Consolidated Financial Results
for the Year Ended March 31, 2018 [Japanese GAAP]May 14, 2018
Company:
Stock Exchange Listing: Tokyo
Hokuetsu Kishu Paper Co., Ltd.
Stock Code:3865
URL: http://www.hokuetsucorp.com
Representative: Sekio Kishimoto, President & CEO
Contact:
Tomonari Maruyama, General Manager, Accounting Department
TEL: +81-3-3245-4500
Scheduled date of ordinary general meeting of shareholders: June 27, 2018
Scheduled date of commencement of dividend payment:
June 28, 2018
Scheduled date of filing annual securities report:
June 27, 2018
Supplementary documents for financial results:
Yes
Results briefing
Yes (for institutional investors and analysts)(Figures rounded down to the nearest million yen)
1. Consolidated financial results for the year ended March 31, 2018 (April 1, 2017 through March 31, 2018)(1) Consolidated results of operations(% change from the previous corresponding period)
Net income attributable
Net sales
Operating income
Ordinary income
to owners of parent
company
Million yen%
Million yen%
Million yen%
Million yen%
Year ended March 31, 2018
269,099
2.6
11,414 (11.5)
13,907(1.1)
10,327(0.5)
Year ended March 31, 2017
262,398
6.3
12,90039.7
14,05532.8
10,38038.8(Note) Comprehensive income:The year ended March 31, 2018: 13,008 million yen(-6.0%)The year ended March 31, 2017:13,840 million yen(326.4%)
Ratio of ordinary
Basic earnings per Diluted earnings
Ratio of operating
Return on equity
income to total
share
per share
income to net sales
assets
Yen
Yen
%
%
%
Year ended March 31, 2018
54.68
53.42
5.6
3.8
4.2
Year ended March 31, 2017
55.09
52.99
6.0
3.9
4.9
(Reference) Investment income by equity method:
The year ended March 31, 2018:
1,844 million yen
The year ended March 31, 2017:
3,019 million yen(2) Consolidated financial position
Total assets
Net assets
Equity ratio
Net assets per share
Million yen
Million yen%
Yen
As of March 31, 2018367,244
191,977
52.1
1,011.58
As of March 31, 2017362,205
181,03449.8
956.63(Reference) Equity:
As of March 31, 2018:
191,154 million yen
As of March 31, 2017:180,294 million yen(3) Consolidated Cash flows
Cash flows from
Cash flows from
Cash flows from
Cash and cash
operating activities
investing activities
financing activities
equivalents at year-end
Million yen
Million yen
Million yen
Million yen
Year ended March 31, 2018
19,741(14,158)(10,644)
14,281
Year ended March 31, 2017
28,918(13,648)(14,446)
19,284
2. Dividends
Annual dividend per share
End of 1Q End of 2Q End of 3Q Year-end

Year ended
March 31, 2017
Year ended
March 31, 2018Year ending
March 31, 2019 (forecast)

Total

Ratio of
Dividend
dividend to
payout ratio
net assets(Consolidated)(Consolidated)
Million yen
%
%
Total
dividends(Total)

Yen

Yen

Yen

Yen

Yen

–

6.00

–

6.00

12.00

2,273

21.8

1.3

–

6.00

–

6.00

12.00

2,273

21.9

1.2

–

6.00

–

6.00

12.00

26.7

3. Forecast of Consolidated Financial Results for the Year Ending March 31, 2019 (April 1, 2018 through March 31, 2019) (%change from the previous corresponding period)
Net income attributable
Basic
Net sales
Operating income
Ordinary income
to owners of parent earnings percompany
share
Million yen% Million yen% Million yen% Million yen%
Yen
2Q (Accumulated)
136,000
2.7
4,000 (12.3)
5,500 (20.8)
3,000 (44.1)
15.88
Full year
275,000
2.2
10,000 (12.4)
13,000(6.5)
8,500 (17.7)
44.98
-1-

