Consolidated Financial Results
for the Year Ended March 31, 2023 [Japanese GAAP]May 12, 2023
Company:
Hokuetsu Corporation
Stock Exchange Listing: Tokyo
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 ordinary general meeting of shareholders: June 29, 2023
Scheduled date of commencement of dividend payments:
June 30, 2023
Scheduled date of filing annual securities reports:
June 29, 2023
Supplementary documents for financial results:
Yes
Results briefing:
Yes (for institutional investors and analysts)(Figures rounded down to the nearest million yen)
1. Consolidated financial results for the year ended March 31, 2023 (April 1, 2022 through March 31, 2023)(1) Consolidated results of operations(% change from the previous corresponding period)
Profit attributable to
Net sales
Operating profit
Ordinary profit
owners of parent
Million yen%
Million yen%
Million yen%
Million yen%
Year ended March 31, 2023
301,204
15.1
17,288 (15.5)
11,471(61.1)
8,325 (60.7)
Year ended March 31, 2022
261,616
17.6
20,455–29,514 202.5
21,20649.6(Note) Comprehensive income:Year ended March 31, 2023:
13,488 million yen (-44.0%)
Year ended March 31, 2022:
24,088 million yen (43.6%)
Basic earnings
Diluted earnings
Ratio of ordinary Ratio of operating
Return on equity
per shareper share
profit to total assets profit to net sales
Yen
Yen
%
%
%
Year ended March 31, 2023
49.54
49.48
3.8
3.0
5.7
Year ended March 31, 2022
126.22126.0910.3
8.0
7.8(Reference) Investment income by equity method: Year ended March 31, 2023:-8,609 million yen
Year ended March 31, 2022:
5,861 million yen(2) Consolidated financial position
Total assets
Net assets
Equity ratio
Net assets per share
Million yen
Million yen%
Yen
As of March 31, 2023
388,444
225,95058.0
1,339.89
As of March 31, 2022
376,956
216,97457.4
1,286.82(Reference) Equity:
As of March 31, 2023:
225,209 million yen
As of March 31, 2022:
216,252 million yen(3) Consolidated cash flows
Cash flows from
Cash flows from
Cash flows from
Cash and cash equivalents
operating activities
investing activities
financing activities
at end of the year
Million yen
Million yen
Million yen
Million yen
Year ended March 31, 2023
1,746
(12,753)(2,099)18,063
Year ended March 31, 2022
20,186(1,648)(19,187)
30,275
2. Dividends
Annual dividend per share
End of 1Q End of 2Q End of 3Q Year-end

Total

Ratio of
Dividend
dividend to
payout ratio
net assets(Consolidated)(Consolidated)
Million yen
%
%
4,047
19.0
2.0
3,035
36.3
1.4
Total
dividends(Total)

Yen
Yen
Yen
Yen
Yen
Year ended March 31, 2022
–
7.00
–
17.00
24.00
Year ended March 31, 2023
–
9.00
–
9.00
18.00
Year ending March 31, 2024
–
9.00
–
9.00
18.00
33.6
(forecast)
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, 2024 (April 1, 2023 through March 31, 2024)(% change from the previous corresponding period)
Basic
Profit attributable to
Net sales
Operating profit
Ordinary profit
earnings perowners of parent
shareMillion yen% Million yen% Million yen% Million yen%
Yen
2Q (Accumulated)
150,000
10.1
10,000150.1
12,000
148.5
8,000
308.3
47.60
Full year
310,000
2.9
11,000(36.4)
14,000
22.0
9,000
8.1
53.55

-1-

* Notes(1) Changes in significant subsidiaries during the year (changes in specified subsidiaries accompanying changes in the scope of
consolidation): None
(2) 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
(3) Shares outstanding (common stock)(i) Number of shares outstanding at year-end (treasury stock included):
As of March 31, 2023

188,053,114 shares

As of March 31, 2022

188,053,114 shares

19,972,637 shares

As of March 31, 2022

20,001,115 shares

168,064,868 shares

For the year ended March 31, 2022

168,018,990 shares(ii) Number of treasury stock at year-end:
As of March 31, 2023(iii) Average number of shares during the year:
For the year ended March 31, 2023

