Results of Operations for theFirst Half of the Fiscal YearEnding March 31, 2023
Tokushu Tokai Paper Co., Ltd. (TSE, Prime section: 3708)

Contents

1

1H FY3/23 Financial Results2

FY3/23 Consolidated Forecast

3

IR Topics

4

Business Strategies/Growth of the Three Paper Businesses

5

Expansion to New Business Domains

6

A Stronger Infrastructure for Business Operations

1

1H FY3/23 Financial Results2

FY3/23 Consolidated Forecast

3

IR Topics

4

Business Strategies/Growth of the Three Paper Businesses

5

Expansion to New Business Domains

6

A Stronger Infrastructure for Business Operations

First Half Financial Summary
 Sales increased 8.3% as volumes were high in all three paper businesses and price revisions started.
 Operating income was down 40.2% because of the sharp increase in the cost of pulp and other raw
materials.
(Millions of yen)

1H FY3/22

1H FY3/23

ChangeNet sales

38,83942,071

3,232

Operating income

2,236

1,337

-899

Ordinary income

3,140

2,549

-591

Profit attributable toowners of parent

3,455

3,150

-305

Operating income to
net sales

5.8%

3.2%

-

4

Components of Change in First Half Earnings
 There was a combined ¥563 million contribution to earnings from sales growth, measures for lowering
fixed expenses and higher earnings at subsidiaries. However, earnings decreased at the three paper
businesses because higher prices of raw materials raised the cost of manufacturing.
(Millions of yen)
Non-operating income/expenses+308
Ordinary
income3,140
Ordinary
income2,549
Operatingincome2,236

Operatingincome1,337
1H FY3/22

Sales

+161

Materials-1,462

Factory
efficiency+1

Fixed cost, etc.

+120

Inventories

Others+47+234

1H FY3/23

5

Segment Information
 Sales increased in all segments.

 Environment-related sales and earnings increased as growth continues in this segment.
(Millions of yen)

Industrial Materials
Business

Specialty Materials
Business

Household Products
Business

Environment Related
Business

Elimination/
adjustment

Total

1H FY3/22

1H FY3/23

ChangeNet sales

19,19921,846+2,647

Operatingincome

605

520

-85

Net sales

10,406

10,543+137

Operatingincome

1,391

718

-673

Net sales

8,246

8,576

+330

Operatingincome

349

61

-288

Net sales

3,424

3,995

+571

Operatingincome

(180)

(34)

+146

Net sales(2,437)(2,890)-453

Operatingincome

+71

+73

+2

Net sales

38,83942,071+3,232

Operatingincome

2,236

1,337

-899
6

1

1H FY3/23 Financial Results2

FY3/23 Consolidated Forecast

3

IR Topics

4

Business Strategies/Growth of the Three Paper Businesses

5

Expansion to New Business Domains

6

A Stronger Infrastructure for Business Operations

Revised FY3/23 Forecasts
 The original forex rate assumption of ¥125/US$ has been revised to ¥150/US$.

 There is no change in the original crude oil price assumption of $100/barrel (Dubai).

(Millions of yen)

FY3/22
results

FY3/23
initial forecasts

FY3/23
revised forecasts

ChangeNet sales

80,71187,00087,0000Operating income

4,231

3,100

1,300

-1,800Ordinary income

5,733

4,000

4,000

0

Profit attributableto owners of parent

5,251

3,900

3,900

0

Operating income
to net sales

5.2%

3.6%

1.5%

-

8

Components in Change in FY3/23 Earnings
 Negative effects of the high cost of raw materials due to the yen’s depreciation and hydroelectric
power interruptions in September due to a typhoon Smaller decrease in ordinary income because of firm equity-method income in the industrial materials
business(Millions of yen)
Non-operating
income/expenses

Ordinary
income+1,198

5,733

Ordinary
incomeOperatingincome

4,000

4,231

Operatingincome1,300
1H FY3/22

Sales

+870

Materials-4,000

Factory
efficiency-50

Fixed cost, etc.

