First Half of Year-Ended March 31,2011

Business Report

Part-1: Financial Review, 2011 First Half
Part-2: Enhanced Countermeasures
November16, 2010
２０１０年１１月１６日
MitsubishiPaper Mills Ltd.
三菱製紙株式会社

ＰＡＲＴ – １

Financial Review for the First Half ofThe Fiscal Year-ended March 31. 2011

1Key Figures＜Consolidated＞（unit:100million yen）
FY2009First-Half
Sales Ratio（%）

AmountSales Ratio（%）

Amount％－1,067－▲16▲1.5

Operating Income

121.1

191.7753.9

Ordinary Income

20.290.87254.6▲16▲1.5▲ 9▲0.97－Net Income
SalesFY3,000

Operating Income

First-Half120

2,585 2,531
2,443
2,197 2,180

1,264First-Half

1,343

93

100
80

1,185

FYNet income

Ordinary Income
100

FY

First-Half

73

80

71
60

60

1,083

1,067

1,000

40

3133

39

20500

43

1260

45
31

20

40

08.3

09.3

10.3

11.3

37
30

27
10

21

-10

0

07.3

08.3

09.3

10.3

32

6

1208.3

09.3

11.3

07.3

08.3

09.3

10.3

11.3

-30

712

900

61

50

40

1970

53

24

First-Half

73

71

207.3

FY90

2,000
1,500

AmountIncrement

1,083

Sales

2,500

FY2010First-Half△1607.3△1610.3△911.32Segment Information by Product ＜Consolidated＞（Unit：100 million yen/%）

FY2009First-Half

FY2010First-Half

Increment%

Sales
Operating Income

Pulp&Paper88989450.6

Imaging &Development
Company247247▲0▲0.3

Others10392▲11▲10.8

Internal Transfer▲156▲166▲10－

合計

1,0831,067▲16▲1.5

Pulp&Paper

1715▲ 2▲14.4

Imaging &Development
Company▲819－Others

330▲8.2

Internal Transfer

000－

合計

1219753.9

Note ： The segment figures for the second quarter of the previous fiscal year were estimated by referencing this quarter’s segment figures.

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

FY2009First-Half

FY2010First-Half

Increment%

Sales

Operating IncomeJapan893889▲4▲0.5Europe

175

192

179.4

U.S.A.

3736▲1▲3.2

Internal Transfer▲22▲50▲28－Total

1,083

1,067

▲16▲1.5

Japan912334.6

Europe143365.0

U.S.A.

110▲37.9

Internal Transfer

121－Total

1219753.9

Note : This quarter’s segment figures were estimated by referencing the previous segment information by area.

Sales2,500Japan
1,9502,051（Unit：100 million yen/）

2,037

2,000

Operating Income （Unit：100 million yen/）

90

82

80
First-Half

1,841
JapanEurope

1,500

FY7060

Japan

50942
1,000

1,001

1,068893

Europe

40889

30500

526

477
233

475
262

07.3

08.3

269

192
175

09.3

10.3

352534Europe 27

20359

066

63

11.3

1040

07.3

96303
08.3

09.3

124

4
1110.3

11.3

4

Breakdown of Increase/Decreaseof Consolidated Ordinary（Unit：100 million yen）

First-Half of FY2010First-Half of FY2010
9First-Half of FY2009
2Sales(Price)▲29CostReduction＋28Sales(Quantity・Raw Material& Energy Cost Product mix)
＋14
▲65

Balance Sheet ＜Consolidated＞（unit:100million yen）

Ended of March 31,2010
Amount％Ended of Sept. 30, 2010
Amount％Increment
Amount

2,821

100.0

2,668

100.0

▲153

Current Assets

1,105

39.2

1,094

41.0

▲11

Fixed Assets

1,716

60.8

1,574

59.0

▲142

Tangibles

1,294

45.9

1,230

46.1

▲64

Intangibles

100.3

70.3

▲3

Investment and Others

412

14.6

337

12.6

▲752,13475.6

2,02275.8

▲112

1,442

51.1

1,37451.5▲ 6869224.5

64824.3▲ 4468724.464624.2▲ 41

1,616－1,514－▲102Assets

Liabilities
Current Liabilities
Long-Term Liabilities
Net Assets

Interest Bearing Debts

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

FY2009First-Half

FY2010First-Half

Increment

AmountAmountAmountCash Flow from Operating Activities

427836

Cash Flow from Investing Activities

▲66

▲066

Cash Flow from Financing Activities

22▲82▲104

Effect of Exchange Rate Fluctuation on Cash & CashEquivalents

0▲2▲2Net Increase/Decrease in Cash and Cash Equivalents▲2▲6▲4Cash and Cash Equivalents at the Beginning of the Year357035

Cash and Cash Equivalents at the End of the Year3364317

通 期 業 for績 FY2010
予想Forecast8Forecast ＜ Increase/Decrease Factors ＞（unit:100million yen）
FY2009Forecast of FY2010

1STHalf

2ndHalf(Actual)(Forecast)

