DAIO PAPER CORPORATION 1
FY2018/3 Financial Overview
Daio Paper Corporation
May 31, 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 May 31, 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.
DAIO PAPER CORPORATION 2
Consolidated Financial Results for the Fiscal Year Ended March 31, 2018
DAIO PAPER CORPORATION 3
Consolidated financial results for FY2018/3
Summary of consolidated financial results
Business results FY17/3 FY18/3 VarianceNet sales % Net sales % %
Net sales 477.1 531.3 54.2 11.4
Operating income 23.5 4.9 11.1 2.1 -12.4 -53.0
Ordinary income 21.3 4.5 12.8 2.4 -8.5 -40.1
Profit attributable toowners of parent
Depreciation 29.0 31.2 2.2 7.4
Capital expenditure 32.5 39.5 7.0 21.8
Exchange rate
(average rate during term): 108.4 JPY/USD 110.9 JPY/USD 2.5 JPY/USD
Dubai crude oil
(average price during term): 47 USD/barrel 56 USD/barrel 9 USD/barrel
Financial data 17/3-end 18/3-end Variance
Net interest-bearing debt 255.1 280.0 24.9
Equity ratio 26.8 % 25.9 % -0.9
Net D/E ratio 1.4 1.6 0.2
NotesAs of the first quarter of FY18/3, due to the acquisition of stocks, Daio Paper Products Corporation and its three subsidiaries (Tokai Seishi Kogyo Co., Ltd.,
Daio Postal Chemical Corporation. and Daiwa Shiko Co., Ltd.), as well as Miura Printing Corporation are included in the scope of consolidation. Also,
as of Apr 1, 2017, due to increased significance, Elleair Paper Co., Ltd. (non-consolidated), which succeeded the Household Paper Products business of
Elleair Product Co., Ltd. (consolidated) following a company split, is included in the scope of consolidation. As a result, the number of consolidated
subsidiaries became 36 (up from 30, at the end of FY17/3).
12.1 2.5 4.0 0.7 -8.1 -67.3
(billions of yen)
DAIO PAPER CORPORATION 4
235
111
Consolidated financial results for FY2018/3
Increase/decrease of consolidated operating income
0
5
10
15
20
25
30
FY17/3 FY18/3
23.5
11.1
Prices of raw
materials and fuels
-8.8
Sales and market
conditions +0.4
Others -0.6
Production increase,
cost reduction
-1.7
Sales and market
conditions -0.1
Prices of raw
materials and fuels
-1.4 Others +0.2
Production increase,
cost reduction
+0.5
Other(incl. adjustments)
-1.1
Fixed manufacturing
costs +1.4
Fixed manufacturing
costs -1.2
Paper & Paperboard (P&P), YoY: -9.3 Home & Personal Care (H&PC), YoY: -2.0
(billions of yen)
P&P H&PC Other Total P&P Major Factors H&PC Major Factors
Sales / market conditions 0.4 -0.1 - 0.3 Price +0.4 Sales volume +1.6, price -1.7
Prices of raw materials
and fuels-8.8 -1.4 - -10.2 Recovered paper -6.5, coal -2.0, heavy
oil -0.8, woodchip -0.7, chemicals and
others -0.3, moving average +1.6
SAP and others -0.9, chemicals and
others -0.3
Production increase,
cost reduction-1.7 0.5 - -1.2 Decreased production -1.0, energy
cost -0.4, yield and raw materials
composition -0.3
Increased production +0.8,
energy cost -0.4
Fixed manufacturing costs 1.4 -1.2 - 0.2 Labor cost +0.5, depreciation +0.3 Labor cost -0.5, depreciation -0.4
Others -0.6 0.2 -1.1 -1.5 Change in scope of consolidation +0.7,
logistics cost +0.5, decline in earnings of
corrugated container subsidiary -1.8, others
Change in scope of consolidation +0.5,
overseas business -0.3, logistics cost
(sales expansion) and others
OP income YoY, total -9.3 -2.0 -1.1 -12.4Increase, total 1.8 0.7 - 2.5
Decrease, total -11.1 -2.7 -1.1 -14.9
*
Operating Income, YoY: -12.4 bn yen (FY17/3: 23.5 bn yen → FY18/3: 11.1 bn yen)
* “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, parking facilities, and real estate leasing businesses. “Adjustments” refer to adjustment for elimination of intersegment transactions.
