Message from the President｜Japan Pulp & Paper Company Limited

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To Become a Group That Pursues Excellence Even Beyond the Paper Industry

Originally, we had planned to start a new medium-term business plan in fiscal 2020, but just before it was scheduled to be released the COVID-19 pandemic broke out and the global economy, including that of Japan, suddenly ground to a halt. Many people believed that it would take a considerable amount of time for the situation to be resolved, and as a result, we decided to postpone the start of the new medium-term business plan for one year. We considered fiscal 2020 to be somewhat of a state of emergency for the company as well, and based on a policy giving serious consideration to our group corporate philosophy and doing our utmost to raise profit levels in a year in which profits were expected to experience declines on an unprecedented scale, we maintained selling prices in Japan and reduced all costs to the bare minimum at all of our business sites throughout the world.
As a result, our consolidated results for fiscal 2020 were net sales of JPY462.9 billion (down 13.4% year-on-year), and ordinary profit of JPY8.9 billion (down 8.7% year-on-year). Although we faced an uphill battle in the Japan and non-Japan paper wholesaling businesses and in the environmental and raw materials fields, which were directly affected by the impact of COVID-19, I feel that our performance fully reflects the results of the aforementioned emergency measures.
Also, in response to this state of emergency and the New Normal we discovered new demand, sales opportunities, and business and investment opportunities, with some large and more innovative ideas being considered for specific projects. I am convinced that these will become the driving force for new business development, and operational and efficiency improvements in the future.

After the COVID-19 pandemic and a year which for the company has been labeled a year under a state of emergency, we formulated OVOL Vision 2030 and set forth three visions.

1. To Become the World’s Leading Paper Distribution Group
Based on a simple comparison of sales figures I would suggest that the group is currently the world’s third-largest paper distributor.
However, in a field such as graphic paper where global demand is shrinking, we believe that rather than increasing volume, sales, and market share, many stakeholders expect and demand that we place importance on sales price and profits, and the increasing of our operational and capital efficiency.
To make this possible, we need to have weapons other than price, and that is exactly what we will do by enhancing our functions and added value to differentiate ourselves from our competitors and increase the satisfaction of our business partners.
On the world stage, we aim to be the world’s leading paper distribution group capable of proposing and supplying the most suitable products, where and when they are needed.

2. To Become a Group That Contributes to a Sustainable Society and Global Environment
In addition to selling the ecological material that is paper, we are very proud of the considerable contributions that we have been making to sustainability through the production of paperboard and household paper using recovered paper, the collection and sale of recovered paper, and our renewable energy business.
However, we are now in an era where there is a strong demand for action to address the SDGs and decarbonization worldwide, and there are concerns that failing to do so will have a direct negative impact on our corporate activities. In light of the recent revision of the Corporate Governance Code, we will promptly make our response to the SDGs and decarbonization into something tangible and visible.

3. To become a Corporate Group That Strives to be Considered a Trustworthy and Engaging Partner Both Within and Beyond the Paper Industry
This does not mean that we will immediately move beyond paper and into other fields and business areas.
Of course, if there is a necessity, we will consider such possibilities, but what we are striving for is to become a corporate group that is widely recognized and appreciated in society beyond the boundaries of the paper industry. In other words, in terms of our business fields, the current five business segments are fine. However, in terms of profitability, capital efficiency, financial base, personnel system, work style, social and regional contributions, environmental responsiveness, customer satisfaction, shareholder satisfaction, employee satisfaction, and so forth, we will be widely recognized and evaluated for our corporate excellence by the public, including those outside the paper industry.
I am convinced that this will lead to the securing of highly capable human resources, the expansion of our business development, and the improvement of our profitability in the future.

By achieving these three visions, we believe that we can achieve our profit target of JPY25 billion in consolidated ordinary profit.

In the Medium-term Business Plan 2023, which covers the first three years of OVOL Vision 2030, we have set two major basic policies.

The first policy, “Creating Added Value in the New Normal,” illustrates that we are aware of the negative impact of the COVID-19 pandemic and the structure of the market and demand as created by the New Normal, and what we must do to become the world’s leading paper distribution group. As stated in OVOL Vision 2030, we will promote the creation of new value by strengthening functions that other companies cannot imitate, creating added value, and taking the initiative in organically combining the assets of each company in the group and those of our business partners.
At the same time however, there are many areas where the various values of paper and paper products have been reconsidered due to the COVID-19 pandemic. If the quality of society as a whole continues to improve in the future, there is a great possibility that the value of analog and real situations will increase in areas such as personal life, enrichment of the human mind, and intellectual training and education. Through various events and business activities we will communicate such possibilities and awareness to society, and expand the scope of paper demand. We are committed to changing ourselves with new functions and added value, engaging our business partners, and influencing society.

With the second policy, we will implement specific initiatives to promote “Evolving Into a Group That Pursues Excellence Even Beyond the Paper Industry” as stated in our long-term vision.

Based on these two basic policies, we have set a consolidated ordinary profit target of JPY15 billion for FY2023, the final year of the medium-term business plan.

We will always keep the group's corporate philosophy in mind as we work together to achieve the goals of the Medium-term Business Plan 2023, which is the first step toward the OVOL Vision 2030. I would like to ask for the further understanding and support of all our stakeholders.

Akihiko Watanabe
President
July 2021

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