Consolidated Quarterly Financial Results
for the Nine Months Ended December 31, 2021 [Japanese GAAP]
February 10, 2022
Stock Exchange Listing: Tokyo
URL: http://www.hokuetsucorp.com

Company:
Hokuetsu Corporation
Stock Code:
3865
Representative: Sekio Kishimoto, President & CEO
Contact:
Tomonari Maruyama, General Manager, Corporate Management Department
Scheduled date of filing quarterly report:
February 14, 2022
Scheduled date of commencement of dividend payments:–
Supplementary documents for quarterly results:
None
Quarterly results briefing:
None

TEL: +81-3-3245-4500(Figures rounded down to the nearest million yen)

1. Consolidated Business Results for the Nine Months Ended December 31, 2021
(April 1, 2021 through December 31, 2021)(1) Consolidated results of operations
Net sales

Operating profit(% change from the previous corresponding period)
Profit attributable toOrdinary profit
owners of parent
Million yen%
Million yen%

Million yen%
Million yen%
Nine months ended
193,984
20.0
16,473–
23,113–
December 31, 2021
Nine months ended
161,596(19.9)(2,890)–1,742(86.4)
December 31, 2020
(Note) Comprehensive income:Nine months ended December 31, 2021: 24,707 million yen (224.0%)
Nine months ended December 31, 2020: 7,625 million yen (387.7%)
Basic earnings per share Diluted earnings per share
Yen
Yen
Nine months ended
134.40134.28December 31, 2021
Nine months ended
43.96
42.62
December 31, 2020

22,580

205.9

7,381

174.8

(2) Consolidated financial position
Total assets
Net assets
Equity ratio
Million yen
Million yen%
As of December 31, 2021
373,491
217,585
58.1
As of March 31, 2021
363,075
195,419
53.6(Reference) Equity:
As of December 31, 2021:
216,904 million yen
As of March 31, 2021:
194,702 million yen

2. Dividends
End of 1Q
Yen

Annual dividend per share
End of 2Q
End of 3Q
Yen
Yen

Year-end

Total
Yen

Yen
Fiscal year ended
–
7.00
–
7.00
14.00
March 31, 2021
Fiscal year ending–
7.00–
March 31, 2022
Fiscal year ending
17.00
24.00
March 31, 2022 (forecast)(Note) Revisions to dividend forecasts published most recently: None
Breakdown of year-end dividends for the fiscal year ending March 31, 2022 (forecast) Ordinary dividend: 7.00 yen Special
dividend: 10.00 yen

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)
Net sales

Operating profit

Ordinary profit

Million yen%
Million yen%
Million yen
Full year
260,000
16.9
18,000957.6
25,000(Note) Revisions to business forecasts published most recently: None

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%
156.2

Profit attributable to
Basic earnings
owners of parent
per share
Million yen%
Yen
21,00048.2
124.99

* Notes(1) Changes in significant subsidiaries during the nine months ended December 31, 2021 (changes in specified subsidiaries accompanying
changes in the scope of consolidation): None
(2) Application of accounting procedures specific to preparation of the consolidated quarterly financial statements: None
(3) Changes in accounting policies, accounting estimates and restatement of prior period financial statements(i) Changes in accounting policies due to amendment to accounting standards: Yes(ii) Changes in accounting policies other than (i): None(iii) Changes in accounting estimates: None(iv) Restatement of prior period financial statements: None
(4) Shares outstanding (common stock)(i) Number of shares outstanding (treasury stock included):
As of December 31, 2021
188,053,114 shares(ii) Number of treasury stock:
As of December 31, 2021
20,000,338 shares(iii) Average number of shares during period:
Nine months ended December 31, 2021
168,009,043 shares

As of March 31, 2021

188,053,114 shares

As of March 31, 2021

20,131,789 shares

Nine months ended December 31, 2020

167,919,491 shares* Consolidated Quarterly Financial Results are exempted from quarterly review performed by a certified public
accountant 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. Refer to “1. Qualitative Information on Consolidated Operating Results for the NineMonth Period; (3) Qualitative Information Concerning Consolidated Earnings Forecasts” on page 4 of the accompanying materials for mattersrelated to results forecasts.

* This document is an excerpt translation of the original in Japanese and is for reference purposes only. In case ofany discrepancy between this document and the original in Japanese, the latter shall take precedence.

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1. Qualitative Information on Consolidated Operating Results for the Nine-Month Period(1) Qualitative Information Concerning Consolidated Operating Results
Demand declined significantly across the industry in the previous fiscal year under the effects of COVID-19. However, signs of a recovery
appeared in the current fiscal year. Sales volumes increased for paper and white paperboard in particular. As a result, net sales for the firstnine months of the current fiscal year amounted to 193,984 million yen (up 20.0% year on year). Operating profit came to 16,473 million
yen (compared to an operating loss of 2,890 million yen a year ago), ordinary profit totaled 23,113 million yen (compared to an ordinary
profit of 1,742 million yen), and profit attributable to owners of parent was 22,580 million yen (up 205.9% year on year).
The Company began applying the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29 issued on March 31, 2020) andrelated implementation guidance at the beginning of the first quarter of the current fiscal year. The application of the Standard affected its
financial conditions and operating results. More information is provided in (3) Notes to Quarterly Consolidated Financial Statements(Changes in Accounting Policies) under 2. Consolidated Quarterly Financial Statements and Key Notes.
The performance of major segments is as follows:(i) Pulp and paper businessIn the pulp and paper business, demand declined significantly across the industry in the previous fiscal year under the effects of COVID19. However, signs of a recovery appeared in the current fiscal year. Sales volumes increased for paper and white paperboard in particular,
which resulted in increases in sales and profits.
As a result, the results of the pulp and paper business were as follows.
Net sales

