Consolidated Quarterly Financial Results
for the Six Months Ended September 30, 2021 [Japanese GAAP]
November 12, 2021
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 12, 2021
Scheduled date of commencement of dividend payments:
December 2, 2021
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, 2021
(April 1, 2021 through September 30, 2021)(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
126,390
22.3
10,801–
14,850–
September 30, 2021
Six months ended
103,304(24.4)(3,253)–(678)–
September 30, 2020
(Note) Comprehensive income:Six months ended September 30, 2021: 19,999 million yen(–%)
Six months ended September 30, 2020: 1,265 million yen (-72.0%)
Basic earnings per share Diluted earnings per share
Yen
Yen
Six months ended
95.96
95.88
September 30, 2021
Six months ended
11.07
9.78
September 30, 2020

16,119

766.8

1,859

(71.6)(2) Consolidated financial position
Total assets
Net assets
Equity ratio
Million yen
Million yen%
As of September 30, 2021
366,240
214,045
58.3
As of March 31, 2021
363,075
195,419
53.6(Reference) Equity:
As of September 30, 2021:
213,396 million yen
As of March 31, 2021:
194,702 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
Fiscal year ended
–
7.00
–
7.00
14.00
March 31, 2021
Fiscal year ending–
7.00
March 31, 2022
Fiscal year ending
–
17.00
24.00
March 31, 2022 (forecast)(Note) Revisions to dividend forecasts published most recently: Yes
Breakdown of year-end dividends for the fiscal year ending March 31, 2022 (forecast) Ordinary dividend: 7.00 yen Special
dividend: 10.00 yen

3. Forecast of Consolidated Financial Results for the Year Ending March 31, 2022
(April 1, 2021 through March 31, 2022)(% change from the previous corresponding period)
Net sales

Operating profit

Ordinary profit

Million yen%
Million yen%
Million yen
Full year
260,000
16.9
18,000957.6
25,000(Note) Revisions to business forecasts published most recently: Yes

-1-

%
156.2

Profit attributable to
Basic earnings
owners of parent
per share
Million yen%
Yen
21,00048.2
124.99

* Notes(1) Changes in significant subsidiaries during the six months ended September 30, 2021 (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, 2021
188,053,114 shares(ii) Number of treasury stock:
As of September 30, 2021
19,999,729 shares(iii) Average number of shares during period:
Six months ended September 30, 2021 167,990,241 shares

As of March 31, 2021

188,053,114 shares

As of March 31, 2021

20,131,789 shares

Six months ended September 30, 2020

167,921,057 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 Result
Demand declined significantly across the industry in the previous fiscal year under the effects of COVID-19. However, signs of a recovery
appeared in the first six months of the current year. Sales volumes increased for paper and white paperboard in particular. As a result, net
sales for the first six months of the current year amounted to 126,390 million yen (up 22.3% year on year). Operating profit came to 10,801
million yen (compared to an operating loss of 3,253 million yen a year ago), ordinary profit totaled 14,850 million yen (compared to an
ordinary loss of 678 million yen), and profit attributable to owners of parent was 16,119 million yen (up 766.8% year on year).
The Company began applying the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29 issued on March 31, 2020) andrelated implementation guidance at the beginning of the first quarter of the current fiscal year. The application of the Standard affected its
financial conditions and operating results. More information is provided in (4) Notes to Quarterly Consolidated Financial Statements(Changes in Accounting Policies) under 2. Quarterly Consolidated Financial Statements and Key Notes.

(2) Qualitative Information Concerning Consolidated Financial Position
Total assets increased 3,165 million yen from the end of the previous fiscal year, to 366,240 million yen. Significant factors included
increases in notes and accounts receivable - trade, and contract assets of 3,457 million yen, merchandise and finished goods of 2,505
million yen, raw materials and supplies of 2,683 million yen and investment securities of 3,544 million yen, which more than offset
decreases in cash and deposits of 2,921 million yen, non-trade accounts receivable included in “Other” of current assets of 1,928 million
yen, income taxes receivable of 1,395 million yen and property, plant and equipment of 2,766 million yen due in part to depreciation.
Total liabilities decreased 15,461 million yen from the end of the previous year, to 152,194 million yen. This was primarily due to adecrease in interest-bearing debt of 19,629 million yen.
Net assets rose 18,626 million yen from the end of the previous fiscal year, to 214,045 million yen. This mainly reflected increases inretained earnings of 14,814 million yen due to profit attributable to owners of parent and foreign currency translation adjustment of 3,374
million yen.