(Reference) Overview of non-consolidated financial results
1. Non-consolidated financial results for the year ended March 31, 2023 (April 1, 2022 through March 31, 2023)(1) Non-consolidated results of operations(% change from the previous corresponding period)
Net sales
Operating profit
Ordinary profit
Net profit
Million yen%
Million yen%
Million yen%
Million yen%
Year ended March 31, 2023
187,13113.6
2,978(59.1)
11,298(13.7)
7,448
1.1
Year ended March 31, 2022
164,681
12.0
7,291
270.9
13,091
97.4
7,368(38.7)
Basic earnings
per share

Diluted earnings
per share
Yen
44.11
43.66

Yen
Year ended March 31, 2023
44.16
Year ended March 31, 2022
43.70
(2) Non-consolidated financial position
Total assets
Net assets
Equity ratio
Million yen
Million yen%
As of March 31, 2023
278,051
135,469
48.7
As of March 31, 2022
268,469
131,785
49.1(Reference) Equity:
As of March 31, 2023:
135,378 million yen
As of March 31, 2022:
131,708 million yen

Net assets per share
Yen
802.67781.04* The summary of financial results is exempt from audits conducted by certified public accountants 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. For assumptions of business forecasts and a note about the use of business
forecasts, please refer to page 6 “1. Summary of Operating Results (4) Future outlook.”* This document is an excerpt translation of the original in Japanese and is for reference purposes only. In case of any discrepancy
between this document and the original in Japanese, the latter shall take precedence.

-2-

1. Summary of Operating Results(1) Summary of operating results during the year
(Operating results during the year)
During the current fiscal year, net sales increased, mainly due to price revisions implemented in the current fiscal year regarding products
for domestic markets and the increase in prices of products for export, but operating profit fell as a result of the soaring prices of raw materials
and fuels. Ordinary profit and profit attributable to owners of parent also decreased due primarily to the recording of an equity method
investment loss. The Group’s consolidated financial results for the current fiscal year were as follows:
Net sales

301,204 million yen(up 15.1% year on year)

Operating profit

17,288 million yen(down 15.5% year on year)

Ordinary profit

11,471 million yen(down 61.1% year on year)

Profit attributable to owners of parent

8,325 million yen(down 60.7% year on year)

The performance of major segments is as follows:(i) Pulp and paper business(Million yen)Previous year

Current year

Difference

Net sales

240,002279,109

39,106

Operating profit

19,241

16,092(3,148)In the pulp and paper business, sales increased mainly due to the effects of price revisions to domestic products implemented in the current
fiscal year and the rising prices of exported products. However, profits decreased due to soaring raw material and fuel prices.
By product type, sales of paper surpassed the level in the previous year in Japan, reflecting price revisions implemented twice in the current
fiscal year. In the second half of the current fiscal year, a recovery of orders for travel magazines mainly targeting overseas travelers
contributed to the growth of sales volume. Sales of exported products increased from the previous year as well, due to rising sales prices.
Sales of paperboard also exceeded the level achieved in the previous fiscal year, like sales of paper, due to price revisions implemented in
the current fiscal year. The sales volume also increased from the previous year although there were variations between product types. By
grade, the sales volumes of special white paperboard and coated duplex board (with gray-back) were solid for fast food takeout applications,and increased for pharmaceutical, confectionery and toy applications, but decreased for exported products reflecting the weakening of themarkets. Sales of high-grade white paperboard fell year on year for card game applications, and also decreased for point-of-purchase (POP)store ad applications. The sales volume of containerboard base paper increased steadily in Japan due to price revisions implemented in thecurrent fiscal year and strong growth centered on Niigata prefecture, while the sales volume of containerboard base paper for overseas
markets also exceeded the level in the previous fiscal year.
Regarding performance materials, sales of functional paper decreased from the preceding fiscal year, and sales of chip carrier tape basepaper for transporting electronic components declined in particular. This was mainly caused by plunged demand due to the strict zeroCOVID policy applied throughout China to address the expanding COVID-19 pandemic. Sales of special paper and communication paper
were higher than in the previous year as a result of price revisions and focusing on the expansion of sales of products for food packaging
materials applications for convenience stores against the backdrop of recovering flow of people in Japan.
Pulp sales surpassed the figure in the previous fiscal year, supported by the rise in sales prices which more than offset a decrease in sales
volume caused by reduced production due to a shortage of freight cars experienced by an overseas subsidiary.