177,491 million yen(up 23.7% year on year)

Operating profit

15,406 million yen (compared to an operating loss of 3,753 million yen a year ago)(ii) Packaging/Paper processing businessIn the packaging/paper processing business, sales and profits decreased mainly due to a fall in orders received for liquid containers as aresult of their shape changes.
As a result, the results of the packaging/paper processing business were as follows.
Net sales
Operating profit

10,512 million yen (down 12.7% year on year)
15 million yen (down 84.6% year on year)(iii) Other businesses
In other businesses, including wood material business, used paper wholesale business, engineering business, and logistics business, external
orders increased but sales decreased primarily due to the termination of certain business operations following the withdrawal decision
made in August 2020. In terms of profitability, an increase in profits was recorded, mainly reflecting the effect of a range of cost reduction
initiatives.
As a result, the results of other businesses were as follows.
Net sales
Operating profit

5,981 million yen (down 1.1% year on year)
648 million yen (up 134.8% year on year)(2) Qualitative Information Concerning Consolidated Financial Position
Total assets increased 10,416 million yen from the end of the previous fiscal year, to 373,491 million yen. Significant factors included
increases in notes and accounts receivable - trade, and contract assets of 17,728 million yen, electronically recorded monetary claims operating of 1,575 million yen, merchandise and finished goods of 2,955 million yen, raw materials and supplies of 3,251 million yen andinvestment securities of 3,147 million yen, which more than offset decreases in cash and deposits of 11,398 million yen, non-trade accounts
receivable of 1,733 million yen, income taxes receivable of 1,394 million yen, which are included in “Other” of current assets, and property,
plant and equipment of 3,574 million yen due in part to depreciation.
Total liabilities decreased 11,750 million yen from the end of the previous year, to 155,905 million yen. This was primarily due to adecrease in interest-bearing debt of 15,637 million yen, which more than offset an increase in income taxes payable of 5,149 million yen.
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Net assets rose 22,166 million yen from the end of the previous fiscal year, to 217,585 million yen. This mainly reflected increases inretained earnings of 20,098 million yen due to profit attributable to owners of parent and foreign currency translation adjustment of 2,606
million yen.

(3) Qualitative Information Concerning Consolidated Earnings Forecasts
No change has been made to the full-year financial forecasts announced on November 12, 2021.

-4-2. Consolidated Quarterly Financial Statements and Key Notes(1) Quarterly Consolidated Balance Sheet(Million yen)
As of March 31, 2021
(Assets)
Current assets
Cash and deposits
Notes and accounts receivable - trade
Notes and accounts receivable - trade, and contract assets
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
Buildings and structures, net
Machinery, vehicles, tools, furniture and fixtures
Accumulated depreciation
Machinery, vehicles, tools, furniture and fixtures, net

As of December 31, 2021

29,84649,653–
5,701
22,374
2,378
22,7127,355(3)18,448–67,382
7,277
25,3301,976
25,9634,901(3)140,020

151,276

85,263(53,994)

84,255(53,444)

31,26830,810438,380(374,249)

441,271(377,478)

64,13063,792Other, net

31,04928,270Total property, plant and equipment

126,448

122,874

Intangible assets
Investments and other assets
Investment securities
Other
Allowance for doubtful accounts

2,668

2,446

86,8299,528(2,420)89,976
6,965(48)

Total investments and other assets

93,93796,894

223,055
363,075

222,215
373,491

Total non-current assets
Total assets-5-

(Million yen)
As of March 31, 2021
(Liabilities)
Current liabilities
Notes and accounts payable - trade
Electronically recorded obligations - operating
Short-term loans
Commercial papers
Current portion of bonds payable
Income taxes payable
Provision
Other

As of December 31, 2021

17,571
5,898
22,928–20,000720
3,375
14,522

18,5706,862
38,853
4,000
–
5,869
2,222
13,392

Total current liabilities

85,016

89,772

Non-current liabilities
Bonds payable
Long-term loans
Provision
Retirement benefit liability
Asset retirement obligations
Other

10,00059,142
1,096
6,940
2,256
3,202

20,00033,694
1,211
6,364
2,191
2,671

Total non-current liabilities

82,63966,133

Total liabilities

167,656

155,905

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

42,02045,341
112,891(9,702)42,02045,341
132,989(9,638)

190,550

210,712

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

4,343
(18)
(949)
775

3,832
16
1,657
684

Total accumulated other comprehensive income

4,151

6,191

102
614

68
613

195,419

217,585

363,075

373,491

Total shareholders’ equity

Share acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets-6-

(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income
Quarterly Consolidated Statements of Income(Nine-month period)(Million yen)
For the nine-month ended
December 31, 2020
161,596
137,279

