Year-Ended March 31,2010

Annual Business Report
Ｐａｒｔ - １ ： Financial Review
Ｐａｒｔ - ２ ： Enhanced Countermeasures －Status of Progress－
May 18, 2010
Mitsubishi Paper
Mills Limited

Ｐａｒｔ - １
Financial Review for theYear-Ended March 31, 2010
&Forecast for theYear-Ended March 31, 2011

Financial Review for theYear-Ended March 31, 2010

1Key Figures＜Consolidated＞（Unit：100 million yen）

FY2008Amount

FY2009

Sales Ratio（％）

AmountIncrement

Sales Ratio（％）（％）

Amount2,531－2,197－▲334▲13.2

Operating Income

71

2.843

1.9▲ 28▲40.2

Ordinary Income

45

1.8271.2▲ 18▲40.9

Net Income

120.5▲16▲0.7▲ 28－Sales

Sales
3,0002,500

FY

2,285

Operating Income

First-Half120

2,585 2,531
2,443

FY

2,197

931008065
1,135

1,185

1,264

100

First-Half

1,343

738071

60

60
4030

31333920500

43120007.3

08.3

09.3

First-Half

10.3

7148

1,083

1,00006.3

FYNet Income
FY

90

2,000
1,500

Ordinary Income

5307.3

08.3

09.3

10.3

06.3

60

61

2437302721

102-1010.3

-30

006.3

7345
31217250402070First-Half

07.3

08.3

09.3

3261208.3

09.312△1606.3

07.3△1610.3

2

Segment Information by Product ＜Consolidated＞（Unit：100 million yen/%）

FY2008

%

2,219

1,916

▲303

▲13.7

Photosensitive

342295▲ 47▲13.6

Others216

200▲ 16▲ 7.5

Internal Transfer

▲246

▲ 214

32－

Total

2,531

2,197▲334▲13.2

Pulp & Paper

65

38▲ 27▲42.6

10－0▲ 7.1▲

Photosensitive▲

1

Others55

Internal Transfer

21▲1－

Total

71

43

▲ 28

▲40.2

selaSemocnIgnitarepO

Pulp & Paper
2,1291,971

Increment

Pulp & Paper

Sales
2,500

FY2009Operating Income （Unit：100 million yen/）（Unit：100 million yen/）

2,271

80

2,219
1,916

2,0007060

Pulp & Paper

65

4950

1,5006745
3840
1,000

30

Photosensitive

212120500

333

333

348

342

295

10

800

2005

2006

2007

2008

2009

-10

Photosensitive

2005

2006

2007

-1-12008

20093

Segment Information by Area ＜Consolidated＞（Unit：100 million yen/%）

FY2008

%

2,037

1,841

▲ 196

▲ 9.6

Europe475359

▲ 116

▲24.4

U.S.A.

8169▲12▲14.472▲

10－▲ 334▲13.2▲32▲48.0▲

selaS

Internal Transfer▲

622,531

2,197

Japan

6634Europe

044－

U.S.A.

110▲16.5

Internal Transfer

440－Total

71

4328

▲40.2emocn
Ignitarep
O

Sales

▲

Operating Income（Unit：100 million yen/）

2,500

90

Japan
1,822

Increment

Japan

Total

2,000

FY2009

1,950

2,051

2,037

8280
1,841

Japan

7060

1,500

（Unit：100 million yen/）

66

63

55

50

Europe

40

1,000

500

30526

477

446

34475359

Europe205462005

2006

2007

100H 1 8 .32005

H 1 9 .32006H 2 0 .3

2007

H 2 1 .3

2008

H 2 2 .3

2009

0H 1 8 .3

H 1 9 .3

H 2 0 .340
H 2 1 .3

2008

H 2 2 .3

20094

Ordinary Profit FY2009 : Analysis of profit and loss
＜Consolidated＞
Comparison of the 1st Half

