New Mid-Term Management Plan
FY2020.03 - FY2022.03 (3 years)

May 28, 2019
Mitsubishi Paper Mills Limited

Second Mid-Term Management Plan Review

1Mid-TermPlan IISecond Mid-Term Management Plan Review

The period of the Second Mid-Term
Management Plan
2016/3ResultSales

2017/3Result2018/3Result(Unit: 100 Million Yen)

2019/3Result (a)2019/3
Plan (b)Variance(a - b)

2,163

2,020

2,015

2,040

2,300-260

Operatingincome3943

18-065-65

Ordinary
income2227

7-945-54

1,388

1,257

1,193

1,046

1,250

D/E ratio

2.8

2.3

2.0

1.62.3Employee

3,697

3,734

3,723

3,668

－

Interest-bearing
liabilities

204
decrease

0.7
improvement－2

Second Mid-Term Management Plan: Factors of Change in
Operating Income (Compared to Mid-Term Plan Goals)

Mid-TermPlan II150(Consolidated operating income for the term
ended March 2019, unit: 100 million yen)

Consolidated operating income-65 (65→-0)
Quantity/
Price productmix+60-88

10050

Results-00Mid-Term
ManagementPlan-50

Rawmaterial & Costs
energy cost +39-76

65

Pulp & Paper -40 (26→-14)
Quantity/
Price product+53 mix-43100MidTerm
Management
Plan

Results

Variance

Pulp &Paper26-14-40

Imaging25

5Speciality
Materials

20Others

Quantity/
product mix

Raw material& energy cost

53-43-75

25-40-20

7-32-611-20

7-130-13-33-13

220

0

0000

Risk

-80800808

Total

65-0-65

60-88-76

39-65(InGermany)－－－（51）

（-7）

（-38）

（-6）

（0）

40

50

Price

Imaging -20 (25→5)
Quantity/
Price product
mix
+7-32

2030
Results

5Results-140-50

Mid-Term
Management
Plan

26

Raw
material&Costs
energy +25
cost-75

0-20

Mid-Term
ManagementPlan

25

Rawmaterial Costs&+11
energycost-6

CostsTotal

Speciality Materials -13(20→7)
Quantity/Price product0mix-1320

Results

1070Mid-Term
Management
Plan

20

Raw
material Costs&+3
energycost-33

Mid-Term
Plan II

Second Mid-Term Management Plan: The
Results of Initiatives for Major Themes (Outline)① Structural Reform of Printing PaperBusiness

A steep rise of raw material & energy cost

The quantity/product mix worsened due to the decline indemand.

We stopped the operation of the paper machines No. 4 inthe Hachinohe Mill.

We revised the prices of printing paper.

We adopted the transportation adjustment payments system.

The operation in Germany secured a certain level of profits.

③ Developing New BusinessesCollaboration with Oji Group is proceeding steadily toinaugurate the biomass power generation business and

 Our alliance with Fujifilm consumed time toachieve high quality base paper and couldn’t
achieve the planned targets.

 Sales expansion for thermo rewrite and tapebase paper targeting overseas were healthy.

④ Strengthening Business Foundation and Financial
Ground That will Support the Group’s Earning PowerStreamlining of business operation by integrating thehousehold and consumer paper business.

accounting departments in the group, unifying fund

We are installing new equipment to establish the functional

procurement, etc.

film business, and we are continuing the cultivation of the IJ
transfer paper market.
② Improving Profit Base

Dealing with personnel affairs with the new operation base

Achievement of the targeted decrease in interest-bearing

A steady growth of the water treatment membrane
supporting bodies, for products related to non-woven fabrics

liabilities and D/E ratio

Reduction of labor costs by soliciting voluntary retirement

4Mid-TermPlan II

Second Mid-Term Management Plan: KeyInvestment Performance 1/2

Household and Consumer Paper Business(Printing Paper Business)

MPM Oji Home Products Co., Ltd.
(Financing: 70% from Mitsubishi Paper Mills and 30% from Oji Nepia)• Product type: Tissue paper and toilet paper• Production volume: Approx. 18,000 tons per year
• Investment amount: Approx. 6 billion yen

Hachinohe

Kyoto’s new coating machine（Imaging Business）• Product type: Functional films (Electronics-related products, etc.)• Sales: Approx. 2 billion yen• Investment amount: Approx. 1.5 billion yen

Kyoto

Inclined-wire paper machines(Speciality Materials Business)• Product type: Inorganic fiber paper, paper wiper,synthetic fiber paper• Installed in Fuji factory, KJ Specialty Paper Co., Ltd.