DAIO PAPER CORPORATION 5
Consolidated financial results for FY2018/3
Business results by segment (Paper & Paperboard)
% OP margin
10.0
15.0
20.0
25.0
30.0Old newspapers, export
Old corrugated containers, export
80.0
85.0
90.0
95.0
100.0
105.0
110.0Coated paper (A2 grade) Kraft linerboard
10
12
14
16
18
20
100
150
200
250USA N-chip(US$/BDU_left) AU L-chip(A$/BDT_left)
USA N-chip(yen/kg_right) AU L-chip(yen/kg_right)
Major factors
Sales and market conditions +0.4
Prices of raw materials/fuels -8.8
Production increase, cost reduction -1.7
Fixed manufacturing costs +1.4
Others -0.6
Total -9.3
C) Prices of major products (Apr 2012=100)
B) Prices of recovered paper A) Prices of imported woodchips ※From Apr 2015, AU L-chip is
imported at rate of US$/BDT instead of A$/BDT.
(yen/kg)
(Source: In-house investigation) (Source: Ministry of Finance Japan Statistics) (Source: The Nikkei)
290.0 300.0 292.0 313.6
10.1 10.5 10.0
0.7
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
0.0
200.0
FY15/3 FY16/3 FY17/3 FY18/3
Net sales OP income Variance
Net sales +21.6 +7.4%
OP income -9.3 -93.0%
Main types Year-on-year change
Vol. Value Major factors
Newsprint - - -Decline in newspaper circulation and pages
Paper - -
+Increase in sales volume and value of wrapping/ functional materials as a result of strategy to shift from coated paper
-Decrease in domestic demand due to decline of print and shift to digital media
Containerboard & corrugated container
+ + +Increase in demand in fields of e-commerce and
processed food and beverage
3.5% 3.5% 3.4%
0.2%
(billions of yen)
DAIO PAPER CORPORATION 6
40
60
80
100
120
140
160
180 JPY/CNY JPY/KRW JPY/THB
JPY/IDR JPY/RUB
146.8 158.9
168.8
197.0
9.2 10.4 10.1
8.1
0
10
20
0
20
40
60
80
100
120
140
160
180
200
220
FY15/3 FY16/3 FY17/3 FY18/3
Net sales OP income
6.5% 6.3%
6.0%
4.1%
% OP margin
95
100
105
110
115
120
125
Facial Tissue (Market) Toilet paper (Market)
Facial Tissue (Daio) Toilet paper (Daio)
Year-on-year change in sales value by category
Dom
estic
Household paper + +Sales increase from acquisition of Nisshinbo HD’s Paper Products business
+Sales shift to value-added products
Baby care - +Price revision to match quality improvements from product update -Shrinking market due to low birth rate
Adult care + +Sales increase of nighttime use incontinence pad (retail route) +Increase in acquisition of new clients (institutional route)
Feminine care → →Suppressed sales of products with low profitability
Overse
as
Baby care +
+China: Added Guangyu series (higher grade than super premium Angel series) to lineup; increased distribution of pants diaper (higher unit price)
+Thailand: Increased distribution of pants diapers; increased sales in each neighboring country
+Indonesia: Strengthened in-store promotion; started E-commerce sales
Others + +Advanced multi-category expansion (product diversification) in each country
Variance
Net sales +28.2 +16.7%
OP income -2.0 -20.0%
Major factors
Sales and market conditions -0.1
Prices of raw materials/fuels -1.4
Production increase, cost reduction +0.5
Fixed manufacturing costs -1.2
Others +0.2
Total -2.0
(billions of yen)
B) Monthly exchange rates (Monthly average TTM) (Apr 2012 = 100)
A) Prices of major products (Apr 2012 = 100)
(Source: SRI(retail tracking research) data)
(Source: MURC Exchange Quotations)
Consolidated financial results for FY2018/3
Business results by segment (Home & Personal Care)
DAIO PAPER CORPORATION 7
Paper & Paperboard Home & Personal Care
Consolidated financial results for FY2018/3
Business results by segment (Quarterly trend)
(billions of yen)
72.8 72.1 75.3
73.5 71.8
75.5 77.7
74.8
82.0
75.9 73.2
80.7
2.1 2.2
-0.5
2.4
3.1
-1.1
2.6 2.8
0.6
3.4
2.0
1.7
-1.5
0.0
1.5
3.0
4.5
-30.0
-20.0
-10.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
16/3 17/3 18/3 16/3 17/3 18/3 16/3 17/3 18/3 16/3 17/3 18/3
Net sales 0 2 OP income (loss)
1Q (Apr-Jun)
37.1 38.5
44.6
39.3 39.3
47.9
42.9 44.3
52.6
39.6
46.8
51.9
2.1 1.9
0.9
2.1 2.3
2.4
3.4
2.3 2.5
2.8
3.6
2.3
0
1
2
3
4
5
6
0
10
20
30
40
50
60
16/3 17/3 18/3 16/3 17/3 18/3 16/3 17/3 18/3 16/3 17/3 18/3
Net sales 0 2 OP income
2Q (Jul-Sep)
3Q (Oct-Dec)
4Q (Jan-Mar)
1Q (Apr-Jun)
2Q (Jul-Sep)
3Q (Oct-Dec)
4Q (Jan-Mar)
FY FY
DAIO PAPER CORPORATION 8
FY15/3 FY16/3 FY17/3 FY18/3 (billions of yen) Results Results Results Results Goal
Net interest-bearing debt
292.5 281.5 255.1 280.0 250.0
Equity ratio 23.7% 24.9% 26.8% 25.9% 28%
Net D/E ratio 1.9 1.7 1.4 1.6 1.5
Operating CF 44.7 47.0 62.9 30.5
Investment CF -28.6 -26.1 -31.4 -50.2
Free CF 16.1 20.9 31.5 -19.7
Credit rating Aug 2016 Sep 2017
R&I BBB-(Stable) BBB(Stable) BBB(Positive) BBB+(Stable)
JCR BBB (Stable) BBB(Positive) BBB+(Stable) BBB+(Stable)
331.8
292.5 281.5
255.1
280.0
6.9 5.8 4.7 3.7 3.2
1.6%
1.5%
1.3%
1.1%
0.9%
0.0%
1.0%
2.0%
0
50
100
150
200
250
300
350
FY14/3 FY15/3 FY16/3 FY17/3 FY18/3
Net interest-bearing debt
Interest expense
Interest rate
Consolidated financial results for FY2018/3
Progress of measures for improving financial strength
Improve financial strength, and suppress financing costs by diversifying financing methods.
