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Here is a summary of the consolidated financial results for fiscal year 2025.

Revenue totaled JPY 609 billion, an increase of JPY 28.7 billion compared to the previous year. Operating profit was JPY 60.2 billion, an increase of JPY 10.2 billion and ordinary profit was JPY 58.2 billion, an increase of JPY 11.9 billion. Net income was JPY 41.9 billion, an increase of JPY 11.5 billion, with all profit categories showing growth.

Factors affecting the change in operating profit. This represents an increase of JPY 10.3 billion compared to the previous year. Although there were increases in expenses such as labor and logistics costs, profit increased significantly due to higher selling prices, price adjustments and increased sales volume across all segments as well as the impact of IRA subsidies in the U.S.

Regarding the IRA subsidies in the U.S., we recognized not only the fiscal year 2025 portion but also the portions for fiscal year 2023 and 2024, resulting in a total positive impact of JPY 3.5 billion on earnings. Consequently, earnings increased significantly partly due to the lump sum recognition of the past 3 years' worth of subsidies in the current fiscal year.

Breakdown of nonoperating income and expenses and extraordinary income and expenses. Nonoperating income increased due to the impact of inflation accounting. Foreign exchange gains and losses contributed JPY 2.2 billion, driven by a shift from foreign exchange losses in the previous year to foreign exchange gains. Interest expense increased due to higher interest payments at our Turkish operations, but ordinary profit still rose. Extraordinary gains include JPY 1.6 billion in proceeds from the sale of idle land.

In addition, there was a gain of JPY 7.0 billion from the sale of Mitsubishi Logisnext shares as a gain on the sale of investment securities.

We recorded a provision of JPY 3.3 billion related to the sale of our Turkish operations as a provision for losses on the liquidation of affiliated companies. Net income was JPY 41.9 billion, an increase of JPY 11.5 billion year-on-year.

Here are the sales and operating income figures for each segment. With the exception of special batteries and others, both revenue and operating profit increased. Automotive Batteries Japan reported increased revenue and operating profit, with revenue up JPY 6.1 billion and operating profit up JPY 1.0 billion. Automotive batteries overseas reported increased revenue and operating profit, with revenue up JPY 4.4 billion and operating profit up JPY 5.8 billion. Industrial battery power sources reported an increase in both revenue and operating profit, with revenue up JPY 11.0 billion and operating profit up JPY 0.5 billion. Automotive lithium-ion batteries reported an increase in both sales and operating profit, with sales up JPY 7.1 billion and operating profit up JPY 3.5 billion. Specialty batteries and others reported a JPY 100 million increase in sales but a JPY 600 million decrease in operating profit.

Automotive Batteries Japan remained largely flat year-on-year. Automotive batteries overseas saw a significant increase in profit. The main factors were the recognition of 3 years' worth of IRA subsidies for fiscal years 2023 through 2025, an increase in sales volume in the fourth quarter primarily in ASEAN countries such as Thailand and Vietnam, and improved profitability in Europe.

In the lithium-ion battery segment, profit increased due to price adjustments for hybrid vehicles as well as higher sales volumes for both hybrid and plug-in hybrid vehicles. Furthermore, domestic infrastructure demand remains robust due to replacement cycles and demand for renewable energy continues to grow steadily. Although domestic lead prices and LME prices have fallen, prices for some raw materials such as antimony have risen sharply. The yen has appreciated compared to the previous year.

In the Automotive Battery Japan segment, net sales were JPY 108.0 billion, an increase of JPY 6.1 billion and operating income was JPY 11.7 billion, an increase of JPY 1.0 billion. For new automobiles, although sales volume remained flat net sales increased due to a revision of selling prices and price adjustments implemented in the second half of the fiscal year in response to rising antimony prices. For replacement, sales increased due to higher sales volumes and an improved product mix, driven by growth in high value-added products, such as those for vehicles equipped with idling stop systems. Despite increased expenses and soaring antimony prices, operating profit and revenue both increased due to the revision of selling prices and price adjustments for antimony.

The Automotive Batteries Overseas segment posted sales of JPY 264.5 billion, an increase of JPY 4.4 billion year-on-year and operating income of JPY 24.5 billion, an increase of JPY 5.8 billion year-on-year, resulting in both higher sales and higher profits. Sales increased at all locations except the Turkish facility. Operating profit was impacted by the challenging market conditions in Turkey, but this was offset by strong sales at other locations. In addition, operating profit increased significantly due to the impact of a JPY 3.5 billion subsidy under the U.S. Inflation Reduction Act, IRA.

The Industrial Battery Power Supply segment reported net sales of JPY 124.1 billion, an increase of JPY 11.0 billion year-on-year and operating income of JPY 18.4 billion, an increase of JPY 0.5 billion year-on-year. For the regular field in Japan, sales increased due to a rise in projects compared to the previous year and the timing shift of projects from the previous fiscal year. For the emergency field in Japan, sales remained strong for nuclear power and data centers, continuing the trend from the previous year and sales also increased in the first half for telecommunications and major convenience store chains. Although sales volume of forklift batteries decreased, sales revenue remained largely flat due to ongoing price revisions. Operating profit saw a slight year-over-year increase, driven by an increase in projects despite rising expenses and soaring raw material prices.