（Unit：100 million yen）

Comparison of the 2nd Half

2nd Half ofFY2009

1st Half of FY2008

＋31
Sales
(Quantity・Product mix)
▲76＋25

2nd Half of FY2008
1st Half of FY2009
Cost Reduction Others▲2＋11＋2Others
Cost Reduction ＋12＋5＋14Sales(Price)▲47Raw Material &Energy Cost＋58
Sales(Quantity・Product mix)
▲17Raw Material &Energy Cost＋36
Sales(Price)＋2

Comparison of FY2008 and FY2009
FY2008＋45Others＋10

Sales (Quantity・Product mix)
▲93Cost Reduction＋16

Raw Material &Energy Cost＋94

FY2009＋27

Others: Extraordinary expenses/income and others

Sales(Price)▲455

Balance Sheet ＜Consolidated＞（Unit：100 million yen/%）

FY2008Amount

FY2009%AmountIncrement%

Amount

2,943

100.0

2,821

100.0

▲122

Current Assets

1,166

39.6

1,10539.2▲ 61

Fixed Assets

1,77760.4

1,71660.8▲ 61

Tangibles

1,36246.3

1,29445.9▲ 68Intangibles

140.5

100.3

▲

Investment andOthers

40113.6412

14.6

112,238

76.1

2,134

75.6

▲1041,588

54.0

1,442

51.1

▲146650

22.1

692

24.5

42705

23.9

687

24.4

▲ 18

1,635－

1,616－▲ 19Assets

Liabilities
Current Liabilities
Long-Term Liabilities
Net Assets
Interest Bearing Debts

46

Statement of Cash Flow ＜Consolidated＞（Unit：100 million yen）

FY2008FY2009

Increment

AmountAmountAmountCash Flow from Operating Activities

42150

108

Cash Flow from Investing Activities▲123▲ 8340

Cash Flow from Financing Activities

81▲ 33▲114

Effect of Exchange Rate Fluctuation
on Cash & Cash Equivalents

121▲ 11Net Increase/Decrease in Cash andCash Equivalents

1235

23

Cash and Cash Equivalents at theBeginning of the Year

2335

12

Cash and Cash Equivalents at the Endof the Year

35

70

35

7

Key Indices＜Consolidated＞（Unit：100 million yen）

FY2008Interest Bearing
Debts

FY2009FY2010（Forecast）

1,635

1,616

1,550

Depreciation

129

129

125

Investments

155

75

35

Number ofEmployees

4,577

4,441

4,370

8

Key Indices ＜Non-Consolidated＞（Unit： ‘000tons ・100 million yen）

FY2008
1st Half

Sales Data

FY2009
1st-Half

Fiscal Year

Fiscal YearSales Qty Sales Amt. Sales Qty. Sales Amt. Sales Qty. Sales Amt. Sales Qty. Sales Amt.

Paper

Uncoated (Wood-free, etc.)
Coated ( Coated, IJ Paper,etc.)
Business Communication
Paper (Thermal, CarbonlessPaper, etc.)
White Card Board
Others (Leaf Paper,Hygiene Paper, Non-Woven
Fabric, etc.)

Total

92

113

179

221

79

98

164

198

328

446

616

826

246

328

527

683

47

105

87

202

40

93

80

186

24

2745

53

22274655

950

1798

843

1693

500

741

944

1,400

395

589

833

1,215FY2007
Exchange Rate
Annual Usage of Woodchips(Import Ratio)
Annual Usage of Purchased Pulp
(Purchase Ratio)
Annual Usage of Oil
Annual Usage of Coal
Purchase Electric Power（Self-Generation Ratio）

FY2008¥100.62/US$
1,217 Tｔ
（66％）
71 Tｔ
（9％）
47 Tｋｌ
301 Tｔ276MWH（80％）¥93.04/US$
1,070 Tｔ
（66％）
46 Tｔ
（7％）
45 Tｋｌ
275 Tｔ259MWH（79％）

RE：The raw materials & energy usage quantities include that of Kitakami HiTec Paper

