expected to be disturbed due to the situation in Russia
and Ukraine, resulting in higher prices.

Acquire packaging and visual communication companies in each ofregions.

【 In-Organic 】
Considering and pursuing M&A mainly in the environmental business.

15

Forecast for Fiscal YearEnding March 2023

Forecast Summary

Operating profit JPY 12 billion (+27.9%). The highest profits ever due to increased sales.

Sales
OperatingprofitOrdinary profit

・ As in the previous year, overseas subsidiaries in Europe and Australia are expected to continue to perform well.
In Japan, the decline in demand for paper will be covered by price revisions for paper/ paperboard andhigher prices for used paper and pulp. The consolidated sales is expected to reach the highest ever.
・ SG&A expenses are expected to increase mainly due to selling and personnel expenses,
however operating profit is expected to increase significantly due to sales growth.
・ Despite an increase in interest expenses due to higher borrowings in line with business expansion and other factors,
record-high ordinary profit is expected.

March 2023

March 2022
(JPY Million)

Full-year results

Full-year forecast

Variation inamountVariation in %Sales

563,414590,000+26,585+4.7%

Gross profit

92,95197,000+4,048+4.4%

Selling, general andadministrative expenses

83,57185,000+1,428+1.7%

Operating profit

9,379

12,000+2,620+27.9%

Ordinary profit

8,844

9,400

+555

+6.3%

Profit attributable toowners of parent

7,497

7,500

+2

+0.0%
16

Forecast for Fiscal YearEnding March 2023

Forecast by Segment

Overseas operations to continue to perform well. Sales to increase dramatically to JPY 328 billion (+7.4%).

Domesticbases

・ Although paper demand is expected to decline, paperboard demand is expected to remain firm.
Higher sales and profits are expected to increase due to price revisions and increased sales of used paper and pulp.

Overseasbases

・ Continued strong sales in Europe and Australia.
Selling price of paper is expected to remain high and the profit ratio is expected to remain flat.
Packaging and visual communication businesses to grow through an in-organic strategy in addition to expanding the markets.

Real estateleasing・ Even though one of our main properties, KPP Yaesu Building will continue to be fully occupied, however the profits will decrease
due to increase in repair costs for other properties. Preparations are underway for the acquisition of new rental properties.
March 2022
Full-year results(JPY Million)

Domestic bases
paper and pulp
wholesale business
Overseas bases
paper and pulp
wholesale business

Real estate leasing
business

Total

March 2023

Sales

256,282

Segment profit

4,982

Profit ratio

1.9%

Sales

305,901

Segment profit

7,160

Profit ratio

2.3%

Sales

1,230

Segment profit

176

Profit ratio

14.3%

Sales * 1

563,414

Operating profit * 2

9,379

Profit ratio

1.7%

Full-year forecast

267,000
5,400
2.0%
328,000
9,600
2.9%
1,200
30
2.5%
590,000
12,000
2.0%

Variation in amount

Variation in %+10,117

+4.2%

+417

+8.4%

-

+0.1 pp+22,098+7.4%+2,439+34.1%-+0.6 pp(30)(2.5%)(146)(83.0%)-(11.8 pp)+26,585+4.7%+2,620+27.9%-+0.4pp* 1 Internal and inter-company sales in the segments are deducted.
* 2 Corporate expenses: general administrative expenses in the administrative divisions of the head office that do not belong to the above segments.

17

The Third Medium-Term Plan
Ⅲ (Fiscal Year March 2023 - March 2025)

Contents

1

The Second Medium-Term Plan Review

19

The Second Medium-Term
Plan Review

The Second Medium-Term Plan Summary

Both sales and profits grew significantly, and the company became highly profitable. ROE rose from 5.1% to 15.0%.
The acquisitions of Antalis and Spicers have led to a significant increase in overseas business performance.
Promote portfolio reform by integrating new business areas such as visual communication and packaging in Europe.
Restructuring of China business is progressing well, and profitability is improving.
Fiscal year ended March 2022
(Final fiscal year of the Second Medium-Term Plan)(JPY Million)
Final year of the first
medium-term plan
Fiscal year ended
March 2019 actual

Sales

384,973

Second Medium-Term Plan
Original planvalue

430,000

Fiscal year
ended March2022 actual

563,414

Change in %from originalplan(JPY Million)

Sales(JPY Million)

