daio paper corporation fy2019/3 h1 (apr-sep 2018 ... · daio paper corporation 1 fy2019/3 h1...

DAIO PAPER CORPORATION 1

FY2019/3 H1 (Apr-Sep 2018)

Financial Overview

Daio Paper Corporation

Nov 29, 2018

Notes regarding figures and expressions: 1. Amounts are rounded off to the nearest 0.1 billion yen; totals may not sum due to rounding.2. Fiscal year (FY) represents the 1-year period from Apr 1 to Mar 31. (FY19/3 is the fiscal year from Apr 1, 2018 to Mar 31, 2019.)

Disclaimers regarding translation: 1. This document is an English translation of the original Japanese document dated Nov 29, 2018 and is only for reference purposes. In the event of any

discrepancy between the original Japanese document and this translated document, the Japanese document shall prevail. 2. Translations of brand names and product names not yet launched in English-speaking regions are not official and are subject to change without notice.

http://www.elleair.jp/index.php


Consolidated Financial Results for the Six Months Ended September 30, 2018



billions of yen, % FY18/3 H1 FY19/3 H1 VarianceNet sales % Net sales % %

Net sales 252.8 257.7 4.9 1.9

Operating income 2.7 1.1 7.9 3.1 5.2 194.0

Ordinary income 5.2 2.1 6.7 2.6 1.5 27.8

4.2 1.6 4.5 1.7 0.3 7.4

Depreciation 15.4 16.1 0.7 4.3

Capital expenditure 15.6 32.6 17.0 109.0

Exchange rate (period-average): 111.1 JPY/USD 110.3 JPY/USD -0.8 JPY/USD

Dubai crude oil (period-average): 50.1 USD/barrel 73.1 USD/barrel 23.0 USD/barrel

billions of yen, times 18/3-end 18/9-end Variance

Net interest-bearing debt 280.0 292.4 12.4

Net D/E ratio 1.6 1.6 -

Profit attributable to

owners of parent

Consolidated financial results for FY2019/3 H1

Financial overview



P&P H&PC Other Total P&P major factors H&PC major factorsSales and market conditions 4.0 0.2 - 4.2 Price +4.1, Volume -0.1 Volume +0.4, Price -0.2

Prices of raw materials and

fuels-0.9 -1.2 - -2.1 Recovered paper +2.7, coal -1.9,

woodchip -0.5, heavy oil -0.4, pulp -0.2,

chemicals and others -0.6

Pulp -0.6, SAP and others -0.3, woodchip

-0.1, coal -0.1, heavy oil -0.1

Mill/factory cost reduction 0.6 -0.7 - -0.1 Yield and raw materials composition +1.0

(includes increase in hard-to-recycle

recovered paper composition), decreased

production -0.5, others +0.1

Decreased production -0.4,

energy efficiency -0.3

Fixed manufacturing costs 1.5 -0.6 - 0.9 Maintenance +0.8, labor +0.5, depreciation

+0.1, others +0.1

Labor -0.5, depreciation -0.2, others +0.1

Overseas business - 1.9 - 1.9 - Overseas subsidiaries profit increase +1.9

Others 1.3 - -0.8 0.5 Corrugated container subsidiary +0.7,

logistics cost and others +0.6

-

OP income YoY, total 6.5 -0.4 -0.8 5.2Increase, total 7.4 2.1 - 9.5

Decrease, total -0.9 -2.5 -0.8 -4.2

*

0

20

40

60

80

100

120

(billions of yen)

FY18/3 H1 FY19/3 H1

2.7

7.9


Increase/decrease of consolidated operating income

Operating income, YoY: +5.2 bn yen (FY18/3 H1: 2.7 bn yen → FY19/3 H1: 7.9 bn yen) Paper & Paperboard (P&P), YoY: +6.5 Home & Personal Care (H&PC), YoY: -0.4

Prices of raw

materials

and fuels

-0.9

Sales and market

conditions +4.0

Others +1.3

Mill/factory cost

reduction

+0.6

Sales and market

conditions +0.2

Fixed manufacturing

costs +1.5

Prices of raw

materials and fuels

-1.2

Mill/factory cost

reduction

-0.7

Other(incl. adjustments)

-0.8

Fixed

manufacturing

costs -0.6

Overseas business

+1.9

* “Other” is the sum of “Other” category and “Adjustments”. The “Other” category consists of business segments such as wood, forestry, machinery, logistics, electric power selling, golf club, and real estate leasing businesses. “Adjustments” refer to adjustment for elimination of intersegment transactions.



