Basic StrategyforNew Mid Term Plan
Post Phoenix Plan

2008-2010“Toward the self-revitalization”～ ‘building solid foundation’ and‘preparing for the next growth’～

November 27, 2007
Takeshi SatoPresident and CEO
Mitsubishi Paper Mills Ltd.

Meet the target of Phoenix plan (2005-2007)

2005-2007 Business Environment
massive price hike of fuel and raw materials
together with sluggish market situation
Measures① Cost structure reformation② Turn around of Kitakami Hi-Tech Paper③ Strengthening Mitsubishi Paper Sales④ Strategic Investment to Hachinohe Mill
⑤ Price increase of Products

Meet the commitments（Ordinary Profit 7 Billion Yen,
Reduction of Interest Bearing Debt 40 Billion Yen）

1Plan and Actual (consolidated)～ Achievement of Phoenix Plan (3 years) ～Sales

Interest bearing debt

Ordinary Profit(100 million Yen)

(100 million Yen)

(100 million Yen)
1,940

2,580
70

1,740

70

1,724
1,640 1,634

2,443
2,347

2,350
2,300

2,285

2,300

48

1,540 1,540

53453517FY2004

FY2005

Phoenix Plan

FY2006

Actual

FY2007

Forecast

Fiscal year
Sales （100 Mil.Yen）

FY2004

FY2005

FY2006

Phoenix Plan

Act ual2004
Actual

FY2007Forecast

FY2004

FY2005

Phoenix Plan2005
Actual2006
ActualFY2006

Act ual

FY2007

Forecast2007
Forecast

2,347

2,285

2,443

2,580

Ordinary Profit （100 Mil.Yen）

17485370

Gross Profit Margin (%)

0.7

2.1

2.2

2.7

Interest Bearing Debt （100 Mil.Yen）

1,940

1,724

1,634

1,540

Equity Ratio (%)

17.2

22.0

22.6

24.0

Year end number of Employees

4,902

4,717

4,541

4,540
2

Business Environment,
Strength and Necessary Challenge for MPM
Geographical Area of Growing
SocialResponsibility

Expanding business chancein the global market

Domestic business EnvironmentMatured Market
MarketMaturedzStrict
Compliance

Expansion of Global market(China, Asia etc.)

High energy
energyHighand rawandraw
material cost
costmaterial(e.g. shareholders,customers,employees, local
society and global
environment incl.
forest resources)

aggressive approach through businessand products

zReturn for thestakeholders

Challenge for

Printing Paper
Investment
Investmentcompetitioncompetition

Development
Developmentofofthethe oligopoly
oligopoly

Having DI

higher costcompetitivenessbusiness
additionally toPrinting andCommunication
paper businesses

stronger salesProduct portfolio•Keep•Keep market
marketprice
price condition
condition•Price•Priceincreasing
increasing

SevereSeverecompetitioncompetition forfor
survival
survival

Communication Paper &DI businessBusiness chance withour own technology

Growing Business Area

Strengthincreased rate ofvalue added
products
reflecting
energy and raw
material cost to
Product prices
embarkation to
growing business/growing market

Markets with high growth potential
e.g. Electronics, Automobile, Environment※ DI business = Digital Imaging Business , IJ = Ink Jet Media, RC base Paper = resin coated base paper for photo and photo IJ papers

with advancedtechnology (e.g. IJ,
RC base paper,Photosensitivematerials) andoversea marketing
experienceMitsubishi Paper

Sales having
Excellentcustomer andstrong merchants,
as a sole agent
Hachinohe Mill,

having big scaleand excellent
coastal milllocation
Unique businessportfolio andtechnology having
ProductDevelopment
Business
3

Post Phoenix Plan (’08 – ’10) Basic strategy
Self-Revitalization through “building solid foundation for the next growingstage” and “Realizing the growth”
 Enhance further improvement of cost structure and financial structure implemented under the Phoenix Plan Take available measures to establish a solid foundation for next phase (from 2011)
Sales
350 Bill. Yen

Foundation for Next growing phase

Invest to infrastructure of Hachinohe Mill for the future expansion
Build a structure to gain the world share of RC base paper and Ink Jet Paper
Acquire the stronghold for enhancing oversea marketing