600,000

10,0009,000

500,000+31.0%

8,000
7,000

400,000

Operatingprofit

2,280

3,000

9,379

+212.6%

Net profit

2,497

2,000

7,497

+274.9%200,000

ROE

5.1%

-

15.0%

-

100,000

ROA

1.3%

-

2.7%

-

6,000
300,000

5,000
4,000
3,000
2,000
1,000

0

0
Original
plan value

Results

Domestic Business Summary

Overseas Business Summary

・ Faced a shrinking market for graphic paper(driven by digitalization and Covid-19 pandemic)

・ Achieved large-scale M&A (Spicers, Antalis)・ Strengthened and promoted comprehensive recycling-oriented
businesses
・ Created solution businesses such as BMecomo

Operating profit

Original
plan value

Results

・ Reformed business portfolio (packaging, visual communication)

・ Implemented business and organizational restructuring(China business, etc.)

20

The Second Medium-Term
Plan Review

Expanded Business Scale and Implemented New Businesses

Completed large-scale overseas M&A
1. Became a consolidated subsidiary in July 2019
⚫ Net sales: JPY 30,300 million (fiscal year ended December 2021)⚫ Number of employees: 337 (as of March 2022)⚫ Business details : Commercial printing and digital media, label packaging,industrial packaging, sign and display, consumables and hardware,architecture and interior design, etc.
⚫ A leading company in Australia and New Zealand in the wholesale businessof commercial printing paper, packaging materials and paper-related products⚫ Strong in visual communication business

2. Became a consolidated subsidiary in July 2020
⚫ Net sales: JPY 236,700 million (fiscal year ended December 2021)⚫ Number of employees: 3,839 (as of March 2022)⚫ Business details : Paper and paper-related products, packaging, visualcommunication⚫ Positioned as a market leader in the distribution of paper and paper-related
products, as well as in the packaging and visual communications businesses
with high profitability and growth⚫ Strong presence in packaging and visual communication businesses

Total results of Antalis and Spicers * Fiscal year ended March 2022
Net sales: JPY 267,100 million
Operating profit: JPY 7,500 million
21

The Second Medium-Term
Plan Review

Transfer of Overseas Business Models in the Paper BusinessHybrid and global deployment of three business models in different regions

Paper Trading

Paper Distribution

Paper MerchantOverseas business model

Domestic business modelBusiness models in the US and Europe

MissionMissionMissionTrading business utilizing global
network in paper, paperboard andpaper materials

Paper-related wholesale
business combining indent
business (consignment sales)with stock business(inventory sales)

High-value-added business throughcutting and processing and sales ofown-brand products with large-scale
logistics and delivery functions

Gross margin ratio

Gross margin ratio

Gross margin ratio

approx. 3%

approx. 6%

approx. 25%

Maximizing profitability and efficiency by developing various business models appropriate
for each region
22

Contents

2

The Third Medium-Term Plan Basic Policy

23

The Third Medium-Term Plan
Basic PolicyLong-Term Vision "GIFT + 1 2024"

The Third Medium-Term Plan is the final stage of the long-term vision "GIFT + 1 2024"- Toward "GIFT + 1 2030" and "NEXT 100" years
The Third Medium-Term Plan Period

Focusing on overseas
markets

Expansion of raw material
business

NEXT 100

Global management
establishing a total
recycling company
Completion toward "NEXT 100"

Investment in growthengines and for overseas
expansion
Strengthening profitability

Reorganizationof business portfolio

Antalis became
Spicers became a consolidated
subsidiarya consolidated(July 2020)
subsidiary
Newly listed on theTokyo Stock Exchange (July 2019)

Current(June 2018)

Business structurereform period
March
2017

March
2018

March
2019

The First Medium-Term Plan

Businessdevelopment period

March
2020

March
2021

March
2022

The Second Medium-Term Plan

Long-Term Vision "GIFT + 1 2024"

The current business plancompletion period

March
2023

March
2024

March
2025

The Third Medium-Term Plan

"GIFT + 1 2030"
24

The Third Medium-Term Plan
Basic Policy

Themes of the Third Medium-Term Plan

Theme
Achieving the Long-Term Vision "GIFT + 1 2024" and for the 100th
Anniversary of the Company

Messages
Contributing to a sustainable society through recycling-enhancing business andincreasing corporate value through business portfolio reform
Strengthen global groupmanagement

Establish and deepen profit base・ Maximize profits of each operatingcompany
・ Promote strategic alliances and M&A

×・ Realization of ESG management
・ Establish a global operations system
・ Strengthen group communication