146.3 143.9 150.9 154.0

4.5

5.3

-1.6

4.9

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

-20.0

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

FY16/3 H1 FY17/3 H1 FY18/3 H1 FY19/3 H1

Net sales OP income

3.7% 3.1% -

% OP margin

10

20

30

Apr'15 Sep Mar'16 Sep Mar'17 Sep Mar'18 Sep

Old newspaper, export Old corrugated container, export

80

90

100

110

120


Coated paper (A2 grade) Kraft linerboard

3.1%


Business results by segment (P&P)

Paper and Paperboard (P&P) results Variance

Net sales +3.1 +2.1%

OP income +6.5 －

OP income increase/decrease

Sales and market conditions +4.0

Prices of raw materials and fuels -0.9

Mill/factory cost reduction +0.6

Fixed manufacturing costs +1.5

Others +1.3

Total +6.5

B) Major products prices（Apr 2015 = 100） A) Recovered paper prices (JPY/kg)

(Source: The Nikkei) (Source: Ministry of Finance Japan Statistics)

（billions of yen）

YoY change in sales volume and value by category

Vol. Val.

Newsprint －－－Decline in newspaper circulation

Paper －－－Decline in domestic demand for printing paper

Containerboard & corrugated container

→ ＋

＋Demand increase in fields of e-commerce and processed food (mainly beverage)

＋Price revision of containerboard and corrugated container

－Impact of typhoons, the West Japan floods and other disasters



76.4 77.7

92.4 92.8

4.2 4.2

3.3 2.9

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

0.0

20.0

40.0

60.0

80.0

100.0

120.0

FY16/3 H1 FY17/3 H1 FY18/3 H1 FY19/3 H1

Net sales OP income

5.4% 5.5%

3.6% 3.1%

% OP margin

0

5

10

15

20

FY16/3 H1 FY17/3 H1 FY18/3 H1 FY19/3 H1

China S.E. Asia Exports(billions of yen)

11.7 11.3

15.8 16.6

H&PC overseas net sales (by country/region）

60

80

100

120


JPY/USD JPY/CNYJPY/THB JPY/IDRJPY/KRW JPY/RUB


Business results by segment (H&PC)

(S. Korea, Taiwan, Russia, Turkey, etc.)

Exchange rates (Monthly average TTM / Apr 2015 = 100)

(Source: MURC Exchange Quotations)

OP income increase/decrease

Sales and market conditions +0.2

Prices of raw materials and fuels -1.2

Mill/factory cost reduction -0.7

Fixed manufacturing costs -0.6

Overseas business +1.9

Total +0.4

Variance

Net sales +0.4 +0.4%

OP income -0.4 -12.1%

Home and Personal Care (H&PC) results （billions of yen）

YoY change in sales value by category

Dom

esti

c

Household paper ＋＋Strong sales of value-added products

Adult care ＋

＋Retail: Acquisition of new users by launching new slim-type pants products, and introduction of new continence care product that adopts a surface sheet made of natural materials

＋Institutional: New user acquisition rate remained robust

Baby care －－Market contraction and decline in inbound demand

Feminine care + ＋Shift of sales from standard range to high value-added range and improvement in unit sales prices

Overs

eas

Baby care ＋

＋China: Strong sales of products with high unit price, such as super premium zone and pull-up pants

＋Thailand: Increased sales in both domestic market and neighboring ASEAN countries

－Indonesia: Intensifying competition due to slowdown in economic growth －S. Korea: Shrinking demand from low birth rate

Others ＋＋China: Launched sales of premium toilet rolls ＋Thailand: Increase in sales of sanitary pads and wet wipes, etc.

