Consolidated Financial Results
for the Year Ended March 31, 2021 [Japanese GAAP]May 14, 2021
Company:
Hokuetsu Corporation
Stock Exchange Listing: Tokyo
Stock Code:3865
URL: http://www.hokuetsucorp.com
Representative: Sekio Kishimoto, President & CEO
Contact:
Tomonari Maruyama, General Manager, Corporate Management Department TEL: +81-3-3245-4500
Scheduled date of ordinary general meeting of shareholders: June 29, 2021
Scheduled date of commencement of dividend payments:
June 30, 2021
Scheduled date of filing annual securities reports:
June 29, 2021
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, 2021 (April 1, 2020 through March 31, 2021)(1) Consolidated results of operations(% change from the previous corresponding period)
Profit attributable to
Net sales
Operating profit
Ordinary profit
owners of parent
Million yen%
Million yen%
Million yen%
Million yen%
Year ended March 31, 2021
222,454 (15.9)
1,701 (84.8)
9,756(37.7)
14,172
75.6
Year ended March 31, 2020
264,618(4.1)
11,208
10.6
15,652
20.3
8,072 (11.8)(Note) Comprehensive income:Year ended March 31, 2021:
16,776 million yen(–%)
Year ended March 31, 2020:
677 million yen (-78.9%)
Basic earnings
Diluted earnings
Ratio of ordinary Ratio of operating
Return on equity
per shareper share
profit to total assets profit to net sales
Yen
Yen
%
%
%
Year ended March 31, 2021
84.40
83.00
7.6
2.8
0.8
Year ended March 31, 2020
43.45
40.95
4.3
4.4
4.2
(Reference) Investment income by equity method: Year ended March 31, 2021:
5,587 million yen
Year ended March 31, 2020:
4,580 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, 2021
363,075
195,41953.6
1,159.49
As of March 31, 2020
344,731
180,86152.3
1,073.08(Reference) Equity:
As of March 31, 2021:
194,702 million yen
As of March 31, 2020:
180,183 million yen(3) Consolidated cash flows
Cash flows from
Cash flows from
Cash flows from
Cash and cash equivalents
operating activities
investing activities
financing activities
at end of the year
Million yen
Million yen
Million yen
Million yen
Year ended March 31, 2021
23,760(19,575)
4,358
29,846
Year ended March 31, 2020
43,974(20,199)(17,261)
21,383
2. Dividends
Annual dividend per share
End of 1Q End of 2Q End of 3Q Year-end

Year ended March 31, 2020
Year ended March 31, 2021
Year ending March 31, 2022
(forecast)

Total

Yen
–
–

Yen
6.00
7.00

Yen
–
–

Yen
6.00
7.00

Yen
12.00
14.00

–

7.00

–

7.00

14.00

Ratio of
Dividend
dividend to
payout ratio
net assets(Consolidated)(Consolidated)
Million yen
%
%
2,148
27.6
1.1
2,359
16.6
1.3
Total
dividends(Total)13.8

3. Forecast of Consolidated Financial Results for the Year Ending March 31, 2022 (April 1, 2021 through March 31, 2022)(% change from the previous corresponding period)
Basic
Profit attributable to
Net sales
Operating profit
Ordinary profit
earnings perowners of parent
shareMillion yen% Million yen% Million yen% Million yen%
Yen
2Q (Accumulated)
125,000
21.0
7,500
–
10,000–11,000491.5
65.51
Full year
255,000
14.6
15,000781.4
20,000105.0
17,00019.9
101.24-1-

* 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 amendment to 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 year-end (treasury stock included):
As of March 31, 2021

188,053,114 shares

As of March 31, 2020

188,053,114 shares

20,131,789 shares

As of March 31, 2020

20,140,702 shares

167,919,947 shares

For the year ended March 31, 2020

185,800,021 shares(ii) Number of treasury stock at year-end:
As of March 31, 2021(iii) Average number of shares during the year:
For the year ended March 31, 2021

