Consolidated Quarterly Financial Results
for the Six Months Ended September 30, 2019 [Japanese GAAP]
November 13, 2019
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, Accounting Department
TEL: +81-3-3245-4500
Scheduled date of filing quarterly report:
November 14, 2019
Scheduled date of commencement of dividend payments:
December 3, 2019
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, 2019
(April 1, 2019 through September 30, 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%Six months ended
136,714
1.4
7,301
276.9
9,557
118.7
September 30, 2019
Six months ended
134,8191.8
1,937(57.5)
4,370(37.1)
September 30, 2018
(Note) Comprehensive income:Six months ended September 30, 2019: 4,515 million yen (173.3%)
Six months ended September 30, 2018: 1,652 million yen (-74.5%)
Basic earnings per share Diluted earnings per share
Yen
Yen
Six months ended
34.62
33.22
September 30, 2019
Six months ended
14.12
13.54
September 30, 2018

6,544

145.3

2,667

(50.2)(2) Consolidated financial position
Total assets
Net assets
Equity ratio
Million yen
Million yen%
As of September 30, 2019
356,012
195,930
54.8
As of March 31, 2019
368,082
192,86152.2(Reference) Equity:
As of September 30, 2019:195,246 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
270,000(2.1)
11,0008.6
14,000(Note) Revisions to business forecasts published most recently: Yes-1-%
7.6

Profit attributable to
Basic earnings
owners of parentper share
Million yen%
Yen
9,500
3.850.25

* Notes(1) Changes in significant subsidiaries during the six months ended September 30, 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 September 30, 2019
209,263,814 shares(ii) Number of treasury stock:
As of September 30, 201920,195,058 shares(iii) Average number of shares during period:
Six months ended September 30, 2019 189,055,612 shares

As of March 31, 2019

209,263,814 shares

As of March 31, 201920,213,382 shares

Six months ended September 30, 2018

188,986,098 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 theFirst Half; (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 First Half
(1) Qualitative Information Concerning Consolidated Operating Results
During the current six months, net sales amounted to 136,714 million yen (up 1.4% year on year) and operating profit amounted to 7,301
million yen (up 276.9% year on year), due primarily to the price revision of paper from January 2019 and increased sales in overseas
subsidiaries. Ordinary profit rose to 9,557 million yen (up 118.7% year on year) and profit attributable to owners of parent came to 6,544
million yen (up 145.3% year on year).

(2) Qualitative Information Concerning Consolidated Financial Position
Total assets decreased 12,070 million yen from the end of the previous fiscal year, to 356,012 million yen. Major factors included
decreases in notes and accounts receivable of 10,872 million yen, and raw materials and supplies of 3,184 million yen, offsetting anincrease in merchandise and finished goods of 2,068 million yen.
Total liabilities fell 15,138 million yen from the end of the previous fiscal year, to 160,082 million yen. This was primarily due to adecrease in interest-bearing debt of 11,828 million yen.
Net assets rose 3,068 million yen from the end of the previous fiscal year, to 195,930 million yen. This chiefly reflected an increase inretained earnings of 5,161 million yen, due mainly to recording profit attributable to owners of parent despite a decline in valuationdifference on available-for-sale securities of 2,006 million yen.

(3) Qualitative Information Concerning Consolidated Earnings Forecasts
Given the softening of the global pulp market, the full-year consolidated earnings forecasts are expected to fall below the previous
forecasts in net sales, operating profit, ordinary profit, and profit attributable to owners of parent.

-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
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

As of September 30, 201915,202
67,7086,228
26,012
2,247
26,6796,075(55)

15,39556,836
6,101
28,081
2,098
23,4955,039(52)

150,098

136,996

83,736(50,949)

84,647(51,883)

32,78732,763427,956(354,882)

431,138(360,475)

73,07470,663

Other, net

29,01831,600Total property, plant and equipment

134,880

135,027

2,907

3,105

73,287
9,335(2,427)73,066
10,243(2,428)