Sales of automotive lithium-ion batteries reached JPY 89.9 billion, an increase of JPY 7.1 billion year-on-year with operating profit of JPY 4.9 billion, a year-on-year increase of JPY 3.5 billion, marking a significant improvement. For HEVs, although sales volume to Toyota decreased due to a model change, sales revenue increased due to a significant expansion in sales volume to Honda. For PHEVs, sales volume to Mitsubishi Motors increased year-on-year, leading to higher sales revenue. Sales of 12-volt lithium-ion batteries declined due to customer circumstances resulting in a decrease in revenue. Operating profit continued the trend seen through the second quarter, largely driven by improved profitability in the hybrid vehicle segment. Although expenses increased, profit rose as the rising expenses was offset by price adjustments and increased sales volume.

The Specialized Batteries & Others segment reported net sales of JPY 22.5 billion, an increase of JPY 0.1 billion year-on-year and operating income of JPY 1.5 billion, a decrease of JPY 0.6 billion year-on-year. Regarding lithium-ion batteries for submarines, sales decreased due to a revision of contract unit prices in response to changes in raw material market conditions. Sales of lithium-ion batteries for aircraft declined for both new installations and airline repair applications. In addition, increased expenses for the head office administrative division and research and development were factors contributing to the decrease in operating income.

This is the balance sheet as of the end of March 2026. Total assets amounted to JPY 741.0 billion, an increase of JPY 47.2 billion compared to the end of March 2025. Tangible fixed assets increased by JPY 35.4 billion. This was primarily due to increases in machinery and equipment and construction in progress as well as investments in the manufacture of batteries for BEVs and in facilities to increase production of batteries for HEVs. In addition, cash and deposits decreased in line with the increase in tangible fixed assets. Inventories increased in the industrial battery power supply sector. The equity ratio was 53.3%. Total borrowings amounted to JPY 87.8 billion.

Operating cash flow was positive JPY 49.5 billion. Investing cash flow was negative JPY 44.9 billion. Financing cash flow was negative JPY 31.8 billion, and free cash flow was positive JPY 4.6 billion.

Here are the main investment plans for fiscal year 2025. We made investments to expand the Blue Energy's production capacity for automotive lithium-ion batteries from 50 million cells to 70 million cells as well as investments in specialized batteries and other areas to establish BEV battery manufacturing operations scheduled to begin in 2027.

We will promote social infrastructure, utility power, emergency power and aerospace and defense sectors as new growth drivers and accelerate growth in areas where we can leverage our strengths. Leveraging our competitive advantage is rooted in exceptional quality and reliability as well as our unique technologies, we will make concentrated investments in high-growth sectors to transform our business portfolio. We will strengthen the mobility sector as a source of cash generation. We aim to further expand earnings in the robust domestic and international lead-acid battery markets. Additionally, we will enhance our cash generation capabilities by improving profitability in batteries for hybrid vehicles, leveraging our expertise in high-rate lithium-ion battery technology. We will enhance profitability and capital efficiency and implement shareholder returns in line with progress towards sustainable growth. We will continue to increase dividends in line with growth through a progressive dividend policy targeting a DOE of 3%. We will redefine our business segments as Mobility and Social Infrastructure, clarify business responsibilities and roles establish management metrics such as ROIC, and clarify accountability for execution.

Here is a review of the 6th Midterm Management Plan. Revenue was JPY 609 billion. Operating profit was JPY 61 billion, and the total payout ratio was 21.2%. While there were variations in revenue across business segments, we successfully captured demand in our existing segments and revenue generated progressed as planned. Operating profit exceeded the plan due to improved profitability, driven primarily by price adjustments. Operating profit before amortization of goodwill and other items, significantly exceeded the plan due to improved profitability, driven primarily by price adjustments and increased sales volume. Regarding the total return ratio, we struck a balance between profit growth and growth investments, implementing returns that prioritized the continuity and predictability of dividends.

Here are the results by segment. While the automotive lithium-ion battery segment fell short of its targets due to fluctuations in material prices and changes in sales volume, other segments performed steadily, thanks to measures such as price adjustments, securing sales volume and initiatives in new businesses, enabling us to achieve the profit targets set in the 6th Midterm Management Plan.

Here are the capital allocation. Cumulative operating cash flow expanded to approximately JPY 150 billion under the 6th Midterm Management Plan. This represents roughly a twofold increase compared to the 5th Midterm Management Plan, demonstrating a steady improvement in the business's earning power. Regarding capital expenditures, we utilized funds raised, including approximately JPY 40 billion from a new share issuance and operating cash flow to invest in expanding production capacity for BEV and hybrid batteries, as well as upgrading equipment for existing businesses.

Here are the key initiatives. We established Honda and Honda GS Yuasa EV Battery R&D, HGYB and began joint development of high-capacity high-output lithium-ion batteries.

To expand our mobility and social infrastructure businesses, we advanced the construction of a factory scheduled to begin operations in 2027 to establish a production and supply system for BEV batteries.