9Forecast for FY201010

Forecast（Unit：100 million yen/%）

FY2009

1st Half

2nd Half

Forecast of FY2010

FY2009

1st Half

2nd Half

Increment

1st Half

2nd Half

FYFY2010
Amt%

Amt%

Amt%

1,083

1,114

2,197

1,100

1,150

2,250

171.6363.253

2.4

Operating Income

123143

174360541.0

1241.11741.1

Ordinary Income

2252773340

5188.5836.61350.4▲160▲16▲ 5201511－20－31－Sales

Net Income

Ａｓｓｕｍｐｔｉｏｎ ： ¥90/US$ 、 ¥130/€ 、 Dubai crude oil $80/barrel

11Ordinary Profit FY2010 (Forecast)＜Consolidated＞: Analysis of profit and loss
Comparison of the 1st Half （Forecast） （Unit：100 million yen）

Comparison of the 2nd Half（Forecast）
2nd Half ofExtraordinary
FY2010expenses/income＋33▲4CostReduction＋27

2nd Half of FY2009＋25
1st Half ofFY2010
1st Half of FY2009

Cost
Reduction＋16＋2＋7Sales(Price)▲5 Raw Material &Energy Cost Sales▲13(Quantity・Product mix)
＋3

Sales
Sales(Price)▲22 Raw Material & (Quantity・Energy Cost Product mix)
▲3＋14

Comparison of FY2009 and FY2010（Forecast）
Extraordinary
expenses/income▲4FY2010＋40

Cost
Reduction＋43

FY2009＋27Sales(Price)▲27Raw Material &Energy Cost▲16Sales(Quantity・Product mix)
＋1712

PART 2— Coping with an Increasingly Severe Business Environment —Enhanced Countermeasures
Status of Progress

May 18, 2010
Kunio Suzuki
President and CEO
Mitsubishi Paper Mills Ltd.

Seven Enhanced Countermeasures(Announced October 30, 2009)
Move from “Scale” to“Cost Competitiveness”
and “Value Added”

21Thorough costminimization

Efficient production system

7
Realize effect of alliancesz Alliance with FUJIFILM
z Alliance with OJI Paper inbusiness communication
paper

FY2010, FY2011
Initiative begun in thesecond half of FY2009z Maximized low-cost structure

Relocation of business
communication paper production
sitesfor I&D Companyz Cost reductions at Hachinoheand Takasago mills

Shut down No. 12 Paper Machine atTakasago Mill
(Transfer production of base paper,
decrease pulp purchases)
Shut down KHP No. 5 RC Machinez Trim logistic costs for printing& communication paper

3

Drastic reductions ofoverhead costz Streamline R&D systemz Reduce costs at theheadquarters and subsidiaries

Transfer personnel of I&DCompany

6Stabilize and capitalize on
overseas operationsz Restructuring of Germanoperationsz Capitalize on and expand

business base in China

5
Launch new productsz Expand sales of ThermalDigiplatez Expand sales of new ink jet

media on a global scale

4

Shift to high value addedproductsz New paper for digital printing
z Expand development ofvarious types of art paperz FSC certified paper and use offorest thinnings

z Expand development offunctional non-woven fabic

1Enhanced Countermeasures: Mission— Effects of Cost Reductions —FY2009(Year ended March 2010)

FY2010(Year ending March 2011)

FY2011(Year ending March 2012)Å ¥500 million front-loaded for enhanced countermeasures
Effects (¥ 100 million)

streamlining

Other(energy,depreciation, etc.)

Total

6111043

36

Production system

Rigorous cost

Overseas

Personnel

rebuilding

reductions

operations

511412

Personnel Decrease Plan(Persons)

Number of employees at term-end(Figures for the next two years are targets)

5,000

Germany

120 people Retirements in 2009

25

4,577

Decrease of over 300 people

4,632

4,441

4,370
4,240

Japan

180 people Natural attrition(Employees resigning at
mandatory retirement age,hiring restrictions)

4,000

Decrease of 300 people
3,0000Mar. 2009

Mar. 2010(Sept. 2009)

Mar. 2011

Mar. 2012(target)(target)2

Printing and communication Paper
Progress in Measures and Plans (1)From production curtailment to improved capacity utilization
1. Rebuilding of Production Systems
z Transfer of business communication base paper production(carbonless and thermal base paper)
Hachinohe Mill
(Integrated paper mill from wood chips)

