THE PACK CORPORATION
Briefing on Business Results for the Second Quarter of Year Ending December 31,
2023

September 05, 2023

Event Summary[Company Name]

THE PACK CORPORATION[Company ID]3950[Event Language]

JPN[Event Type]

Briefing on business results[Event Name]

Briefing on Business Results for the Second Quarter of the Year Ending
December 31, 2022

[Fiscal Period]FY2023 2Q[Date]

September 5, 2023

[Pages]34[Time]

10:00 – 10:42(Total: 42 minutes: Presentation: 28 min.; Q&A: 14 min.)[Location]

The Pack Corporation Tokyo Head Office and online streaming[Venue Area][Number in Attendance][Speakers]

2
President & CEO

Hideaki Yamashita (“Yamashita” hereinafter)

Managing Director, Corporate Division
Michihisa Fujii (“Fujii” hereinafter)

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Presentation

Moderator: The scheduled hour has arrived. We will now commence The Pack Corporation’s
briefing on business results for the year ending December 31, 2023. Thank you very much forattending our briefing on business results today despite your busy schedules.
I would like to start by introducing two attendees. On your right is Hideaki Yamashita, ourCompany’s President and CEO. On the left is Michihisa Fujii, Managing Director of the Corporate
Division. We appreciate your kind attention.
Today’s briefing is being held at our Tokyo Head Office. It is also being live-streamed online. The
briefing is scheduled to take one hour. Our presentation will be based on the materials on financial
results disclosed on our website yesterday, September 4. In accordance with the order indicated in
the Table of Contents, President Yamashita will present Topics; Mr. Fujii will present BusinessResults for the Second Quarter of the Year Ending December 31, 2023 and Forecasts of BusinessResults for the Year Ending December 31, 2023; and President Yamashita will present our
promotion of sustainable management and progress on the Medium-Term Management Plan.
A question-and-answer session will follow the presentation. We will take questions during the Q&A
session from those participating online as well as those attending at the venue. We will accept online
questions via computer audio only. Please use the Raise Hand button at the bottom of the screen
when the time comes to let us know if you have a question. Please wait for your turn to speak. Moredetailed explanations will be provided later.
Now, President Yamashita will begin his presentation on the Topics. Mr. Yamashita, would you
please?

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Yamashita: Thank you for the introduction. My name is Hideaki Yamashita. Now, let me begin bypresenting reports on several topics.
Food and beverage, leisure, and lodging-related activities have begun recovering with easing
restrictions on activities due to COVID-19, but the outlook remains uncertain due to soaring energy
prices, high commodity prices associated with rising material prices, and the effects of fluctuations inforeign exchange rates.
Company sales and profits increased across all segments. Sales volumes have increased due torecovery in personal consumption, our solution proposals for customers, and efforts to promotesales. Despite the rising cost of sales, profits increased significantly thanks to efforts to optimize
sales prices.
We have revised upward our full-year forecasts both for business results and projected year-end
dividends. We plan to pay annual dividends of 78 yen per share.
To promote sustainable management, we have established a Sustainable Committee charged with
the Mission to bolster social prosperity and creating satisfaction through packaging. This concludes
my presentation.

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3Moderator: Mr. Fujii will now present the business results for the second quarter of the fiscal year
ending December 31, 2023.
Fujii: My name is Fujii. Thank you for the introduction. I will discuss our financial results for thesecond quarter of this fiscal year.
Let’s begin with a summary. A recovering market, expanding sales volumes, and optimized sales
prices led to significant growth in both sales and earnings.
Net sales increased 13.3% year-on-year to ¥44.8 billion. Profit attributable to owners of parent
increased 50% year on year to of 2.1 billion yen.

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4Next are the factors underlying projected changes in our operating profit. Sales volumes grewsignificantly, mainly for paper cartons, but also for paper bags and in the film packaging business.
Average sales price rose, to which sales proposals for high value-added products also contributed,
and covered the increase in raw material prices, manufacturing costs such as utilities and power
costs, and labor costs.
Operating profit thus increased by ¥932 million, or 45% year-on-year.