※

※After application of IFRS 15



Consolidated Financial Forecast for the Fiscal Year Ending March 31, 2019



billions of yen, % FY18/3 FY19/3 VarianceNet sales % Net sales % %

Net sales 531.3 550.0 18.7 3.5

Operating income 11.1 2.1 18.0 3.3 6.9 62.7

Ordinary income 12.8 2.4 15.0 2.7 2.2 17.4

4.0 0.7 10.0 1.8 6.0 151.9

Depreciation 31.2 34.0 2.8 9.1

Capital expenditure 39.5 74.8 35.3 89.4

Exchange rate (period-average): 110.9 JPY/USD 110.6 JPY/USD -0.3 JPY/USD

Dubai crude oil (period-average): 55.7 USD/barrel 72.8 USD/barrel 17.1 USD/barrel

billions of yen, times 18/3-end 19/3-end Variance

Net interest-bearing debt 280.0 350.0 70.0

Net D/E ratio 1.6 1.9 0.3

Profit attributable to

owners of parent

Consolidated financial forecast for FY2019/3

Financial forecast overview



Full year consolidated forecast by business segment

May 11 Forecast Nov 8 Revision Variance

Net sales OP income OP margin Net sales OP income OP margin Net sales OP income OP margin

Paper and Paperboard

310.0 4.5 1.5% 320.0 9.5 3.0% +10.0 +5.0 +1.5

H&PC 220.0 12.0 5.5% 210.0 7.5 3.6% -10.0 -4.5 -1.9

Others 20.0 1.5 7.5% 20.0 1.0 5.0% - -0.5 -2.5

Total 550.0 18.0 3.3% 550.0 18.0 3.3% - - -

(billions of yen)

Based on the results up to the second quarter of the fiscal year under review, the Company has revised its forecasts for each business segment. There is no change in the total consolidated forecast for the full fiscal year.


Revision to full-year forecast by segment



P&PMay 11 Nov 8 Variance

Sales/market conditions 4.2 9.4 5.2 Price revision of paper and containerboard

-4.8 -5.2 -0.4 Heavy oil -0.5, others

1.1 1.3 0.2Yield and raw materials composition +0.5 (includes increase in hard-to-recycle

recovered paper composition), energy efficiency +0.3, decreased production -0.6,

others

Fixed manufacturing costs1.4 2.2 0.8

Change in fixed cost allocation segment due to absorption-type merger of subsidiary

(formerly: EPA) +0.6, others

Others 1.9 1.1 -0.8 Worsening logistics cost -0.5, others

OP income, YoY 3.8 8.8 5.0

H&PCMay 11 Nov 8 Variance

Sales/market conditions 9.7 7.1 -2.6 Price revision of absorbent products business, others

-2.7 -3.0 -0.3 SAP, woodchip, coal, others

1.8 2.2 0.4 Increased production due to the start of the operations of Kawanoe mill +0.5, others

Fixed manufacturing costs-2.2 -2.6 -0.4

Change in fixed cost allocation segment due to absorption-type merger of subsidiary

(formerly: EPA) -0.6, others

Overseas business 4.0 1.4 -2.6 Mainly due to revision of sales plan for Indonesia and South Korea

Others-6.7 -5.7 1.0

Decline in logistics cost due to revision of logistics structure, decline in labor cost due

to revision of recruitment plan, others

OP income, YoY 3.9 -0.6 -4.5

Major factors for differences

Major factors for differences

Prices of raw materials

and fuelsProduction increase,

cost reduction

Prices of raw materials

and fuelsProduction increase,

cost reduction

The Company has revised its forecasts for each business segment. The differences in breakdown are as follows.