+110

Growthstrategies-70

Inventories

Others+50+159

1H FY3/23

91

1H FY3/23 Financial Results2

FY3/23 Consolidated Forecast

3

IR Topics

4

Business Strategies/Growth of the Three Paper Businesses

5

Expansion to New Business Domains

6

A Stronger Infrastructure for Business Operations

Retirement of Treasury Stock About 1.5 million shares of treasury stock were purchased between February and September 2022 inconjunction with the February 2022 secondary stock offering.
 Based on the treasury stock policy, an amount of treasury stock was retired in October that was
sufficient to reduce this stock to about 10% of all shares issued.
Treasury Stock Holding Ratio

Stock Activities after the Secondary Offering
Confirmation of intent
to sell TTP stock

5 companies

End of January

10.2 %End of March

17.7 %End of September

20.2 %

Purchase of treasury
stock between Feb.-Sept.
(About ¥5,260 million)

MarketSecondary offering of about
1,798 thousand shares

1,500 thousand shares＝ Improved liquidity,
About 300
primarily involving
thousand sharesindividual investors

Shareholder
Distributions
vs. Earnings
FY3/22

FY3/23 forecast

105％

63％

October Retired 1.6 million shares

November

10.7 %

11

Shareholder Distributions
 No change in FY3/23 dividend forecast of ¥100

 Plan to maintain the dividend payout ratio target of 30%, as stated in our return policy
Dividends per share (Yen)Consolidated payout ratio (%)

(Yen)

(%)

125.0

100 yen

50

Expect a payout
ratio of morethan 30%

100.0

40

75.0

30

50.0

20
25.0

10
0.0

0
FY3/18

FY3/19FY3/20FY3/21

FY3/22

FY3/2312

Cross-shareholdings
 In addition to the cross-shareholding sales already planned for FY3/23, an additional ¥500 million(approx.) of cross-shareholdings were sold in October.
 Cross-shareholdings were about 7.1% of net assets in November.
Cross-shareholdings (Billions of yen)

Cross-shareholdings as pct. of net assets (%)
25.0%

Reduction of
approx. 60%
in 5 years

20.0%

15.0%

15.4

14.4
10.0%

11.0

FY3/19FY3/20FY3/21

9.9

FY3/22

6.0

5.5

5.0%

1H FY3/23

Nov. 2022

0.0%

7.1%

FY3/19* Estimated using market value as of the end of September 2022

FY3/20FY3/21

FY3/22

1H FY3/23 Nov. 2022

13

1

1H FY3/23 Financial Results2

FY3/23 Consolidated Forecast

3

IR Topics

4

Business Strategies/Growth of the Three Paper Businesses

5

Expansion to New Business Domains

6

A Stronger Infrastructure for Business Operations

Progress of the Final Year of the Fifth Medium-term Management Plan The business climate has been extremely challenging because of the Ukraine crisis, rapid decline of the
yen and other events. Sales are strong but operating income well below the target.

 Ordinary income and profit are expected to be relatively firm and activities are continuing to reach the
ROE target.
Sales target¥

Operating income (margin) target

ROE target

4.5 billion (5.5%)

6.5％

82.5 billion
87.0¥(Billions of yen)45
4.5

Expect 3year average

8of 6.7%

Accelerating pace of
80.7

30
3.0

increases in raw
material prices

7

76.4

4.0

3.9

(Forecast)(Forecast)

6

15
1.5
5

1.3
(Forecast)4

FY3/21

FY3/22

FY3/23
Forecast

Expect to reach the target

FY3/210

Operating income

Ordinary income

Unlikely to reach target

ProfitFirm earnings to someextentFY3/22

FY3/23
Forecast

Still aiming to reach the target
15

Progress of the Final Year of the Fifth Medium-term Management Plan Aiming for a big increase in earnings in FY3/24 despite the difficult business climate by revising prices,
cutting costs and making new products profitable quickly

Growth in
FY3/24▶ Price revisions▶ Cost cutting▶ Quick profits from new products

16Medium-term Management Plan Earnings
 Ordinary income has generally been on an upward trend since the start of the Third Medium-term Plan.
 Performance has been good in terms of the ROE too.
Earnings since the Third Medium-term Plan and Avg. Ordinary Income for Each Plan
Fourth Medium-term Plan

Third Medium-term Plan

Fifth Medium-term Plan

(Millions of yen)
6,000

9.0%

¥5,200 million¥4,600 million¥3,900 million
4,000

6.0%

2,000

3.0%

0

0.0%

FY3/15

FY3/16

FY3/17■ Operating income ■ Ordinary income

FY3/18

FY3/19FY3/20FY3/21

FY3/22

FY3/23■ Profit ― ROE ➡ Average ordinary income during each medium-term management plan
17

Overview of the Three Paper BusinessesIn the two paper businesses where consumer necessities are the main products, sales are strong despite the negative
effect on paper use of the shift to digital formats.