2,197

1,067

1,113

926

1,815

894

247

251

498

Others103

88

InternalTransfer▲156

Operating
IncomeOrdinary
Income

1ST

2ndHalf

Half

1,083

1,114

Pulp & paper

889

I&DCompany

Sales

Net Income

FY2009

Increment

FY2010

2nd Half

1ST Half

FY (Forecast)(Forecast)（Forecast）

Amt%

Amt%

Amt%2,180▲16▲1.5▲1▲0.1▲17▲0.89361,830

50.6

101.1

150.8247253500▲0▲0.3

21.2

20.51919288180▲11▲10.
800.0▲11▲5.8▲151▲307▲166▲164▲330▲10－▲13－▲23－123143194160

753.9

1036.01741.12252793140

7254.6630.0

1350.4▲160▲16▲ 91677－

16－

23－

Note : The segment figures for first half, second half and full-year earnings were estimated by referencing this quarter’s segment figures.

Forecast of the 2nd Half: ¥85/$、Dubai crude oil $75/barrel

9Breakdown of Increase/Decreaseof Consolidated Ordinary Income
Comparison of the 2ND Half (Forecast)Comparison of the 1ST Half (Actual)（Unit：100 million yen）
2ND Half of FY2010+31

2nd Half of FY2009+25

1ST Half of FY2010
1ST Half of FY2009+9Others▲4Sales(Price)▲16+2

Cost Reduction＋34

Cost Reduction＋28

Sales(Price)▲29Sales(Quantity・Product mix)
＋14

Raw Material& Energy Cost
▲6Sales(Quantity・Product mix)
＋7

Raw Material& Energy Cost
▲15Comparison of FY2009 and FY2010(Forecast)

FY2010
Others▲4FY2009+40+27Sales(Price)▲45Cost Reduction
＋62

Sales
Raw Material (Quantity・& Energy Cost Product mix)
▲21＋21Others: Extraordinary expenses/income and others

10Key Indices＜Consolidated＞（unit:100million yen）

FY2009First-Half
Interest Bearing Debts

FY2010First-Half

FY2010(Forecast)

1,675

1,514

1,500

Depreciation

6562

122

Investment

55

1935

4,632

4,389

4,350

Number of Employees

11Key Indices ＜Non-consolidated＞（unit:100million yen/%）
FY2009

Sales Data

1STHalf

FY2010
1STHalf

Fiscal Year

Fiscal YearSales Qty. Sales Amt. Sales Qty. Sales Amt. Sales Qty. Sales Amt. Sales Qty. Sales Amt.
Uncoated (Wood-free, etc)
Coated (Coated, etc)
Business Communication
Paper (Thermal,Carbonless Paper, etc)
White Card Board
Others (Leaf paper, Hygiene
Paper, etc)

79
246

98
328

164
527

198
683

85
267

97
332

175
550

198
682

4093

80

186

4193

81

183

22274655

23274857

843

1693

846

17100

1ST Half of FY2009
Exchange Rate

1ST Half of FY2010¥95.27/US＄¥88.85/US＄

Annual Usage of Woodchips(Import Ratio)

500Tｔ
（67％）

572Tｔ
（67％）

Annual Usage of Purchased
Pulp (Purchase Ratio)

23Tｔ
（7％）

21Tｔ
（6％）

Annual Usage of Oil

19Tｋｌ

18Tｋｌ

Annual Usage of Coal

131Tｔ

139Tｔ

130MWH（79％）

127MWH（80％）

Purchase Electric Power(Self-Generation Ratio)

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

12ＰＡＲＴ - ２

Enhanced Countermeasures:
Status of Progress
November 16, 2010
Kunio Suzuki
President and CEO

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

21

Thorough costminimization

Efficient production system

7

Relocation of business
communication paper production
bases

Realize effect of alliances

Shut down No. 12 Paper Machine atTakasago Mill
(Transfer production of base paper,decrease pulp purchases)
Shut down KHP No. 5 RC Machine Alliance with FUJIFILM
 Alliance with OJI Paper inbusiness communication
paper

FY2010, FY2011
Initiative begun in thesecond half of FY2009

 Maximized low-cost structure

for I&D Company
 Cost reductions at Hachinohe

and Takasago mills
 Trim logistic costs for printing& communication paper6 Restructuring of Germanoperations
 Capitalize on and expand

business base in China

 Streamline R&D system Reduce costs at theheadquarters and subsidiaries

Transfer personnel of I&D
CompanyStabilize and capitalize on
overseas operations

3

Drastic reductions ofoverhead cost5
Launch new products
 Expand sales of Thermal

Digiplate Expand sales of new ink jet

media on a global scale

4

Shift to high value addedproducts
 New paper for digital printing Expand development ofvarious types of art paper
 FSC certified paper and use ofthinnings

 Expand development offunctional non-woven fabic

1Enhanced Countermeasures: Effects
Effects: ¥ 100 million
Production system
Costrebuilding
reductions

Overseas
operations

Personnel
streamlining

Other (energy,depreciation, etc.)