-3-

(ii) Packaging/Paper processing business(Million yen)Previous year
Net sales

Current year

Difference

13,60913,740

130

(71)

(3)

68

Operating loss

In the packaging/paper processing business, sales and profit grew due to increased orders for domestic products and the effects of pricerevisions, despite the impact of the lockdown implemented in some areas in Shanghai in line with the Chinese government’s zero-COVID
policy.
(iii) Other businesses(Million yen)Previous year
Net sales
Operating profit

Current year

Difference

8,004

8,355

350

759

694

(65)

In other businesses, including the wood material business, construction business, logistics business and used paper wholesale business,sales increased due to a rise in external orders, especially in the wood material business. However, profits declined chiefly due to cost
increases in the logistics business.
(2) Summary of financial conditions during the fiscal year
(Million yen)
End of previous year

End of current year

ChangeTotal assets

376,956

388,444

11,488

Net assets

216,974

225,950

8,975

Equity ratio

57.4%

58.0%

0.6%

Net assets per share

1,286.82 yen

1,339.89 yen

53.07 yenInterest-bearing debt at year-end

99,088103,725

4,637

Total assets increased 388,444 million yen from the end of the previous fiscal year, to 11,488 million yen. This was attributable primarily toincreases of 15,078 million yen in notes and accounts receivable - trade and contract assets, 5,946 million yen in raw materials and supplies,
and 4,004 million yen in guarantee deposits included in investments and other assets, which more than offset a decrease of 12,212 million
yen in cash and deposits.
Total liabilities rose 2,512 million yen from the end of the previous fiscal year, to 162,494 million yen. This was primarily due to an increase
in interest-bearing debt of 4,637 million yen and electronically recorded obligations - operating of 1,481 million yen, which more than offset
a decrease in income taxes payable of 1,094 million yen and retirement benefit liability of 1,854 million yen.
Net assets rose 8,975 million yen from the end of the previous fiscal year, to 225,950 million yen. This mainly reflected increases in retained
earnings of 3,873 million yen due to profit attributable to owners of parent and foreign currency translation adjustment of 4,275 million yen.

-4-(3) Summary of cash flow during the fiscal year
(Million yen)Previous year

Current year

ChangeCash flows from operating activities

20,186

1,746(18,439)

Cash flows from investing activities(1,648)(12,753)(11,105)

Cash flows from financing activities(19,187)(2,099)17,087

1,078

893

(184)

Net increase (decrease) in cash and cash equivalents

428(12,212)(12,641)

Cash and cash equivalents at beginning of the year

29,84630,275428

Cash and cash equivalents at end of the year

30,27518,063(12,212)

Effect of exchange rate change on cash and cash equivalents

Cash and cash equivalents as of the end of current year decreased 12,212 million yen year on year, to 18,063 million yen.
(Cash flow from operating activities)
Net cash provided by operating activities was 1,746 million yen (down 91.3% year on year.)
Major inflows were profit before income taxes of 13,757 million yen, depreciation of 11,854 million yen, a loss of entities accounted forusing equity method of 8,609 million yen and an increase in notes and accounts payable - trade of 2,074 million yen. Major outflows werean increase in trade receivables - trade of 15,973 million yen, an increase in inventories of 5,960 million yen, income taxes paid of 7,450
million yen and deposit money of 4,000 million yen.
(Cash flow from investing activities)
Net cash used in investing activities amounted to 12,753 million yen (up 673.8% year on year).
Major outflows were purchase of property, plant and equipment of 12,515 million yen. Major inflows were proceeds from sale of property,
plant and equipment of 1,047 million yen.
(Cash flow from financing activities)
Net cash used in financing activities amounted to 2,099 million yen (down 89.1% year on year).
Major outflows were a decrease in short-term loans of 8,427 million yen, repayment of long-term loans of 27,324 million yen, and dividends
paid of 4,380 million yen. Major inflows were a net increase in commercial paper of 7,000 million yen and proceeds from long-term loansof 31,380 million yen.

