Wood is an extremely useful, renewable resource that is characterized by its diverse applications, and makes possible the creation of the true leading materials of our generation. Using woody biomass, we operate a wide range of businesses, from developing forest resources through planting and growing trees, through to manufacturing paper and paper-related products with wood fiber as the raw material, creating biochemical products that take advantage of wood components, producing timber and building materials, and providing energy services.

Now, we are implementing the fifth medium-term business plan covering fiscal 2015 to 2017. One of the plan's key theme is to accelerate the transformation of our business structure. We have begun to take on new challenges for market creation, including the development of new materials based on our technologies for utilizing wood pulp that we have cultivated to date.
A typical example is the cellulose nanofiber (CNF) that is deemed a promising next-generation material. We have been engaged in research and development for CNF for more than ten years. In the autumn of 2015, we developed a CNF sheet by adding deodorant and antibacterial effects for the first time in the world, and put it into practical use as "Hada Care Acty", adult diapers from Nippon Paper Crecia Co., Ltd., a Group company.
Then, in the year of 2017, which is a milestone for us, we have started mass-producing CNF. In April this year, the world's largest CNF production facilities began operating at our Ishinomaki Mill. This will be followed by the start of operation of a demonstration facility for CNF-reinforced resins at Fuji Mill in June and a facility for mass production of carboxymethylated CNF (CM-CNF) to be used for thickening agents for food and cosmetics at Gotsu Mill in September. We aim to lead the world with the early establishment of technologies for manufacturing CNF which are appropriate for its application, combined with a full-scale system for supplying CNF.

On the other hand, the papermaking business, which we have been operating for many years, is expected to grow in fields such as healthcare and packages with materials derived from wood biomass with a wide range of functions, such as wiping surfaces and wrapping goods as well as conveying information in daily life. Paper still has considerable potential. We believe that we can develop our papermaking business further by replacing various materials with paper. We will be proactive in developing new products and suggesting services.

Meanwhile, in this context, we have been proactive in recent years in entering overseas markets in Asia and other growth regions of the world. In 2016, we purchased the packaging board business from Weyerhaeser Company in the United States in relation to our liquid packaging carton business, which we have been operating in Japan for more than 50 years. This acquisition has enabled us to establish an integrated production system, from base paper to processing, and to provide products with higher added value as a total system supplier with an eye to the Asian market as well. In addition, in Vietnam and India, two rapidly growing economies, we have begun operating new businesses that are expected to see significant growth in demand, through local acquisitions and alliances. These businesses include paper containers such as paper cups and healthcare products including disposable diapers. We will expand our business domains and quickly build our presence in the global market by operating a global marketing system in which our sales, production, and research and development departments cooperate closely.

The mission of the Nippon Paper Group is "to contribute to better living and cultural progress everywhere it does business." We will continue our efforts to create unprecedented new value as "a comprehensive biomass company shaping the future with trees."

Fumio Manoshiro,

President

Nippon Paper Industries, Co., Ltd.