(3) Qualitative Information Concerning Consolidated Earnings Forecasts
Considering steady overseas sales of pulp and other factors, full-year financial forecasts, including net sales, operating profit, ordinary
profit and profit attributable to owners of parent, are expected to exceed the previous forecast.

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2. Quarterly Consolidated Financial Statements and Key Notes(1) Quarterly Consolidated Balance Sheet(Million yen)
As of March 31, 2021
(Assets)
Current assets
Cash and deposits
Notes and accounts receivable - trade
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
Buildings and structures, net
Machinery, vehicles, tools, furniture and fixtures
Accumulated depreciation
Machinery, vehicles, tools, furniture and fixtures, net

As of September 30, 2021

29,84649,653–
5,701
22,374
2,378
22,7127,355(3)26,924–
53,111
5,616
24,8802,271
25,3954,374(3)140,020

142,571

85,263(53,994)

83,995(52,927)

31,26831,068438,380(374,249)

440,595(375,358)

64,13065,236

Other, net

31,04927,377

Total property, plant and equipment

126,448

123,682

Intangible assets
Investments and other assets
Investment securities
Other
Allowance for doubtful accounts

2,668

2,587

86,8299,528(2,420)90,374
7,078(54)

Total investments and other assets

93,937

97,398223,055
363,075

223,669
366,240

Total non-current assets
Total assets-4-

(Million yen)
As of March 31, 2021
(Liabilities)
Current liabilities
Notes and accounts payable - trade
Electronically recorded obligations - operating
Short-term loans
Current portion of bonds payable
Income taxes payable
Provision
Other

As of September 30, 2021

17,571
5,898
22,92820,000720
3,375
14,522

17,792
6,557
38,55910,0005,144
3,382
14,209Total current liabilities

85,016

95,645

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

10,00059,142
1,096
6,940
2,256
3,202

10,00033,765
1,244
6,280
2,260
2,998

Total non-current liabilities

82,63956,548

Total liabilities

167,656

152,194

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

42,02045,341
112,891(9,702)42,02045,341
127,705(9,638)

190,550

205,429

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

4,343
(18)
(949)
775

4,807
9
2,425
724

Total accumulated other comprehensive income

4,151

7,967

102
614

60
589

195,419

214,045

363,075

366,240

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, 2020
103,304
88,812

Net sales
Cost of sales

For the six -month ended
September 30, 2021
126,390
95,527Gross profit

14,49130,862

Selling, general and administrative expenses

17,74520,061

Operating profit (loss)(3,253)

10,801Non-operating income
Interest income
Dividends income
Share of profit of entities accounted for using equity method
Other
Total non-operating income

16
523
2,297
989
3,828

11
480
2,796
1,265
4,552

Non-operating expenses
Interest expenses
Foreign exchange losses
Leave allowance
Rental expenses
Other
Total non-operating expenses

226
322
354
120
228
1,253

203
–
1
141
157
503

Ordinary profit (loss)(678)

14,850Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Gain on change in equity
Gain on reversal of asset retirement obligations
Insurance claim income
Gain on reversal of retirement benefit obligations
Total extraordinary income

17
137
267
327
252
–
1,002

6,980
0
–
–
33
77
7,092

658
2
12
3
753
799
–

515
–
31
–
–
–
360

Extraordinary losses
Loss on sales and retirement of non-current assets
Impairment loss
Loss on tax purpose reduction entry of non-current assets
Loss on sales of investment securities
Loss on valuation of investment securities
Business restructuring expenses
Provision for loss related to the Anti-Monopoly Act
Total extraordinary losses

2,230

907

Profit (loss) before income taxes(1,906)

21,035

Income taxes - current
Refund of income taxes
Income taxes - deferred

393
(391)
(3,821)

5,096
–
(210)

Total income taxes(3,819)4,886

Profit1,912

16,149

52

30

1,859

16,119Profit 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, 2020
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 -month ended
September 30, 2021

1,912

16,149454(9)(1,421)
55

559
23
3,407
(32)

274

(108)

(646)

3,849

Comprehensive income

1,265

19,999Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

1,227
38

19,93563-7-

(3) Quarterly Consolidated Statement of Cash Flows(Million yen)

Cash flows from operating activities
Profit (loss) 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 profit of entities accounted for using equity method
Loss on tax purpose reduction entry of non-current assets
Loss (gain) on sales and retirement of non-current assets
Business restructuring expenses
Reversal of retirement benefit obligations
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
SubtotalInterest and dividend income received
Interest paid
Income taxes paid
Proceeds from insurance income
Net cash provided by (used in) operating activities
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
Proceeds from sale of businesses
Other
Net cash provided by (used in) investing activities-8-