Sales
300 Bill. Yen

Strategy for
Next growingphase

Mid term measures

Establishing the high profitability business portfolio
Phoenix Plan
FY2007

Concentrated investment for Digital Imaging Businesshigh value added Products
higher profit opportunity RC base paper capacity
 Printing and Communication
increase
Paper Business IJ paper capacity
Profitability improvement
increase Product Development OEM of Communication
BusinesspaperAccelerate the growth
Promote Strategic Alliancewith the Best match
Strengthen the domestic & oversea Sales

FY2010After5 years

Sales 258 Bill. Yen

Last Year of Post phoenix Plan

Mid term measures

FY2012
4

Strategic Target

Mid Term Basic TargetYear

FY2010FY2012

Sales

300 Bill Yen

350 Bill Yen

Ordinary
Profit15.0 Bill Yen

17.5< Bill Yen

ROS

5%

5%<Targetted position in our Industry

Business Portfolio

Obtain the highest Profitability in ourindustry through establishing theunique position of MPM as “High Gradeand Information Media”

Business group with balanced growthof 3 business areas i.e. Printing &Communication Paper, DI Media, andNew Products5

7 basic principles
Strategic AllianceSales expansion of RC base paper through the alliance with FUJIFILM
Expansion of Business communication paper through the alliance with OJI Paper
Expansion of Printing paper supply source (Alliance of ‘Mitsubishi Paper sales’ with
Hokuetsu Paper
Business expansion of New Products through Alliance

Strengthen Domestic Sales

Expansion in the Global Market

Strengthen Sales of Mitsubishi Paper Sales and customer oriented
service function
Strengthen the function of Diamic as a Technology Service SupplierExpansion of High value added Ink Jet Media Brand
Development and expansion of FSC certified and environment
friendly products.

Expansion of Global Ink Jet Market ShareObtaining Asian Production Site for Thermal Paper throughAlliance to prepare for developing an Asian Market
Profitability improvement of German Operation throughshifting towards high value added products.

Platform for Future GrowthInvestment to the Production infrastructure considering future expansion ofHachinohe Mill
Building up the structure to expand the global share of RC base paper and Ink
Jet media.
Acquire the stronghold for market development of New products.

Cost Structure Reformation
Minimizing the cost of the mill to strengthen cost competitivenessLogistic Cost cutting including the alliance with others.
Promotion of BPR through keeping up IT infrastructure
Promotion
Promotion ofof CSR
CSR Management
Management
Further
Further effort
effort forfor
Environment&ForestResource
Environment & Forest Resource Protection
Protection

Strengthen
Strengthen Group
Group Consolidation
Consolidation Management
Management6Basic Financial Targets
Sales

Sales
(100 million Yen)

Operating Profit(100 million Yen)

Ordinary Profit(100 million Yen)

Ordinary Profit Ratio(%)

FY2007
Forecast FY2008

FY2009FY2010

2,580

2,760

2,850

3,000

100133

152

184

70

100120

150

2.7

3.6

4.2

5.0

Interest bearing debt
(100 million Yen)

Equity to total assets
(%)

2,850

44.0Billion Yen(Total within 3 years)

Investment

3,000:100 M Yen

Project

2,760
2,580

2007
(forecast)

2008(Plan)

2009(Plan)

2010(Plan)

Ordinary Profit, Ordinary Profit ratio
150:100 M Yen

120
1005.0%4.2%

3.6%

70
2.7%

1,540

1,44024%30％<2007(forecast)

2008(Plan)

Ordinary Profit

2009(Plan)

2010(Plan)

Ordinary Profit Ratio7

To achieve the Plan
－ Breakdown of the Ordinary Profit Increase Plan－(100 million Yen)

200
180
160

27140

Profitincrease
Subsidiary

51

150

120
CostDown

10080

70
depreciation

60

-1040

26

Non-operating-5

Downside
Risk

ProductMix

Sales
VolumeIncrease

-25

20016

Ordinary
profit2007

Ordinary
profit2010

8

Sales Plan of each business division(100 million Yen)

FY2005 Actual

FY2007 Forecast

PaperPaperBusinessBusiness・Printing & writing
・Business communication

1,360
1,360
1,124
1,124

1,180
1,180

DigitalDigital Imaging
Imaging
BusinessBusiness・Ink Jet Paper
・RC Base Paper
・Photosensitive Materials

