Consolidated Quarterly Financial Results
for the Nine Months Ended December 31, 2019 [Japanese GAAP]
February 13, 2020
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, Accounting Department
Scheduled date of filing quarterly report:
February 14, 2020
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, 2019
(April 1, 2019 through December 31, 2019)(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
201,818
(2.1)
9,429
118.9
12,786
107.9
December 31, 2019
Nine months ended
206,1212.7
4,307(47.2)
6,150(43.0)
December 31, 2018
(Note) Comprehensive income:Nine months ended December 31, 2019: 1,563 million yen (–%)
Nine months ended December 31, 2018: -1,305 million yen (–%)
Basic earnings per share Diluted earnings per share
Yen
Yen
Nine months ended
14.21
12.29
December 31, 2019
Nine months ended
19.34
18.94
December 31, 2018

2,685

(26.5)

3,654(47.6)(2) Consolidated financial position
Total assets
Net assets
Equity ratio
Million yen
Million yen%
As of December 31, 2019368,506
191,833
51.9
As of March 31, 2019
368,082
192,861
52.2(Reference) Equity:
As of December 31, 2019:
191,140 million yen
As of March 31, 2019:
192,104 million yen

2. Dividends
End of 1Q
Yen

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

Fiscal year ended–
6.00
March 31, 2019
Fiscal year ending–
6.00
March 31, 2020
Fiscal year ending
March 31, 2020 (forecast)(Note) Revisions to dividend forecasts published most recently: None–

Year-end

Total
Yen

Yen

6.00

12.00

6.00

12.00

–

3. Forecast of Consolidated Financial Results for the Fiscal Year Ending March 31, 2020
(April 1, 2019 through March 31, 2020)(% change from the previous corresponding period)
Net sales

Operating profit

Ordinary profit

Million yen%
Million yen%
Million yen
Full year
268,000(2.8)
11,0008.6
15,000(Note) Revisions to business forecasts published most recently: Yes-1-%
15.2

Profit attributable toBasic earnings
owners of parent
per share
Million yen%
Yen
8,000(12.6)
42.32

* Notes(1) Changes in significant subsidiaries during the nine months ended December 31, 2019 (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, 2019
209,263,814 shares(ii) Number of treasury stock:
As of December 31, 201920,234,824 shares(iii) Average number of shares during period:
Nine months ended December 31, 2019 189,056,306 shares

As of March 31, 2019

209,263,814 shares

As of March 31, 201920,213,382 shares

Nine months ended December 31, 2018 188,997,630 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 3 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.

-2-1. Qualitative Information on Consolidated Operating Results for the Nine-Month Period(1) Qualitative Information Concerning Consolidated Operating Results
During the nine-month period under review, net sales decreased to 201,818 million yen (down 2.1% year on year), reflecting the weakdomestic demand and declining sales prices abroad, partially offset by the price revision of paper that was implemented in January 2019.
Operating profit during the period came to 9,429 million yen (up 118.9% year on year), with ordinary profit rising to 12,786 million yen(up 107.9% year on year), reflecting the price revision of paper and a range of successful cost reduction initiatives. Meanwhile, profit
attributable to owners of parent decreased to 2,685 million yen (down 26.5% year on year), due to the impairment loss on non-current
assets at Jiangmen Xinghui Paper Mill Co., Ltd.

(2) Qualitative Information Concerning Consolidated Financial Position
Total assets increased 424 million yen from the end of the previous fiscal year, to 368,506 million yen. Major factors included increases
in cash and deposits of 7,310 million yen and investments in securities of 5,656 million yen, partially offset by decreases in raw materials
and supplies of 4,363 million yen and property, plant and equipment of 7,480 million yen, due mainly to depreciation.
Total liabilities rose 1,452 million yen from the end of the previous fiscal year, to 176,672 million yen. This was primarily due to anincrease in interest-bearing debt of 2,669 million yen.
Net assets fell 1,027 million yen from the end of the previous fiscal year, to 191,833 million yen. This chiefly reflected a decrease invaluation difference on available-for-sale securities of 816 million yen.

(3) Qualitative Information Concerning Consolidated Earnings Forecasts
Given the financial results for the nine-month period under review and the business outlook, the full-year consolidated earnings forecasts
for the fiscal year ending March 31, 2020 announced on November 13, 2019 have been revised as follows:

Operating profit

Ordinary profit

Profit attributableto owners ofparent

Basic earnings
per share

Million yen
270,000

Million yen
11,000Million yen
14,000Million yen
9,500

Yen
50.25

Latest forecasts (B)268,000

11,00015,000

8,000

42.32

Change in amount (B-A)(2,000)–1,000(1,500)

Change in percentage

(0.7)

–

7.1

(15.8)

275,807

10,13013,0159,155

Net sales

Previous forecasts (A)(Reference) Actual results(for fiscal year ended March 31, 2019)

48.44

The above forecasts are based on information available to the Company 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.