* Notes(1) Changes in significant subsidiaries during the year (changes in specified subsidiaries accompanying changes in the scope of consolidation):
None(2) Changes in accounting policies, accounting estimates and restatement of prior period financial statements(i) Changes in accounting policies due to revision of accounting standards: None(ii) Changes in accounting policies other than (i): None(iii) Changes in accounting estimates: None(iv) Restatement of prior period financial statements: None
(3) Shares outstanding (common stock)(i) Number of shares outstanding at the year-end (treasury stock included):
As of March 31, 2018
209,263,814 shares
As of March 31, 2017(ii) Number of treasury stock at the year-end:
As of March 31, 2018
20,298,290 shares
As of March 31, 2017(iii) Average number of shares during the year:
For the year ended March 31, 2018
188,864,106 shares
For the year ended March 31, 2017

209,263,814 shares
20,794,944 shares
188,442,763 shares* The summary of financial results is exempt from audits conducted by certified public accountants or an audit corporation.
* Explanation regarding appropriate use of business forecasts and other special instructions
The forward-looking statements such as forecasts of financial results contained in this material are based on information available to theCompany at the time of the publication of this document and certain assumptions that the Company considers to be reasonable, and may differ
materially from the actual results due to various factors. For assumptions of earnings forecasts and a note about the use of earnings forecasts,
please refer to page 5 “1. Summary of Operating Results (4) Future outlook.”* This document is an excerpt translation of the original in Japanese and is for reference purposes only. In case of any discrepancy
between this document and the original in Japanese, the latter shall take precedence.

-2-

1. Summary of operating results(1) Summary of operating results during the year under review(Operating results during the year under review)
With respect to the business results for the year ended March 31, 2018, while net sales increased due to strong sales of overseas subsidiaries,
profits were down because the raw fuel price rose sharply. The Group’s consolidated financial results for the fiscal year were as follows:
Net sales

269,099 million yen(up 2.6% year on year)

Operating income

11,414 million yen(down 11.5% year on year)

Ordinary income

13,907 million yen(down 1.1% year on year)

Net income attributable to owners of parent company

10,327 million yen(down 0.5% year on year)

The performance of major segments is as follows:(i) Pulp and paper business(Million yen)Previous year

Current year

Difference

Net sales

234,576

242,082

7,506

Operating income

10,321

8,808(1,512)In the pulp and paper business, the Groups saw higher net sales due to brisk sales of overseas subsidiaries. However, profits were down
due to a sharp rise in the raw fuel price.
By product type, net sales for Western paper decreased due to the impact of electronic advertising media and mail-order catalogs and adecrease in the circulation of publications.
With regard to white paperboard, net sales of coated duplex board (with gray-back) for food-related items including confectionery andretort remained strong. Net sales of premium white paperboard were down slightly year on year due to sluggish sales for use forconvenience stores’ sales promotion goods and POP in stores. Net sales of special white paperboard remained steady for package use forwestern confectionery and souvenirs.
As for specialty paper, in the area of functional paper, net sales for base paper for chip carrier tape to carry electronic parts increased
because of the increased demand for smartphones and automotive electronic parts. Moreover, net sales of automotive battery separatorsand filters for air purifiers remained strong as well. Meanwhile, with respect to the overall situation of fancy paper, a downgrade to general
paper in addition to a decline in demand were seen, but high-grade printing paper remained robust. Net sales of adhesive postcards fornotices exceeded those of last year, but regarding overall communication paper, a decrease in use for vouchers and a shift to electronic
media continued, creating a severe sales situation.
Net sales of pulp at Alberta-Pacific Forest Industries Inc. were strong due to rising pulp market conditions, and the sales volume rose year
on year.
(ii) Packaging/Paper processing business(Million yen)Previous year

Current year

Difference

Net sales

20,146

19,428(717)

Operating income

1,261

1,128

(132)

A decrease in net sales and profits for the packaging/paper processing business were posted due to a decline in the order volume from acustomer which made a change in the shape of fluid containers.

