2006 06 strategy review -final0612.pptVIP

H05/2491 IP Asia 2006 June strategy review Agenda A recap What has changed and what continues Key initiatives by business Summary September 2005 Strategy Statement: what we said last year September 2005 strategic plan major decisions Healthy baseline growth and new initiatives to grow EBIT 7 times Potential Initiatives List 2006 strategy status Consolidated IPPM ownership, including CHH’s portion Completed Yellow Jade negotiations, transition plan on track Started up box plant in Beijing (already profitable) and Asian Customer Solution Center in Guangzhou, closed Future Safe mill in Hong Kong Ramped up Shorewood Korea Phase 1, completed Phase 2 CIP Started procurement pilot, achieved savings 1MM – chain and caustic Low cost model extended to Topaz 100 MM impact Asia is a vast diverse region, China is a vast diverse country Agenda A recap What has changed and what continues Key initiatives by business Summary What has changed and what continues Major implications to IP Asia 1. China shifts its focus from export to domestic consumption Chinese government plans to stimulate domestic consumption but cool down export for future economic growth Chinese government is undertaking the following measures: Establish better social security system Restructure capital market to provide more investment channels Set up consumer credit system Increase pace of urbanization 300MM rural population is expected to move to coastal areas in the next 15 years 2008 Olympics is expected to increase GDP by 1% 2. Paper mills in China no longer enjoy export benefit From Jan. 1st, 2006, paper mills in China no longer enjoy VAT benefit of “Processing Contract” policy, exports from China not as profitable Some international and Chinese paper companies are lobbying the government to uplift the new policy 3. Protecting environment becomes more important in China In Dec. 2005, Premier Wen said China should become an environmental friendly society by 2010 China aims to improve resource effi