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5Here we see the results by segment. The table shows increased sales and profits. We see significant
recovery in the film packaging business as well.

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Let's look at trends by segment. As shown in this graph, there has been steady recovery and growth
exceeding 2019 performance.
The net sales figure of 44.8 billion yen exceeds the figure for 2019 and sets an all-time high.
Operating profit is second only to the record figure set in 2017.

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Next, let’s look at the sales composition and net sales by business. Sales of products for food,convenience stores, pharmaceuticals and cosmetics, and life care products increased significantly. In
the life care segment, sales of external packages for disposable diapers grew sharply.

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8Here allow me to discuss matter segment by segment. First, the Paper Products Segment.
In terms of the business environment, department store sales were up nationwide for 16 consecutive
months. Both domestic travel and numbers of foreign visitors to Japan are rising. So are the numbersof people shopping in various settings. We are working hard to respond to the packaging demands
generated by these trends. We are proposing solutions for labor savings and mechanization in the
packaging operations of our customers and proposing environmentally-friendly packaging. As aresult, net sales for the first half of the year under review totaled ¥31.7 billion, a 13% increase from
¥28.0 billion in 2019. Operating profit is ¥2.7 billion, about 34% more than the ¥2.0 billion figurefor 2019.

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Shown here is paper bags category of the Paper Products Segment. In the current businessenvironment, demand for paper shopping bags is recovering on the heels of increasing personal
consumption, tourism, and inbound demand. Increasingly, for deliveries, the e-commerce market isusing delivery bags in addition to corrugated boxes.
As you can see in the upper and lower graphs on the right, we have seen steady growth both in salesof paper bags and in sales volumes. We are also expanding sales of delivery bags. We’re making agreater effort to develop, offer, and sell environmentally-friendly products, as shown in the photos
below, in response to growing environmental awareness.

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Now I’ll discuss paper cartons, a product area where we have also seen significant recovery indemand from the tourism and souvenir markets. Plastic materials have traditionally been used forcontainers in which food is placed and for containers that come into direct contact with food. But intoday’s market environment, there is growing demand to use paper materials to respond toenvironmental concerns and reduce use of plastic materials. We are responding by developing
primary paper containers, expanding manufacturing facilities, and increasing sales.
Since we seldom handled plastic containers for food products, I think it’s fair to say this is a new
business area.
The graph on the right shows trends in net sales and operating profit for paper cartons. Net sales forthe first half of the year under review is ¥11.2 billion, a 35% increase from ¥8.3 billion in 2019. The
operating profit of ¥900 million is nearly double the 2019 figure.

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11Here we see the corrugated boxes category. The total production of the corrugated industry in thefirst half of 2023 was 98.4% of the figure recorded for the same period last year. In suchcircumstances, we seek to expand sales with a focus on large and reinforced corrugated boxes andproposal of products that make the most of our design capabilities.

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12Next is the Film Packaging Segment. Personal consumption in this area has also recovered. Demandis growing for various environmental solutions, including demand to reduce use of plastics, boost
recycling, and convert to paper products. To meet these demands, we’re taking a proactive approachto developing new products, formulating and presenting sales proposals, and expanding sales.
Sales of flexible packages for food products, which we are enhancing through combined sales withpaper cartons, paper bags, and corrugated boxes, are also growing steadily, as shown in the graph on
the lower right.

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The next category is Other Businesses. As customers return to the stores, novelty and otherpromotions are recovering, and events are increasing. In response, we are developing and proposing
food trays made of environmentally-friendly materials and soft bags made of recycled materials.

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Next is our balance sheet, as you can see here.

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Regarding cash flow, cash flows used in investment activities saw increased expenditures as purchaseof property, plant, equipment and purchase of intangible assets have increased.