(Reference) Overview of non-consolidated financial results
1. Non-consolidated financial results for the year ended March 31, 2021 (April 1, 2020 through March 31, 2021)(1) Non-consolidated results of operations(% change from the previous corresponding period)
Net sales
Operating profit
Ordinary profit
Net profit
Million yen%
Million yen%
Million yen%
Million yen%
Year ended March 31, 2021
146,976(15.9)
1,965(34.4)
6,632(32.5)
12,029340.2
Year ended March 31, 2020
174,709
(1.7)
2,994
–
9,824
236.1
2,732
–
Basic earnings
per share

Diluted earnings
per share
Yen
71.30
14.66

Yen
Year ended March 31, 2021
71.39
Year ended March 31, 2020
14.67
(2) Non-consolidated financial position
Total assets
Net assets
Equity ratio
Million yen
Million yen%
As of March 31, 2021
271,560
126,647
46.6
As of March 31, 2020
260,526
115,008
44.1(Reference) Equity:
As of March 31, 2021:
126,545 million yen
As of March 31, 2020:
114,926 million yen

Net assets per share
Yen
751.01
682.16* 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(Caution regarding forward-looking statements)
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 business forecasts and a note about the use of business
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
(Operating results during the year)
During the current year, demand decreased substantially in the second quarter due to the slowdown in social and economic activities underthe effects of COVID-19. Demand began recovering with the step-by-step resumption of social and economic activities in the second half.
However, net sales and profits fell year on year, reflecting heavy declines in the second quarter. Meanwhile, profit attributable to ownersof parent increased year on year with a gain on sales of all investment securities the Company had held in Japan Brazil Paper and Pulp
Resources Development Co., Ltd. The Group’s consolidated financial results for the current year were as follows:
222,454 million yen(down 15.9% year on year)

Operating profit

1,701 million yen(down 84.8% year on year)

Ordinary profit

9,756 million yen(down 37.7% year on year)

Profit attributable to owners of parent

14,172 million yen(up 75.6% year on year)

Net sales

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

Current year

Difference

237,895

198,770(39,124)

9,321

673

(8,648)In the pulp and paper business, demand fell substantially in the second quarter due to the stagnation of social and economic activities underthe effects of COVID-19. Demand began recovering with the step-by-step resumption of social and economic activities in the second half.
However, net sales and profits fell year on year, reflecting heavy declines in the second quarter.
By product type, sales of paper decreased substantially from the previous fiscal year as a result of the slowdown in social and economic
activities as well as the suspension and voluntary restraints that effected numerous events because of COVID-19.
Sales of paperboard for foods remained firm. However, sales of paperboard for cosmetics and souvenirs fell sharply due to the evaporationof inbound demand under the effects of COVID-19. By grade, special white paperboard and coated duplex board (with gray-back) for
primary food containers, containers related to take-home foods, and boxes used for instant and retort-pouch foods remained strong.
However, sales of special white paperboard and coated duplex board for souvenirs and pharmaceuticals fell significantly below the levels
posted in the previous fiscal year. Sales of high-grade white paperboard sank sharply year on year, reflecting heavy falls for products forpoint-of-purchase (POP) store ads, different types of cards, cosmetics and pharmaceuticals. Moreover, the shipment of containerboard basepaper to containerboard manufacturers, which are the product customers, began in April 2020.
Regarding specialty paper, sales of products in the functional paper category remained generally strong. Sales of base paper for chip carrier
tapes used to carry electronic parts were favorable, helped by demand for new 5G smartphone models and demand for PCs and tablets
supported by the growing practice of working from home. Sales of base paper for filters for air purifiers also remained strong due toincreased hygiene awareness. Sales of functional paper as a whole surpassed the level posted in the previous fiscal year. Looking at fancy
paper in general, sales of high-grade printing paper for catalogs and pamphlets were sluggish, like sales of paper, due to the suspension of,and voluntary restraints on, events. Sales of communication paper remained stagnant, the result of a shift from adhesive postcards fornotices and vouchers to electronic media. Meanwhile, sales of OCR paper decreased substantially to fall below the result posted in theprevious fiscal year.
Sales of pulp fell from the previous fiscal year, reflecting a drop in pulp prices attributable to weak economic activities under the effects
of COVID-19.
(ii) Packaging/Paper processing business(Million yen)Previous year

Current year
-3-

DifferenceNet sales

18,227

15,599(2,628)

418

89

(328)