To thoroughly create added value and improve profitability, we improved profitability by advocating for appropriate prices in the domestic automotive lead business.

To shift our regional strategy, including a review of our China operations and to concentrate resources on key locations and maximize profits, we decided to withdraw from our operations in China and Turkey in light of the business environment. We improved profitability by strengthening sales expansion in the ASEAN region, and restructuring our production and sales systems.

To maximize profits by leveraging our overwhelming competitive advantage in the domestic industrial battery power supply business, we established an energy solution model combining storage batteries and STARELINK. We secured orders for storage batteries for the power market and expanded our scale.

To expand production of lithium-ion batteries for general use, we adjusted prices to reflect raw material costs and the impact of inflation. We strengthened our maintenance system by leveraging a service network of over 100 locations nationwide, thereby increasing revenue.

Regarding our assessment of the current business environment. Expansion of the automotive lead-acid battery aftermarket due to longer vehicle ownership periods, changes in model change cycles and rising new car prices, demand in the aftermarket is on an upward trend. Consequently, demand for lead-acid batteries remains robust, even amid vehicle electrification and digitalization trends. With an expected increase in demand for hybrid vehicles, demand for higher rate batteries is also expanding. We anticipate opportunities for increased demand for higher capacity and longer-lasting batteries alongside improved profitability.

Emergence of new markets driven by technological advancements, demand for data centers for AI and grid-connected storage batteries is on the rise. We view this as an opportunity for new market expansion and anticipate that AIDC will see increased demand for lead-acid and lithium-ion batteries, while ESS will see growing demand for industrial lithium-ion batteries. Growing awareness of security issues, such as economic and energy security. There is a growing demand for strengthening domestic production and supply systems and the defense-related market is expanding. We anticipate opportunities for expanding demand in industrial, aerospace and defense applications, driven by the strengthening of requirements for purely domestic products and procurement.

GS Yuasa's strength and competitive advantages. In the mobility sector, we will maintain a solid foundation with a product portfolio that supports both lead-acid and lithium-ion batteries. In the social infrastructure sector, we will drive this sector as a new growth driver by leveraging our comprehensive capabilities in high reliability and field support based on domestic production. In the social infrastructure sector, we are recognized for our battery performance that achieves high output and long life. Our track record in developing high output batteries honed through HEV battery technology, our proven track record of long-life products utilizing degradation suppression technology and our strong TCO performance. Safety and reliability based on a long track record, including high safety and reliability that has earned high praise in the emergency power supply and defense sectors. We will develop value-added businesses through our maintenance and operation, O&M service capabilities that support stable operation.

Here is an update on strategic policy. To respond swiftly to changes in the market environment and further enhance corporate value, we will strategically transform our business portfolio through focused investments that prioritize growth potential and capital efficiency. We will also take on the challenge of creating new value for the next generation by leveraging our assets. In the LED business, we will generate funds for growth investments by maximizing stable cash flow. In the automotive lithium-ion battery business, we will mitigate risk through selective investments and shift to a profitable business model. We will position social infrastructure as a pillar of growth and accelerated through concentrated investment in key areas. In particular, based on the certification of our plan to secure the supply of storage batteries, we will provide end-to-end support ranging from the manufacturer of domestic battery cells to O&M.

Here is the growth outlook for each segment. In light of changes in the market environment for each segment, we have updated the growth outlook presented in Vision 2035. We anticipate that demand in the Automotive Battery segment will remain robust in both domestic and overseas markets. In the Automotive Lithium-Ion Battery segment, we anticipate expanding demand driven by electrification and digitalization as well as continued growth in demand for hybrid vehicles. In the Industrial Battery Power Supply segment, we anticipate steady growth in the regular power supply market driven by heightened economic and energy security concerns as well as in the emergency power supply markets, driven by technological advancements. In the Aerospace and Defense segment, we anticipate growing demand driven by heightened security awareness. This segment is expected to grow to a scale of JPY 40 billion in the latter half of the 8th Midterm Management Plan. We expect to achieve the 2035 sales target of JPY 800 billion, set forth in Vision 2035 announced in 2023 by the end of the 8th Midterm Management Plan, fiscal year 2031.

This is a projected trend for operating profit. With mobility and social infrastructure as our 2 pillars, we aim for them to contribute equally to profits by 2035. Furthermore, regarding our lead-acid battery business in the automotive and industrial battery sectors, we will continue to focus on it as a foundation for generating cash. The 7th Midterm Management Plan will be a period during which we will actively invest in the social infrastructure sector and work to transform our business portfolio. While we will not see a full return on these investments until the 8th Midterm Management Plan or later, we will continue to drive sustainable growth while generating cash from our existing businesses. In the 8th Midterm Management Plan, we aim to achieve operating income of at least JPY 75 billion at an early stage through stable growth in the mobility sector and the major leap forward in the social infrastructure sector.