-5-(4) Future outlook
Forecast on financial results for the next fiscal year
The Japanese economy is expected to recover due to the effects of various policies in the endemic COVID-19 era, but the outlook for the
future remains uncertain because of the impact of the prolonged conflict in Ukraine, soaring prices of raw materials and fuels, concerns
about fluctuations in the financial and capital markets and other factors.
Under these circumstances, uncertainty over business conditions in the pulp and paper industry continues, with rapid changes in domestic
demand trends, movements in global market prices and the rises in material and fuel prices. Implemented in the fiscal year ended March
31, 2023, the revision of the prices of a range of products is expected to positively effect the Group throughout the fiscal year. Moreover,the Group will further continue to work on full-scale cost reductions to strengthen its financial conditions.
The following business forecast was prepared by considering these circumstances comprehensively.
The following forecast was based on information currently available to the Company at the time of the release of these materials. Actual
result may differ from the above forecast due to various factors.

Operating profit

Ordinary profit

Profitattributable toowners of parent

Basic earnings
per share

Million yen

Million yen

Million yen

Million yen

Yen

Year ending March 31, 2024 (forecast)

310,000

11,00014,000

9,000

53.55

Year ended March 31, 2023 (actual)

301,204

17,288

11,471

8,325

49.54

2.9%

(36.4)%

22.0%

8.1%

Net sales% change from the previous
corresponding period

2. Our Basic Philosophy on the Selection of Accounting Standards
Taking into account the period comparability of consolidated financial statements, the Group currently prepares consolidated financial
statements based on Japanese GAAP. With respect to the International Financial Reporting Standards (IFRSs) the Company will address theissue appropriately with consideration to the various circumstances in Japan and overseas.

-6-

3. Consolidated Financial Statements(1) Consolidated Balance Sheet(Million yen)
(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
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation

As of March 31, 2022

As of March 31, 2023

30,27560,7497,133
27,2602,684
26,4695,741(5)18,06375,827
8,752
28,4582,792
32,4154,469(4)160,308

170,775

85,623(54,260)

87,761(56,135)

Buildings and structures, net

31,36331,625

Machinery, equipment and vehicles
Accumulated depreciation

432,919(374,780)

439,463(381,854)

58,13857,6096,509(5,219)6,841(5,511)

1,290

1,330

17,850185(119)

17,981
184(134)

Machinery, equipment and vehicles, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Leased assets
Accumulated depreciation

65

49

Right-of-use assets
Accumulated depreciation

2,596
(540)

2,803
(762)

Right-of-use assets, net

2,056

2,040

2,166
2,449

3,991
2,431

Total property, plant and equipment

115,382

117,060

Intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Long-term loans
Asset for retirement benefits
Deferred tax assets
Other
Allowance for doubtful accounts

2,406

2,467

22,022
69,562
215
3,869
1,663
1,811
(288)

22,272
63,643
223
4,316
1,779
6,189
(283)

Leased assets, net

Construction in progress
Forestland

Total investments and other assets
Total non-current assets
Total assets-7-

98,857

98,141

216,647

217,669

376,956

388,444(Million yen)
(Liabilities)
Current liabilities
Notes and accounts payable - trade
Electronically recorded obligations - operating
Short-term loans
Commercial papers
Current portion of bonds payable
Lease obligations
Income taxes payable
Accrued consumption taxes
Contract liabilities
Provision for bonuses
Provision for directors’ bonuses
Provision for environmental measures
Provision for loss on disaster
Provision for reforestation
Provision for loss related to the Anti-Monopoly Act
Notes payable - facilities
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans
Lease obligations
Deferred tax liabilities
Provision for environmental measures
Provision for reforestation
Retirement benefit liability
Asset retirement obligations
Other

As of March 31, 2022

As of March 31, 2023

20,3606,339
40,748
3,000
–
280
4,013
432
507
2,613
65
54
123
191
180
1,325
11,55921,283
7,820
17,05810,00010,000
301
2,919
144
538
2,771
62
39
107
225
–
1,406
11,186