For the six -month ended
September 30, 2020

For the six -month ended
September 30, 2021

(1,906)
8,074
2
61
(252)
311
(540)
226
(2,297)
12
640
799
–
8,830
2,788
95
(5,118)
(422)
(913)

21,035
6,235
–
66
(33)
(797)
(491)
203
(2,796)31(6,465)–(77)(2,542)(3,728)
(248)
601
(793)
(482)

10,393

9,717

903
(162)
(503)
239

914
(170)
2,262
2

10,87012,725(7,064)201(7,563)
21
(151)
119
–
(559)

(756)
6
(6,047)
11,285
(106)
122
1,500
(521)

(14,996)

5,481

(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
Redemption of bonds
Dividends paid
Dividends paid to non-controlling interests
Payments for purchases of treasury stock
Other

For the six -month ended
September 30, 2020

For the six -month ended
September 30, 2021

1,459
8,000
10,000(2,336)–(1,010)
(84)
(0)
(63)

(5,953)––(4,202)(10,000)(1,179)
(89)
(0)
(82)
(21,507)

Net cash provided by (used in) financing activities

15,963

Translation (loss) gain on cash and cash equivalents

(352)

377

Net increase (decrease) in cash and cash equivalents

11,486(2,921)

Cash and cash equivalents at beginning of period

21,38329,846

Cash and cash equivalents at end of period

32,86926,924-9-

(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.
(Changes in Accounting Policies)(Application of Accounting Standard for Revenue Recognition, etc.)
The Company began applying the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29 issued on March 31, 2020,
hereinafter the “Revenue Recognition Standard”) and related implementation guidance at the beginning of the first quarter of the current
fiscal year. Accordingly, the Company recognizes the amount expected to be received in exchange for promised goods or services asrevenues at points where control over such goods and services moves to customers.
Previously, the Company had recognized the gross amount as revenues with regard to certain revenues from transactions. With theapplication of the Revenue Recognition Standard, the Company adopted the method of recognizing the net amount as revenues fromtransactions judged to be made as an agent based on the assessment of the roles of the Company in the provision of goods to customers.
The Company had previously presented a portion of compensation paid to customers as selling, general and administrative expenses.
With the application of the Revenue Recognition Standard, the Company adopted the presentation method of transaction prices with thecompensation portion deducted.
The Company applies the Revenue Recognition Standard in accordance with transitional treatment set forth in the proviso in Paragraph
84 of the Revenue Recognition Standard. The Company began applying the new accounting policies to the balance of retained earnings
at the beginning of the first quarter, adding the amount of cumulative effect of retrospective application to the beginning balance of thefirst quarter or subtracting such amount from the same balance. However, adopting the method stipulated in Paragraph 86 of the Revenue
Recognition Accounting Standard, the Company does not apply the new accounting policies retroactively to contracts prior to thebeginning of the first quarter wherein almost all revenues are recognized in accordance with the previous treatment. Further, applying
the method prescribed in Subparagraph (1), Paragraph 86 of the Revenue Recognition Accounting Standard, the Company performs
account processing for contract changes made prior to the beginning of the first quarter based on contract terms after the reflection of allcontract changes, adding the amount of the cumulative effects of such changes to retained earnings at the beginning of the first quarteror subtracting the amount from the same retained earnings.
As a result, the effect of the application of the above accounting standard on the profit and loss of the first six months of the current fiscal
year is insignificant. They also had an immaterial impact on the balance of retained earnings at the beginning of the first quarter.
The Company decided to present notes and accounts receivable - trade, which had been stated under current assets in the consolidatedbalance sheet for the previous fiscal year, by including them in notes and accounts receivable - trade, and contract assets from the firstquarter because it began applying the Revenue Recognition Accounting Standard and related implementation guidance. The Company
did not revise its results for the previous fiscal year using a new presentation method in accordance with transitional treatment stipulated
in Paragraph 89-2 of the same Accounting Standard.
(Application of Accounting Standard for Fair Value Measurement, etc.)
The Company began applying the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30 issued on July 4, 2019,
hereinafter the “Fair Value Measurement Standard”) and related implementation guidance at the beginning of the current first quarter. In
accordance with the transitional treatment set forth in Section 19 of the Fair Value Measurement Standard and Section 44-2 of the
Accounting Standard for Financial Instruments (ASBJ Statement No. 10 issued on July 4, 2019), the Company applies new accounting
policies prescribed in the Fair Value Measurement Standard and related implementation guidance prospectively. Their application
produces no impact on quarterly consolidated financial statements.

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