KJ5

Mid-Term
Plan II

Second Mid-Term Management Plan: KeyInvestment Performance 2/2

Biomass power generation business
MPM Oji Eco Energy Co., Ltd.
(Financing: 45% from Mitsubishi Paper Mills and 55% from Oji Green Resources)• Production Capacity: Approx. 75,000kW(Power generation capacity)• Sales: Approx. 11 billion yen per year
• Investment amount: Approx. 24 billion yenHachinohe6

New Mid-Term Management Plan

7

New Mid-TermManagementPlan

The Capital and Business Alliance Agreementwith Oji Holdings

Second Mid-Term Management Plan

New Mid-Term Management Plan

Capital allianceBusiness alliance

Oji Holdings holds 33% of our company’s shares⇒ Our company became Oji Holdings’ equitymethod affiliate

Broadening and cementing of business alliances
Biomass power generation businessHousehold and consumer paper businessCommunication paper field

Synergy encompassing all business fields

33%Achieve a synergy effect of 2.5 billion yen
or more by the final year of the plan
・ Equipment investments for joint venturebusinesses, etc.
・ Reducing the costs for raw material &energy

2.35%％: The ratio of our company’s shares
owned by Oji Holdings Corporation(based on voting rights)

・ Reducing the supply and logistics costs
・ Reducing the chip procurement andlogistics costs
・ Streamlining of production system, etc.

8New Mid-Term
ManagementPlan

The Basic Principles for the New Mid-Term Management Plan

PeriodFY 2020 to FY 2022 (3 years)

Basic PrinciplesStrengthening and diversifying the business base for a new stage

Key strategies
1２３

To establish a robust management base through the alliance with Oji
Group
To make structural reforms and enrich existing businesses
To diversify the business base by fostering new profit pillars

9New Mid-Term
ManagementPlan

Management Targets Value of the New Mid-Term
Management Plan

●Management targets value
2019/3Result (a)Targets of the New MidTerm Management Plan

2022/3
Plan (b)(Unit: 100 million yen)(b) - (a)●Change in operating income +55（0→55）
Raw
Quantity/80

Sales

2,040

2,200+160

Price+5360

product
mix+13material &energy
cost-22

Costs+1122/3 (target)
55

40
Operatingincome-0

Ordinary
income-9

Interestbearing
liabilities

55+55

200

1,04660

980+6966 decrease

19/3-0-20●Reference$1 = ¥110€１ = ¥130

D/E ratio

1.6

1.3

0.3
improvement

Crude oil price in Dubai is $65 per barrel

10New Mid-Term
ManagementPlan

Management Targets Value of the New Mid-Term
Management Plan (for Each Segment)●Management targets value (for each segment)
Sales

2019/3Result (c)2022/3
Plan (d)(d) - (c)Operatingincome

2019/3Result (e)2022/3
Plan (f)(f) - (e)Pulp & Paper

1,568

1,640+72

Pulp & Paper-1424+38

Imaging353

395+42Imaging

510+5Speciality
Materials

175

220+45Speciality
Materials

718+11Others

148

155+7Others

34+1

Adjustment-204-210-6

Adjustment

-1-1

0

Total

2,040

2,200+160

Total-055+55● Investment Plan
Approval Base (Unit: 100 million yen)
3 years for mid-term plan

Main content of strategic investment

Strategic investment

100・ Hachinohe: To improve the efficiency of the productionInvestment inmaintenanceandimprovement

150

Total

250

Investment plan

facilities
・ Hachinohe : Handling new products
・ Kitakami: Handling new products
・Takasago: Installing new non-woven fabrics machines,etc.

