Long-term Corporate Vision “Vision 2030”
Medium-term Management Plan 2023

May 22, 2020

Long-term Corporate Vision & Medium-term Management Plan
Long-term Vision – “Vision 2020”
Business Results
Medium-term Management Plan

G-1stVision 2020 Corporate Image

C-next

V-DRIVE

Net Sales
Over ¥300 billion
Overseas Sales Percentage
25%

FY2019 Results
Net Sales¥264.6 billion
Overseas Sales Percentage 30.5%
FY2019 Target Consolidated
Management Indicators

Final Fiscal Year Goals

Final Fiscal Year Results¥300 billion
Net Sales¥15 billion
Operating income
Operating income Percentage 5.0%
6.0%
ROE
¥40 billion
EBITDALess than 0.6
Net D/E Ratio

FY2019 Consolidated ManagementResults¥264.6 billion
Net Sales¥11.2 billion
Operating income
Operating income Percentage 4.2%
4.3%
ROEEBITDA¥34.9 billion
Net D/E Ratio
0.471Long-term Vision “Vision 2020” Results Examination
 Gas turbine facility installed in the Niigata Mill

2020 Corporate Image Target■ Calculations of greenhouse gases begun across the entire

supply chain (from FY2013)
 CO2 emission levels (single substance)

A business that promotes environmental
management and places importance on theenvironment in its various business activities.

FY2011 437kg/CO2/t→ FY2018 398kg/CO2/t

9% reduction

 High-efficiency Black Liquor evaporator activated at Niigata Mill New wood chip carrier (eco ship) introduced■ A business that provides attractive productswith high quality and cost-competitiveness,through advanced technology.

 Expansion of FSC certified products lineup
 Operation of solar power generator facilities (Niigata Mill, Kanto

Mill, Hokuetsu-Material) Exhibited at EcoPro exhibition■ A business that continues steady growth andendless challenges with passion.

■ Net Sales： Over ¥300 billion

 Expansion of high-bulk-LWC paper products lineup Development and sale of paper container and paper straw material
 Development of Cellulose Nano Fiber and Carbon Fiber compositematerial
 Development of paper material “Panse” (Paper from New Sense)(Overseas Sales Percentage： 25%)

FY2019

 Acquisition of performance materials paper company Bernard Dumas(France) Acquisition of pulp business company Al-Pac (Canada) White paperboard production started at Jiangmen Xinghui Paper Mill(China)
 Containerboard business started at Niigata Mill

 Consolidated Sales: ¥264.6 billion
 Overseas Sales Percentage: 30.5%

Business developed in line with the “Vision 2020” corporate image2Medium-term Management Plan “V-DRIVE” Results Examination

BasicPolicy

Expansion of OverseasBusinessDirect Trade
SystemStrengthened

Ho Chi Minh City
Representative Office
EstablishedContainerboard
Production at Niigata
Mill Started

Paper Processing Business
Capital Investment/Gravure
Printing Machines etc.
Expanded
Performance Materials
Paper Production
System in France
Strengthened

Strengthen Foundations ofConsolidated Management
SystemRe-Strengthen Mill
CompetitivenessWhite Paperboard Sales
in China Stabilized

２０１９

Expanded Sales of
Plastic Alternative
Materials/Performance
Materials Paper２０１８Pulp Production Sales
Business at Niigata Mill
Expanded

Pulp Business Sales inCanada Expanded/Chemicaland Freight Car Receiving
Facility Introduced

Major Product of Coated Paper,White Paperboard,
FSC Certified Paper Production
Started

２０１７
Rationalization ofLogistics Promoted

Overseas Group
Governance Meeting
Held

Group Corporate
Philosophy/Group Codeof Conduct EstablishedGroup Governance
Department
Established

V-DRIVE Overview
By steadily implementing measures in line with the Basic Policy, we have been able to expand overseas business
operations, deliver attractive products to our customers, realize the creation of a firm compliance/governancesystem, and establish our position as a global business.

Target Consolidated Management Indicators were not achieved due to a reduction in the amount of produced/sold
paper, and other factors.
3The Hokuetsu Group’s Business Environment Recognition

6,000

12,0005,000

10,000

4,000

8,000

3,000

6,000

2,000

4,000

1,000

2,000
Printing andCommunication PaperContainerboard

White Paperboard (left axis)

02010

2015

2020

2025

02030

Domestic demand for printing andcommunication paper is expected todecrease by 3 million tons over the 10 years
from 2020.
Printing and Communication Paper/Containerboard Domestic Demand (1,000t)

Printing and Communication Paper/Containerboard Domestic Demand (1,000t)

Outlook on Domestic Demand for Printing and Communication Paper, White
Paperboard and Containerboard (Company Estimation)

Reconstruction of production system andproduct mix to respond to the decrease indomestic demand is inevitable

A stable demand for containerboard
is expected.