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Allow me to discuss the annual forecast for the fiscal year under review. We have revised upward ourfull-year earnings forecast for the fiscal year under review presented when we disclosed our financialsummaries of the second quarter on August 7. We have revised net sales upward from the initial
forecast of ¥94.0 billion to ¥97.0 billion and revised operating profit from ¥6.4 billion to ¥7.1 billion.
We also revised ordinary profit and profit attributable to owners of parent upward.
We will continue to work to strengthen revenues and profits.

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Next, I’ll discuss the trends in consolidated business results. The net sales figure of ¥97.0 billion
forecast for the current fiscal year would mark a record high. Operating profit would be second only
to the figure recorded in 2017.

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Next are the factors underlying the projected changes in our operating profit. Although we expect
raw material prices and manufacturing costs to continue to rise in the second half of the fiscal year,
we plan to achieve profit growth by steadily increasing sales volumes and optimizing sales prices.
This concludes my presentation. Thank you for your time and attention.

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19Moderator: Next, President Yamashita will discuss our promotion of sustainable management.
Yamashita: I’ll discuss our efforts to promote sustainable management.
In February, we established the purpose of our existence as our mission to bolster social prosperity
and create satisfaction through packaging. As part of this mission, we’re promoting sustainable
management. The next slide shows the newly established basic policy for sustainable management
and our materiality items.

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We established the Sustainable Committee this year. This committee, which I chair, manages andpromotes sustainable management; formulates policies related to important themes; manages the
progress on initiatives; and deliberates on and determines how to reflect the results in the mid-term
management plan.
Among several initiatives, we redesigned our corporate website to better communicate information
related to sustainability issues. In addition, to promote sustainability within the company, we havepublished a booklet titled SHINKA, which we have distributed to all employees, including employeesof Group companies. Volume two has already been published and distributed. Volume three isscheduled to be distributed this month.
Future efforts include establishing materiality KPIs within this fiscal year and holding internal
workshops for managers to promote on-site activities and achieve materiality goals.
We also plan to work to issue our first integrated report to improve disclosure to stakeholders.
This concludes my presentation on sustainability.

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21Moderator: Mr. Yamashita will discuss our progress on the medium-term management plan.
Yamashita: Here I’ll discuss our progress with the medium-term management plan.
This is a summary of the mid-term management plan launched this past February. The targets forthe fiscal year ending December 31, 2025 are consolidated net sales of ¥107.0 billion, operating
profit of ¥7.0 billion, and both ROE and ROIC of 8%.

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Now, let me start with a report on our progress with the strategy in each market.
First, our growth strategy for the food market. In the food market, sales in the first half of this year
were ¥12.1 billion, and the full-year forecast is ¥28 billion, compared to ¥25 billion in 2022.
Our evaluations of efforts suggest better-than-anticipated results in the areas of primary foodcontainers, environmentally-friendly products, and flexible packaging. Solution proposals, trays, andmolded containers achieved good results. However, despite our efforts to expand the paper carton
product lineup, we proved unable to achieve the targeted performance in the first half. Our productdevelopment will continue to address this shortfall.
Here I’ll address the actual progress made to date.
Net sales of FSC products were up 33% year on year. Net sales of Forrest target products were up
40% year on year. An energetic sales campaign and growing environmental awareness amongcustomers is helping to boost sales volumes.
Flexible label and film packaging sales were up 25% year on year, driven by strong sales of Craft
Barrier and other internally developed products, as well as progress in the development of beveragebottle labels and food flexible packaging.

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We have also seen an increase in requests for proposals of solutions across Japan due to labor
shortages at customers. We will open a new food setup base this fall, something many of ourcustomers have asked for.
In addition, some of the automation equipment introduced to our customers based on our proposals
is now online. We expect this to generate increased sales.
The production capacity for food paper trays has been strengthened, increasing output by about
10% from last year. We are also working to strengthen our production capacity for various types of
paper trays. These efforts are intended to strengthen sales and set the foundations for continuing
growth.