Initiatives in the social infrastructure sector. We're establishing a business framework and advancing to the recovery phase under the 8th Midterm Management Plan. Driven by growing awareness of economic and energy security, we will meet new infrastructure demands with purely domestically produced products. In the 6th Midterm Management Plan, the market was in an expansion phase as power supply demand from the expansion of AIDC generation and ESS demand driven by the expansion of renewable energy arose simultaneously. Under the 7th Midterm Management Plan, as a company certified under the supply assurance plan, we will begin investing in factories and equipment for the manufacture of domestically produced batteries starting in fiscal year 2026, with operations commencing in the second half of fiscal year 2028.

Our initiatives in the aerospace and defense sectors. We aim to capture market demand by leveraging our unique technological capabilities and achieve sustainable growth. Major investments in production expansion include those to meet demand for new submarines equipped with lithium-ion batteries and replacement batteries, as well as investments to increase production of thermal batteries for space and defense vehicles. As part of the business expansion and production increased investment phase of the 7th Midterm Management Plan, we will implement investments to increase production of lithium-ion batteries for submarines from fiscal years 2027 to 2029, and investments to increase production of thermal batteries from fiscal years 2026 to 2027. Starting with the 8th Midterm Management Plan, the company will enter a phase of investment recovery and rapid growth, beginning increased production of lithium-ion batteries for submarines in 2030. Production volume of thermal batteries will be increased to approximately 3x that of the 6th Midterm Plan by fiscal year 2028, when increased production begins.

These are our initiatives in the mobility sector. In the mobility sector, we will generate funds for growth investments by maximizing cash flow. Global vehicle ownership is projected to grow, and since even electric vehicles such as EVs and HEVs require 1 lead-acid battery per vehicle, the role of lead-acid batteries will remain critical in the future. We will maximize cash flow by prioritizing profitability in the lead-acid battery business, and we will promote the development of storage batteries, lead-acid and 12-volt lithium-ion batteries that meet the demand for higher output and capacity. For drive and hybrid applications in electric vehicles, we will prioritize profitability and make maximum use of existing production capacity.

Next-generation technology road map. We will drive the evolution of batteries with a focus on high safety, long life and recyclability. Going forward, we will focus on further advancing existing liquid lithium-ion batteries and promoting the development of next-generation lithium-ion batteries, including all solid-state batteries. We will focus on advancing the development of high-power, long-life large-scale batteries for industrial use, developing rare metal-free batteries, lead-free alternatives and technologies to extend battery life and promoting the development of technologies based on electrochemistry.

Regarding changes to segment composition. This change was made to clarify our business strategy and revenue structure. The reported segments consist of mobility and social infrastructure with mobility serving as a stable cash-generating foundation and social infrastructure as a new growth driver, thereby clarifying their respective roles. We will enhance the level of information disclosure by establishing Aerospace and Defense, 1 of our key investment areas as an independent segment. Additionally, the overseas industrial business previously included in automotive batteries overseas will be reclassified to social infrastructure. This change will have an impact of approximately JPY 31 billion on revenue and approximately JPY 1.3 billion on operating profit for the fiscal year ending March 2025.

Consolidated performance targets. We will focus on building a business foundation centered on 2 pillars: the mobility sector and the social infrastructure sector. In the mobility sector, we will promote business operations focused on stabilizing earnings and generating cash flow through lead-acid batteries and lithium-ion batteries for hybrid vehicles and 12-volt applications. In the social infrastructure sector, we will position this as an investment phase for building a foundation and will reliably execute and promote initiatives to secure a return on investment. In the 7th Midterm Management Plan, we set targets of JPY 720 billion in net sales and JPY 65 billion in operating profit. The starting point for growth is set at JPY 56.7 billion, excluding the U.S. IRA subsidy received in a lump sum for 3 years in fiscal year 2025. Although the return on investment for social infrastructure will not be realized until the 8th Midterm Management Plan or later, we aim to achieve an operating profit of JPY 75 billion at an early stage.

These are the targets by segment.

These are the key initiatives for achieving our goals. In the mobility sector, we will ensure investments commensurate with the scale of our operations to further strengthen our profitability. In the social infrastructure sector, we will steadily execute growth-oriented investments to build a solid business foundation. Key initiatives in the mobility sector include strengthening our product lineup through the development of new 12-volt products, lead-acid, LiB, addressing the need for higher capacity and greater durability in automotive lead-acid batteries, strengthening our global supply chain centered on our ASEAN basis, Thailand, Indonesia and Vietnam, and improving the utilization rate and efficiency of our lithium-ion battery plants for hybrid vehicles as well as enhancing battery performance.

Key initiatives in the social infrastructure sector include expanding our presence in the ESS market as a purely domestic manufacturer certified under the plan for securing the supply of storage batteries, developing products optimized for AIDC and strengthening sales in Japan and the U.S. Emergency power. Strengthening the profitability of the emergency power business by promoting efficiency through DX and AI and expanding orders for high value-added specialty batteries through unique defense products such as lithium-ion batteries for submarines and thermal batteries for special applications.

Details of key initiatives in the mobility sector. While steadily executing investments aimed at streamlining supply systems and strengthening business continuity planning, BCP, we will curb large-scale investments and prioritize investment efficiency. By enhancing productivity, we aim to steadily improve profitability. Below, we outlined the initiatives, the rationale behind them, their feasibility, while we are capable of executing them and our competitive advantages.