-3-2. Consolidated Quarterly Financial Statements and Key Notes(1) Quarterly Consolidated Balance Sheet(Million yen)
As of March 31, 2019(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
OtherAllowance 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

As of December 31, 201915,202
67,7086,228
26,012
2,247
26,6796,075(55)

22,512
66,167
6,734
27,051
2,034
22,3155,627(53)

150,098

152,390

83,736(50,949)

84,253(52,412)32,787

31,840427,956(354,882)

427,804(363,151)

73,07464,653

Other, net

29,01830,905

Total property, plant and equipment

134,880

127,399

2,907

2,962

73,287
9,335(2,427)78,944
9,242(2,432)

Machinery, vehicles, tools, furniture and fixtures, net

Intangible assets
Investments and other assets
Investments in securities
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets-4-80,19585,754217,983

216,116

368,082368,506

(Million yen)
As of March 31, 2019
(Liabilities)
Current liabilities
Notes and accounts payable - trade
Electronically recorded obligations - operating
Short-term borrowings
Commercial papers
Income taxes payable
Provision
Other

As of December 31, 2019

21,4096,632
25,655
10,5002,531
3,413
14,15221,013
6,895
25,45811,000530
2,251
15,478

Total current liabilities

84,29382,628Non-current liabilities
Bonds payable
Long-term borrowings
Provision
Retirement benefit liability
Asset retirement obligations
Other

30,00043,331
1,386
12,0142,376
1,818

30,00044,083
1,392
12,2962,435
3,835

Total non-current liabilities

90,926

94,044

Total liabilities

175,220

176,672

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

42,02045,348105,599(9,933)42,02045,346
105,768(9,939)183,034

183,195

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

8,876
(1)
(388)
583

8,059
9(604)
479

Total accumulated other comprehensive income

9,070

7,944

104
651

118
574

192,861

191,833

368,082368,506

Total shareholders’ equity

Share acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets-5-(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, 2018
206,121
171,157

Net sales
Cost of sales

For the nine-month ended
December 31, 2019
201,818
162,120Gross profit

34,964

39,698Selling, general and administrative expenses

30,65630,268Operating profit

4,307

9,429

Non-operating income
Interest incomeDividends income
Share of profit of entities accounted for using equity method
OthersTotal non-operating income

58923
771
1,851
3,604

69
981
3,610
1,216
5,877

Non-operating expenses
Interest expenses
Foreign exchange losses
Environmental expenses
OthersTotal non-operating expenses

596
95
679
390
1,761

493
1,157–
870
2,520

Ordinary profit

6,150

12,786Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment in securities
Gain on change in equity
Gain on transfer of businessInsurance claim income
OthersTotal extraordinary income

222
0256
8750
1617

31856
10–
89–
988

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
Loss on sales of equity investment of subsidiary

955
5348
34–––

888
6,354
684
21
015
666

1,343

8,631

Profit before income taxes

5,424

5,143

Income taxes - current
Income taxes - deferred

2,512(565)

1,904
547

Total income taxes

1,946

2,451

Profit

3,478

2,691

Total extraordinary losses

Profit (loss) attributable to non-controlling interests

(176)

6

Profit attributable to owners of parent

3,654

2,685-6-Quarterly Consolidated Statements of Comprehensive Income(Nine-month period)(Million yen)
For the nine-month ended
December 31, 2018
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

For the nine-month ended
December 31, 2019

3,478

2,691

(2,938)26(1,349)
(89)

95
(1)
(218)
(82)

(433)

(920)

(4,784)(1,128)Comprehensive income(1,305)

1,563

Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests(1,077)
(228)

1,560
3

Total other comprehensive income-7-(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)
Overseas consolidated subsidiaries that have adopted IFRS commenced the application of IFRS 16: Lease in the first quarter of the current
fiscal year. Therefore, the lessee shall recognize assets and liabilities for all leases in the balance sheet, in principle. In applying IFRS 16,
practical expedient is followed and the cumulative effect of initially applying IFRS 16 at the date of application is recognized as anadjustment to retained earnings at the beginning of the first quarter of the current fiscal year.
As a result, “Other, net” in property, plant and equipment, “Other” in current liabilities, and “Other” in non-current liabilities at the end of
the third quarter of the current fiscal year rose 2,124 million yen, 214 million yen, and 1,444 million yen, respectively. “Other” in current
assets, “Other” in investments and other assets declined 108 million yen and 574 million yen, respectively. The impact on profit in thenine-month period under review is immaterial. In addition, retained earnings at the beginning of the current fiscal year was decreased by
248 million yen.

-8-