Supplement: Differences from breakdown released on May 11



P&P H&PC Other Total P&P major factors H&PC major factors

Sales and market conditions 9.4 7.1 - 16.5 Volume +0.2, price +9.2 Volume +6.2, price +0.9

Prices of raw materials and

fuels-5.2 -3.0 - -8.2 Coal -3.2, woodchip -1.1, heavy oil -0.8, others

-0.1

Pulp -1.4, SAP -0.7, chemicals and others -0.5,

woodchip -0.2, coal -0.2

Mill/factory cost reduction 1.3 2.2 - 3.5 Yield and raw materials composition +1.5

(includes increase in hard-to-recycle recovered

paper composition), energy efficiency +0.4,

decreased production and others -0.6

Increased production +2.5, energy efficiency -

0.2, others -0.1

Fixed manufacturing costs 2.2 -2.6 - -0.4 Maintenance +1.4, labor +0.9, depreciation -

0.2, others +0.1

Maintenance +0.3, labor -1.1, depreciation -

1.1, others -0.7

Overseas business - 1.4 - 1.4 - Overseas subsidiaries profit increase +1.4

Others 1.1 -5.7 -1.3 -5.9 Improved earnings of corrugated container

subsidiary +1.4, others -0.3

Logistics cost (sales expansion) -4.4, moving

average -1.3

OP income, YoY, total 8.8 -0.6 -1.3 6.9

Increase, total 14.0 10.7 - 24.7Decrease, total -5.2 -11.3 -1.3 -17.8

*

0

50

100

150

200

250

300

350

18.0 11.1


Breakdown of changes in consolidated operating income

Operating income, YoY: +6.9 bn yen (FY18/3: 11.1 bn yen → FY19/3 forecast: 18.0 bn yen)

Paper & Paperboard (P&P), YoY: +8.8 Home & Personal Care (H&PC), YoY: -0.6

FY18/3 FY19/3 forecast

(billions of yen)

Prices of raw

materials

and fuels

-5.2

Sales and market

conditions +9.4

Others +1.1

Mill/factory cost

reduction

+1.3

Sales and market

conditions +7.1

Fixed manufacturing

costs +2.2

Prices of raw

materials and fuels

-3.0

Mill/factory cost

reduction

+2.2

Other(incl.

adjustments) -1.3

Fixed manufacturing

costs -2.6

Overseas business

+1.4

Others -5.7

* “Other” is the sum of “Other” category and “Adjustments”. The “Other” category consists of business segments such as wood, forestry, machinery, logistics, electric power selling, golf club, and real estate leasing businesses. “Adjustments” refer to adjustment for elimination of intersegment transactions.



Paper & Paperboard H&PC


Business results forecasts by segment

158.9 168.8

197.0 210.0

10.4 10.1

8.1 7.5

0

10

20

0

50

100

150

200

250

FY16/3 FY17/3 FY18/3 FY19/3 forecast

Net sales OP income

6.5% 6.0%

4.1%

% OP margin

(billions of yen)

3.6%

300.0 292.0 313.6 320.0

10.5 10.0

0.7

9.5

0

3

6

9

12

15

18

21

0

50

100

150

200

250

300

350

FY16/3 FY17/3 FY18/3 FY19/3 forecast

Net sales OP income

3.5% 3.4% 0.2%

% OP margin

3.0%

Net sales OP income OP margin Net sales OP income OP margin Net sales OP income OP margin(loss)

154.0 4.9 3.1% 166.0 4.7 2.8% 320.0 9.5 3.0%

(Results of prev. corresponding period) 150.9 -1.6 - 162.7 2.3 1.4% 313.6 0.7 0.2%

92.8 2.9 3.1% 117.2 4.6 4.0% 210.0 7.5 3.6%

(Results of prev. corresponding period) 92.4 3.3 3.6% 104.5 4.8 4.6% 197.0 8.1 4.1%

10.8 0.2 1.6% 9.2 0.8 9.1% 20.0 1.0 5.0%


257.7 7.9 3.1% 292.3 10.1 3.5% 550.0 18.0 3.3%


Full year forecastセグメント

Paper & Paperboard

Total

H&PC

Other (incl. adjustments)