The specialty materials business handles paper used for reports and other communications, a category where demandis declining due to the shift to digital formats. Structural reforms are planned by creating new profit centers that use avariety of knowledge and other resources acquired by operating the specialty paper business.
Industrial Materials BusinessNo effect ofHouseholds Products Business

Strong sales of paper

digital shift

involving e-commerce shoppingand cardboard for boxes as people
stayed home for safety during the
pandemic

Increasing demand for
paper towels because ofheightened vigilance about
hygiene during the pandemic

Specialty materials business structural reforms
FiblicPersonnel

Effect ofdigital shift

Declining use of
paper for reports
and othercommunications

Package

Synthetic fiber productsTechnologies

Knowledge

Industrial functional paper

To offset declining product lineup

New products and new
businesses
18Growth of the Use of Paper and Biomass
As interest in protecting the environment increases, TTP is working on the conversion of many items to paperand biomass materials in many business sectors.
Fancy/functional
paper category

Fiblic TANT BOARD-F

P28

 Increase share ofmarket for paperwith glass fiber

Package Category
 New version of
TT-PACKAGE

Processed
Products/
Sanitary Category

P27

 NatuLami

 TOKYO Use of towel paper
as wrapping paper

P20 -Aramid Paper

Specialty Paper
New Products
 Gastect
P25 -

P23 -

Increase marketing and research activities
Innovation

Market needs
Matching

TTP technologies + Other ideas*Pictures are not actual products- Environment -- Sanitary 19

Package Category: Highlights
 Using trade shows and a website to provide information about products in this category
 Focusing on raising awareness of TTP and building strong ties with customers

TOKYO PACK 2022

TT-PACKAGE CONCIERGE

Constantly adding new information that is useful for

お客様の”課題解決事例“や、 TT-PACKAGE
businesses,
such as examples of how

Requests for samples

紙とパッケージにまつわる”ナレッジ“など
solvesproblems for customers
and knowledge

250 companies

ビジネスに役立つトピックスを随時更新中
about
paper and packaging

Requests for sales
meetings

110 companies（https://www.tt-package.com/）20

Package Category: T T-PACKAGE
 Updated the product lineup
 Added the MATERIAL series of paper materials and the FORM series of 3D products to the TT-PACKAGE
category
Paper for packaging

Focus on A diverse lineup of TT-PACKAGE sheet products

Paper for 3D objects

and categorization in individual products

 A series of 3D products consisting of three categories
 A lineup of ready-made and custom-made products

21

Package Category: Goal of TT-PACKAGE
 Meet needs extending from intermediate to end users as well as demand created by rising consumer
interest in replacing plastic with other materials
How the package business provides value

The new

Conversion of other materials to paperin the packaging sector is beneficial
Colorful and versatile
Ready to use

papermaterials

3D objects

Intermediate demand

End users(examples: packaging material
producers, trading companies,
printing companies)(examples: producers offood products, cosmetics
and medical products)

for the environmentand society

Consumers

22

Processed Products/Sanitary Category (Households Products Business): Processed Products Business A lineup centered on environmentally responsible products, such as products using lamination
More variations of packaging products by combining these products with specialty material products
Major products

Synergies from combining product categories

×＝
Many types of 3D products to precisely
match users’ requirements*This is only part of the lineup of major products.

23

Processed Products/Sanitary Category (Households Products Business): Examples of Applications
 Interest among package users is high due to use of trade fairs and other activities

Increasing use of these products, including the NatuLami brand, as companies switch to paper fromother materials
Examples of applications and new products
Large convenience store company

Theme park

Traditional New Year holiday foodCandy packaging

Consumer Towper

wrapping paper towel

24

TM

Specialty Paper New Product (Specialty Materials Business): “TOKYO ”
 Used a collaboration with FAVINI, a prominent Italian maker of specialty paper, to start selling a new
type of fancy paper that is environmentally responsible
 Plan to start overseas operations in Europe, North America and Asia.

Collaboration
Tokushu Tokai Paper

FeatureFAVINI Dye and embossing
technologies

 Marketing power
mainly in Europe Development of designs

 Strong sales network

 Fancy paper containing more than
40% recycled paper

 Sales using FAVINI’s global network

 Announced at the LuxePack Monaco
creative packaging trade show Positive response to the paper’s textureand design concept25Specialty Paper New Product (Specialty Materials Business): Gastect®
 TTP will soon start selling Gastect®, a packaging material that absorbs corrosive gases.