11New Mid-Term
Management
Plan

Strengthen Financial Ground2016/32017/3

2018/3

2019/3

2019/3

Second Mid-term
Plan’s2022/3ResultResultResultMid-term PlanTargets

ResultImproved Results

New Mid-term
Plan Targets

Interestbearing
liabilities

138.8 billionyen

125.7 billion
yen

119.3
billion yen

125 billion
yen

104.6
billion yen

D/E ratio

2.8

2.32.0

2.3

1.6

2,000
(100 million yen)

20.4 billion
yenreduction
0.7

98 billion yen
1.3

improvement

New Mid-term
Plan’s
Improvement
Target

6.6 billion
yenreduction
0.3
improvement

6

1,919

Balance of interest-bearing liabilities

D/E ratio

・・・・・ Results ・・・・・

1,800
1,705
1,626

1,600

1,598

・・・・・

1,616

1,580

1,530

5

Plan ・・・・・

1,553

4

1,490
1,448

1,435

3.5

1,388

1,400

3.2
2.9

2.9
2.5
1,200
2.2

2.4

1,350
1,300

2.8

2.8

2.8

2.5

2.7

1,257

1,250

2.53

1,193

2.3

2.1
1,046

2.3

1,000980

2.0
1.6

1.3

0800
2005/3

06/3

07/3

08/3

09/3

10/3

11/3

12/3

13/3

Phase 1

14/3

15/3

16/3

Phase 2 Rolling Plan

17/3

18/3

19/3

Second Mid-Term Management Plan

2

22/3

10

New Mid-Term
Management Plan

12

New Mid-Term
ManagementPlan

To Establish a Robust Management Base Through theAlliance with Oji Group 1/2

Broadening and cementing of the effect of thecapital and business alliances with Oji Group

Production(1) Basic strategy
・ We aim to enhance our competitiveness byrapidly improving efficiency and cutting down
costs by building strong cooperative
relationships in all business fields.
・ We will stabilize the management base andreduce interest-bearing liabilities further bystrengthening the financial ground.

(2) GoalIndirectdivisions

R&D

Sales

All businessfieldsCapitalinvestment

Raw materials
procurement

Logistics
Engineering

・The goal of the business alliance by the final year of the plan (the term
ending March 2022) is to achieve an operating income of 2.5 billion yen ormore.
・ To strengthen the business base by expanding the alliances in multiple
businesses and enhancing synergistic effects.
・ To strengthen the financial ground (interest-bearing liabilities are 100 billion
yen or less; D/E ratio is 1.3.)

13New Mid-Term
Management
Plan

To Establish a Robust Management Base Through theAlliance with Oji Group 2/2◆ Stabilizing the profitability of the Printing PaperBusiness(1) Basic strategy
・ Early exertion of the effect of the alliancewith Oji Group・ Marketing that prioritizes profit
・ Changing the product lines(2) Major policies
・To mutually strengthen OEM
Manufacturing facilities of household and・To change the sales policies of Mitsubishi Paper
consumer paper (above) and products (below)
Sales Co., Ltd.
(Shift to the distributor of Oji Paper Co., Ltd. inJanuary this year)
・To reduce procurement and logistics costs including
mutual utilization of warehouses and logistics systems.
・To establish a production system according to thedemand trend and improve production efficiency.
・To reduce costs for buying raw material & energy.
14New Mid-Term
Management
Plan

To Make Structural Reforms and Enrich Existing
Businesses 1/2

To make structural reforms and enrich Imaging
Businesses(1) Basic strategy
・ To expand our alliance with Fujifilm further
・ To secure profit from the maturing existing products
by actively expanding into overseas markets(2) Major policies

To establish
newbusinessTo secure profit fromexisting products
Further expansion of alliances・ To cement our alliance with Fujifilm toincrease the volume of base paper・ To expand the application scope of ink-jet
paper and promote sales in emerging
economies・ To expand sales of flexographic and screen
printing market in Asia
Kyoto’s new coating machine15