Promotion of containerboard
business

White paperboard is expected to firmly
transition while the usage will change inaccordance with the needs of the times.

Responding to newcustomers and demand

Calendar Year
(Estimated based on the Japan Paper Association domestic demand performance trends
and the annual report on the aging society)*2020 domestic demand is a prediction

4

The Hokuetsu Group’s Business Environment【Positive Factors】
Increased demand for plastic alternatives (packaging paper, paperboard for paper
containers, processed paper products, vulcanized fibers etc.)
Increased demand for performance materials paper (RO membrane backings, chip
carrier tape base paper)
Increased demand for containerboard【Uncertain Factors】
Market/Price fluctuations (pulp, used paper, fuel, chemicals etc.)
Stagnation in economic activities due to the impact of the novel coronavirus disease【Negative Factors】
Reduction in domestic demand (printing and communication paper etc.)
Slow growth in the printing and writing paper market in the East Asian region
Domestic and overseas logistics problems (lack of human resources, rising costs)

5

Long-term Corporate Vision “Vision 2030”
Basic Policy

In a business environment that is subject to major changes, the Group and all its
stakeholders will aim for continuous growth by promoting management witheffective governance and compliance, and developing and providing services andproducts that are both high quality and cost-competitive through environmentallyfriendly business activities.

1. Name of the Vision： Vision 2030
2. Period： April 1, 2020 through March 31, 2030
3. Target Image of the Group in 2030
■ A business group that contributes to sustainable social development based onenvironmental management■ A business group that makes use of diverse human resources and the latest
technology to challenge ourselves in new business fields in step with the times■ A business group made up of people working proactively with dreams, hopes andpride6

Medium-term Management Plan 2023 Period and Target Consolidated Management Indicators■ Formulation Background: the first step towards the realization of the Group image set out in “Vision 2030.”

Name

Medium-term Management Plan 2023

PeriodApril 1, 2020 through March 31, 2023 (3 years)

TargetConsolidated
ManagementIndicators(FY2022)Net sales:¥280 billion

Operating income:¥15 billion

Ordinary income:¥20 billion

Netincome:attributable to owners of parent company¥15 billion

ROE：
EBITDA：

7.0%¥35 billion

PremiseExchange Rate： ¥108/USD
Dubai Crude Oil： USD50/bbl.
7FY2022 Consolidated Management ProfitsFactors for Fluctuation(Hundred Million Yen)

8Medium-term Management Plan 2023 Basic Policies (1)Enhance functions ofGroup Governance
Administration Department

Shift business portfolio
Pioneer new businesses
Expand strategic investment"Group Environmental
Target 2030" initiative

Strengthen
Strengthen
Expand businessprofitability of existing business in Japanworldwidebusinesses
Introduce
Construct an optimalmanagement focusedStrengthen systems for
production system
on main businesses
developing new materials andStrengthen
new products
Make containerboard
profitability throughinto a core business
Logisticalcollaboration within andreforms
without group
Expand paper
Hold Consolidated
processing business
Promote M&A
Management andInternal Control Meetings

Establish
a new Audit &Supervisory Board
Member OfficeStrengthen
governance management

Developeco-friendly
products

Promotework-stylereforms

Respect
human rights

PromoteSDG-related activities

9Medium-term Management Plan 2023 Basic Policies (2)Shift Business Portfolio

We will pioneer new core businesses in Japan and overseas and accelerate thebusiness portfolio shift that we have promoted, with the aim of the continuous growthof the Group.
Expand Business Worldwide

Strengthen Business in Japan

We will develop a system to manage our main businesses

We will strengthen the profitability of our existing businesses

outside Japan in a focused and collective manner for

by implementing measures such as logistic reforms andfurther collaboration within and without the Group andconstructing an optimal production system that meets trends

more profitability, and expand our businesses globallyin demand, make our containerboard business into a corethrough investments like M&A.

business, and further expand our paper processing business.

Strengthen Corporate Governance

Promote SDG-related activities

We will strengthen our internal controls by holding “Consolidated

We will promote activities that contribute to the SDGs

Management and Internal Control Meetings” and enhancing thethrough initiatives to reach the “Group Environmental

functions of the Group Governance Administration Department,
set up an Audit & Supervisory Board Member Office (support
staff for Audit & Supervisory Board Members), and increase theTarget 2030,” the development of eco-friendly products
such as plastic alternatives, and workstyle reforms.

effectiveness of Audit & Supervisory Board Members’ audits.