・ Pursue global synergies

・ Appropriate allocation of management

・ Promote DX (Digital Transformation)

resources

25

The Third Medium-Term Plan
Basic Policy

KPP GROUP WAY（Management Philosophy/ Guidelines/ Management Vision）

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

26

The Third Medium-Term Plan
Basic Policy

KPP Group's Sustainability Strategy

KPP Group Basic Sustainability Policy
The KPP Group Way formed in three layers of the Management Philosophy, the Guidelines for Corporate Conduct,
and the Management Vision includes many elements that underpin sustainability management such as sustainable growth,compliance with laws and regulations, and ESG. This fiscal year, we established the KPP Group Basic Policy on Sustainability,
identifying material issues.
The Group will continue to engage in the resolution of global sustainability issues by leveraging the KPP Group Way.

Material Issues of the KPP Group
Global Expansion

Response to DX

Implementation of Green BusinessClimate Change Countermeasures

Diversity & Inclusion

Enhancement of Governance・ Creation of group synergies
・ Internal communication

・ Expansion of e-commerce
・ Development of new systems

・ Development of solutions to prevent global warming
・ Reduction of CO2 emissions

・ Ensuring diversity
・ Utilization of diverse personnel

・ Resolution of the marine plastic pollution problem
・ Recycling and waste reduction
・ Compliance・ Information security

・ Risk management

ESG Management Initiatives

E

S
G

Reduction of GHG Emissions

We have established a method for measuring emissions and started measuring them globally.
Gradually broaden the scope and set goals for the entire group.

Development of Green BusinessIn addition to Green Products, we aim to achieve global results in Europe and Oceania.

Expansion of Environmentally
Friendly Businesses)

Development of recycling-oriented businesses is stated in the management philosophy,
and we are promoting both materials and thermal recycling-oriented businesses in Japan.

Utilization and Developmentof Diverse Human Resources

Continue to respect work-life balance, employ people with disabilities, foreigners,
and mid-career employees. Continue various training (by level, harassment, etc.) and education.
Promote business activities with consideration for forests and biodiversity. Creating a safe,
healthy and fulfilling work environment that takes into accounts of the circumstances of each region.

* Targets for KPP

Risks and Incidents
Development of Management

Develop global management rules, global risk maps, and risk action plans.

Risk-based
Implementation of Internal Audits

Examination, preparation and construction of risk-based internal audits based on awareness of global risks.
Based on the above, we introduced and implemented audit plans and methods, and upgraded audit methods.

Strengthening Compliance

Promote surveys of core operating companies and establish a reporting system equivalent to risks and incidents.
Strongly promote compliance education at overseas sites, as necessary.

will strive to strengthen risk management by identifying the responses to risks revealed inStrengthening Information Security We
risk assessments conducted by core operating companies and the status of responses.

27

The Third Medium-Term Plan
Basic Policy

Example of ESG Management (E)Investments for Realization of a Recycling-Oriented Society

Capital and business alliance with Amica Terra Co., Ltd.,
engaged in the sale and manufacturing of non-plastic
products.

Oji Fiber Co., Ltd., which manufactures and processes
paper yarn and other textile products made frompaper, became a subsidiary.

In February 2022, formed a capital and business alliance with Amica Terra
Co., Ltd., which is engaged in plastic substitute materials (modo-cell ®)made mainly from plant fibers (cellulose).

In March 2022, Oji Fiber Co., Ltd. became a subsidiary,
which manufactures paper yarn "Kami no Ito OJO +"made from Manila hemp.

Characteristics of modo-cell ®

Features of Kami no Ito OJO +Plants are the main raw material, plant residues that werepreviously discarded of can be used as raw materials.
The main raw material is plants, it is completely
biodegraded on the ground and in the soil.
No special mold is required for molding, and products canbe manufactured using general plastic molding machines.

Lightweight and excellent in water absorption,quick drying, toughness, deodorization,
dyeability and biodegradability.
Wide range of applications including artificial grass,apparel, night wear and daily necessities

Effective in disposing of abandoned bamboo forests andagricultural waste
modo-cell ®

Possible to reflect the characteristics of plants used as raw
materials in products.

