Pack : Quarterly Report for the Third Quarter of 72nd Term

Quarterly Report

2023

(Third quarter of 72nd term)

Quarterly Report

1. This document is the print version of the Quarterly Report submitted via the Electronic Disclosure for Investors' NETwork (EDINET), pursuant to Article 27-30-2 of the Financial Instruments and Exchange Act of Japan, to which a table of contents and pagination have been added.
2. The quarterly review attached to the Quarterly Report submitted via EDINET and the letter of confirmation submitted alongside the Quarterly Report are appended to the end of this document.

		Contents
			Page
[Cover page]	2
Part 1. Corporate information	3
1.	Corporate overview	3
	1.	Trends in major management indicators	3
	2.	Lines of business	3
2.	Business overview	4
	1.	Business and other risks	4
	2.	Management analysis of financial standing, business results, and cash flow	4
	3.	Major business contracts, etc	6
3.	Information on filing company	7
	1.	Information on stock, etc	7
	2.	Directors	8
4.	Financial information	9
	1.	Quarterly Consolidated Financial Statements	10
	2.	Other	18
Part 2. Information concerning guarantor of filing company	19

Independent Auditor's Report on Quarterly Review

Confirmation Letter

- 1 -

[Cover page]

Document filed:	Quarterly Report
Legal basis:	Article 24-4-7, Paragraph 1 of the Financial Instruments and Exchange Act
Submitted to:	Director-General, Kinki Local Finance Bureau
Filing date:	November 9, 2023
Quarterly accounting period:	Third quarter of 72nd term (July 1 - September 30, 2023)
Company name (Japanese):	ザ・パック株式会社
English name:	THE PACK CORPORATION
Name and title of representative:	Hideaki Yamashita, President & CEO
Location of head office:	9-3 Higashiobase 2-chome,Higashinari-ku, Osaka, Japan
Telephone no.:	[phone]
Name of administrative contact:	Michihisa Fujii, Managing Director, Corporate Division
Nearest point of contact:	9-3 Higashiobase 2-chome,Higashinari-ku, Osaka, Japan
Telephone no.:	[phone]
Name of administrative contact:	Michihisa Fujii, Managing Director, Corporate Division
Locations where this document is	THE PACK CORPORATION
available for public inspection:	(9-3 Higashiobase 2-chome,Higashinari-ku, Osaka, Japan)
	Tokyo Stock Exchange
	(2-1 Nihonbashi Kabutocho, Chuo-ku, Tokyo, Japan)

- 2 -

Part 1. Corporate information

1. Corporate overview

1. Trends in major management indicators

		Third quarter of
Term		consolidated 71st term
		(cumulative)
Fiscal period		January 1 -
	September 30, 2022
Net sales	(million yen)	60,481
Ordinary profit	(million yen)	3,592
Profit attributable to owners of	(million yen)	2,250
parent
Comprehensive income (loss)	(million yen)	2,646
Net assets	(million yen)	63,655
Total assets	(million yen)	87,082
Basic earnings per share	(yen)	118.43
Diluted earnings per share	(yen)	118.33
Capital adequacy ratio	(%)	73.0

Third quarter of

consolidated 72nd term

(cumulative)

January 1 -

September 30, 2023

67,586

4,727

3,205

4,379

68,476

94,107

168.46

168.34

72.7

71st term

January 1, 2022 - December 31, 2022

89,060

6,353

4,058

4,362

65,371

94,365

213.55

213.38

69.2

		Third quarter of	Third quarter of
Term		consolidated 71st term	consolidated 72nd term
		(cumulative)	(cumulative)
Fiscal period		July 1 - September 30,	July 1 - September 30,
	2022	2023
Basic earnings per share	(yen)	43.58	56.30

Note: Trends in key management indicators for the reporting company are not provided because the Company prepares quarterly consolidated financial statements.

2. Lines of business

No material changes occurred in the lines of business pursued by the Group (i.e., the Company and its affiliates) during the cumulative period through the third quarter of the consolidated fiscal year under review.

No changes affecting major affiliates emerged.