-3-

(iii) Other businesses(Million yen)Previous year
Net sales
Operating income

Current year

Difference

7,676

7,589

(87)

623

815

192

As for other businesses such as the wood business, the construction business, the transportation and the warehousing business, net sales
for construction decreased due to a decline in orders. Net sales of the other businesses increased thanks to the impact of a range of cost
reductions.
(2) Summary of financial conditions during the fiscal year under review(Million yen)
End of previous year

End of current year

ChangeTotal assets

362,205367,244

5,038

Net assets

181,034

191,977

10,942Equity ratio

49.8%

52.1%

2.3%

Basic earnings per share

956.63 yen

1,011.58 yen

54.95 yenInterest-bearing debt at year-end

116,753

108,240(8,513)

Total assets increased 5,038 million yen from the end of the previous year, to 367,244 million yen. Major factors included increases innotes and account receivable-trade of 5,028 million yen, electronically recorded monetary claims - operating of 2,095 million yen,merchandise and finished goods of 2,990 million yen and investment securities of 2,818 million yen, chiefly reflecting rising stock prices,in spite of decreases in cash and deposits of 5,178 million yen and property, plant and equipment of 4,408 million yen, due mainly todepreciation.
Total liabilities decreased 5,903 million yen from the end of the previous year, to 175,266 million yen. This was mainly due to a decline
in interest-bearing debt of 8,513 million yen.
Net assets rose 10,942 million yen from the end of the previous year, to 191,977 million yen. This chiefly reflected an increase in retained
earnings of 8,062 million yen, due mainly to net income attributable to owners of parent company.
(3) Summary of cash flow during the fiscal year under review(Million yen)Previous year

Current year

ChangeCash flows from operating activities

28,91819,741(9,176)

Cash flows from investing activities(13,648)(14,158)(509)

Cash flows from financing activities(14,446)(10,644)

3,802

Effect of exchange rate change on cash and cash equivalents

(428)

58

486

Net increase (decrease) in cash and cash equivalents

394(5,002)(5,397)

Cash and cash equivalents at beginning of the year

18,89019,284394

Cash and cash equivalents at end of the year

19,284

14,281(5,002)

Cash and cash equivalents as of the end of current year decreased 5,002 million yen year on year, to 14,281 million yen.
(Cash flow from operating activities)
Net cash provided by operating activities was 19,741 million yen (down 31.7% year on year.) Major inflows were income before income-4-taxes of 13,521 million yen and depreciation of 19,065 million yen, and major outflows were equity in income of affiliates of 1,844 million
yen, an increase in notes and accounts receivable - trade of 6,649 million yen, an increase in inventories of 3,707 million yen and anincrease in corporate taxes paid of 2,155 million yen.
(Cash flow from investing activities)
Net cash used in investing activities amounted to 14,158 million yen (up 3.7% year on year). A major factor was purchase of property,
plant and equipment of 13,705 million yen.
(Cash flow from financing activities)
Net cash used in financing activities was 10,644 million yen (down 26.3% year on year). Major outflows were a net decrease in short-term
debt of 1,365 million yen, repayments of long-term debt of 10,537 million yen, and cash dividends paid of 2,273 million yen. A major
inflow was proceeds from long-term debt of 3,871 million yen.
(4) Future outlook

Net sales

The year ending
March 31, 2019 (forecast)
The year ended
March 31, 2018 (actual)

OperatingincomeOrdinary income

Net income
attributable toowners of parent
company

Basic earnings
per share

Million yen

Million yen

Million yen

Million yen

Yen

275,000

10,00013,000

8,500

44.98

269,099

11,414

13,907

10,32754.68

2.2(12.4)(6.5)(17.7)(17.7)% change from the previous
corresponding period(Business environment forecast for the next fiscal year)

The Japanese economy remains on a moderate recovery track, and the mild recovery is expected to continue as corporate earnings and theemployment situation continue to improve in the next fiscal year. However, there are concerns regarding the risks of the impact of
uncertainties of overseas economies, such as the trend of the economic policies of the U.S. government administration and the economic
outlook of emerging countries in Asia, including China.
Under these circumstances, the environment surrounding the paper and pulp industry remains uncertain due to a decrease in domestic
demands for printing paper and communication paper, and the rising raw fuel price. The Group will continue to address cost reductions
thoroughly to further reinforce the earnings structure.
The above earnings forecast was prepared by considering these circumstances comprehensively.
The above forecast was based on information currently available to the Company at the time of the release of these materials. Actual result
may differ from the above forecast due to various factors.
2. Our basic philosophy on the selection of accounting standards
Taking into account the comparability of consolidated financial statements, the Group currently prepares consolidated financial statements
based on Japanese GAAP. With respect to the International Financial Reporting Standards (IFRS,) the Company will address the issue
appropriately with consideration to the various circumstances in Japan and overseas.