Next, let me turn to our strategies in the e-commerce/mail order/logistics industry. For thesemarkets, sales were ¥7.0 billion in the first half of the year and the full year forecast is ¥15 billion,
compared to ¥14.0 billion in 2022.
In terms of evaluations of efforts, both proposals and results for the staff reduction solutions proved
successful. We made steady progress in sales of delivery bags, developing materials and processing
for automated packing machines, and sales of reinforced corrugated boxes.
Here I’ll address the actual progress made to date.
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First, regarding strengthening the sales of delivery bags, we are actively proposing delivery bags as
one of the solutions to improve transportation efficiency, and inquiries are increasing. We plan toincrease the number of machines in the first half of 2024, so that we can meet the growing demand.
Regarding labor-saving proposals, two labor-saving facility solutions have already been adopted,
although it takes a long time to plan, develop, and adopt. The number of new projects is increasing,which will hopefully lead to increased sales in the future.
The development of materials and processing for automated packing machines made steady progressin the first half of the year, and we plan to introduce an automated paper delivery bag packing
system with improved and additional functions in the second half of the year. Our focus in the future
will be on promoting this system and expanding sales.
For reinforced corrugated boxes, despite a slowdown in exports from Japan due to U.S. and Chinese
protectionist policies, we were able to increase sales, if only slightly, by taking advantage of ourdesign capabilities and aggressive marketing efforts.

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Next, I will report on our progress in the general distribution, retail, and other markets. For thesemarkets, sales were ¥25.8 billion in the first half of the year and the full year forecast is ¥54 billion,
compared to ¥50 billion in sales in 2022.
As for our evaluations of efforts, we achieved better-than-anticipated results in both activities andperformance for expanding paper bag sales, promoting the shift to paper products, and social
contribution activities with customers.
Developing ASEAN sales channels and sales of products suitable for 3R have been successful in our
activities.
In terms of combined sales with assembly and setup operations, we must further our efforts since thenumber of projects is rather small compared to those in the food, e-commerce and mail order
sectors.
Here I’ll address the actual progress made to date.
With regard to expanding sales of paper bags and promoting the shift to paper, we were successful inpromoting the switch to paper packaging for our customers by proposing specification changes,
despite the soaring price of raw materials. In addition, the recovery of consumer activities
contributed to the overall performance, boosting sales by 15.4%—or ¥1.7 billion—compared to thefirst half of 2022.
ASEAN sales have increased business negotiations with customers who seek to secure stable quality
and supply in ASEAN markets with a backdrop of supply chain concerns and China Plus One
strategies. This reflects the high reputation of quality and supply in the Japanese market. We will
strengthen joint efforts with overseas group companies in China and the U.S. and work to present
effective proposals to global brands in Japan and overseas. We are continuing to work towards thenext term in the hopes that this will expand sales channels in the ASEAN region.
In terms of social contributions pursued in partnership with our clients, we have strengthened our
engagements in this area since restrictions related to COVID-19 were lifted. Two of the four forest
conservation activities were undertaken in cooperation with customers in the first half of the year.
We have 10 forest conservation activities planned before the end of 2023. Six are joint projects withcustomers. We have launched forest conservation activities at a new site this year for which we areconsidering the possibility of working with our customers in the next fiscal year and beyond. We willcontinue to promote public awareness and engage in corporate activities that enhance the corporate
and brand value of our customers.