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2. Business overview

1. Business and other risks
   During the cumulative period through the third quarter of the consolidated fiscal period under review, no new business or other risks were incurred. Additionally. no material changes arose with respect to the business and other risks presented in the Securities Repot for the preceding fiscal year.
   The business impact of the COVID-19 pandemic will continue to be closely monitored.
2. Management analysis of financial standing, business results, and cash flow
   Forward-looking statements in the text below are based on judgments made as of the end of the quarter of the consolidated fiscal period under review.
3. 1. Business performance
      In the cumulative period through the third quarter of the consolidated fiscal year under review, Japan's economy moved into the post-COVID era owing to COVID being downgraded to a Category 5 infection, and demand for face-to-face service industries such as eating out and lodging increased. In addition, the trend toward recovery in the manufacturing industry has continued, while the economy has been on a gradual recovery trend with the recovery on inbound tourism and associated demand and wage rises. Stay-at-home demand saturated, while the prolonged impact of soaring crude oil prices and exchange rate fluctuations led to increases in prices of daily necessities and materials, leaving future conditions remaining uncertain.
      In the United States, the employment environment remains favorable, real wages are rising, and the consumption of services such as transportation, healthcare, and entertainment is growing. However, monetary tightening aimed at curbing inflation continues, raising concerns about an economic recession.
      In China, exports increased at the beginning of the year as the Zero COVID policy was lifted. However, a decline in the investment in real estate development, including housing, and a slump in exports may slow the Chinese economy.
      Within this context, the Group has adopted "Evolution-Start of purpose-based management and Sustainable Management" as the slogan for our Medium-Term Management Plan, which aims to achieve consolidated net sales of 107,000 million yen and operating income of 7,000 million yen for the fiscal year ending December 31, 2025. Toward this goal, group companies worked collectively to increase earnings by venturing into new markets, making substantial capital expenditures, and improving quality management.
      Due to these efforts, during the cumulative period through the third quarter of the consolidated fiscal year under review, net sales grew by 11.7% year on year to 67,586 million yen ; operating profit rose 37.5% year on year to 4,500 million yen; ordinary profit grew 31.6% year on year to 4,727 million yen; and profit attributable to owners of parent improved 42.4% year on year to 3,205 million yen.
      The business performance for each segment is reviewed below.
   2. 1. Paper Products
         The paper products segment accounted for 70.7% of consolidated sales during the period under review. Sales of paper bags, which accounted for 29.1% of consolidated sales, rose alongside growing domestic consumer spending and continued recovery in tourism demand, with net sales growing 14.5% year on year to 19,678 million yen.
         Sales of folding paper cartons, which accounted for 25.5% of consolidated sales, grew 15.2% year on year to 17,239 million yen. This was due to strong sales of cartons for takeout/delivery food products and strong performance in the market for souvenirs, mainly food.
      2. • 4 -

Sales of corrugated boxes, which accounted for 13.6% of consolidated sales, grew 3.1% year on year to 9,184 million yen as sales to manufactures and package sales to the e-commerce market remained at the same level as the previous year.

Printing sales, which accounted for 2.5% of consolidated sales, rose 7.5% year on year to 1,693 million yen based on firm sales at Keihin Tokushu Printing Corp. and NIKKO PRINT CORPORATION.

Overall, sales in this segment grew 12.1% year on year to 47,796 million yen. Operating profit rose 37.3% year on year to 4,206 million yen.

1. 1. Film Packaging
      In the film packaging segment, which accounted for 14.7% of consolidated sales during the period under review, net sales rose 22.3% year on year to 9,926 million yen. This was due to continued strong sales of disposable diaper products and flexible film packaging for food products, as well as strong sales to mail order enterprises and specialty stores, due mainly to recovery in consumer spending and inbound tourism consumption in association with an increase in the number of foreign visitors to Japan. Operating profit grew by 44.0% year on year to 456 million yen.
   2. Other Businesses
      Other businesses in the period under review accounted for 14.6% of consolidated sales. While COVID- 19 vaccine-related sales declined, sales of sewn products and non-woven bags to specialty stores were firm. Net sales grew by 1.5% year on year to 9,864 million yen. Operating profit rose 18.2% year on year to 741 million yen.
2. Analysis of Financial Position
   Assets totaled 94,107 million yen at the end of the third quarter of the consolidated fiscal year under review, down 258 million yen from the end of the previous consolidated fiscal year. Major factors included growth of 2,050 million yen in buildings and structures, 1,909 million yen in land, 1,528 million yen in intangible assets, 1,377 million yen in merchandise and finished goods, and declines of 5,219 million yen in notes and accounts receivable-trade and 2,900 million yen in securities.
   Liabilities totaled 25,630 million yen at the end of the third quarter of consolidated fiscal year under review, down 3,363 million yen from the end of the previous consolidated fiscal year. The primary factors were declines of 2,260 million yen in notes and accounts payable-trade and 560 million yen in income taxes payable.
   Net assets totaled 68,476 million yen at the end of the third quarter of consolidated fiscal year under review, up 3,105 million yen from the end of the previous consolidated fiscal year. Key factors included increases of 1,873 million yen in retained earnings and 897 million in valuation difference on available-for-sale securities.
3. Management policies, management strategies, etc.
   No material changes occurred in the Group's established management policies, management strategies, or other plans during the cumulative period through the third quarter of the consolidated fiscal period under review.
4. Major business and financial issues
   No material changes arose with regard to major business or financial issues during the cumulative period through the third quarter of the consolidated fiscal period under review.
5. Research and development activities
   The total research and development costs recorded during the cumulative period through the third quarter of the consolidated fiscal period under review amounted to 288 million yen.
6. • 5 -

