Consolidated Quarterly Financial Results
for the Six Months Ended September 30, 2022 [Japanese GAAP]
November 11, 2022
Company:
Stock Exchange Listing: Tokyo
Hokuetsu Corporation
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 filing quarterly report:
November 14, 2022
Scheduled date of commencement of dividend payments:
December 5, 2022
Supplementary documents for quarterly results:
Yes
Quarterly results briefing;
Yes (for institutional investors and analysts)(Figures rounded down to the nearest million yen)

1. Consolidated Business Results for the Six Months Ended September 30, 2022
(April 1, 2022 through September 30, 2022)(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%Six months ended
136,1877.8
3,997(63.0)
4,828(67.5)
September 30, 2022
Six months ended
126,390
22.3
10,801–
14,850–September 30, 2021
(Note) Comprehensive income:Six months ended September 30, 2022: 7,469 million yen (-62.6%)
Six months ended September 30, 2021: 19,999 million yen(–%)
Basic earnings per share Diluted earnings per share
Yen
Yen
Six months ended
11.66
11.65
September 30, 2022
Six months ended
95.96
95.88
September 30, 2021

1,959

(87.8)

16,119766.8(2) Consolidated financial position
Total assets
Net assets
Equity ratio
Million yen
Million yen%
As of September 30, 2022
396,532
221,494
55.7
As of March 31, 2022
376,956
216,974
57.4(Reference) Equity:
As of September 30, 2022:
220,705 million yen
As of March 31, 2022:
216,252 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
Year ended–
7.00
–
17.00
24.00
March 31, 2022
Year ending–
9.00
March 31, 2023
Year ending–
9.00
18.00
March 31, 2023 (forecast)(Note) Revisions to dividend forecasts published most recently: None
Breakdown of year-end dividends for the fiscal year ended March 31, 2022: Ordinary dividend: 7.00 yen; Special dividend: 10.00
yen

3. Forecast of Consolidated Financial Results for the Year Ending March 31, 2023
(April 1, 2022 through March 31, 2023)(% change from the previous corresponding period)
Net sales

Operating profit

Ordinary profit

Million yen%
Million yen%
Million yen
Full year
300,000
14.7
12,000(41.3)
8,000(Note) Revisions to business forecasts published most recently: Yes-1-%(72.9)

Profit attributable to
Basic earnings
owners of parent
per share
Million yen%
Yen
3,000(85.9)
17.85

* Notes(1) Changes in significant subsidiaries during the six months ended September 30, 2022 (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: None(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 September 30, 2022
188,053,114 shares(ii) Number of treasury stock:
As of September 30, 2022
19,992,819 shares(iii) Average number of shares during period:
Six months ended September 30, 2022 168,054,212 shares

As of March 31, 2022

188,053,114 shares

As of March 31, 2022

20,001,115 shares

Six months ended September 30, 2021

167,990,241 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 First
Half; (3) Qualitative Information Concerning Consolidated Earnings Forecasts” on page 3 of the accompanying materials for matters related
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 First Half
(1) Qualitative Information Concerning Consolidated Operating Results
During the six months of the current fiscal year, sales increased mainly due to the effects of price revisions to domestic products
implemented in the previous fiscal year and rising prices of exported products. While net sales amounted to 136,187 million yen (up 7.8%year on year), operating profit, ordinary profit and profit attributable to owners of parent came to 3,997 million yen (down 63.0% year onyear), 4,828 million yen (down 67.5% year on year) and 1,959 million yen (down 87.8% year on year), respectively, due to soaring raw
material and fuel prices.
The performance of major segments is as follows:(i) Pulp and paper businessIn the pulp and paper business, sales increased mainly due to the effects of price revisions to domestic products implemented in theprevious fiscal year and rising prices of exported products. However, profits decreased due to soaring raw material and fuel prices.
As a result, the results of the pulp and paper business were as follows.
Net sales

125,168 million yen (up 8.5% year on year)

Operating profit

3,469 million yen (down 65.8% year on year)(ii) Packaging/Paper processing businessIn the packaging/paper processing business, sales and profits decreased, mainly because of the transfer of information media businessand rising raw material prices.
As a result, the results of the packaging/paper processing business were as follows.
Net sales
Operating loss