Pulp
Production

Paper
MachineCoating Process
CoaterTransfer ofbase paperproduction(Supply to coater atTakasago )No. 12 Paper
MachineTakasago Mill
(Paper mill that purchases pulp)

Pulp PurchaseCoating Process
CoaterShut down(September 2010)z Hachinohe Mill: Improve capacity utilization, reduce energy costsz Takasago Mill: Drastic reduction in purchased pulp, reduce fixed costs

3Printing and communication Paper
Progress in Measures and Plans (2)2. Hachinohe Mill – Estimated Capacity Utilization
Capacity utilization

1,000 tons

900
800
700
600
500

850,000t

94%

700,000t

78%

750,000t

83%

800,000t

100%

90%

80%
60%

2009.3月期
FY20082010.3月期
FY20092011.3月期
FY20102012.3月期
FY2011

3. Improving Hachinohe Mill Capacity Utilization(1) Transfer of business communication base paper production(2) Expansion of exports(3) Expansion of digital printing paper sales(4) Expansion of environmental value-added product sales (FSC, etc.)

4. Alliances with Other Companies
Alliance with OJI Paper on communication paper, now underway

4Imaging and Development
Progress in Measures and Plans (1) I&D Business (Driven by Imaging & Development Company)
Applicable Items:
Inkjet paper, photographic paper, photo-sensitive printing plate, resin-coatedpaper, various functional materials (non woven fabric, filters, rewritable media,etc.), R&D developed products, etc.
Rebuilding of Production Systems (Kitakami Hitec Paper)
Add new No. 8 RC Machine, and concentrate
operations on three multi-function resin coaters
Æ No. 5 RC Machine to be shut down (August 2010)

Restructuring, Cost Reductions, Alliances
1. I&D Company personnel reductions (Kyoto, Kitakami,Headquarters, etc.)
Æ Proceeding according to plan

Kitakami Hitec Paper

2. Alliance with FUJIFILM on photographic base paper,
now underway
5

Imaging and Development
Progress in Measures and Plans (2)New Product Development
1. Inkjet media
Inkjet photo books, pearlescent inkjet photo media, etc.

2. Print plate
TDP and IDP: Deepening expansion in emerging
countries

Inkjetphoto books

TDP

TDP: Thermal DigiPlate (Direct thermal digital printing plate)Awarded Distinguished Technology Award by the Japanese Societyof Printing Science and Technology in FY2009
IDP: Inkjet DigiPlate (Inkjet digital printing plate)

Functional Material Development Business
1. Operations being developed focusing on filter
business, now underway
2. Operations being developed in China and other Asianmarkets

Air purifier filters

Full production at filter processing site in Zhuhai, ChinaExpansion into other businesses under consideration(Printing plate converting and finishing, etc.)6German Operations
Progress in Measures and Plans

Fundamental Restructuring at ＭＰＢ
MPB : Mitsubishi HiTec Paper Bielefeld GmbH

1. No. 1 Paper Machine (30,000 t/yr) shut down in July 2009; plant is currently operating with No.3 Paper Machine (120,000 t/yr)
2. All four cast coaters shut down in August 2009
3. Personnel cuts affecting 120 people in 2009
4. Review product portfolio, improve Product mix

1. Firmly established profitability through restructuring and recovery of actual
demand in Europe
Business Results for European Segment(¥ million)

350
300
250200150
100500-50311
Operating IncomeFY2008(Total ¥27 million)

FY2009(Total ¥382 million)

7159-32
Jan. – Jun.

2008

Jul. – Dec.

Jan. – Jun.

2009

Jul. – Dec.

2. Improved productivity in high value added products such as inkjet paperfor digital printing
7

These slides contain forward-looking statements with respect tofuture results, performance and achievements that are subject torisks and uncertainties, and reflect management’s views andassumptions formed based on available information. All data otherthan historical facts are data that could be considered forwardlooking data. Should one or more of these risks or uncertainties
materialize or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein.
Mitsubishi Paper Mills does not intend or assume any obligation toupdate this forward-looking data.