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Finally, I would like to report on the progress on our human capital and financial strategies. The
upper part shows what was posted in February. The lower part shows how things have progressed
through June.
We’ll start by reporting on our hiring. We promote various recruitment methods, centering on career
hiring. While we hired 23 career hires for the full year of 2022, we hired 29 careers during the firsthalf of this year. We also hired eight referral/comeback candidates in the first half of the year.
In terms of human resource development, we launched a six-month DX (Digital Transformation)
training program for all executives and employees in the first half of the year. We will continue tofocus on human resource development in addition to the current training programs.
In the first half of this year, we sought to improve the working environment and to maximize
employee engagement. These efforts included revising policies to allow remote work during normal
times, encouraging men to take parental leave, and implementing wage increase negotiations,
including base salary increases.
As for financial strategies, we implemented capital investment in line with the plan set forth inFebruary. To increase paper carton production capacity, we made investments of ¥520 million in thefirst half of the year and plans call for the investment of ¥800 million in the second half of the year.
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We invested ¥460 million in the first half of the year to expand paper bag production capacity andplan to invest ¥550 million in the second half.
In terms of shareholder returns, we have revised our year-end dividend forecast based on the revised
consolidated earnings forecast for the fiscal year ending December 31, 2023, to maintain a payout
ratio of at least 30%, in line with our initial plan and our commitment to increasing returns of profits
to our shareholders. This will result in a planned dividend of 78.00 yen per share, an increase of
13.00 yen over the previous fiscal year.
This concludes my report.