6,650 million yen (down 5.2% year on year)-99 million yen (compared to operating loss of 8 million yen a year ago)(iii) Other businesses
In other businesses, including the wood material business, construction business, logistics business and used paper wholesale business,sales and profits increased due to a rise in external orders, especially in the wood material business.
As a result, the results of other businesses were as follows.
Net sales
Operating profit

4,368 million yen (up 9.2% year on year)
422 million yen (up 3.7% year on year)(2) Qualitative Information Concerning Consolidated Financial Position
Total assets increased 19,576 million yen from the end of the previous fiscal year, to 396,532 million yen. This was attributable primarily
to increases of 6,511 million yen in raw materials and supplies, 4,188 million yen in notes and accounts receivable - trade, and contract
assets, 3,389 million yen in merchandise and finished goods, 4,278 million yen in property, plant and equipment and 3,001 million yen inguarantee deposits included in investments and other assets, which more than offset a decrease of 868 million yen in cash and deposits.
Total liabilities rose 15,056 million yen from the end of the previous fiscal year, to 175,038 million yen. This was primarily due to increasesof 12,056 million yen in interest-bearing debt and 2,132 million yen in notes and accounts payable - trade, which more than offset adecrease in income taxes payable of 2,315 million yen.
Net assets rose 4,519 million yen from the end of the previous fiscal year, to 221,494 million yen. This mainly reflected an increase of
4,939 million yen in foreign currency translation adjustment.

(3) Qualitative Information Concerning Consolidated Earnings Forecasts
Looking at the full year of the fiscal year ending March 31, 2023, consolidated net sales are expected to exceed the previous forecast
mainly due to rising sales prices of paper and pulp in overseas markets and revision of sales prices of paper in Japan. Further, although thebusiness environment in Japan is expected to become even more challenging because of the sharp depreciation of the yen and soaring
prices of various raw materials and fuels, operating profit is expected to exceed the previous forecast due to the steady performance of thepulp sales business overseas. On the other hand, earnings forecasts for equity-method affiliates are expected to fall below the previousforecasts, and as a result of this, ordinary profit and profit attributable to owners of parent are expected to be lower than the previous
forecasts due to the posing of additional share of loss of entities accounted for using equity method.
-3-2. Quarterly Consolidated Financial Statements and Key Notes(1) Quarterly Consolidated Balance Sheet(Million yen)
As of March 31, 2022
(Assets)
Current assets
Cash and deposits
Notes and accounts receivable - trade, and contract assets
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 September 30, 2022

30,27560,7497,133
27,2602,684
26,4695,741(5)29,40764,937
7,349
30,6493,200
32,9805,151(5)160,308

173,672

85,623(54,260)

87,589(55,540)

31,36332,049439,429(380,000)

445,931(384,432)

59,42961,499Other, net

24,58926,112Machinery, vehicles, tools, furniture and fixtures, net
Total property, plant and equipment

115,382

119,661

Intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Other
Allowance for doubtful accounts

2,406

2,498

22,022
69,562
7,560(288)

23,094
66,872
11,019(286)

Total investments and other assets

98,857100,700

216,647

222,860

376,956

396,532

Total non-current assets
Total assets-4-(Million yen)
As of March 31, 2022
(Liabilities)
Current liabilities
Notes and accounts payable - trade
Electronically recorded obligations - operating
Short-term loans
Commercial papers
Income taxes payable
Provision
Other

As of September 30, 2022

20,3606,339
40,748
3,000
4,013
3,229
14,10522,492
7,047
23,75823,000
1,698
3,035
16,265

Total current liabilities

91,796

97,298Non-current liabilities
Bonds payable
Long-term loans
Provision
Retirement benefit liability
Asset retirement obligations
Other

20,00033,495
1,477
5,661
2,845
4,704

20,00042,256
1,833
5,767
2,720
5,162

Total non-current liabilities68,184

77,739Total liabilities

159,981

175,038

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

42,02045,341
131,615(9,639)42,02045,341
130,610(9,635)