560560331331440440

Product
Product Development
Development
Business
Business
・Non-woven fabric rel.
・Rewrite Media・ others

FY2010 Plan100
100444460609

Basic Business Strategy-1 Paper BusinessPaper
Paper BusinessBusiness
Printing
Printing Paper
Paper
Strengthen
Strengthen thethe competitivenesscompetitiveness ofof Hachinohe
Hachinohe Mill,Mill, Production
Production shift
shift toto highhigh value
value
added
Products
added Products
AssureAssure thethe productproduct line-ups
line-ups andand supply
supply volume
volume throughthrough Alliance
Alliance withwith others
othersReview
Review thethe productproduct logistic
logistic
Investment
Investment toto thethe Production
Production infrastructure
infrastructure considering
considering future
future expansion
expansion ofof
Hachinohe
Hachinohe MillMillBusinessBusiness communication
communication Paper
Paper
AlliancewithOji
paper
Alliance with Oji paper
Building
Building up
up thethe foundation
foundation forfor strengthening
strengthening thethe oversea
oversea businessbusiness mainly
mainly ofofThermalpaper
Thermal paperForFor BothBothStrengthen
Strengthen Sales
Sales ofof Mitsubishi
Mitsubishi Paper
Paper Sales
Sales andand customer
customer orientedoriented service
servicefunctionfunction

Hachinohe Mill

Takasago Mill10

Basic Business Strategy-2 Digital Imaging Business

DigitalDigital Imaging
Imaging BusinessBusinessInk
Ink JetJet MediaMedia
Sales
Sales expansion
expansion ofof HighHigh value
value added
added Brand
Brand (Pictorico,(Pictorico, Gekko,Gekko, etc.)etc.) andand acquiring
acquiring ofofnew
new demands
demands
Securing
Securing thethe oversea
oversea Finishing
Finishing Sites
Sites toto expand
expand thethe oversea
oversea sales
sales
Investment
Investment forfor thethe Capacity
Capacity increase
increase ofof Kyoto
Kyoto MillMillRC
RC BaseBase Paper
Paper
Alliance
Alliance withwith FUJIFILM
FUJIFILM
Expanding
Expanding thethe supply
supply forfor Ink
Ink JetJet Media
Media
Improvement
ofoperation
rateofImprovement of operation rate of Kitakami
Kitakami Hi-tech
Hi-tech Paper
Paper throughthrough RC
RC BaseBase Paper
Paper
Production
Capacity
increase
investment
Production Capacity increase investment
Photosensitive
Photosensitive Materials
Materials
MarketMarket introductionintroduction ofof ProcesslessProcessless andand Chemicalless
Chemicalless Printing
Printing Plates
PlatesStrengthen
Strengthen thethe function
function ofof Diamic
Diamic as
as aa technology
technology service
service suppliersupplier

Kitakami Hitec Paper

Kyoto Mill11Basic Business Strategy-3 Product Development
BusinessNewNew BusinessBusiness Development
Development(Non-woven fabric related, Rewrite Media, and others)

Expansion
Expansion ofof businessbusiness opportunity
opportunity throughthrough integrated
integrated group
group businessbusiness operation
operation・building・building upup thethe Production
Production infrastructure
infrastructure forfor Filter
Filter BusinessBusiness inin China
China・Own
・Own production
production ofof Rewrite
Rewrite MediaMedia・Expansion
・Expansion ofof BusinessBusiness including
including possible
possible M&A
M&A
Alliance
Alliance withwith Woongjin
Woongjin Coway
Coway Co.,
Co., Ltd.
Ltd. InIn SouthSouth Korea
Korea
Concentration
Concentration ofof R&D
R&D towards
towards growing
growing market
market12