Details of key initiatives in the social infrastructure sector. We will make proactive investments to expand our business as a new growth driver and lay the foundation for sustainable growth, starting with our 7th Midterm Management Plan. This slide summarizes the initiatives, the reasons for undertaking them, their feasibility, why our company is capable of executing them and our competitive advantages.

Capital policy and financial strategy. We will generate steady operating cash flow primarily through our existing businesses, continue to invest in the social infrastructure and mobility sectors and ensure shareholder returns to drive a cycle of growth and return. In our 7th Midterm Management Plan, we aim to implement a progressive dividend policy with a target dividend payout ratio, DOE, of 3%.

Capital allocation. We anticipate cash inflows of JPY 255 billion from operating cash flow and fundraising. We plan to allocate JPY 135 billion for growth investments. The breakdown includes JPY 850 billion for the construction of a domestic battery plant for ESS, increased production of submarine batteries and thermal batteries and JPY 50 billion for new product development of automotive lithium-ion batteries and small-scale M&A to strengthen the supply chain. We anticipate shareholder returns of approximately JPY 30 billion and will implement a progressive dividend policy targeting a DOE of 3.0%, providing shareholder returns commensurate with our growth. We plan to invest JPY 90 billion in our business infrastructure. This infrastructure investment includes R&D expenses for next-generation batteries and investments in the refurbishment of the Gunma plant, our main production facility for automotive lead-acid batteries.

This section discusses the relationship between our newly formulated materiality criteria and corporate value assessments. With the formulation of our 7th Midterm Management Plan, we have shifted from the traditional materiality framework based on our CSR policy to a new framework based on our sustainability management policy, focusing on materiality that contributes to creating value for society. We have established business materiality, which serves as a growth driver and foundational materiality, which contributes to reducing the cost of capital.

This slide summarizes the initiatives related to our newly established business materiality.

We have summarized our initiatives regarding foundational materiality in this slide.

Earnings forecast. For the 2026 earnings forecast, net sales are projected to reach JPY 660 billion, representing an increase of JPY 51 billion. Operating profit is projected to be JPY 60 billion, representing a decrease of JPY 200 million. Since the previous fiscal year included a onetime payment of JPY 3.5 billion in U.S. IRA subsidies covering a 3-year period, we are using JPY 56.7 billion as the baseline. Net income is projected to be JPY 36 billion, representing a decrease of JPY 5.9 billion. In the previous fiscal year, a gain of JPY 7.0 billion from the sale of investment securities boosted net income, but we do not currently anticipate a similar gain this fiscal year. We forecast an annual dividend of JPY 98 per share, which is in line with the 3% DOE target, representing an JPY 8 increase.

The actual and forecast comparisons of factors affecting operating income are as follows.

Here are the earnings forecasts by segment. Automotive Batteries Overseas is expected to see a revenue decrease of JPY 40.5 billion due to the impact of segment transfers and to the closure of our Turkish facility. For Industrial Battery Power Supplies, in addition to the segment transfer, we expect a significant revenue increase of JPY 65.9 billion due to higher volumes in ESS and AIDC. In the Industrial Battery Power Supply business, while order intake for both regular and emergency power systems remains strong, revenue will be impacted by increased expenses related to investments in the new ESS factory and higher development costs for new battery models. In addition, profitability will temporarily deteriorate due to large orders for overseas AIDC batteries. Across all divisions, expenses will rise due to the impact of the situation in the Middle East. This will particularly affect logistics costs, raw material costs and component procurement costs. However, due to the rapid rise in expenses, we believe it will be difficult to pass on all of these costs to sales prices. In addition, some automakers have announced production cuts, and we anticipate a decline in profits due to reduced volume and lower operating rates.

Regarding capital expenditures, depreciation and R&D expenses. In the Industrial Battery Power segment, based on the approval of our supply assurance plan, we will execute investments aimed at the development and mass production of domestically manufactured stationary lithium-ion batteries.

To what extent will the situation in the Middle East this fiscal year have an impact? Will recovery be possible in the next fiscal year or later?

We expect company-wide expenses to increase by nearly JPY 15 billion. Logistics costs and raw material costs, particularly for hard to obtain materials, are surging sharply. As supply and demand conditions are changing rapidly, we are carefully timing when to pass on these costs to customers. In the medium to long term, these costs are expected to level off.

Regarding the partnership with Honda, we understand that Honda's business in North America is winding down. How will this impact the current fiscal year?

Regarding the impact of BEVs, we are currently engaged in various discussions with Honda, but no conclusion has been reached yet. We will provide a further explanation once a conclusion is reached. Please understand that there is no immediate impact at this time.

I understand that the 7th Midterm Management Plan is designed to improve overall performance. But I would like to hear details regarding changes in top line revenue and profitability for the Industrial Battery Power segment.