Examples of products using modo-cell ®

Examples of products using Kami no Ito OJO +Artificial grass made of paper yarnthat contributes to the resolutionof river and ocean pollution

https://amica-terra.com/

http://ojifiber.co.jp/✓ Continue to promote initiatives to realize a sustainable recycling-oriented society
28

Contents

3

Group Strategy(Kokusai Pulp & Paper/ Antalis/ Spicers)

29

Group Strategy

Transition to a Holding Company Structure and Global Expansion Management by Area

Transition to a holding company structure is scheduled in October 2022.
Establishing the system to manage the group companies in three regions by area of operation.
* Management structureby area
after establishing theholding company

Business area

Business area

Northeast Asia
Kokusai
Pulp & Paper(Japan)【Purpose of transition to the holding company structure】

KPP Group Holdings
Business area

Europe / North andSouth America

Strengthening global governance inline with business scale expansion

2.

Business portfolio reform and new
business expansions

3.

Promoting sustainability
management

Asia Pacific(Oceania / Southeast Asia / India)

AntalisSpicers(France)(Australia)

North America

1.

EuropeNortheast
Asia

Southeast Asia
and India

South
America

Oceania* Northeast Asia : Japan, China, Taiwan, Hong Kong and Korea

30

Group Strategy

Creating Synergies by Becoming a Holding Company✓Strategy: Share strategies, tactics, andmanagement methods across regions✓Sales: Business matching within the✓Human Resources: Optimizing global

group. Sharing know-how, skill market
information and sales organizations/channels

staffing✓Functions: Eliminating duplicated✓SCM: Global sharing of distributionfunctions through shared services etc.

networks and product inventories✓Procurement: Achieving✓Funding: Utilization of surplus funds✓Credit: Utilization of credit✓Taxation: Global tax savings

Management
Synergies

Financial
Synergies

economies of scale through joint
procurement of products✓Brand: Brand awareness and brandstrength

Business
Synergies

31

Group Strategy

Acquisition of External Management Resources (M&A and Alliances)

Achieving sustainable growth by acquiring external management resources (in-organic)in addition to growth from internal management resources (organic)

Organic Growth

In-organic Growth

Expansion of recycling-based
business models

Expanding business domains by acquiringexternal management resources

1. Further expansion of recycling-oriented
businesses by balancing used paper businesswith product sales
2. Strengthen pulp business, including raw
materials for sanitary paper
3. Maximize profits by expanding the share of
the paper and paperboard wholesale
business, and promoting e-commerce,
while reducing expenses
4. Expansion of solution businesses

Total amount: JPY

20 billion(in three years)➢ Target markets for M&A
VisualCommunication

Packaging

Other
Processing
Businesses➢ Management resources to be acquired
Portfolio

Human
Resources

Management
Know-how

Locationsand Facilities

Sustainable Growth32

Contents

4

The Third Medium-Term Plan Numerical Targets

33

Numerical Targets of
the Third Medium-Term Plan

Net Sales and Gross Profit by Business Segment

Continue to promote business portfolio reforms under the Third Medium-Term Plan
Final year of the Second
Medium-Term Plan

Final year of the Third
Medium-Term Plan (Target)

March 2022

March 2025
650,000(JPY million)

45,500563,400
Visual Communication

50,00030,900

Packaging

77,600Paper Raw Material

43,900Board

60,500Chemicals and Machinery etc.

65,000+79.7%

130,000

108,000
9,300

2,900

18,30097,50024,400Paper+67.6%

38,2004,700
3,000

300,600

5,200
4,500

260,000
48,600

Sales

2,500

52,00092,900Gross profit

39,300Sales

Gross profit

Ratio of visual communications and packaging businesses
with higher gross margins to rise34

Numerical Targets of
the Third Medium-Term Plan

Regional Strategy Summary

Overseeing the global operations by the three pillars: KPP, Antalis and Spicers, North and South America,
Southeast Asia and India businesses will be fully developed through the Third Medium-Term Plan.
(JPY Billion )Company
in charge

Area in charge

March 2025

Sales Target

Strategy Overview
・ Expand sales of paper and board by reviewing marketing methods focusing on
e-commerce while ensuring sales share and profits.

Kokusai Pulp &Paper (KPP)

Northeast Asia

320

・ Promote comprehensive recycling-oriented business.
・ In China, increase both sales and profit by expanding sales volume in linewith market expansion.
・ For paper & board, maintain the number 1 position in the region, and secure revenue
and profit growth.

Europe250

Antalis・ Packaging and visual communication businesses will make good use of
the in-organic strategy to expand while capturing market expansion.

・ Promote e-commerce in all three businesses for further improvement of
profit margin ratio.

North andSouth America

20・ Consider full-scale entry into North America and implement in-organic strategy.
・ Increase profitability by maintaining the market share in paper and board
in the region and promoting e-commerce.