H1 results H2 forecast



75

H&PC domestic business operating income, YoY: -2.0 bn yen （FY18/3: 9.4 bn yen → FY19/3, expected: 7.4 bn yen）

9.4 7.4

0

5

10

FY18/3 FY19/3 FY20/3

【紙製品】

影響額

・拡販、価格改定他 42・川之江工場稼動に伴う固定費増加他 -26・工場ｺｽﾄﾀﾞｳﾝ 17・原燃料価格(ﾊﾟﾙﾌﾟ等)の高騰 -20・物流費の増加等 -42

-29【吸収体】

影響額

・大人用、ﾌｪﾐﾆﾝの拡販 30・工場ｺｽﾄﾀﾞｳﾝ 5・原燃料価格(荷資材)の高騰 -10・物流費の増加等 -15

10

影響額

・ﾌﾟﾛﾀﾞｸﾄﾐｯｸｽ改善 10

・旧日清紡(東海製紙工業)の生産品種転換による改善

10

・紙製品価格改定 10・原燃料価格(ﾊﾟﾙﾌﾟ等)の高騰 -10

・大人用、ﾌｪﾐﾆﾝの拡販ﾍﾞﾋﾞｰ用紙おむつの生産体制見直し 5

・ﾊﾟﾚｯﾄ輸送や大型物流倉庫の本格稼動による物流費削減等 5

30

Household paper Impact

・ Increase in sales, price revision +4.2

・ Rise in prices of raw materials and fuels (pulp, etc.)

-2.0

・ Mill/factory cost reduction +1.7

・ Increase in depreciation and labor costs due to the start of operations of Kawanoe mill and Gyoda factory

--1.3

・ Change in fixed cost allocation segment

-0.9

・ Increase in logistics cost -4.2 ・ Others -0.5

-3.0

Absorbent products Impact

・ Sales increase of adult diapers and feminine care products

+3.0

・ Rise in prices of raw materials and fuels (SAP, etc.)

-1.0

・ Factory cost reduction +0.5

・ Increase in logistics cost, etc. -1.5

+1.0

Impact

・ Improvement in product mix +1.0

・ Improvement arising from switch in product type manufactured at former Tokai Seishi Kogyo (acquired from Nisshinbo HD)

+1.0

・ Price revision of household paper +1.0

・ Increase in in-house pulp consumption ratio due to surplus pulp arising from shutting down operations of N7 machine

0

・ Sales increase of adult diapers and feminine care products; review of baby diaper production structure

+0.5

・ Reduction of logistics cost from switch to pallet distribution and full-scale launch of operations of large-scale logistics centers

+0.5

+4.0


H&PC segment’s operating income (domestic)

(billions of yen)

• Main factors for FY19/3 are the cost increase of raw materials and fuels for household paper products, and the increase in fixed cost due to the start of Kawanoe mill’s operations.

• For FY20/3, Daio Paper is expecting mainly an increase in OP income from the household paper business.



Sales region FY19/3 Key initiatives for the fiscal years

including and beyond FY20/3 Main factors Impact

(bn yen)

China China (EICN)

Sales increase of high value-added products

Increase in e-commerce sales +1.0 Increase sales of premium toilet rolls

Increase sales of 雲紗 (“Yunsha”) series targeting third and fourth tier cities

S.E. Asia

Thailand and neighboring

(EIT)

Sales increase to neighboring countries

Expansion of feminine care products business

+0.9 Accelerate multi-category business expansion in Thailand with feminine care products and wet wipes

Increase sales of baby diaper and promote multi-category business expansion in neighboring countries

Indonesia (EITI/EIMI)

Temporal decline in earnings improvement due to a review of distribution strategy in relation to the business downsizing of its main local distributor

－ Review sales mix by retailer type and sales territory strategy

Export, etc.