91,79685,86520,00033,495
1,563
2,909
1,136
340
5,661
2,845
231

10,00054,938
1,427
2,224
1,267
325
3,806
2,410
228

68,184

76,629Total liabilities

159,981

162,494

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

42,02045,341
131,615(9,639)42,02045,342
135,489(9,625)

Total non-current liabilities

209,338

213,226

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

4,418
79
5,907
1,576

Total accumulated other comprehensive income

6,913

11,982

77
644

91
649

216,974

225,950

376,956

388,444

Total shareholders’ equity

Share acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets-8-(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income(Million yen)
For the year ended
March 31, 2022

For the year ended
March 31, 2023

Net sales
Cost of sales

261,616
200,490

301,204
237,186

Gross profit

61,12564,018Selling, general and administrative expenses

40,67046,729Operating profit

20,455

17,288Non-operating income
Interest income
Dividends income
Share of profit of entities accounted for using equity method
Foreign exchange gains
Other
Total non-operating income

27
776
5,861
1,729
1,855
10,250

128
1,402
–
2,238
1,024
4,793

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

393
–
244
240
312
1,191

796
8,609
210
–
993
10,610Ordinary profit

29,514

11,471

Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Gain on contribution of securities to retirement benefit trust
Gain on reversal of retirement benefit obligations
Subsidy income
Insurance claim income

6,985
20
–
77
–
34

845
233
1,416
–
6
689

7,117

3,192

873
7,855
130
31
22
360

899
–
–
6
–
–

9,273

905

Profit before income taxes

27,35813,757

Income taxes - current
Income taxes - deferred

4,452
1,633

6,364
(1,010)Total income taxes

6,085

5,354

Profit21,272

8,403

66

78

21,206

8,325

Total extraordinary income
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
Loss related to the Anti-Monopoly Act
Total extraordinary losses

Profit attributable to non-controlling interests
Profit attributable to owners of parent-9-Consolidated Statements of Comprehensive Income(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
Total other comprehensive income
Comprehensive income:Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests- 10 -For the year ended
March 31, 2022

For the year ended
March 31, 2023

21,272

8,403

(328)
126
2,634
689

719
(104)
847
152

(307)

3,470

2,815

5,085

24,08813,48823,968119

13,39493

(4) Consolidated Statement of Cash Flows(Million yen)
For the year ended
March 31, 2022

For the year ended
March 31, 2023

27,35813,213
7,855
133
(34)
(539)
(804)
393

13,757
11,854
–
141
(689)
233
(1,530)796(5,861)

8,609

(20)
31
(6,111)

(233)
6
53

–

(1,416)(77)(11,586)(7,455)(1,034)
2,849
(798)
(339)

–
(15,973)(5,960)
252
2,074
(290)
(785)

Subtotal

17,172

10,899Interest and dividend income received
Interest paid
Income taxes paid
Proceeds from insurance income
Payments for deposit money

1,646
(396)
1,760
2
–

2,338
(730)
(7,450)689(4,000)Net cash provided by (used in) operating activities

20,186

1,746

(775)
31
(12,918)(777)
11,291
(110)
177
1,500
(67)

(432)
415
(12,515)
(715)
1,047
(92)
45
–
(506)

(1,648)(12,753)

Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment loss
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 (gain) on sale of investment securities
Loss on tax purpose reduction entry of non-current assets
Net loss (gain) on sales and retirement of non-current assets
Loss (gain) on contribution of securities to retirement benefit
trust
Reversal of retirement benefit obligations
Decrease (increase) in trade receivables
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
Payments for retirement 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
Other
Net cash provided by (used in) investing activities- 11 -

(Million yen)

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
Proceeds from issuance of bonds
Redemption of bonds
Dividends paid
Dividends paid to non-controlling interests
Other

For the year ended
March 31, 2022

For the year ended
March 31, 2023

(4,133)3,000–(5,372)
10,000(20,000)(2,352)(89)(238)(8,427)7,000
31,380(27,324)––(4,380)(89)(258)(2,099)Net cash provided by (used in) financing activities(19,187)

Translation (loss) gain on cash and cash equivalents

1,078

893

Net increase (decrease) in cash and cash equivalents

428(12,212)

Cash and cash equivalents at beginning of period

29,84630,275

Cash and cash equivalents at end of the year

30,27518,063- 12 -