Net sales
Cost of sales

For the nine-month ended
December 31, 2021
193,984
147,530

Gross profit

24,31646,453

Selling, general and administrative expenses

27,207

29,979Operating profit (loss)(2,890)16,473Non-operating income
Interest income
Dividends income
Share of profit of entities accounted for using equity method
Other
Total non-operating income

20
746
4,172
1,711
6,651

19
754
4,186
2,416
7,376

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

331
549
464
182
489
2,018

293
–
6
196
240
737

Ordinary profit (loss)

1,742

23,113Extraordinary 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
Insurance claim income
Gain on reversal of retirement benefit obligations
Other
Total extraordinary income

48
5,323
267
327
315
–
1
6,282

6,981
0
–
–
34
77
–
7,093

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
Provision for loss related to the Anti-Monopoly Act

878
3
–
17
3
1,229
792
–

665
–
35
31
–
18
–
360

2,925

1,110

Profit before income taxes

5,100

29,096

Income taxes - current
Refund of income taxes
Income taxes - deferred873(1,071)(2,161)

6,358
–
108

Total income taxes(2,358)

6,466

Profit7,459

22,629Total extraordinary losses

Profit attributable to non-controlling interests
Profit attributable to owners of parent
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77

49

7,381

22,580Quarterly Consolidated Statements of Comprehensive Income(Nine-month period)(Million yen)
For the nine-month ended
December 31, 2020
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

For the nine-month ended
December 31, 2021

7,459

22,629

1,000
(39)
(950)
100

(344)
29
2,644
(64)

55

(187)

166

2,077

Comprehensive income

7,625

24,707

Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

7,552
72

24,62087-8-

(3) Notes to Quarterly Consolidated Financial Statements(Notes to Going Concern Assumption)
Not applicable.
(Notes on Any Significant Change in the Value of Shareholders’ Equity)
Not applicable.
(Changes in Accounting Policies)(Application of Accounting Standard for Revenue Recognition, etc.)
The Company began applying the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29 issued on March 31, 2020,
hereinafter the “Revenue Recognition Standard”) and related implementation guidance at the beginning of the first quarter of the current
fiscal year. Accordingly, the Company recognizes the amount expected to be received in exchange for promised goods or services asrevenues at points where control over such goods and services moves to customers.
Previously, the Company had recognized the gross amount as revenues with regard to certain revenues from transactions. With theapplication of the Revenue Recognition Standard, the Company adopted the method of recognizing the net amount as revenues fromtransactions judged to be made as an agent based on the assessment of the roles of the Company in the provision of goods to customers.
The Company had previously presented a portion of compensation paid to customers as selling, general and administrative expenses.
With the application of the Revenue Recognition Standard, the Company adopted the presentation method of transaction prices with thecompensation portion deducted.
The Company applies the Revenue Recognition Standard in accordance with transitional treatment set forth in the proviso in Paragraph
84 of the Revenue Recognition Standard. The Company began applying the new accounting policies to the balance of retained earnings
at the beginning of the first quarter, adjusting the amount of cumulative effect of retrospective application to the beginning balance ofthe first quarter. However, adopting the method stipulated in Paragraph 86 of the Revenue Recognition Accounting Standard, theCompany does not apply the new accounting policies retroactively to contracts prior to the beginning of the first quarter wherein almost
all revenues are recognized in accordance with the previous treatment. Further, applying the method prescribed in Subparagraph (1),Paragraph 86 of the Revenue Recognition Accounting Standard, the Company performs account processing for contract changes madeprior to the beginning of the first quarter based on contract terms after the reflection of all contract changes, adjusting the amount of the
cumulative effects of such changes to retained earnings at the beginning of the first quarter.
As a result, the effect of the application of the above accounting standard on the profit and loss of the first nine months of the current
fiscal year is insignificant. They also had an immaterial impact on the balance of retained earnings at the beginning of the first quarter.
The Company decided to present notes and accounts receivable - trade, which had been stated under current assets in the consolidatedbalance sheet for the previous fiscal year, by including them in notes and accounts receivable - trade, and contract assets from the firstquarter because it began applying the Revenue Recognition Accounting Standard and related implementation guidance. The Company
did not reclassify itemsfor the previous fiscal year using a new presentation method in accordance with transitional treatment stipulated
in Paragraph 89-2 of the same Accounting Standard.
(Application of Accounting Standard for Fair Value Measurement, etc.)
The Company began applying the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30 issued on July 4, 2019,
hereinafter the “Fair Value Measurement Standard”) and related implementation guidance at the beginning of the current first quarter. In
accordance with the transitional treatment set forth in Section 19 of the Fair Value Measurement Standard and Section 44-2 of the
Accounting Standard for Financial Instruments (ASBJ Statement No. 10 issued on July 4, 2019), the Company applies new accounting
policies prescribed in the Fair Value Measurement Standard and related implementation guidance prospectively. Their application
produces no impact on quarterly consolidated financial statements.

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