10Investment Plan

Total Investment¥110 billion
Strategic Investment:

Investment
Allocation¥70 billion

Maintenance and renewal investment: ¥40 billion

StrategicInvestment

Capital investment with the main goal ofstrengthening competitiveness
Policy investment, including M&A
R&D investment

CurrentlyProgressing
Items

Canada Pulp Business: extension of onsite warehouses,
heat recovery equipment installed in the recovery boiler(expansion of electricity sales business)
Nagaoka Mill: revision to increased production of chip carrier tape base paper
Kanto Mill (Katsuta): Measures for boiler fuel diversification

11Business Strategy (1)Paper BusinessWhite Paperboard Business■Policy■Policy Create the most appropriate production system forprinting and communication paper, to respond todomestic and overseas demand trends.

 Seek out potential demand for our products andimprove customer satisfaction.

 Strengthen export sales ability based on a direct tradesystem.
 Expand sales of packaging-compatible products / plastic
alternative packaging.
 Develop products for new applications by applying
manufacturing
technology
forprintingandcommunication paper.

 Address the demand for plastic alternative containers /packaging materials.
 Address new product needs by integrating the paper
processing business and Hokuetsu Paper Sales.
 Develop the Kanto Mills as bases for next-generation
environmental manufacturing.

Kanto Mill(Ichikawa)
Niigata MillKishu Mill

Paper, plastic alternative materials, usage examples

Kanto Mill(Katsuta)

12Business Strategy (2)Specialty Paper Business

Paper Processing Business■Policy■Policy Build a system to produce / sell growth products from aglobal perspective.

 Develop a business that takes advantage of thestrengths of integrated group production from basepaper to processed products.

 Address the demand for plastic alternative materials.
 Enter new fields and businesses for high added value
products.

 Advance considerations of new fields / businesses while
restructuring the business portfolio.
 Strengthen business through deepening cooperation
between group companies.

Plastic alternative
materials, usage
examplesHokuetsu Package Co., Ltd
Katsuta Production
Department
Eight-color rotogravure
printing press

PASCO
products
Sprayprevention panel

Hokuetsu Package Co., Ltd
Tokorozawa Production
Department

13

Business Strategy (3)Containerboard Business

Overseas Business■Policy■Policy Deepen relationships with customers, and build thefoundations of production/sales in the containerboard
business.

 Establish a system to centrally and collectively
manage major overseas businesses.

 Promote improvements of production efficiency andimprove profitability in advance.
 Address customers’ needs and link them to the future
growth of the containerboard business.

 Expand overseas business and advance thedevelopment of new business domains.
 Strengthen the profitability of overseas business.

No. 6 board machineat Niigata Milland a product

Alberta-Pacific
Forest Industries Inc.

Jiangmen Xinghui
Paper Mill Co., Ltd14

Research and Development Policy

Basic Policy
1) Develop and launch of plastic alternative substrates►►►“Panse” usage examples

Practical commercialization of new paper material “Panse”
Development of vulcanized fiber applications
White paperboard with new functions and new processed
paper container products2) Develop new functional materials
New filter media use products, CNF usable products, etc.

Fiber materials production examples

3) Concentrate the development/investment intoproducts that are expected to grow in the market
Packaging paper
Food packaging/materials for containers/processed paper
products► Performance material paper section►►15

Environmental Management
Basic Policy
We will advance initiatives for each goal, as the first step of the group’s newly-established long-term
environmental goal “Group Environmental Target 2030.”

Group Environmental Target 2030
1. Measures to combat global warming Reduce CO2 emissions by 43% compared toFY2005 (approx. 450,000t).
 Promote reduction of CO2 emissions generated
from logistics.

4. Measures on waste
 Improve the effective utilization rate of waste.

2. Forest management/cultivation
 Obtain all used wood raw materials fromforests that have been certified as legal andsustainable (maintain 100% utilization).
 Continue forest management with the aim of
improving biodiversity and multifaceted
functions of forests.

5. Compliance with environmental laws/emission
management
 Aim to reduce environmentally hazardous
substances that accompany drainage andexhaust.

3. Resource utilization/recycling
 Advance reduction of water usage.
 Promote the use of waste paper by expanding
the products that use it.

6. Environmentally-friendly products/technology
 Expand environmentally friendly products.
(Development of products that contribute to solving
marine plastic problems etc.)
 Use raw materials and chemicals that have a low
environmental impact.

Black liquor(A biomass fuel madefrom resin content ofwood chips, the raw
material of pulp)

Company-owned
forests in South Africa

Applicable to all group production bases both domestic and overseas

16

The contents related to the goals and other information contained in this document are based on
various assumptions at the time of formulating this plan, and they do not guarantee the feasibility ofthis plan.
In addition, we are not under any obligation to update the forward-thinking statements of this plan
based on new information, future events, etc.

For inquiries regarding this document
Hokuetsu Corporation Corporate Planning Department
03-3245-4870