Operating profit

Net sales and profits for the packaging/paper processing business decreased, reflecting a fall in fluid container orders due to shape changes
and a sharp decline in demand given the COVID-19 pandemic. Low sales posted in areas centered on packaging and information media
were particularly responsible for the decreases.
(iii) Other businesses (including wood material, engineering, logistics businesses)(Million yen)Previous year
Net sales
Operating profit

Current year

Difference

8,494

8,083

(411)

890

326

(563)

In wood material, engineering, logistics, and other businesses, sales of fuel chips for biomass boilers remained strong in the wood material
business. However, large project orders decreased in the engineering business, transaction volumes fell in logistics businesses under theeffect of COVID-19, and the operation of certain businesses ended with pullout decisions in other businesses. As a result, net sales andprofits for other businesses declined year on year.
(2) Summary of financial conditions during the fiscal year
(Million yen)
End of previous year

End of current year

ChangeTotal assets

344,731363,075

18,344

Net assets

180,861

195,419

14,557

Equity ratio
Net assets per share
Interest-bearing debt at year-end

52.3%

53.6%

1.4%

1,073.08 yen

1,159.49 yen

86.40 yen

106,832

113,991

7,159

Total assets increased 18,344 million yen from the end of the previous fiscal year, to 363,075 million yen. Main factors included increases
in investment securities of 16,462 million yen, cash and deposits of 8,463 million yen and asset for retirement benefits of 1,347 million
yen, which more than offset decreases in merchandise and finished goods of 6,825 million yen and property, plant and equipment of 941
million yen due to depreciation.
Total liabilities rose 3,787 million yen from the end of the previous fiscal year, to 167,656 million yen. This was chiefly due to an increase
in interest-bearing debt of 7,159 million yen, which more than offset decreases in notes and accounts payable – trade of 1,788 million yen
and notes payable – facilities of 1,192 million yen.
Net assets rose 14,557 million yen from the end of the previous fiscal year, to 195,419 million yen. This mainly reflected increases inretained earnings of 12,011 million yen due to profit attributable to owners of parent and valuation difference on available-for-salesecurities of 2,184 million yen.

-4-(3) Summary of cash flow during the fiscal year
(Million yen)Previous year

Current year

ChangeCash flows from operating activities

43,97423,760(20,213)

Cash flows from investing activities(20,199)(19,575)

623

Cash flows from financing activities(17,261)

4,358

21,619Effect of exchange rate change on cash and cash equivalents

(332)

(80)

252

Net increase (decrease) in cash and cash equivalents

6,180

8,463

2,282

Cash and cash equivalents at beginning of the year

15,202

21,383

6,180

Cash and cash equivalents at end of the year

21,38329,846

8,463

Cash and cash equivalents as of the end of current year increased 8,463 million yen year on year, to 29,846 million yen.
(Cash flow from operating activities)
Net cash provided by operating activities was 23,760 million yen (down 46.0% year on year.)
Major inflows were profit before income taxes of 13,331 million yen, depreciation of 14,482 million yen and a decrease in inventories of
6,516 million yen. Major outflows were share of profit of entities accounted for using equity method of 5,587 million yen and gain on salesof investment securities of 5,320 million yen.
(Cash flow from investing activities)
Net cash used in investing activities amounted to 19,575 million yen (down 3.1% year on year).
Major outflows were purchase of investment securities of 10,625 million yen and the purchase of property, plant and equipment of 15,526
million yen. A major inflow was proceeds from sales of investment securities of 7,478 million yen.
(Cash flow from financing activities)
Net cash provided by financing activities was 4,358 million yen (outflow of 17,261 million yen in the previous fiscal year).
Major inflows were an increase in short-term loans of 7,060 million yen and proceeds from long-term loans of 16,000 million yen. Major
outflows were a decrease in commercial paper of 7,000 million yen, repayment of long-term loans of 9,145 million yen and dividends paidof 2,190 million yen.
(4) Future outlook
Forecast on financial results for the next fiscal year
The Japanese economy continues to face difficult conditions with the impact of COVID-19. Looking ahead, signs of recovery are expected
to continue to be seen, given the effects of various policies and improvements in overseas economies amid measures to prevent the spreadof COVID-19. However, there are concerns that the infection’s spread in Japan and overseas may put downward pressure on the economy.
Under these circumstances, given a range of factors such as rapid changes in domestic demand and global market price trends, there is
growing uncertainty in the business environment surrounding the pulp and paper industry. The Group will continue to work on full-scalecost reductions to strengthen its financial conditions.
The following business forecast was prepared by considering these circumstances comprehensively.