Oceania35

・ Go-on in-organic strategy for packaging and visual communication andpursue M&A actively.
・ Further promote adhesive labels as a product segment.

Spicers
Southeast Asia
and India

25

・ Complete organizational restructuring. Promote business by utilizing know-how
under the control of Spicers.
・ Aim for growth by capturing market expansion in the area of paper and board,packaging and visual communication.

35

Numerical Targets of
the Third Medium-Term Plan

Targets for the Final Year 2025 of the Third Medium-Term Plan

Aiming to increase both sales and profits with more profitability.
(JPY million or %)March 2022

March 2025

Growth rateSales

563,414650,000+18.2%

Operating profit

9,379

14,500+54.6%

Operating profit

1.7%

2.2%

+0.5pp

Net profit

7,497

9,000

+20.0%

ROE

15.0%

12.0% or more

-

ROA

2.7%

2.5% or more-

Measures to achieve targets
・ Improvement in profitability: Increase in sales and operating profit ratio, etc.
・ Improvement of asset efficiency: Group business management through ROIC, etc.

Targets for improving financial position
March 2022

March 2025

*1

1.4x

1.0x or less

Capital adequacy ratio

19.4%

25.0% or more

Debt to equity ratio* 1 Debt to equity ratio : Interest-bearing debt/ net assets

36

Contents

5

Financial and Capital Strategy

37

Financial andCapital Strategy

Cash Flow Allocation

Increasing corporate value by growth investment within operating cash flow.
Improving our financial position by accumulating retained earnings.
Maintaining a net debt-to-equity ratio of less than 1 x and increase equity ratio to 25% or more.
Shareholder returns are based on an appropriate amount of retained earnings.

Cash inCash and
Deposits

・Sales of fixed assets andcross-shareholdings+

Cash out
Repayment of interest-bearing debt

・Return of fund management
・Collection of doubtful debt

Growth Investments
Operating cash flow
Three year cumulative

JPY

36 billion

JPY

23

billion(free cash flow)

Investment amount used forin-organic strategy (M&A, etc.)
approximately JPY

20 billion

Retained earnings

Shareholder returns (dividends)
Use of external funds38

Financial andCapital Strategy

Shareholder Returns (Dividend) Policy

20

Cash dividends per share

18
16

(JPY)

(Forecast)14
12
Listing Commemorative
Dividend of JPY 2

10
8
6
4
2
0
March
2012

March
2013

March
2014

March
2015

March
2016

March
2017

March
2018

March
2019

March
2020

March
2021

March
2022

March
2023

March
2024

March
2025

The Third Medium-Term Plan Period

FY March 2022: Upward revision of dividend forecast in August 2021 and February 2022.
Acquisitions of Spicers and Antalis contributed significantly to the Group‘s earnings, for solid earning base.
➣The first interim dividend was paid, and the foreseen annual dividend was increased to JPY 14 per share.

FY March 2023
We expect the solid business environment to continue, and both sales and profits are expected to increase as in the previous
fiscal year. Annual dividend forecast has increased to JPY 15 per share.

Aiming to increase dividends as a result of profit growth whileconsidering a balance between investments and shareholder returns
39

Ⅳ Reference Materials

Company Profile (as of the End of March 2022)
Paper wholesale distributor with 97-year history
Kokusai Pulp & Paper Co., Ltd.

Established

November 1924

Representative

Head Office
Address

Nippon Paper Industries Co., Ltd.

17.3%
9.2%

The Master Trust Bank of Japan, Ltd. (trust account)

6.8%

Oji Holdings Corporation

Company
Name

Kokusai Pulp & Paper Co., Ltd.
(Stock ownership Association)

Principle
Shareholders Hokuetsu Corporation（ End of Mar. 2022 ）Mizuho Bank, Ltd.,
6-24 Akashi-cho, Chuo-ku, Tokyo

Mitsui Sumitomo Insurance Company, Limited

MUFG Bank, Ltd.,

Capital
Employees

3.68%
Trust
banks

13.35%

Madoka Tanabe, Chairman &Chief Executive Officer
Tadashi Kurihara, President &Executive Officer

Foreigncorporations, etc.

4,723 million yen

Sumitomo Mitsui Banking Corporation

5,354（Consolidated）

The Norinchukin Bank

Major affiliated companies of our Group（91 subsidiaries and 6 affiliated companies）
Domestic bases
Wholesale business of pulp and paper, etc.