S. Korea (EIK)

Decline in number of births -0.1 Adapt to aging of society and declining birthrate, and accelerate sales growth of feminine care products and adult diapers

(Taiwan) Growth in high-end products +0.1 Shift in sales mix to high value-added products such as pants diapers

Diversify product offerings with feminine care products, adult diapers and household paper

(Others) Market shift to low-end products due to economic stagnation in Russia

-0.5

Strengthen line-up of low-end products

Increase in promotional activities in Turkey Promote switch from tape diapers to pants diapers

Total +1.4


H&PC segment’s operating income (overseas)

H&PC overseas business operating income, YoY: +1.4 bn yen （FY18/3: -1.3 bn yen → FY19/3, expected: +0.1 bn yen）



26.4 26.4 27.2 27.0 29.0

31.2 34.0 34.9

36.9

21.7 24.9

31.6

37.3 32.5

39.5

74.8

51.1

32.1

10

20

30

40

50

60

70

80

FY13/3 FY14/3 FY15/3 FY16/3 FY17/3 FY18/3 FY19/3 Plan

FY20/3 Plan

FY21/3 Plan

Depreciation CAPEX

FY13/3 FY14/3 FY15/3 FY16/3 FY17/3 FY18/3FY19/3

Plan

FY20/3

Plan

FY21/3

Plan

Depreciation 26.4 26.4 27.2 27.0 29.0 31.2 34.0 34.9 36.93-year cumulative

CAPEX 21.7 24.9 31.6 37.3 32.5 39.5 74.8 51.1 32.13-year cumulative 78.3 109.3

80.0 87.2 105.8

158.0

1st Medium-term Business Plan 2nd Medium-term Business Plan 3rd Medium-term BusinessPlan


Capital expenditure, depreciation

(billions of yen)


DAIO PAPER CORPORATION 16 ※Reviewed to reflect the impact of IFRS 15

407.4 430.1

450.2 474.1 477.1

531.3 550.0

635.0

2.6% 3.0%

4.9% 5.3%

6.7% 7.7%

6.7%

15.0%

2.8% 3.7%

4.8% 5.1% 4.9%

2.1% 3.3%

5.0%

0

5

10

15

20

25

0

100

200

300

400

500

600

700

FY13/3 FY14/3 FY15/3 FY16/3 FY17/3 FY18/3 FY19/3 FY21/3

Net sales H&PC overseas net sales ratio OP margin

FY19/3 FY21/3

Plan Target

Net sales 407.4 430.1 450.2 474.1 477.1 531.3 550.0 635.0

(H&PC overseas sales) 10.7 13.1 22.2 25.1 31.8 41.1 37.0 100.0

H&PC overseasnet sales ratio

2.6% 3.0% 4.9% 5.3% 6.7% 7.7% 6.7% 15.0%

OP income 11.6 16.0 21.8 24.3 23.5 11.1 18.0 32.0

OP margin 2.8% 3.7% 4.8% 5.1% 4.9% 2.1% 3.3% 5.0%

FY18/3FY13/3 FY14/3 FY15/3 FY16/3 FY17/3

1st Medium-term Business Plan 2nd Medium-term Business Plan 3rd Medium-term Business Plan

(%)


Net sales, overseas net sales ratio, operating income (margin) (billions of yen)

※



15.1

6.3

13.2

14.6

12.1

4.0

10.0

16.8%

6.1%

10.0% 9.2%

7.1%

2.2%

5.5%

8.0%

3.7 3.0

1.9 1.7 1.4 1.6 1.9 1.6 0

5

10

15

20

25

0

5

10

15

20

FY13/3 FY14/3 FY15/3 FY16/3 FY17/3 FY18/3 FY19/3 FY21/3

Profit ROE Net D/E ratio

FY19/3 FY21/3

Plan Target

Profit attributable toowners of parent

Equity 97.1 109.8 154.5 163.1 176.5 178.0 - -

Net interest-

bearing debt363.5 331.8 292.5 281.5 255.1 280.0 350.0 350.0

Net D/E ratio 3.7 3.0 1.9 1.7 1.4 1.6 1.9 1.6

ROE

FY18/3FY13/3 FY14/3 FY15/3 FY16/3 FY17/3

15.1 6.3 13.2 14.6 12.1

16.8% 6.1% 10.0% 9.2% 7.1% 8.0%

-4.0 10.0

2.2% 5.5%

1st Medium-term Business Plan 2nd Medium-term Business Plan 3rd Medium-term Business Plan


Profit, equity, ROE, net interest-bearing debt, net D/E ratio (%) (billions of yen)



Reference materials



Topic

Issuance of Green Bond

Daio Paper Corporation hereby notifies that it has issued green bonds (Unsecured Straight Bonds No. 21 and No.22: 20 billion yen in total) in October 2018.

