Consolidated Quarterly Financial Results
for the Three Months Ended June 30, 2020 [Japanese GAAP]
August 7, 2020
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:
August 11, 2020
Scheduled date of commencement of dividend payments:–Supplementary documents for quarterly results:
None
Quarterly results briefing:
None(Figures rounded down to the nearest million yen)

1. Consolidated Business Results for the Three Months Ended June 30, 2020
(April 1, 2020 through June 30, 2020)(1) Consolidated results of operations
Net sales
Three months ended
June 30, 2020Three months ended
June 30, 2019
(Note) Comprehensive income:(% change from the previous corresponding period)
Profit attributable toOperating profit
Ordinary profit
owners of parent
Million yen%
Million yen%
Million yen%

Million yen%

51,438(28.1)(1,277)–877(87.2)

2,490(49.1)

71,560

4.7

5,935

114.0

6,828

27.1

4,891

31.2

Three months ended June 30, 2020: 1,554 million yen (-62.1%)
Three months ended June 30, 2019: 4,103 million yen (808.2%)
Diluted earnings
Basic earnings per shareper share
YenYenThree months ended
June 30, 2020Three months ended
June 30, 2019

14.83

13.99

25.87

25.51

(2) Consolidated financial position

As of June 30, 2020
As of March 31, 2020(Reference) Equity:

Total assets
Net assets
Equity ratio
Million yen
Million yen%
344,941
181,401
52.4
344,731
180,861
52.3
As of June 30, 2020:
180,709 million yen
As of March 31, 2020:
180,183 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, 2020
Fiscal year ending–March 31, 2021
Fiscal year ending
7.00
March 31, 2021 (forecast)(Note) Revisions to dividend forecasts published most recently: None

Year-end

Total
Yen

Yen–

6.00

12.00

–

7.00

14.00

3. Forecast of Consolidated Financial Results for the Year Ending March 31, 2021
(April 1, 2020 through March 31, 2021)(% change from the previous corresponding period)
Net sales

Operating profit

Million yen% Million yen%
2Q (Accumulated)
100,000(26.9)(2,000)–
Full year
210,000(20.6)
1,000(91.1)(Note) Revisions to business forecasts published most recently: Yes-1-

Ordinary profit
Million yen
1,000
5,500%(89.5)(64.9)

Basicearnings pershare%Yen(84.7)
5.96(56.6)
20.84

Profit attributable toowners of parent
Million yen
1,000
3,500

Notes(1) Changes in significant subsidiaries during the three months ended June 30, 2020 (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 of 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 June 30, 2020
188,053,114 shares(ii) Number of treasury stock:
As of June 30, 2020
20,140,791 shares(iii) Average number of shares during period:
Three months ended June 30, 2020 167,912,371 shares

As of March 31, 2020

188,053,114 shares

As of March 31, 2020

20,140,702 shares

Three months ended June 30, 2019

189,050,357 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
Quarter; (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 Quarter(1) Qualitative Information Concerning Consolidated Operating Results
During the current three months, net sales amounted to 51,438 million yen (down 28.1% year on year), the operating loss was 1,277 million
yen (compared to operating profit of 5,935 million yen in the same period of the previous fiscal year), ordinary profit decreased to 877
million yen (down 87.2% year on year), and profit attributable to owners of parent came to 2,490 million yen (down 49.1% year on year)
due primarily to a sharp decline in demand in the overall industry as a result of the spread of the novel coronavirus infection disease(COVID-19).

(2) Qualitative Information Concerning Consolidated Financial Position
Total assets increased 210 million yen from the end of the previous fiscal year, to 344,941 million yen. This was attributable primarily toincreases of 906 million yen in merchandise and finished goods, 679 million yen in raw materials and supplies, 1,616 million yen in
investment securities, and 3,090 million yen in deferred tax assets included in investments and other assets, which more than offset
decreases of 4,763 million yen in notes and accounts receivable - trade and 1,621 million yen in property, plant and equipment due todepreciation, etc.
Total liabilities fell 328 million yen from the end of the previous fiscal year, to 163,540 million yen. This was attributable primarily todecreases of 2,396 million yen in notes and accounts payable - trade, 734 million yen in income taxes payable, and 1,594 million yen inprovisions, which more than offset an increase of 4,548 million yen in interest-bearing liabilities.
Net assets rose 539 million yen from the end of the previous fiscal year, to 181,401 million yen. This chiefly reflected increases of 1,467
million yen in retained earnings due in part to profit attributable to owners of parent and 1,340 million yen in valuation difference on
available-for-sale securities, which more than offset a decrease of 2,431 million yen in foreign currency translation adjustment.