1. Major Facilities
   The reconstruction of our head office building, which was in the planning stage at the end of the previous consolidated fiscal year, was completed in the cumulative period through the third quarter. As a result, buildings and structures increased by 2,305 million yen.

3. Major business contracts, etc.

No major business contracts, etc. were concluded and no associated decisions were made during the cumulative period through the third quarter of the consolidated fiscal period under review.

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3. Information on filing company

1. Information on stock, etc.

1. Total number of shares, etc.
2. 1. Total number of shares

Class	Total number of authorized shares
Common stock	77,000,000
Total	77,000,000

(ii) Shares issued and outstanding

	Current number of shares	Current number of shares
Class	issued as of the end of	issued as of the filing
the third quarter	date
	(September 30, 2023)	(November 9, 2023)
Common	19,900,000	19,900,000
stock
Total	19,900,000	19,900,000

Name of exchange on

which shares are listed or

financial instruments

trading industry

association with which shares are registered and authorized

Tokyo Stock Exchange

Prime Market

-

Details

One trading unit consists

of 100 shares.

-

1. Information on stock acquisition rights, etc.
2. 1. Stock option plan details Not applicable
   2. Information on other stock acquisition rights, etc. Not applicable
3. Information on exercise of bonds with stock acquisition rights and strike price adjustment terms, etc. Not applicable

(4) Trends in total shares issued and outstanding, capital, etc.

	Increase	Balance of total	Increase	Balance of
	(decrease) in total
Date	shares issued and	(decrease) in
shares issued and	capital
	outstanding	outstanding	capital	(million yen)
	(thousand shares)	(million yen)
	(thousand shares)
July1 -
September 30,	-	19,900	-	2,553
2023

Increase

(decrease) in

capital reserve (million yen)

-

Balance of

capital reserve (million yen)

2,643

1. Major shareholders
   Not presented for the third quarter

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1. Voting rights
   Voting rights as of the end of the third quarter cannot be presented here because the details of the list of shareholders cannot be confirmed at this time. Accordingly, the information shown below is from the list of shareholders as of the most recent basis date (June 30, 2023).
2. 1. Shares issued and outstanding

				As of June 30, 2023
Category	Number of shares	Number of voting	Details
rights
Non-voting shares	-		-	-
Shares with restricted voting rights	-		-	-
(e.g., treasury shares)
Shares with restricted voting rights	-		-	-
(other)
Shares with full voting rights	(Treasury shares)		-	-
(e.g., treasury shares)	Common stock	867,800
Shares with full voting rights (other)	Common stock	19,024,800	190,248	-
				This refers to shares in
Shares in less than one trading unit	Common stock	7,400	-	lots numbering fewer
than 100 shares (one
				trading unit).
Total shares issued and outstanding		19,900,000	-	-
Total shareholder voting rights	-		190,248	-

Note: The shares of common stock under "Shares in less than one trading unit" include 96 shares of treasury shares owned by the Company.

(ii) Treasury shares, etc.

As of June 30, 2023

					Rate of shares
Name or title of		Number of shares	Number of shares		held as a
Address of owner	Total number of	percentage of
owner	held in own name	held in other	shares held	total shares
			names		issued and
					outstanding (%)
(Treasury shares	9-3 Higashiobase
owned by the
2-chome,
Company)	867,800	-	867,800	4.36
Higashinari-ku,
THE PACK
Osaka, Japan
CORPORATION
Total	-	867,800	-	867,800	4.36

2. Directors Not applicable

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