-5-The following 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.

Operating profit

Ordinary profit

Profitattributable toowners of parent

Basic earnings
per share

Million yen

Million yen

Million yen

Million yen

Yen

Year ending March 31, 2022 (forecast)

255,000

15,00020,00017,000101.24

Year ended March 31, 2021 (actual)

222,454

1,701

9,756

14,172

84.40

14.6

781.4

105.0

19.9

Net sales% change from the previous
corresponding period

2. Our Basic Philosophy on the Selection of Accounting Standards
Taking into account the period comparability of consolidated financial statements, the Group currently prepares consolidated financial
statements based on Japanese GAAP. With respect to the International Financial Reporting Standards (IFRSs) the Company will address
the issue appropriately with consideration to the various circumstances in Japan and overseas.

-6-

3. Consolidated Financial Statements(1) Consolidated Balance Sheet(Million yen)
(Assets)
Current assets
Cash and deposits
Notes and accounts receivable - trade
Electronically recorded monetary claims - operating
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation

As of March 31, 2020

As of March 31, 2021

21,38350,0786,427
29,2002,429
22,7225,445(6)29,84649,653
5,701
22,374
2,378
22,7127,355(3)137,679

140,020

84,722(52,954)

85,263(53,994)

Buildings and structures, net

31,76731,268

Machinery, equipment and vehicles
Accumulated depreciation

423,773(361,058)

431,975(369,170)

62,71562,805

6,188(4,948)6,404(5,079)

1,240

1,324

22,514500(395)

22,412408(318)

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

104

90

Right-of-use assets
Accumulated depreciation

2,619
(302)

2,557
(471)

Right-of-use assets, net

2,317

2,086

4,251
2,480

3,989
2,470

127,390

126,448

2,984

2,668

70,366
206
2,109
1,840
4,577
(2,425)86,829
224
3,456
1,621
4,226
(2,420)

Leased assets, net

Construction in progress
Forestland
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment 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-7-

76,67593,937207,051

223,055

344,731363,075

(Million yen)
(Liabilities)
Current liabilities
Notes and accounts payable - trade
Electronically recorded obligations - operating
Short-term loans
Commercial papers
Current portion of bonds payable
Lease obligations
Income taxes payable
Accrued consumption taxes
Provision for bonuses
Provision for directors’ bonuses
Provision for environmental measures
Provision for business structure improvement
Provision for loss on disaster
Provision for reforestation
Notes payable - facilities
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans
Lease obligations
Deferred tax liabilities
Provision for environmental measures
Provision for business structure improvement
Provision for reforestation
Retirement benefit liability
Asset retirement obligations
Other

As of March 31, 2020

As of March 31, 2021

19,3606,317
19,338
7,000
–
288
1,086
892
2,757
94
330
–
214
177
2,642
11,03017,571
5,898
22,928–20,000
293
720
1,230
2,368
79
305
258
220
142
1,449
11,54871,53185,01630,00048,460
1,744
435
803
197
375
7,266
2,441
612

10,00059,142
1,626
1,209
805
–
291
6,940
2,256
367

92,337

82,639Total liabilities

163,869

167,656

Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares

42,02045,341
100,879(9,708)42,02045,341
112,891(9,702)

Total non-current liabilities

178,533

190,550

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans

2,159
21
337
(868)

4,343
(18)
(949)
775

Total accumulated other comprehensive income

1,650

4,151

81
596

102
614

180,861

195,419344,731363,075

Total shareholders’ equity

Share acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets-8-(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income(Million yen)
For the year ended
March 31, 2020

For the year ended
March 31, 2021

Net sales
Cost of sales

264,618
213,143

222,454
183,978

Gross profit

51,47438,475

Selling, general and administrative expenses

40,26636,773Operating profit

11,2081,701

Non-operating income
Interest income
Dividends income
Share of profit of entities accounted for using equity method
Other
Total non-operating income

