Hokuetsu Corporation
3865・Prime Market・Pulp & Paper
Business
Hokuetsu Corporation is an integrated paper manufacturer founded in 1907, comprising the company itself, 22 consolidated subsidiaries, and 6 affiliated companies. Its core Paper & Pulp Business (approximately 90.8% of consolidated net sales) encompasses the manufacture of Paper (Western-style paper), Paperboard (whiteboard, corrugated medium), and Functional Materials (functional paper, specialty paper, information paper) at its domestic Niigata, Kishu, and Kanto plants, alongside Market Pulp (Canada) operations through Alberta-Pacific Forest Industries Inc. in Canada, and functional materials through Bernard Dumas S.A.S. in France. The Packaging & Paper Converting Business manufactures liquid containers, paper containers, and other products, while Others includes wood, construction, and logistics operations. Major customers include domestic and overseas printing, food, and electronic components manufacturers, reached mainly through paper trading companies such as Shinsei Paper & Pulp Trading Co., Ltd. (12.2% of net sales).
Business Model
The company operates an integrated production chain from its own pulp (Market Pulp (Canada)) through to Paper (Western-style paper), Paperboard (whiteboard, corrugated medium), and Functional Materials (functional paper, specialty paper, information paper), generating earnings through both domestic sales and exports (overseas sales ratio of 34.4%). Profitability in Paper (Western-style paper) and Paperboard (whiteboard, corrugated medium) is maintained through price revisions and product mix shifts, while Functional Materials (functional paper, specialty paper, information paper) (chip carrier tape base paper, RO membrane support material, etc.) complement margins as high-value-added products. The Packaging & Paper Converting Business is improving profitability by reducing outsourcing costs through in-house production investment. The business alliance with Daio Paper Corporation (a revenue improvement effect of over ¥3.0 billion in its second year) reinforces the cost structure.
Company Strengths
The Niigata Plant, as the largest core plant in Japan, achieves highly efficient operations. It produces Paper (Western-style paper), Paperboard (whiteboard, corrugated medium), all at the same site, and has flexibly carried out equipment conversions, such as converting the No. 6 machine into a corrugated medium paper machine in 2020. Total capital expenditure for FY2026 (ending March 2026) reached ¥19,465 million, and the company continues to promote productivity improvements and strengthen competitiveness.
The company wholly owns Alberta-Pacific Forest Industries Inc. (Canada) and produces Market Pulp (Canada) in-house. Pulp production volume for FY2026 (ending March 2026) was 1,454,880 tons (97.6% year-on-year). By internalizing part of its raw material supply, the company reduces its dependence on fluctuations in external market conditions and maintains a vertically integrated business structure that enables the flexible allocation of raw materials within the group.
In the 2025 CDP scores, the company obtained the highest rating of "A" in both the Forests and Water Security categories, and "A－" in Climate Change, achieving the top leadership level across all categories. With a target of net-zero CO2 emissions by 2050, the company is promoting a modal shift and participating in a CCS project (the only company in the paper and pulp industry to do so), and its environmental initiatives are contributing to gaining support from customers and business partners.
ENVALITH's Perspective
Performance Trend
Net sales had been on an expansionary trend, rising from ¥261,616 million in FY2022 to ¥305,718 million in FY2025, but reversed course in FY2026 to ¥287,736 million (down 5.9% year on year). Operating income plunged 61.8% from ¥19,727 million in FY2025 to ¥7,539 million in FY2026, with the operating margin falling from 6.5% to 2.6%. External factors included a worldwide softening of pulp market conditions, the continuation of the structural decline in domestic demand for paper (Western-style paper), and weaker export market conditions, all occurring simultaneously. Operating cash flow decreased 75.1% from ¥40,932 million to ¥10,192 million, mainly due to a ¥7,635 million increase in net defined benefit assets, a ¥5,406 million increase in inventories, and ¥6,013 million in income tax payments. For FY2027 (ending March 2027), net sales are projected to recover to ¥305,000 million, but due to cost increases such as soaring raw material and fuel prices, operating income is forecast to decline further to ¥3,000 million.
Growth Strategy
Rebuilding the earnings base centered on strengthening export sales, expanding high-value-added products, and recovering pulp prices
Export sales are being continuously strengthened to offset the structural decline in domestic paper demand. In FY2026 (ending March 2026), both sales volume and prices struggled due to a softening in export market conditions, but the FY2027 (ending March 2026) forecast positions this as a key driver toward achieving net sales of ¥305,000 million (up 6.0% year on year).
Expanded sales and price revisions were implemented for premium whiteboard (for trading card applications), corrugated medium (reinforced thin-gauge core), and Functional Materials (chip carrier tape base paper and tack-related converting base paper). In FY2026 (ending March 2026), Paperboard and Functional Materials achieved increased revenue, partially offsetting the deterioration in Paper (Western-style paper) and pulp market conditions.
In FY2026 (ending March 2026), the Paper & Pulp Business saw a significant decline in profit due to falling pulp prices and reduced sales volume in overseas markets. The FY2027 (ending March 2026) forecast explicitly incorporates a recovery in pulp selling prices and increased sales volume as factors supporting earnings, but this carries high uncertainty as it depends on external market conditions.
Through price revisions for liquid containers and increased sales volume, FY2026 (ending March 2026) achieved net sales of ¥17,437 million (up 4.7% year on year) and operating profit of ¥558 million (up 144% year on year), marking both increased revenue and profit. The company will continue strengthening its integrated production system by leveraging synergies with the group's whiteboard business.
Capital expenditure on tangible fixed assets in FY2026 (ending March 2026) totaled ¥16,690 million. The net amount of machinery, equipment, and vehicles increased from ¥63,696 million to ¥70,563 million, reflecting continued renewal and expansion of production facilities. With rising raw material and fuel costs expected in FY2027 (ending March 2026) as well, maintaining profitability through improved production efficiency remains a key challenge.
Last updated: July 19, 2026