New Mid-Term
ManagementPlan

To Make Structural Reforms and Enrich Existing
Businesses 2/2

To make structural reforms and enrich theSpeciality Materials Business(1) Basic strategy
・ To expand sales of non-woven-fabrics-related
products and install more paper machines
・ To expand sales in Asian and European markets(2) Major policies
Water treatment element

・ To increase sales of base materials for RO
membrane, MBR membrane, and Olefin membrane
・ To supply battery separators to Beijing National
Battery Technology Co., Ltd. on a full-scale basis
・ To expand sales of decorative sheet base paper inSoutheast Asia
・ To expand sales of tape base paper in Europe
・ To make an early launch of new products
manufactured by the new inclined-wire paper
machines
China national standards filter evaluation device(Installed in Chinese subsidiaries)
16

New Mid-Term
ManagementPlan

To Diversify the Business Base by Fostering New Profit
Pillars 1/3●The new businesses we are preparing for industrialization (Imaging)
DomainPossible applications

Materials forthe electronics
industry
Dry film resist
products

Electroconductive
films

Features High chemical resistance High resolution
 The etching of difficult-toprocess insulating resin ispossible.

Goals during the Mid-Term Plan

・To expand the lineup of dry film resists

and handle custom orders
・ To launch the system foradvanced insulating materials

processing

 Silver mesh films that arecompatible with large touchpanels

・To increase new customers for the bonded
products with high added value that meetcustomers' needs

 The newly developed IJ transfer
paper for textile

・To expand the sales of sublimation transfer
paper (for polyester fabric)・ To commercialize thermo-compressedtransfer paper (for cotton and nylon)

Touch panel

IJ transfer paper
Dye printedtextile17

New Mid-Term
ManagementPlan

To Diversify the Business Base by Fostering New ProfitPillars 2/3●The new businesses we are preparing for industrialization (Speciality Materials)
DomainCarbon nanotube
relatedPossible applications

写真Features

 High electro-conductivity
 High heat generating High transparency

Goals during the Mid-Term Plan

・To handle carbon nanotube dispersion liquid, paintand film for preventing electrostatic buildup and forheat generation

Electro-conductive paint Extremely thin shieldingThin film materialsshielding
electromagneticwaves

material of 10µm thickness

写真 High-strength and high・ To make base material and launch products withelectro-conductive non-woven fabrics

shielding properties

Electro-conductive
non-woven fabric Superior applicability inelectronic circuit boards
 Proactive use of recycled

Recycled carbon
fiber
non-woven fabric“Carboplas Ripro”

materials
 Uniformity on par with virginmaterials

Non-woven sheet

・To develop acoustic diaphragms, heating elements,
friction materials, electromagnetic wave shielding
materials, reinforcing materials for CFRP, etc.

 Conductivity and shielding
properties18

New Mid-Term
ManagementPlan

To Diversify the Business Base by Fostering New Profit
Pillars 3/3●Plastic replacement businessDomainPossible applications

Barrier paper

Food package

Bleached kraft
paper
Paper bags,etc.

Features

Goals during the Mid-Term Plan

 It combines barrier property, heatsealability, etc. that are required
for food packaging with coatedpaper only
 A paper material that has
defibering properties, which makeit biodegradable and recyclable(It has been successfully introduced inGermany and has been adopted by manyleading food manufacturers in Europe, and adevelopment project is ongoing to introduce it
to multiple global companies.)・ To start the expansion into the Asian region
including Japan in the first half of this term・ To plan domestic production

 A bleached kraft paper that takes
advantage of the manufacturing
technologies we’ve beencultivating over many years; gives
it superior suitability for printing
and bag manufacturing

・ To expand sales as bleached kraft paper inthe Asia region including Japan・ To develop high added value products suchas barrier paper based on the bleached kraftpaper19

The statements concerning expected numbers andbusiness forecasts in this document have been
prepared based on predictions of the economic
environment in the future and information available
at the present point intime. The actual numbers in our financial results andperformance in the future may differ.