-5-

3. Consolidated Financial Statements and Key Notes(1) Consolidated Balance Sheet(Million yen)
As of March 31, 2017

As of March 31, 201819,49464,1503,858
20,5101,976
22,402
1,779
5,474
(48)

14,31569,178
5,954
23,5002,030
23,659
1,396
6,033
(82)

139,598

145,986

80,360(47,394)

82,098(49,456)

Buildings and structures, net

32,96632,641

Machinery, equipment and vehicles
Accumulated depreciation

405,531(324,639)

413,379(337,646)

80,89175,733

5,243(4,187)

5,544(4,494)

1,055

1,049

22,831
1,700(1,443)22,730831(572)(Assets)
Current assets
Cash and deposits
Notes and accounts receivable - trade
Electronically recorded monetary claims
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation

Machinery, equipment and vehicles, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Leased assets
Accumulated depreciation
Leased assets, net

256

259

Construction in progress
Forestland

2,843
3,535

4,391
3,166

144,381

139,972

3,172

3,091

68,906
297
2,257
1,459
4,592
(2,460)71,725
277
2,638
1,453
4,536
(2,437)

Total property, plant and equipment
Intangible assets
Investments and other assets
Investment in securities
Long-term loans
Asset for retirement benefits
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets-6-75,052

78,192

222,606

221,257

362,205367,244(Million yen)
As of March 31, 2017

As of March 31, 2018

20,1497,737
26,823
11,000
–
232
1,334
968
2,675
169
53
211
1,851
10,356

21,8407,118
21,941
11,00010,000
72
1,801
225
2,698
94
307
177
2,071
11,482

83,564

90,83230,00048,540
157
1,748
45
274
521
13,656
2,056
605

20,00045,064
160
2,832
297
270
408
11,7722,950
676

97,60584,434

Total liabilities

181,170

175,266

Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock

42,02045,39690,752(10,160)

42,02045,524
98,814(9,976)(Liabilities)
Current liabilities
Notes and accounts payable - trade
Electronically recorded obligations
Short-term debt
Commercial papers
Current portion of bonds
Lease obligations
Income taxes payable
Accrued consumption taxes
Provision for bonuses
Provision for directors' bonuses
Provision for environmental measures
Provision for reforestation
Notes payable - facilities
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term debt, less current maturities
Lease obligations
Deferred tax liabilities
Provision for environmental measures
Provision for business structure improvement
Provision for reforestation
Liability for defined benefit
Asset retirement obligations
Other
Total non-current liabilities

Total shareholders’ equity

168,010

176,383

Accumulated other comprehensive income
Unrealized holding gains on securities, net of taxes
Unrealized losses on hedging derivatives, net of taxes
Foreign currency translation adjustment
Remeasurements of retirement benefit, net of taxes

10,534
(56)
1,595
210

11,360
(21)
3,064
367

Total accumulated other comprehensive income

12,284

14,770

140
600

121
701

181,034

191,977

362,205367,244

Share subscription rights
Non-controlling interests
Total net assets
Total liabilities and net assets-7-

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income(Million yen)
For the year ended March 31,
2017

For the year ended March 31,
2018

Net sales
Cost of sales

262,398
209,628

269,099
216,846

Gross profit

52,76952,253

Selling, general and administrative expenses

39,86940,839Operating income

12,90011,414Non-operating income
Interest income
Dividends income
Foreign currency exchange gains
Other
Total non-operating income