This change was driven by the transfer of the low-margin industrial battery business, previously part of the Automotive Batteries Overseas segment to the Industrial Battery Power Supply segment. We are working to improve profitability and develop high-margin products for this business in order to offset the negative impact.

will the negative impact from batteries for data centers in North America significantly affect the midterm business plan?

This is our first time securing a large-scale order for data centers, and we are facing challenges as product improvements to the batteries themselves are necessary. While the project is not unprofitable, we are incurring costs related to product improvements. To some extent, this is unavoidable because we must secure a certain volume of large-scale orders to secure future projects, but this does not mean that low-margin projects will continue indefinitely. Since initial deliveries are incurring somewhat higher expenses, we will work to improve this going forward.

The guidance for this fiscal year projects an increase of approximately JPY 66 billion in industrial battery power supplies. How much of this is attributable to the North American data center project and by how much will ESS sales increase? Also, while profitability for the North American data center project is expected to deteriorate, does this mean it will be in the red?

The North American data center projects are not operating at a loss. We expect order intake of approximately JPY 4 billion to JPY 5 billion.

Do you expect the market for regular use batteries to grow more than that for emergency use batteries going forward?

Total sales for ESS are expected to grow by approximately JPY 20 billion to JPY 30 billion year-over-year plus additional growth.

You have implemented a 10% price increase for industrial battery power supplies, but it appears this has had little impact on the profit plan for this segment. Is it correct to assume that this has been offset by rising raw material costs due to the situation in the Middle East?

That is correct. In addition to the situation in the Middle East, there are various other factors driving up costs, such as rising labor expenses. We are in a situation where even after adjusting selling prices, profits are being eroded.

The medium-term plan gives a conservative impression. While I understand this is an investment phase, many forecasts project flat sales and profits. You mentioned that lead-acid batteries are expected to grow gradually, but this does not appear to be the case. Please explain the opportunities within each segment.

Although we have decided to withdraw from the automotive battery overseas business in Turkey, we have signed a supply agreement with the company and expect to continue receiving supplies. For automotive batteries overseas, we will expand our operations while containing rising costs through rationalization. The challenge going forward is how to maintain and expand our market share. In the 6th Midterm Plan, we achieved certain targets through base price increases. However, base price increases cannot be implemented at any stage. We also need to control future costs. In the 7th Midterm Plan, our approach to increasing revenue and passing on price increases will differ from the 6th Midterm Plan. We will expand while offsetting costs.

Regarding investment in industrial battery plants, while we would like to bring forward the start of production, SOP, to fiscal year 2028, there are unavoidable challenges such as the time and cost required for construction. Since the plant is scheduled to be completed and begin accepting orders in fiscal year 2028, the final year of the 7th Midterm Plan, the key point will be how much of an order backlog we can accumulate.

While the defense sector does not generate its own business opportunities, there is a sharp increase in demand. However, expanding our production capacity is necessary to meet this demand. This may appear conservative, but we ask that you understand the 7th Midterm Management Plan as an investment phase intended to be fully recouped in the 8th Midterm Management Plan.

There was mention of defense production volumes tripling. Is it correct to understand that the goal is to triple the JPY 19.8 billion figure from the 6th Midterm Plan?

This refers to tripling the production volume of thermal batteries.

I believe performance exceeded expectations across all business segments, but are there any onetime factors affecting each segment?

Since the February earnings revision, nearly all business segments have shown further improvement. For the Automotive Japan segment, this is due to solid sales in the aftermarket and the impact of price adjustments. Overseas, factors include strong performance in the IRA and ASEAN markets, as well as lower procurement costs. The Industrial Battery Power Supply segment performed as expected. The lithium-ion battery business exceeded expectations due to changes in HEV and PHEV volume and successful negotiations for significant price increases.

Regarding the U.S. IRA subsidies, what is the gap between the portion factored into the third quarter and the guidance announced this time?

The IRA subsidies recorded in the third quarter were for fiscal year 2024. We had also applied for fiscal year 2023 subsidies, but the fiscal year 2024 subsidies were received first and the fiscal year 2023 portion was received in the fourth quarter. Regarding these subsidies, the timing of receipt remains uncertain. Since we should also recognize the fiscal year 2025 portion as uncollected revenue, this represents an upward revision for 2 years. The U.S. IRA subsidies will add approximately JPY 1 billion annually. Fiscal year 2026 is not included in the current guidance. We are providing conservative guidance because U.S. policies are prone to change.

Does this mean there is a high probability that JPY 1 billion will be received this fiscal year as well?

That is correct.

Regarding the Industrial Battery Power Supply segment for the next fiscal year and the medium term plan, could you provide a breakdown of the revenue increase from the transfer of sales for the next fiscal year? Are the North American data center projects using lead-acid batteries, and will such projects continue to increase in the future?

Regarding North American data centers, while I mentioned a delivery value of JPY 4 billion, this is a project that will be delivered sequentially over several years. It is not a onetime project. We will be delivering over the course of 1 to 2 years. We plan to continue supplying products to North America data centers. It is not lead-based. We are developing new lithium-ion batteries for data centers and plan to begin supplying them next year and beyond.

Regarding the segment realignment for fiscal year 2026, approximately JPY 30 billion in revenue and JPY 1 billion in profit are transferred from overseas operations.