*An increase in trade payables and others due to the acquisition of Nisshinbo HD’s Paper Products business and Miura Printing Corporation resulted in a one-time decrease in operating CF.
*
Progress of diversifying Jul 2015 Registered issuance limit of CP
financing methods Sep 2015 Issued CB (30 bn yen)
Sep 2016 Submitted straight bond shelf registration
Mar 2017 Issued straight bond (15 bn yen)
Dec 2017 Issued straight bond (25 bn yen)
<Trend of net interest-bearing debt, interest expenses, and interest rate>
DAIO PAPER CORPORATION 9
Consolidated Financial Forecast for the Fiscal Year Ending March 31, 2019
DAIO PAPER CORPORATION 10
Business results
(forecasts) 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
Profit attributable to
owners of parent4.0 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
Net D/E ratio 1.6 1.9 0.3
Exchange rate
(average rate during term): 110.9 JPY/USD 110.0 JPY/USD -0.9 JPY/USD
Dubai crude oil
(average price during term): 56 USD/barrel 67 USD/barrel 11 USD/barrel
NotesAs announced on May 15, 2018, the resolution to implement an absorption-type merger as regards the wholly-owned consolidated subsidiary,
Elleair Paper, was approved by the Board of Directors on Apr 26, 2018. For details, please see the press release (only in Japanese) on
Daio Paper's website.
Consolidated financial forecast for FY2019/3
Summary of consolidated financial forecast
(billions of yen)
DAIO PAPER CORPORATION 11
Consolidated financial forecast for FY2019/3
Increase/decrease of consolidated operating income
Operating Income, YoY: +6.9 bn yen (FY18/3 : 11.1 bn yen → FY19/3 forecast: 18.0 bn yen)
0
5
10
15
20
25
30
11.1 18.0
Overseas business
+4.0
FY18/3 FY19/3 forecast
Prices of raw
materials
and fuels -4.8
Sales and market
conditions
+4.2 Others +1.9
Production
increase,
cost
reduction +1.1
Sales and market
conditions
+9.7
Prices of raw
materials and fuels
-2.7
Others -6.7
Production increase,
cost
reduction +1.8 Other(incl.
adjustments)
-0.8 Fixed manufacturing
costs
+1.4
Fixed manufacturing
costs
-2.2
Paper & Paperboard (P&P), YoY: +3.8 Home & Personal Care (H&PC), YoY: +3.9 (billions of yen)
P&P H&PC Other Total P&P Major Factors H&PC Major Factors
Sales / market conditions 4.2 9.7 - 13.9 Product mix +0.6, price +3.6 Volume +6.4, price +3.3
Prices of raw materials
and fuels-4.8 -2.7 - -7.5 Coal -3.0, woodchip -1.5,
recovered paper +0.4, others -0.7
Pulp -1.5, SAP and others -0.6,
chemicals and others -0.5
Production increase,
cost reduction1.1 1.8 - 2.9 Yield and raw materials composition
+1.0, energy-saving +0.1
Production increase +2.0
Fixed manufacturing costs 1.4 -2.2 - -0.8 Maintenance +1.5, depreciation -0.1 Labor cost -0.8, depreciation -0.8
Overseas business - 4.0 - 4.0 - Overseas subsidiaries' sales expansion +4.0
Others 1.9 -6.7 -0.8 -5.6 Improvement in earnings of corrugated
container subsidiary +1.4,
logistics cost +0.5
Logistics cost (sales expansion) -4.8,
moving average -1.0, personnel increase
(sales expansion) -0.7
OP income YoY, total 3.8 3.9 -0.8 6.9Increase, total 8.6 15.5 - 24.1
Decrease, total -4.8 -11.6 -0.8 -17.2
*
* “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, parking facilities, and real estate leasing businesses. “Adjustments” refer to adjustment for elimination of intersegment transactions.