Other
corporations

3.6%
3.4%
2.5%
2.4%
2.3%
2.3%
2.3%

Share
Financial ownership
ratio 39.57%
institutions
by owner

17.95%(As of the end of
March 2022)

Individuals
and others

25.46%
Expansion status

Overseas bases
Wholesale business of pulp and paper, etc.

Consolidated subsidiaries

Equity-method affiliates

Consolidated subsidiaries

Narumiya Kami-shoji Co., Ltd.

Green Remake Co., Ltd.

Antalis S. A. S. * Consolidated subsidiary in July 2020.

Daidou Paper Trading Co., Ltd.

Green Fujikawa Co., Ltd.

Spicers Limited * Consolidated subsidiary in July 2019

Kyushu Kami-shoji Co., Ltd.

Mikasa Shikougyo Co., Ltd.

KPP ASIA-PACIFIC PTE. LTD.

Okayama Kami-shoji Co., Ltd.

Takaoka Co., Ltd.

DaiEi Papers (USA) Corp.

Kikyoya Kami-shoji Co., Ltd.

DaiEi Papers Korea Company Limited

Musashino Paper Recycling Co., Ltd.

DaiEi Papers Taiwan Co., Ltd

Green Sanai Co., Ltd.

ANTALIS (HONG KONG) LIMITEDKPP Logistics Co., Ltd.

Keishin Papers Trade (Shanghai) Co., Ltd■ Number of Countries

45■ Number of Cities

147■ Number of Bases

157

BMecomo Co., Ltd.
Oji Fiber Co., Ltd.

41

Paper and Paperboard 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

Wrapping paper manufacturers（Secondary trading）

Packaging paper manufacturers

Consumers
Products

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

42

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 the remaining 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
functionPaperbusiness
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.

43

Packaging Business (Customized Solutions)Customized solutions (Antalis)- Experts who handle a wide range of packaging materials customized solutions that meet customer needs
Providing services in a wide range of industrial fields, including automobiles, electronics, high-tech, machinery, metals, food, chemicals and so on.

Inquiries from Customers
We have products that need protection,
but we can't find a standard packaging
solution to meet our needs.

Expert・ What protection does the product need?
・ What are the transportation modes and routes?
・ What are the on-site inventory conditions?
・ What does your internal logistics look like?
・ What about the disposal after use?

・Carefully consider customers unique cases and develop a solution that meets their requirements
・Procurement of the highest quality packaging materials at competitive prices through a broad network of suppliers and manufacturers
Packaging Design Center

Providing a variety of packaging materials (examples)

Corrugatedcardboard

Foam cushion

Air cushion

Paper cushion

Honeycomb
panel

Gap filling buffermaterial

Bag Type Air
Cushioning Material

Film packaging
material

Corrugated foam

44

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.”

45

Visual Communication Business（Examples of Installations）
Various examples of installation 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

DIBOND46

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‐ Propose customers the best combination of surface materials, adhesives, release paper and release film for various different applications.
‐ Wide range of supply sources, especially in Asia and Europe‐ A large selection of approx. 100 different products.
‐ In-house slitting process provides added value, responding flexibly to customer specifications.

Daily Necessities

Logistics

Food & Beverage

OthersMedical Care

47

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

48

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, Artificial grass made of paper yarn

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

Reduced plastic cutlery

Artificial grass made of paper yarn49ecomo Closed Recycle Service

https://ecomo.closedrecycle.jp/•

Our recycling brand, the "ECOMO" series•

Provides closed recycling from proposal to construction•

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

Delivery ofused paper

Paper manufacturers
Purchase of productsCollection ofused paper

Our Company
Data Analysis

Business partners
Sales ofproducts

Visualization of recycling
Improving operational efficiency

Integrated platform

Strengthen profitability by providing customers with added value such asreal time visualization of their recycling and convenience.
50

BM ecomo
An operation support system that aims to support biomass power plant operation management,
facility management, and business management by utilizing the latest technologies
such as big data analysis, AI and IoT.
Provide a service to purchase waste wood and use it as biomass fuelhttps://bmecomo.com【Biomass power plant operation support system
conceived by our company】
・ October 2019: Start of demonstration operation
・ November 2021: Conclude agreement on service use
・ March 2022: Spin off to further expand businessand increase efficiency

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
51

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.

52

Integrated Report/ TSUNAGU（Public Relations Magazine）
Integrated Report （published in October 2021）

TSUNAGU（published in May 2022）

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

53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.
This English document is just a translation of the Japanese document. Therefore, please use this English
document only for convenience and refer to the original Japanese document as appropriate.
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

54

55