Regarding the gap between the JPY 230 billion target for the final year of the 7th Midterm Management Plan and current levels, we expect significant growth in the data center and ESS segments. We do not anticipate significant growth in sales of forklifts or emergency power supplies. The breakdown of this growth is expected to be 70% from ESS and 30% from data centers with continued growth anticipated in these areas.

Is my understanding correct that organic growth for the Industrial segment in fiscal 2026 will be around JPY 30 billion?

That is correct. Growth will come from North American data centers, JPY 4 billion, ESS, JPY 78 billion and the remainder from factors such as a 10% price increase.

What does it mean that the approach to passing on price increases is changing phases from the 6th Midterm Management Plan? I understood that rising costs would be passed on, but does this mean that has become difficult?

The challenge regarding price pass-through for so-called unprofitable businesses was implementing base price increases. We intend to continue passing on such costs through price increases. We will continue to address areas where base price increases have not yet been implemented, but for costs that have already been covered by base price increases yet continued to fluctuate upward, our policy is to charge them separately.

Please explain the current business environment in the emergency preparedness sector as well as how emergency preparedness is incorporated into this fiscal year's plans in the new midterm plan?

Regarding the emergency power sector, there have been no changes in market conditions since the previous fiscal year. Sales of lead for nuclear power and data centers remain strong and are expected to continue. However, the challenge lies in determining to what extent we can cover cost increases through price adjustments. Under the new midterm plan, we intend to pass on incurred costs. But for the emergency power sector, we also plan to focus on expanding sales by targeting replacement and construction-related demand. We are planning to overhaul our sales system, which is expected to streamline order-taking activities, and we have factored this into our projections.

Regarding the medium-term plan, I would like to ask about your approach to ROE and ROIC. The current plan projects that ROE and ROIC in the final year will decline from recent actual results. Is it correct to understand this as merely a temporary decline in profitability due to factors such as investments in production expansion? What are the final target levels you have in mind for each? Generally, the standard is around 10%, is a level of 9% acceptable? Or are you aiming for a higher figure.

Regarding ROIC, as you pointed out, investment will expand significantly during the 7th Midterm Plan period. While we assume profitability will improve to a certain extent, there may be phases where ROIC inevitably declines. However, starting with the 8th Midterm Plan and beyond during the phase where we firmly launch new businesses and restore profitability, we aim for a ROIC of 10% or higher. As for ROE, while we cannot disclose specific measures regarding capital structure at this time, we certainly believe it must exceed 10%.

What assumptions underlie the plan for the current fiscal year? How should we assess the potential for positive surprises?

We are not focusing on precisely quantifying the impact of the situation in the Middle East, but management had originally intended to build up profits even further. On top of that, we expect the situation in the Middle East to have a certain degree of impact. We anticipate cost increases of several billion yen. And since we do not know to what extent we can adjust selling prices to offset this, our overall forecast is conservative. Since there are areas where costs will increase organically, we will reflect those increases in selling prices.

Previous medium-term plans were achieved in the first year. This plan also seems quite conservative. Has there been a changing approach? I would also like to ask about the rationale for exceeding the JPY 70 billion in funding mentioned.

There has been no change from previous plans. Regarding the comment that it appears conservative, the period from the 7th to the 8th Midterm Plans is a phase of investment recovery. While we did consider building up results in the first year, given the limitations of our production capacity, we had no choice but to set figures within the range of what is realistically achievable. Rather than a conservative approach, it is about determining how much we can stretch our capabilities while facing reality. It will come down to a balancing act regarding how much costs related to the situation in the Middle East will be reduced.

Regarding funding, I assume your concern is whether there will be a public offering. However, we have no such plans at this time. We plan to raise funds through indirect or direct financing.

I understand that the future of Honda's Shiga plant is still under discussion, but how is this factored into the midterm plan? Since there are no longer any vehicles to be equipped there, many suppliers are taking impairment charges. So why hasn't GY done so?

The BEV plant in Moriyama City, Shiga Prefecture is scheduled for completion in the second half of fiscal year 2027. Prototyping and mass production are planned to begin from there. Since the impact on the 7th Midterm Business Plan is minimal, there is a possibility that the prototyping phase could be included if the project proceeds as planned. However, it has not been incorporated into the current midterm plan. We are currently in discussions with Honda regarding what will be manufactured at the Shiga plant and how it will be utilized. So we are not yet in a position to provide further details.

The new ESS battery plant will be built in a different region, but why is it also being built in Shiga? I would also like to ask about the structure and details of the subsidies.

The battery chemistry differs from the batteries produced in Moriyama, Shiga. Large-scale industrial batteries for ESS have a much higher capacity than automotive batteries and the assembly and other processes are also different. Therefore, we have separated the production bases and established a separate factory to specialize in manufacturing batteries for ESS.

How competitive will the new industrial batteries be?