93
1,030
4,580
1,633
7,338

26
772
5,587
3,366
9,752

Non-operating expenses
Interest expenses
Foreign exchange losses
Leave allowance
Other
Total non-operating expenses

654
1,177
–
1,062
2,894

437
–
535
725
1,697

Ordinary profit

15,652

9,756

Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Gain on change in equity
Gain on reversal of asset retirement obligations
Gain on contribution of securities to retirement benefit trust
Insurance claim income
Compensation income
Other
Total extraordinary income

56
897
48
–
4,874
719
–
23
6,620

60
5,323
499
327
–
315
99
1
6,626

Extraordinary losses
Loss on sales and retirement of non-current assets
Impairment loss
Loss on disaster
Loss on tax purpose reduction entry of non-current assets
Loss on sales of investment securities
Loss on valuation of investment securities
Business restructuring expenses
Loss on sales of equity investment of subsidiary

1,751
6,382
675
57
0
27
–
666

1,142
114
308
95
3
588
798
–

9,561

3,051

Profit before income taxes

12,711

13,331

Income taxes - current
Refund of income taxes
Income taxes - deferred

2,210
–
2,398

848
(1,351)(435)

Total income taxes

4,609

(938)

Profit8,101

14,269

28

97

8,072

14,172

Total extraordinary losses

Profit attributable to non-controlling interests
Profit attributable to owners of parent-9-Consolidated Statements of Comprehensive Income(Million yen)

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted forusing equity method
Total other comprehensive income
Comprehensive income:Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests- 10 -For the year ended
March 31, 2020

For the year ended
March 31, 2021

8,101

14,269(5,435)16
721(1,404)2,004(42)(1,282)
1,465(1,322)360(7,424)

2,506

677

16,776652
24

16,673102

(4) Consolidated Statement of Cash Flows(Million yen)
For the year ended
March 31, 2020

For the year ended
March 31, 2021

12,711
18,450
6,382
125
–
(719)
186
(1,124)654(4,580)
(897)
57
1,694
–

13,331
14,482
114
124
(99)
(315)
443
(798)
437
(5,587)(5,320)
95
1,082
798

(4,874)–

17,550801(161)(2,338)
446
2,782

980
6,516
54
(2,184)471(801)

Subtotal

47,14823,829Interest and dividend income received
Interest paid
Income taxes paid
Proceeds from compensation
Proceeds from insurance income

1,528
(605)
(4,860)
–
763

1,449
(349)
(1,570)99
302

Net cash provided by (used in) operating activities

43,97423,760(4,569)2,128(14,857)(1,002)
65
(119)
136
(1,979)(10,625)
7,478(15,526)
(831)
68
(152)
133
(121)

(20,199)(19,575)

Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment loss
Amortization of goodwill
Compensation income
Insurance claim income
Increase (decrease) in net defined benefit liability
Interest and dividend income
Interest expenses
Share of profit of entities accounted for using equity method
Loss (gain) on sale of investment securities
Loss on tax purpose reduction entry of non-current assets
Loss (gain) on sales and retirement of non-current assets
Business restructuring expenses
Loss (gain) on contribution of securities to retirement benefit
trust
Decrease (increase) in trade receivables - 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

Cash flows from investing activities
Payments for purchases of investment securities
Proceeds from sales of investment securities
Payments for purchases 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- 11 -

(Million yen)

Cash flows from financing activities
Net increase (decrease) in short-term loans
Net increase (decrease) in commercial papers
Proceeds from long-term loans
Repayments of long-term loans
Dividends paid
Dividends paid to non-controlling interests
Purchase of treasury shares
Other
Net cash provided by (used in) financing activities

For the year ended
March 31, 2020

For the year ended
March 31, 2021

(1,463)(3,500)16,000(15,551)(2,274)(80)(10,097)
(293)

7,060
(7,000)16,000(9,145)(2,190)
(84)
(0)
(282)

(17,261)

4,358

Translation (loss) gain on cash and cash equivalents

(332)

(80)

Net increase (decrease) in cash and cash equivalents

6,180

8,463

Cash and cash equivalents at beginning of the year

15,202

21,383

Cash and cash equivalents at end of the year

21,38329,846- 12 -