Features

Sales plan

Absorbs sulfurous gases that corrode copper and silverProtects electronic materials, metallic parts, jewelry and other products
Sample applications

Use Interior of cardboard boxes

Gastect

 Cover for items in packages

Target markets will be the transportof electronic parts and jewelry andthe protection of metallic items
near natural hot springs.
Sales target(2025)¥40 million/year

FY3/23

FY3/24

FY3/25

Medium/longterm outlook

26

Aramid Paper (Specialty Materials Business): Toray Group Collaboration
 Collaboration with the Toray Group, which is already working with TTP for TT-TOKRON®, where
sales are rising consistently, for the launch of a manufacturing and sales business for moist
nonwoven fabrics using synthetic fibers.
Fourth Medium-term Plan

Fourth Medium-term Plan

Medium/Long-term Forecast

Toray Group

Toray Advanced Materials
Korea Inc.

Launch of TT-TOKRON®

(TAK) Use of TTP’s advanced manufacturing
technology to fabricate sheets of heatresistant aramid fiber made by TAK

High-performancesynthetic fiber

Develop synthetic
fiber sheets

Develop and sell new
types of functional sheets
using aramid and other fibers

 Sales started in 2020 for use as an insulationmaterial in transformers and motors
Current sales target for the synthetic
fiber business including TT-TOKRON

Steady increase in applications

Net sales¥3.0 billion/year

Manufacturing technology

Tokushu Tokai Paper*Photos are examples of applications
27

Fiblic Business Started sales of a cellulose separator for lithium-ion rechargeable batteries
 Planning on more capital expenditures due to the strong positive response from users
Meets users’
requirements

Superiority
for lithium-ion batteries

Film

NonwoventextileIncreasing output
to meet expected growth in demand Companies using Fiblic wantoutput increased

FiblicHeat
resistant△〇〇

Heat resistant

Permeable

△

〇

〇

Thin

Pore
diameter〇✕〇Low cost

Thin

〇

△

〇

Strong◎△〇 to △

 Medium/long-term orders may
exceed production capacity

From 2023

Production increase
and modifications28

1

1H FY3/23 Financial Results2

FY3/23 Consolidated Forecast

3

IR Topics

4

Business Strategies/Growth of the Three Paper Businesses

5

Expansion to New Business Domains

6

A Stronger Infrastructure for Business Operations

Environment Related BusinessActivities for growth in businesses involving the environment as a new business domain other than the three paper
businessesChanneling substantial resources to the two categories of the environment related business to aim for more growth

Environment
Related Business

Natural Environment BusinessResource Reuse Business
Use TTP Group
resources to

Whisky aged for many years
and otheruses of TTP forests＆

Biomass fuel production and otherrecycling businesses

create a major
new corebusiness30

Resource Reuse Business Continuing to make investments for the advancement and growth of the recycling business Aiming for a growth trajectory that differs from those of major companies that handle industrial wastematerials
Stages of Growth of the Resource Reuse Business

Forth stage of recycling
We are here
today!

First stage ofrecycling
Recycling of paper

Second stage ofrecycling
Thermal energy fromwaste materials

Use of heat from internally produced
sludge, etc.
Use of heat from waste
plastics/construction waste
Use of used paper (use of substances)
Recovery of chemicals (use of substances)
Use of black liquor fuel (thermal recovery)

Third stage ofrecycling
More advanced
recycling techniques

Use of materials in internally produced
incinerator ash
Use of substances/heat using advanced
sorting techniques

Sustainable wastematerial processing
and energy use

Processing that includes returningmaterials to nature (landfills, etc.)
Green electricity/electric car business

31

Natural Environment Business: Whisky Business Overview
 Using the website, participation in events and other activities to provide information about this business Priority now is establishing a base to start sales of Ikawa Distillery brand whisky
Web site

EventsCompetitions

The new JUZAN corporate website has
information about the whisky business aswell as the Minami Alps region where
this business is located.

Booths at numerous events throughout Japan,
including the Shizuoka Craft Beer and Whisky Fair

The Tokyo Whisky & Spirits
Competition, one of the largest
events of this type in Asia

The appeal of Ikawa

Interacting with whisky fans

Won the Newcomer
Award（https://juzan.co.jp/）32

Natural Environment Business: NEW BORN Non-Peat 2022
 Started sales of Newborn*, a limited release of one of approximately 600 barrels at the Ikawa Distillery,as the first step to heighten expectations for the whisky of this distillery, which is aged longer.
 Sales of this whisky will be used to raise awareness of the Ikawa brand.