(3) Qualitative Information Concerning Consolidated Earnings Forecasts
Domestic and overseas demand for paper products and pulp is rapidly decreasing due to the impact of COVID-19, which is causing a fallin net sales and other adverse effects on the financial performance of the Hokuetsu Group. In light of more serious damage inflicted on thesales of printing and communication paper and pulp constituting the core products of the Hokuetsu Group, the Group now expects that netsales, operating profit, ordinary profit, and profit attributable to owners of parent for the fiscal year ending March 31, 2021, to fall below
the levels of its previous forecast.

-3-2. Consolidated Quarterly Financial Statements and Key Notes(1) Quarterly Consolidated Balance Sheet(Million yen)
(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 March 31, 2020

As of June 30, 2020

21,38350,0786,427
29,2002,429
22,7225,445(6)22,01745,314
5,429
30,106
2,017
23,402
6,954(5)

137,679

135,236

84,722(52,954)

84,758(53,211)31,76731,546429,962(366,006)

432,917(368,701)

63,95564,215

Other, net

31,66730,007

Total property, plant and equipment

127,390

125,769

2,984

2,860

70,366
8,734(2,425)71,982
11,516(2,424)

Machinery, vehicles, tools, furniture and fixtures, net

Intangible assets
Investments and other assets
Investment in securities
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets-4-76,675

81,075207,051

209,705

344,731344,941(Million yen)
(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 March 31, 2020

As of June 30, 2020

19,3606,317
19,3387,000–
1,086
3,574
14,853

16,964
6,423
21,151
10,00010,000352
2,100
14,550Total current liabilities

71,53181,541

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

30,00048,460
1,376
7,266
2,441
2,792

20,00048,360
1,256
7,334
2,336
2,710

Total non-current liabilities

92,337

81,998

Total liabilities

163,869

163,540

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

42,02045,341
100,879(9,708)42,02045,341
102,347(9,708)

178,533

180,000

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

2,159
21337
(868)

3,500
21(2,093)(719)

Total accumulated other comprehensive income

1,650

708

81596

89602

180,861181,401

344,731344,941

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(First three-month period)(Million yen)
For the three-month
ended June 30, 2019

For the three-month
ended June 30, 2020

Net sales
Cost of sales

71,56055,13851,43843,757Gross profit

16,421

7,680

Selling, general and administrative expenses

10,486

8,957

Operating profit (loss)

5,935(1,277)

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

21455
547
537
1,561

12471
1,462
695
2,642

172
305
–
189
668

113
–
151
222
487

6,828

877

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

2088
7115

5100
12118

Extraordinary losses
Loss on sales and retirement of non-current assets
Loss on tax purpose reduction entry of non-current assets
Loss on sales of investment securities
Loss on valuation of investment securities

302––
17343
123
1,111

Non-operating expenses
Interest expenses
Foreign exchange losses
Leave allowance
OthersTotal non-operating expenses
Ordinary profit

Total extraordinary losses

320

1,471

Profit (loss) before income taxes

6,624(474)

Income taxes - current
Income taxes - deferred

1,330
389

320(3,303)

Total income taxes

1,719(2,983)

Profit

4,904

2,508

Profit attributable to non-controlling interests
Profit attributable to owners of parent-6-1317

4,891

2,490

Quarterly Consolidated Statements of Comprehensive Income(First three-month period)(Million yen)

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 three-month
ended June 30, 2019

For the three-month
ended June 30, 2020

4,904

2,508(1,397)
7640(27)

1,164
3(2,443)
49(23)

271(800)(953)

Comprehensive income

4,103

1,554

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

4,080
23

1,548
5

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.

-8-