209,338

208,337

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

3,686
157
1,632
1,437

4,284
153
6,572
1,359

Total accumulated other comprehensive income

6,913

12,3687764487700

216,974

221,494376,956

396,532

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(Six-month period)(Million yen)
For the six months ended
September 30, 2021

For the six months ended
September 30, 2022

Net sales
Cost of sales

126,390
95,527

136,187
110,750

Gross profit

30,86225,437

Selling, general and administrative expenses

20,06121,439

Operating profit

10,801

3,997

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

11480
2,796
78
1,186
4,552

34554
–
2,479
538
3,607

Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity method
Rental expenses
Other
Total non-operating expenses

203–
141
158
503

333
2,002
104
337
2,777

Ordinary profit

14,8504,828

Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Insurance claim income
Gain on reversal of retirement benefit obligations
Total extraordinary income

6,980
033
77
7,092

35
–––
35

515
31360

527
––

Extraordinary losses
Loss on sales and retirement of non-current assets
Loss on tax purpose reduction entry of non-current assets
Provision for loss related to the Anti-Monopoly Act

907

527

Profit before income taxes

21,035

4,335

Income taxes - current
Income taxes - deferred

5,096(210)

2,366(11)Total income taxes

4,886

2,354

Profit16,149

1,981

30

22

16,119

1,959

Total extraordinary losses

Profit attributable to non-controlling interests
Profit attributable to owners of parent-6-Quarterly Consolidated Statements of Comprehensive Income(Six-month period)(Million yen)
For the six months ended
September 30, 2021
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 six months ended
September 30, 2022

16,149

1,981

559
23
3,407
(32)

789
(29)
4,973
(59)

(108)

(185)

3,849

5,488

Comprehensive income

19,9997,469

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

19,935
63

7,414
55

-7-(3) Quarterly Consolidated Statement of Cash Flows(Million yen)
For the six months ended
September 30, 2021

For the six months ended
September 30, 2022

21,035
6,235
66
(33)
(797)
(491)203

4,335
6,042
68–
118
(589)
333

(2,796)2,002

31(6,465)
(77)

–
492
–

(2,542)(2,490)(3,728)
(248)
601
(793)
(482)

(7,728)538
2,340(200)(926)

Subtotal

9,717

4,338

Interest and dividend income received
Interest paid
Income taxes paid
Proceeds from insurance income
Payments for deposit money

914
(170)
2,262
2–

1,106
(323)
(4,660)–(3,000)Net cash provided by (used in) operating activities

12,725(2,540)(756)
6(6,047)
11,285
(106)
122
1,500
(521)

(411)
0(5,362)49(90)
36–(614)

5,481(6,393)

Cash flows from operating activities
Profit before income taxes
Depreciation
Amortization of goodwill
Insurance claim income
Increase (decrease) in net defined benefit liability
Interest and dividend income
Interest expenses
Share of loss (profit) of entities accounted for using equity
methodLoss on tax purpose reduction entry of non-current assets
Net loss (gain) on sales and retirement of non-current assets
Reversal of retirement benefit obligations
Decrease (increase) in notes and accounts receivable tradeDecrease (increase) in inventories
Decrease (increase) in consumption taxes refund receivable
Increase (decrease) in notes and accounts payable - trade
Increase (decrease) in accrued consumption taxes
OtherCash flows from investing activities
Payments for purchases of investment securities
Proceeds from sales of investment securities
Payments for purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments of loans receivableCollection of loans receivable
Proceeds from sale of businesses
OtherNet cash provided by (used in) investing activities-8-(Million yen)
For the six months ended
September 30, 2021

For the six months ended
September 30, 2022

(5,953)––(4,202)(10,000)(1,179)
(89)
(82)

(472)
20,0008,729(19,152)–(2,862)–(57)(21,507)6,183

Translation (loss) gain on cash and cash equivalents

377

1,881

Net increase (decrease) in cash and cash equivalents(2,921)(868)

Cash and cash equivalents at beginning of period

29,84630,275

Cash and cash equivalents at end of period

26,92429,407

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
Redemption of bonds
Dividends paid
Dividends paid to non-controlling interests
OtherNet cash provided by (used in) financing activities-9-(4) 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.

- 10 -