Products
 Sale locations
 Bottle size
 Number Launch Retail price*Newborn is a spirit rather than a whisky, which requires a minimum of three years of aging.

Bars, stores and other locations
in Tokyo and Shizuoka
200ml
923 bottles
October 24, 2022
¥4,800 plus tax

33

1

1H FY3/23 Financial Results2

FY3/23 Consolidated Forecast

3

IR Topics

4

Business Strategies/Growth of the Three Paper Businesses

5

Expansion to New Business Domains

6

A Stronger Infrastructure for Business Operations

ESG Information CO2 Emissions
 Currently, TTP’s low-carbon performance is far better than at other paper companies in Japan due to theinstallation of biomass boilers many years ago.
 The replacement of the Shimada boiler that will be completed in FY3/27 will further lower CO2 emissions.
Fossil Fuel Energy CO2 Emission Intensity*

13B
 10B boiler replacement work started in September 2023 and is to becompleted in FY3/27.

(t-CO2/ton of production)
1.2

 The use of wood chips and RPF (refuse paper and plastic fuel) as fuel is
expected to continue to lower the amount of fossil fuel energy used.

1

Expected Fossil Fuel Energy Use Pct. at Shimada Mill in FY3/31 (Vs. FY3/14)

0.8

11.5

0.6

FY3/14 ： 26.5％
-15％

0.4

0.171

↓
FY3/31 ： 11.5%

0.2■ Non-fossil fuel energy ■ Fossil fuel energy0
FY3/14

FY3/15

FY3/16

FY3/17

Industry average
Company A
Company C

FY3/18

FY3/19FY3/20FY3/21

FY3/22Tokushu Tokai Paper
Company B

Including the benefit of installing 13B, the fossil fuel energy derived
CO2 emission intensity in FY3/31 is expected to decrease to 0.14
ton of CO2 per ton of products manufactured.

*Figures for TTP are for Tokushu Tokai Paper and Shin Tokai Paper; all other numbers are TTP estimates

35

ESG Biodiversity Activities
 In September 2022, TTP joined the 30by30 Alliance for Biodiversity.
 Aiming for OECM (Other Effective area-based Conservation Measures) registration of the Ikawa Forest,
which is a central element of TTP’s corporate identity.

36

ESG Strengthening Corporate Governance

In July, the number of independent directors increased to four, making these directors more than one-third of all
directors as specified in the new Corporate Governance Code.



One of the new outside directors has experience in corporate management in order to facilitate more thoroughdiscussions at board meetings.

Management Structure

Skill Matrix

Directors
Internal

×5

External

×
3

×
1

Audit & Supervisory Board Members
Internal

External

Name

Corporate
Management

Corporate
Management

R&D

Sales

Yuji
Matsuda

●

●

●

●

Katsuhiro
Watanabe●

ToyohisaMori●

Hiroyuki
Onuma●

Tomoaki
Sano

●

Kyoko
Kanazawa

×
1

●

●
●
●

●

Akira
Isogai×1

Yuzo
Ishikawa

Legal

●

●
●

TakashiNagasaka

×
1

Manufacture
Finance andand
Accounting
technology

●
●

●

●

*The information in the skill matrix covers only part of the experience and professional skills of thedirectors.

37

The Goals of T TP
Our Vision

Use technologies and reliability to operate businesses like no others for progress withour customers
Corporate activities that contribute to creating a sustainable society
The challenge foradding new
business domains
Environmental businesses
Utilization of the Minami Alps
Effective reuse of wastematerials (biomass energy,etc.)

A resolute commitment tocontributing to the creationof a sustainable society
More progress

Stop using plastics with the three
Reduce use of
papermaking
plastics
Replace current
materials with paper(use as a biomass
material)

businesses

Industrial materials
Specialty materials
Household products

Fusion of distinctive
technologies

A stronger
foundation
for managing
business
operations

Activities for upgrading employees’skills and increasing diversity
Upgrade and firmly establish corporate
governance* Excerpts from the CEO message in the Integrated Report 2021
38

Inquiries:

Finance & IR Div.
Sumitomo Fudosan Yaesu Building
2- 4- 1 Yaesu, Chuo- ku, Tokyo
Tel: +81- 3- 3281- 8581

Fax: +81- 3- 3281- 8591
E- mail: ttp.ir@s.tt- paper.co.jp* Plans, actions and other statements in this presentation are based on management decisions using information that wasavailable as of the date of this presentation. As these statements include numerous risk factors and other uncertainties, actual
results of operations may differ from the information in this presentation.