Green bonds are bonds that align to the Green Bond Principles set by the International Capital Market Association (ICMA), and refer to bonds that companies, municipalities and other organizations issue to procure funds exclusively for projects aimed at solving environmental problems (“Green Projects”).

This was the first green bond issuance in the papermaking and the daily necessities industries in Japan.

As regards the green bond eligibility of the bonds, Daio Paper Corporation has obtained second party opinion from DNV GL Business Assurance Japan K.K.

Funds procured will be used for the following Green Projects.

(1) Facility for the effective use of hard-to-recycle recovered paper (2) Biomass boiler fueled by black liquor

(Total investments: Approx. 16 billion yen) Total investments: Approx. 21 billion yen *1

◎Modify existing facility and install new facility for the

recycle of hard-to-recycle recovered paper

◎Burn as fuel the residual waste, such as vinyl, that arises

from the recycling process of hard-to-recycle recovered paper, and make use of the resulting heat energy for power generation and in the papermaking process

◎Install new biomass boiler that uses black liquor, a

byproduct of the kraft pulping process, as fuel

◎The new boiler to be installed will use 100%*2 black

liquor, a type of biomass fuel

Environmental benefits of the project: 1) Reduction of waste materials 2) Reduction of CO2 emissions

Environmental benefits of the project: 1) Reduction of CO2 emissions

For more details regarding the Green Projects and the terms and conditions of the bond issuance, please see the following announcements on the company’s website.

• Issuance of Green Bond. Released 1 Oct 2018. • Regarding the Terms and Conditions of the Issuance of Daio Paper Green Bonds (Unsecured Straight Bonds No. 21 and No. 22). Released 19 Oct 2018.

*1 Of the total investments of approximately 21 billion yen, 9 billion yen was procured through the euroyen zero coupon convertible bonds due 2020 issued in September 2015.

*2 Fossil fuels will be used only during startup and shutdown of facility.



50

75

100

125

A) Exchange rate at quarter-end

0

50

100

150

(Source: The Nikkei)

40

60

80

100

120

(Source: GCI-NC)

USD/barrel

USD/t

Reference material 1

Changes in external environment

B) Crude oil price JPY/USD(TTM)

C) Coal price

10

15

20USA softwood chip AU hardwood chip

(Source: In-house investigation)

JPY/kg D) Woodchip price



70

90

110

130

0

4,000

8,000

12,000

16,000

FY13/3 H1

FY13/3 H2

FY14/3 H1

FY14/3 H2

FY15/3 H1

FY15/3 H2

FY16/3 H1

FY16/3 H2

FY17/3 H1

FY17/3 H2

FY18/3 H1

FY18/3 H2

FY19/3 H1

Domestic shipment, total Import, total Paper Paperboard

Domestic shipment + Import ＝ Domestic demand Thousand t ％

(Source: Japan Paper Association Statistics, Ministry of Finance Japan Trade Statistics)

（FY13/3 H1 = 100% _ right axis）

Reference material 2

Domestic demand for paper and paperboard



Cautions regarding forward-looking statements

Forward-looking statements such as projections and forecasts on business results included in this document are derived by Daio Paper Corporation (the “Company”) based on beliefs as well as assumptions made using information currently available to it at the time of the release (Nov 29, 2018), and are subject to contingencies, risks and uncertainties.

As such, actual future performance and results could differ materially from the statements included herein as a result of latent risks, factors not yet known to the company or not currently considered material to the company and its subsidiaries by the company.


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