Total

FY2010(Year 146 ending March 2011)

5116

111043

1H results

28693

28

2H forecast

5172

3

734

Full-year outlook

725

8121062

Initial Target

Benefits of measures are steadily emerging, with cost reductions offsetting factorsthat depress earnings. Pushing on next year with original targets.
FY2011(Year 147 ending March 2012)

Initial Target

41236252

Pulp & Paper Business:
Progress in Measures
Production System Rebuilding & Alliances Transfer of business communication base paper production progressing

well, with No. 12 Paper Machine in the Takasago Mill shut down to schedule Hachinohe Mill: Reduce energy costs through improved capacity utilization
 Takasago Mill: Reduce business communication base paper costs
 Developing business communication paper alliance with Oji Paper
Hachinohe Mill- Capacity Utilization Trend 1,000 tons

900
800
700
600
500

850,000t
94%

700,000t
78%

FY2008FY2009750,000t
85%

FY2010800,000t 100%
90%
90%
80%
70%60%FY2011

Increase to 90% capacity utilization after transfer of business communicationbase paper and expansion of environmental value-added product sales

3

I&D Business:
Progress in Measures
Production System Rebuilding & Alliances Kitakami Hitec Paper

Add new No. 8 RC Machine and shut down No. 5 RC Machine (May 2010) to concentrate
operations on three multi-function resin coaters
 MP Juarez LLC (MPJ / Mexico)

As well as inkjet paper, expand local finishing of photo-sensitive print material products Alliance with FUJIFILM on photographic base paper, now underwayPersonnel Reassignment, Cost Reductions
 I&D Company personnel reductions:

Reduction of approx. 160 staff since year ended March 2009, generating ¥1 billion incost savings

Expansion of Functional Material Development Business Sales expansion into emerging markets, focused on Asia

Approx. 10% sales growth in filters, non-woven fabric business Full production at filter processing subsidiary in Zhuhai, China

4

Restructuring in Germany
Restructuring to 2009:
・Close/merge paper machines (partial shutdown of paper machines / complete
shutdown of all cast coaters)
・Personnel cuts affecting 120 people
・Review product portfolio, improve product mix
Unit: ¥ 100million

Business Results for European Segment<Forecast>

Operating Income

5500<Results>
34300

1100-100
Jan-Jun

Jul-Dec

Jan-Jun

Jul-Dec

Jan-Jun

Jul-Dec

2008

2009

2010

年

年

年

Establishing profitability throughpositive effects of measures
Margin improvement: Approx. ¥500mn (vs. 2009)5

Reorganization of Consolidated
Subsidiary in Germany
ＭＰＨ(Mitsubishi Paper Holding (Europe) GmbH)

ＭＰＦ(Mitsubishi HiTec Paper Flensburg)

ＭＰＢ(Mitsubishi HiTec Paper Bielefeld)

ＭＰＧ(Mitsubishi Paper GmbH)

Production and sale of thermosensitive
recording paper (primarily high valueadded products), other products

Production and sale of thermosensitive
recording paper (primarily general-useproducts), carbonless copying paper,
inkjet paper, other products

Print plate sales/
technical services

Sweeping restructuring
1. Consolidation of production
facilities
2. Personnel streamlining
3. Review of produced brands

ＭＰＨ(Mitsubishi Paper Holding (Europe) GmbH)ＭＰＥ(Mitsubishi HiTec Paper Europe GmbH)

ＭＰＧ(Mitsubishi Paper GmbH)

Production and sale of thermosensitive
recording paper, carbonless copying
paper, inkjet paper,other products

Print plate sales/
technical services
6Printing and communication Paper Expansion into growth fields Promote shift to high value-added printing and business communication paper Expansion of digital printing paper market

Develop products targeting future expansion into industrial printing field Develop and grow sales of value-added products (witheco-friendly, art features, etc.)
FSC-certified paper, paper using forest thinnings,
high-grade printing paper, etc.

Various types of digitalprinting paper

Use of forest thinnings(Forest Neighborhood Association
Copying Paper)

Example of FSC logo on printed matter

Example of FSC-certified paper

7

I&D Company- Shift to high-margin structure / expand sales of new products -New business development - Bolstering production  Strategic investment in functional non-woven fabric business, a growth area
 Consider increase of filter processing in Zhuhai, China, and expansion of otheroperations

Inkjet - Shift toGrowthhigh-margin
strategy: Newstructure
product development& investment
 Expand sales of high value-added inkjet paper

Pearlescent inkjet, display-use film inkjet, double-sided inkjet
 Stimulate demand for high-grade photobooks

Print plates - New product sales expansion  TDP sales expansion and new IDP, PDP products

TDP = Thermal DigiPlate (Direct thermal digital plate making material)
TDP = Inkjet DigiPlate (Inkjet digital plate making material)
PDP = Polymer DigiPlate (Photopolymerization-based digital plate making material)
8Future earnings assumptions<Consolidated Ordinary Income>

Measuresnext year¥7bn
Effect of Enhanced
Countermeasures(next year)¥4bn¥2.7bnProduction system
rebuilding
Cost reductions

Effect of Enhanced
Countermeasures(first year)
Strengthenmeasures

Review ofoverseas ops.
Personnel
streamlining

FY2009＋α
FY2010FY2011
9

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.