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Q&A

Moderator [M]: That is all what we have today. From this point, we’ll respond to questions. First,
we’ll take questions from those present at the venue. Then we’ll move on to asking to those who areparticipating online. For those online, we ask for your patience.
For those of you attending the meeting on site, do you have any questions? Thank you. We have one
person here. Please wait a minute while we deliver a microphone.
Before you ask a question, can you tell us your name?
Miyata [Q]: My name is Miyata from Sazalle Capital Management. Thank you for letting me ask you
a question.
I’d like to ask about the issue of disposable diapers. In China, local companies are making efforts inthis area, and we’ve seen articles about factories like Kao closing down. Your company is mentioned
on page 8. It looks like demand for the outer external packages for disposable diapers is growing.
Given the comparatively low share of Film Packaging Business in your company’s overall profit, theimpact on your company may not be that significant. Still, could you tell us how related
developments in China and other factors might affect your company?
Thank you.
Moderator [M]: Mr. Fujii will answer your question.
Fujii [A]: Thank you for your question. As you mentioned, the demand for disposable diapers for
China is declining. A few years ago, I believe there were explosive buying of Chinese people whocame to Japan to buy a lot of diapers and brought them back home or parallel imports. However, we
believe such demand has already vanished. Now we see the increase in sales of external packages forpaper diapers in the domestic market, which increased our market share.
Moderator [M]: Thank you very much. Is there anyone else in the audience? No one in the audienceappears to have questions. Does anyone participating online have questions?
There are two people. First, Mr. Ueda. Let me connect you.
Ueda [Q]: My name is Ueda from Simplex Asset Management. Let me ask one question. According
to the revised document regarding the earnings forecast disclosed by your company on August 7, theoperating profit forecast was revised from the original 6.4 billion yen to 7.1 billion yen. This is anincrease of 700 million yen. Meanwhile, your company had previously forecasted operating profit at
2.3 billion yen of the cumulative total for the second quarter disclosed at the time in the first-quarter
financial summaries. Since the actual figure announced in the summary of the second quarter was
2.976 billion yen in operating profit, the explanation for this upward revision of 700 million yen
compared to the original forecast suggests this revision derives from the increase achieved in the first
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half of the fiscal year. Accordingly, the forecast for the second half of this fiscal year remains virtuallyunchanged. Can you please explain this forecast?
Moderator [M]: Mr. Fujii will answer your question.
Fujii [A]: Thank you for your question. As you pointed out, in terms of both sales and profits, weachieved growth of 7% in the first half of the year 2022 and 14% in the second half of 2022
compared to 2021. Based on this background, we think we can’t expect much growth in the second
half of the current fiscal year compared to the results in the first half of the year. In terms of bothsales and operating profit, we don’t expect to see as much growth as in the previous term. As statedby the President at the beginning of this briefing, we made this forecast given many uncertain
factors.
Ueda [M]: I understand. Thank you.
Moderator [M]: Next, Mr. Kitagawa. Go ahead.
Kitagawa [Q]: Thank you very much. My name is Kitagawa from Sumitomo Mitsui DS AssetManagement. I would like to ask one question.
It’s about pricing strategy, and it’s about the future. My understanding is that rising commodity
costs have been the main factor in price increases to date. Looking to the future, I think the overallrise in commodity costs will eventually settle down. In some cases there may be a phase of decline. If
so, will you lower your prices?
Looking at the past few years, I see that your company has been able to sell value-added products
well. Perhaps your market share is increasing. With demand remaining solid, I’d like to know how
your company plans to negotiate pricing in the future.
Moderator [M]: Mr. Yamashita will answer your question.
Yamashita [A]: Thank you for your question. As I understand it, I think your question is that while
we see the raw material costs have increased, will there be an impact on our sales price when raw
materials costs start to fall? In our case, almost all our products are made to order. We manufacture
them based on discussions with our customers. This means if raw material costs drop, we will discuss
the situation with our customers and set new prices.
Likewise, if logistics and other costs rise further in the future, we will set prices that reflect thesecosts and promote flexible pricing as needed.
Kitagawa [Q]: Thank you. Then, am I correct in understanding that comprehensive pricenegotiations will take place that account for rising labor costs and other factors given rising inflationin various areas?
Yamashita [A]: Yes.
Kitagawa [M]: I understand. Thank you. That’s all I wanted to know.
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30Moderator [M]: Thank you very much, Mr. Kitagawa. If anyone in the audience has a question,please let us know. There is one person at the venue. Please tell us your name and ask your question.
Ichihara [Q]: My name is Ichihara, from Carrera Asset Management. Thank you for thisopportunity.
I have one question regarding the Medium-Term Management Plan on page 25. You have revised
the full-year forecast upward and now expect operating profit to reach 7.1 billion yen. This will
increase the likelihood that the target for 2025 will be achieved early. Am I correct in assuming thatat the current pace, the figures of 6.7 billion yen or 7 billion yen is likely to be revised upward in the
future? Or, if these figures remain unchanged without revision, I guess we can say that it means
stagnation or slowing down? Can you comment?
Moderator [M]: Mr. Yamashita will answer this question.
Yamashita [A]: I understand that your question is about the final connection or relevance between
the revision of this fiscal year’s financial results forecast and the Medium-Term Management Plan.
As I explained in the Topics section, there is still some uncertainty regarding this issue. We willreconsider the revision once the financial results for the current fiscal year ending December 31 aresomewhat clearer.
Moderator [M]: Are there any other questions? Whether you are attending at the venue or online,
we welcome questions.
Ueda [Q]: This would be the second question, but may I ask it once again?
I think there’s discussion about the TSE’s recommendation to companies trading at less than one ofprice-book value ratio. What are your thoughts on this?
Moderator [M]: This answer will be provided by Mr. Yamashita.
Yamashita [A]: Regarding the standard of price-book value ratio one, our first priority is to strive forsustainable profit improvement in our core business by steadily implementing our current MediumTerm Management Plan.
In addition, with our current performance almost back to pre-Covid levels, we intend to develop ourbusiness by increasing production capacity and developing new products, including aggressive
investment, as advocated in our Medium-Term Business Plan.
As our business performance improves, we also hope to increase shareholder returns, with a focus on
the dividend payout ratio. We hope to achieve a price-book value ratio one.
Ueda [M]: Thank you.
Moderator [M]: Thank you very much, Mr. Ueda. Any other questions? Since there appear to be noquestions from either the in-person or online audience, we will close the Q&A session. Thank youvery much for your participation and cooperation.
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We hereby conclude The Pack’s briefing on its business results for the second quarter of the fiscal
year ending December 31, 2023. Thank you very much. For those of you participating online, pleaseleave the room.
[End]______________

Footnotes
1. In the conversation, [Q] is a question, [A] is an answer, and [M] is neither a question nor ananswer.

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SupportJapan

050-5212-7790

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1-800-674-8375

Toll free: 0120-966-744

Email: support@scriptsasia.com
33

Support
Japan

050-5212-7790

US

1-800-674-8375

Toll free: 0120-966-744

Email: support@scriptsasia.com
34