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-4-80,19580,882217,983

219,015

368,082

356,012(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 September 30, 2019

21,4096,632
25,655
10,5002,531
3,413
14,152

19,017
6,612
24,437–787
3,368
14,828

Total current liabilities

84,29369,051

Non-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

30,00041,414
1,453
12,1892,467
3,506

Total non-current liabilities

90,92691,030Total liabilities

175,220

160,082

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

42,02045,348105,599(9,933)42,02045,345
110,760(9,924)

183,034

188,202

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

6,870
0(331)
504

Total accumulated other comprehensive income

9,070

7,043

104
651

114
569

192,861

195,930

368,082

356,012

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 -month ended
September 30, 2018
134,819
112,660

Net sales
Cost of sales

For the six -month ended
September 30, 2019
136,714109,248

Gross profit

22,15827,466

Selling, general and administrative expenses

20,221

20,164

Operating profit

1,937

7,301

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

38
594
1,110
951
1,120
3,814

47
685
2,578
–
839
4,151

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

406–
669
304
1,380

339941–614
1,895

Ordinary profit

4,370

9,557

Extraordinary 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
Total extraordinary income

214
0241
87
24567

27
153
–
–
46
226

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 valuation of investment securities

734
5322
16–

697
0561
–
16

1,078

1,275

Profit before income taxes

3,859

8,508

Income taxes - current
Income taxes - deferred

1,397(162)

1,781
176

Total income taxes

1,235

1,957

Profit

2,624

6,551

(43)

7

2,667

6,544

Total extraordinary losses

Profit (loss) 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 -month ended
September 30, 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 six -month ended
September 30, 2019

2,624

6,551

1,527
35
(3,013)
(60)

(856)
(1)
47
(54)

540

(1,170)(971)(2,035)Comprehensive income

1,652

4,515

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

1,711
(58)

4,517
(1)

Total other comprehensive income-7-(3) Quarterly Consolidated Statement of Cash Flows(Million yen)
For the six -month ended
September 30, 2018

For the six -month ended
September 30, 2019

3,859
9,119
567
(24)
111(632)406(1,110)
16

8,508
9,302
0
63(46)
105
(732)
339
(2,578)
–

520

670

4,333
(1,605)
529
(526)
181
901

11,016
1,288
115(2,368)(86)
1,291

Subtotal

16,15326,890Interest and dividend income received
Interest paid
Income taxes paid
Proceeds from insurance income

881
(381)
(2,287)–969(317)(4,135)162

Net cash provided by (used in) operating activities

14,36523,570(2,824)–(6,158)
627(112)
57(667)(26)
342(6,037)31(114)123(2,645)(9,078)(8,327)(3,033)(11,000)
12,200(2,826)(1,136)
(77)
(0)
(46)

(1,990)(10,500)
1,000(1,900)(1,137)
(80)
(0)
(65)

Net cash provided by (used in) financing activities(5,921)(14,674)

Translation (loss) gain on cash and cash equivalents

(235)

(375)

Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment loss
Amortization of goodwill
Insurance income
Increase (decrease) in net defined benefit liability
Interest and dividend income
Interest expenses
Equity in (income) losses of affiliates
Loss on tax purpose reduction of property, plant and equipment
Loss (gain) on sales or disposal of property, plant andequipment
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories
Decrease (increase) in consumption taxes refund receivable
Increase (decrease) in notes and accounts payable - trade
Increase (decrease) in accrued consumption taxes
Other

Cash 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
OtherNet cash provided by (used in) investing activities
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
Dividends paid
Dividends paid to non-controlling interests
Payments for purchases of treasury stock
OtherNet increase (decrease) in cash and cash equivalents

(869)

192

Cash and cash equivalents at beginning of period

14,281

15,202

Cash and cash equivalents at end of period

13,412

15,395-8-(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.
(Changes in Accounting Policies)
Overseas consolidated subsidiaries that have adopted IFRS commenced the application of IFRS 16: Lease in the first quarter of thecurrent 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 an adjustment 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 endof the second quarter of the current fiscal year rose 2,196 million yen, 215 million yen, and 1,613 million yen, respectively. “Other” incurrent assets, “Other” in investments and other assets declined 109 million yen and 598 million yen, respectively. The impact on profit
in the first half of the current fiscal year is immaterial. In addition, retained earnings at the beginning of the current fiscal year wasdecreased by 248 million yen.

-9-