71
818
3,019
1,591
5,500

92
982
1,844
1,426
4,346

654
1,475

766
–

1,426

–

－

438

787
4,345

647
1,852

14,055

13,907

16
28
–
–
–
1
46

260
46
30
2,103
179
1
2,621

1,573
–
–
1
10
–
2

2,602
87
163
42
58
54
–

Non-operating expenses
Interest expenses
Foreign currency exchange losses
Costs in relation to suspending the operation of production
equipment
Environmental expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of property, plant and equipment
Gain on sales of investment securities
Gain on liquidation of associates
Gain on revision of retirement benefit plan
Insurance income
Other
Total extraordinary income
Extraordinary losses
Loss on sales and disposal of property, plant and equipment
Impairment loss
Loss on disaster
Loss on reduction of property, plant and equipment
Loss on valuation of investment securities
Loss on sales of shares of associates
Other
Total extraordinary losses

1,587

3,008

Income before income taxes

12,514

13,521

Income taxes - current
Income taxes - deferred

1,881
337

2,191
827

Total income taxes

2,219

3,019

Net income

10,295

10,501(85)

174

10,380

10,327

Net income (loss) attributable to non-controlling interests
Net income attributable to owners of parent company-8-

Consolidated Statements of Comprehensive Income(Million yen)
For the year ended March 31,
2017
Net income
Other comprehensive income
Unrealized holding gains on securities, net of taxes
Unrealized gains on hedging derivatives, net of taxes
Foreign currency translation adjustment
Remeasurements of retirement benefit, net of taxes
Share of other comprehensive income of associates accounted
for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
company
Comprehensive income attributable to non-controlling interests-9-

For the year ended March 31,
201810,295

10,501

3,069
112
(360)
(128)

933
34
1,489
209

851

(161)

3,544

2,506

13,84013,00813,991

12,813(151)

195

(4) Consolidated Statement of Cash Flows(Million yen)
For the year ended March 31,
2017Cash flows from operating activities
Income before income taxes
Depreciation
Impairment loss of property, plant and equipment
Amortization of goodwill
Insurance income
Increase (decrease) in net defined benefit liability
Interest and dividend income
Interest expenses
Equity in (income) losses of affiliates
Loss on reduction of property, plant and equipment
Loss (gain) on sales and retirement of property, plant andequipment
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories
Decrease (increase) in consumption taxes refund receivable
Increase (decrease) in notes and accounts payable - trade
Increase (decrease) in accrued consumption taxes
Other

For the year ended March 31,
201812,51419,093
–
134
–
(439)
(890)
654
(3,019)1

13,521
19,065
87
130
(179)
144
(1,075)766(1,844)
42

1,556

2,342

(2,337)
1,663
77
176
169
405

(6,649)(3,707)
(551)
890
(743)
(1,184)

Subtotal

29,76121,054

Interest and dividend income received
Interest paid
Income taxes paid
Proceeds from insurance income

1,992
(670)
(2,164)
–

1,420
(761)
(2,155)183

Net cash provided by (used in) operating activities

28,91819,741(281)(12,932)
(784)
239
(159)
254
15

(48)
(13,705)
(926)
394
(62)
78
110

(13,648)(14,158)

Cash flows from investing activities
Purchase of investment in securities
Purchase of property, plant and equipment
Payments for retirement of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments of loans receivableCollection of loans receivable
Other
Net cash provided by (used in) investing activities- 10 -

(Million yen)
For the year ended March 31,
2017Cash flows from financing activities
Net increase (decrease) in short-term debt
Net increase (decrease) in commercial papers
Proceeds from long-term debt
Repayments of long-term debt
Proceeds from issuance of bonds
Redemption of bonds
Dividends paid
Dividends paid to non-controlling interests
Purchase of treasury shares
Other
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents

For the year ended March 31,
2018

3,294
(9,000)3,362(19,112)20,000(10,000)(2,272)
(71)
(1)
(645)

(1,365)–
3,871(10,537)––(2,273)
(93)
(1)
(243)

(14,446)(10,644)

(428)

58

Net increase (decrease) in cash and cash equivalents

394(5,002)

Cash and cash equivalents at beginning of the year

18,89019,284

Cash and cash equivalents at end of the year

19,284

14,281- 11 -