April 7, 2003

Construction of New Distribution System for the Group
— Aiming to greatly reduce distribution costs —

Nippon Paper Industries Co., Ltd.

Nippon Paper Industries Co., Ltd. (merged with Daishowa Paper Manufacturing Co., Ltd. and Nippon Paper Sales Co., Ltd. on April 1 this year), Japan's leading paper and pulp manufacturing company and a core member of the Nippon Unipac Holding Group, is applying a new system *1 introduced in January this year to push ahead with a new distribution system, which hinges on the restructuring of distribution affiliates and the widening of managerial scope, into blocs.
More specifically, the company is dividing its nationwide production areas into four blocs, Hokkaido, Tohoku, Chubu and west of Kansai, and is starting by centralizing distribution of the Hokkaido, Tohoku and Chubu blocs into supervisory companies from April this year. The Hokkaido bloc, covering the Yufutsu, Shiraoi and Asahikawa Mills, is becoming the supervisory company Kyokushin Transport Co., Ltd., the Tohoku bloc, controlling the Ishinomaki, Iwanuma and Nakoso Mills, is to become NANKO UNYU CO., LTD. Meanwhile, the Chubu bloc covering the Suzugawa and Fuji Mills and Nippon Daishowa Paperboard Yoshinaga Co., Ltd., will be Daishowa Logistics Co., Ltd.
The area west of Kansai is scheduled for centralization from October 2003.
Then, in the next phase, the company plans for each supervisory company to oversee all other mills and affiliates in each bloc (for example, Nippon Daishowa Paperboard Tohoku Co., Ltd. in the Tohoku bloc, and Fushiki Mill and affiliates of Fuji District in the Chubu bloc).
Nippon Paper Industries is also considering centralizing distribution in consumption areas in the course of its restructuring and streamlining of distribution affiliates including paperboard affiliates.
As a result of the above measures, the Group can expect benefits including:
1. Merits of scale resulting from widening the managerial scope of supervisory distribution companies,
2. An increase in the direct shipment ratio from production areas to users,
3. Cost reductions resulting from the centralized management of information and efficient round transportation within regional blocs,
4. Streamlining and restructuring of consumption area warehouses,
5. Job rationalization.
Cost reductions of more than 3.5 billion a year are anticipated.
Further, to develop mass distribution as a core business, with the annual distribution of 6 million tons of paper products and 2.5 million tons of waste paper, Nippon Paper Industries intends to strengthen links between production area distribution and consumption area distribution and to increase the centralization of information with the aim of further cost reductions. In future, the company also intends to promote initiatives geared to streamlining the distribution of the Nippon Unipac Holding group.
*1: System called 'Prime' that supports paper sales and marketing and centrally manages information from user orders and production to delivery.


Overview of Group's New Distribution System

Overview of Group's New Distribution System

*) Production area system distribution : Distribution delivering from mills that produce the products to consumption areas
*) Consumption area system distribution : Distribution delivering products that have been delivered to consumption areas to users (agents, newspaper companies, printing companies, etc.)
Kyokushin Transport Co., Ltd.
Daishowa Logistics, Co., Ltd.
Head Office Location
Asahikawa City, Hokkaido
Ishinomaki City, Miyagi
Fuji City, Shizuoka
Nobuaki Kobayashi
Tadamitsu Ono
Yutaka Nakano
Capital (million yen)
Perspective Sales for FY2004 ( million yen)
Ratio of NPI Capital Provision