Basic Strategy for German Operation

GermanGerman Operation
Operation

MPF, MPB, etc.
MPF

MPB

Shift
Shift toward
toward highhigh value
value added
added products,products, Cost
Cost down,down, andandProductivity
Productivity improvement
improvement
ThermalThermal Paper
Paper
Strengthen
Strengthen thethe sales
sales inin EuropeEurope andand America
America
Concentrated
Concentrated production
production ofof commodity
commodity grades
grades at
at MPB’s
MPB’s highhigh efficiency
efficiency Coater
CoaterProduction
andmarket
developmentofHigh
value
added
products
byMPF
Production and market development of High value added products by MPF
Carbonless
Carbonless Paper
Paper
Selectivesales
Selective sales ofof highhigh value
value products
products andand toto highhigh priceprice market,market, andand introduction
introduction
ofnewproducts
suchasCarbonlessfordigitalprinting.
of new products such as Carbonless for digital printing.
Ink
Ink JetJet Paper
Paper
Cost
Cost competitivenesscompetitiveness improvement,improvement, introduction
introduction ofof new
new products,
products, andand transfer
transfer ofoffinishing
toPolandfinishing to Poland

13

Promote the activity on CSR

CSR
Environment
Environment andand Preservation
Preservation ofof forest
forest resources
resources
Realizing
Realizing thethe societysociety withwith sustainable
sustainable development
development throughthrough promoting
promoting thetheEnvironment
management.
Environment management.
Approach
Approach toto Global
Global plantation
plantation throughthrough preservation
preservation andand cultivation
cultivation ofof Forest
Forestresources
resources
Promotion
Promotion ofof FSC
FSC certified
certified paper,paper, andand approach
approach ofof “FSC
“FSC Forest”
Forest” which
which allows
allows thetheparticipation
totheforest
management
participation to the forest management
Product
Product development
development considering
considering thethe environment
environment friendlinessfriendliness
Compliance
Compliance
Establishing
Establishing Corporate
Corporate Governance
Governance
StrictStrict compliancecompliance withwith lawslaws andand regulations
regulations
Returns
Returns forfor Stakeholders
Stakeholders
Continuous
Continuous contribution
contribution toto all
all thethe stakeholders
stakeholders e.g.
e.g. shareholders,shareholders, employees,
employees, and
and
local
society
local society

14

Strengthen the Group consolidation management

GroupGroup consolidation
consolidation
management
management
Improving
Improving thethe profitability
profitability ofof subsidiarysubsidiary companies
companies
Realization
Realization ofof profitability
profitability improvement
improvement andand growth
growth ofof subsidiaries
subsidiaries

Establishing
Establishing thethe infrastructure
infrastructure ofof management
management systemsystem
Optimization
Optimization ofof businessbusiness operation
operation byby concentrated
concentrated group
group management
management andand integrated
integrated
operation
operation throughthrough thethe groupgroup subsidiarysubsidiary
・・ BusinessBusiness management
management on
on consolidation
consolidation basis
basis andand strengthen
strengthen thethe management
management power
power・・ efficiency
efficiency improvement
improvement throughthrough installation
installation ofof IT
IT andand consolidation
consolidation ofof organization
organization

15

Investment Plan and Financial Plan
Total Investment ： 2008-2010 Total of 44 Billion Yen
Aggressive
Aggressive investment
investment forfor competitivenesscompetitiveness improvement
improvement andand forfor next
next growing
growing phase
phase andandcompress
compress thethe interest
interest bearing
bearing debt
debt forfor 10
10 billion
billion Yen
Yen

Financing(100 million Yen)

Usage(100 million Yen)
Repayment ofinterest bearing debt

Profit before
tax

Depreciationand others

capital400

financial

40370
Investment

Investment

StrategicDI Business:
RC base paper capacity increase (Kitakami
Hi-tech Paper)
IJ media capacity increase (Kyoto Mill)
Communication Paper:
OEM supply (Takasago and Hachinohe Mill)
Printing Paper:
Recovery Boiler (Hachinohe Mill)265

4.5 billion Yen/year

135

100390maintenance

Sales of fixedassets

30

total

790

total

(100 thousand Yen)

440
CapitalOperating expense,
Dividend , etc

AmountInvestment
Purpose250

790

Financialtotal 400
Afforestation and others
Investment Sum for 2008 - 2010

40
440

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This material has been prepared based upon information we believed to be reliable, but
no representation or warranty, express or implied, is made as to the consistency of
future results or events with any estimate, forecast, projection or opinion, and noreliance should be placed on, the fairness, accuracy, completeness or reliability of thecontents of this material.
We will not be liable for any damage or loss incurred by you arising out of or inconnection with this material.

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