DAIO PAPER CORPORATION 12
Paper & Paperboard H&PC
Consolidated financial forecast for FY2019/3
Business results forecasts by segment
158.9 168.8
197.0
220.0
10.4 10.1
8.1
12.0
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)
5.5% 300.0 292.0
313.6 310.0
10.5 10.0
0.7
4.5
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
1.5%
Net sales OP income OP margin Net sales OP income OP margin Net sales OP income OP margin(loss)
150.0 3.0 2.0% 160.0 1.5 0.9% 310.0 4.5 1.5%
(Results of prev. corresponding period) 150.9 -1.6 - 162.7 2.3 1.4% 313.6 0.7 0.2%
100.0 3.5 3.5% 120.0 8.5 7.1% 220.0 12.0 5.5%
(Results of prev. corresponding period) 92.4 3.3 3.6% 104.6 4.8 4.6% 197.0 8.1 4.1%
10.0 0.0 0.0% 10.0 1.5 15.0% 20.0 1.5 7.5%
(Results of prev. corresponding period) 9.5 1.0 10.5% 11.3 1.3 11.3% 20.8 2.3 10.9%
260.0 6.5 2.5% 290.0 11.5 4.0% 550.0 18.0 3.3%
(Results of prev. corresponding period) 252.8 2.7 1.1% 278.5 8.4 3.0% 531.3 11.1 2.1%
Full year forecastセグメント
Paper & Paperboard
Total
H&PC
Other (incl. adjustments)
H1 forecast H2 forecast
DAIO PAPER CORPORATION 13
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
Consolidated financial forecast for FY2019/3
Capital expenditure, depreciation
(billions of yen)
DAIO PAPER CORPORATION 14
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%
9.5%
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 52.0 100.0
H&PC overseasnet sales ratio
2.6% 3.0% 4.9% 5.3% 6.7% 7.7% 9.5% 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
(%)
Consolidated financial forecast for FY2019/3
Net sales, overseas net sales ratio, operating income (margin) (billions of yen)
DAIO PAPER CORPORATION 15
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
Consolidated financial forecast for FY2019/3
Profit, equity, ROE, net interest-bearing debt, net D/E ratio (%) (billions of yen)
DAIO PAPER CORPORATION 17
A) Exchange rate at quarter-end
C) Price of coal
Reference material 1
Changes in external environment
B) Price of crude oil
50.0
75.0
100.0
125.0
JPY/USD(TTM)
0.0
50.0
100.0
150.0
(Source: The Nikkei)
40.0
60.0
80.0
100.0
120.0
(Source: NEX Index)
USD/barrel
FOB USD/t
DAIO PAPER CORPORATION 18
Reference material 2
Domestic demand for paper and paperboard
70
80
90
100
110
120
130
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
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
Domestic shipment, total Imports, total Paper Paperboard
Domestic Shipment + Imports = Domestic Demand Thousand t %
(Source: Japan Paper Association Statistics, Ministry of Finance Japan Trade Statistics)
(Take FY13/3 H1 as 100 _ right axis)
DAIO PAPER CORPORATION 19
Reference material 3
Consolidated ordinary income
11.2 14.2
5.7 4.7 6.6 11.3
21.3 21.3
12.8
2.4
3.4
1.4 1.2 1.6
2.6
4.8 4.5 4.5
2.4
0.5
1.5
2.5
3.5
4.5
5.5
0
5
10
15
20
25
30
FY09/3 FY10/3 FY11/3 FY12/3 FY13/3 FY14/3 FY15/3 FY16/3 FY17/3 FY18/3
Ordinary income Sales ratio
21.8
(19.1)※
(2.7)※
※Subsidy income from Fukushima Pref. of approx. 2.7 billion yen is included in ordinary income (21.8 billion yen) of FY15/3.
FY09/3 FY10/3 FY11/3 FY12/3 FY13/3 FY14/3 FY15/3 FY16/3 FY17/3 FY18/3
Consolidated
ordinary income11.2 14.2 5.7 4.7 6.6 11.3 21.8 21.3 21.3 12.8
Sales ratio 2.4 3.4 1.4 1.2 1.6 2.6 4.8 4.5 4.5 2.4
3-year cumulative 24.7 bn yen (2.0%) 39.7 bn yen (3.2%) 55.3 bn yen (3.7%)
第1次中期事業計画 2nd Medium-term Business Plan1st Medium-term Business Plan
billions of yen %
DAIO PAPER CORPORATION 20
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 (May 31, 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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