In terms of a simple cost comparison, larger-scale factories can naturally produce batteries at significantly lower costs. However, our ESS business aims to supply domestically produced batteries to customers eligible for government subsidies in Japan. Our key differentiator is leveraging the advantage of domestic production to supply these batteries. We do not compete solely on price. We also aim to achieve 100% domestic sourcing of materials in the medium to long term.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good afternoon, everyone. My name is Hiroaki Matsushima, Director and CFO at GS Yuasa Corporation. Allow me to use this opportunity to thank analysts and fund managers for their coverage and interest in our company's operations. Today's briefing covers the results for the 6 months ended September 30, 2025.

Key points from the second quarter results for fiscal year 2025. Revenue reached JPY 272.2 billion, representing an increase of JPY 7.7 billion compared to the previous year. Operating profit was JPY 18.7 billion, an increase of JPY 3.0 billion, while ordinary profit was JPY 17.3 billion, an increase of JPY 2.8 billion, and interim net profit was JPY 10.5 billion, an increase of JPY 1.1 billion, resulting in both increased revenue and profit.

Performance trends are as follows: the increase in both revenue and profit was driven by higher sales volumes, alongside price revisions for automotive batteries domestic, industrial battery power sources and automotive lithium-ion batteries. Interim net profit increased due to extraordinary gains, specifically the recognition of gains on the sale of fixed assets from the disposal of idle land. Both sales revenue and profits at each stage have reached record highs.

Factors contributing to the year-on-year change in operating profit before amortization of goodwill and similar items. Although personnel costs rose year-on-year and various expenses increased due to inflation, this was offset by volume growth and higher selling prices, resulting in a JPY 3.0 billion increase in profit. Despite the underperformance of the Turkish base, strong results from other bases, particularly in the ASEAN region combined with cost reductions and selling price adjustments in the lithium-ion battery business, especially for hybrid vehicle batteries, contributed to a total of JPY 19.1 billion.

Breakdown of non-operating income and expenses, and extraordinary gains and losses. Nonoperating income has decreased. Research and development expenses at Honda GS Yuasa EV battery R&D, HGYB, our joint venture with Honda, have increased, and there are negative contributions from some equity-method affiliates. Foreign exchange gains and losses improved year-on-year. Interest expense increased, but this resulted in an increase in ordinary profit. Extraordinary gains include JPY 1.6 billion in gains on the sale of fixed assets arising from the disposal of idle land. Income tax expense increased year-on-year. Interim net profit increased by JPY 1.1 billion year-on-year to JPY 10.5 billion.

Revenue and operating profit by segment. All segments, except Automotive Batteries overseas recorded increased revenue and profit. Automotive batteries in Japan recorded increased revenue and profit with sales up JPY 3.5 billion and operating profit up JPY 0.3 billion. Automotive Batteries overseas saw a decrease in both sales revenue and operating profit, with sales revenue down JPY 4.4 billion and operating profit down JPY 0.3 billion. Industrial battery power sources saw increased revenue and profit with sales up JPY 4.7 billion and operating profit up JPY 0.6 billion. Lithium-ion batteries for vehicles recorded a significant increase in both sales revenue by JPY 4.1 billion and operating profit by JPY 2.6 billion. Specialized and others recorded a decrease in both sales and profit with sales down JPY 300 million and operating profit down JPY 300 million.

Domestic automobile production is currently recovering from the previous year's shutdowns at new car manufacturers. Furthermore, domestic infrastructure demand remains robust, partly due to replacement cycles, while renewable energy demand continues to grow steadily. Whilst domestic lead base prices and LME prices have declined, there has been a surge in the cost of certain raw materials such as antimony. Compared to the previous year, the yen has strengthened.

Automotive batteries in Japan recorded sales of JPY 47.1 billion, an increase of JPY 3.5 billion, with operating profit reaching JPY 3.7 billion, an increase of JPY 0.3 billion. Sales for new vehicles increased due to higher sales volumes following the recovery from the previous year's production stoppages at new vehicle manufacturers, the effect of selling price adjustments and the successful conclusion of price adjustments reflecting the sharp rise in antimony, a key raw material.

For the replacement market, sales volume increased alongside an improvement in the product mix, leading to higher sales revenue. Operating profit remained largely unchanged from the previous year. However, despite increases in certain raw material costs, primarily antimony and higher expenses, mainly labor costs, profit increased due to higher sales volumes and sales price revisions.

Automotive Batteries overseas recorded sales of JPY 123.1 billion, a decrease of JPY 4.4 billion year-on-year and operating profit of JPY 9.1 billion, a decrease of JPY 0.3 billion year-on-year, resulting in both reduced sales and profit. The decrease in sales was due to the impact of the Turkish base and exchange rate effects. Although sales in Turkey declined significantly, Southeast Asia, Europe and Australia remained robust. Operating profit was negative, partly due to exchange rate effects, but we recognized an increase on a local currency basis.

Industrial battery power supplies recorded sales of JPY 50.9 billion, an increase of JPY 4.7 billion year-on-year and operating profit of JPY 4.5 billion, an increase of JPY 0.6 billion year-on-year. For regular field, including ESS, sales increased slightly due to a rise in projects and the carry-over effect from the previous period. Sales in the emergency use increased due to expanding demand for nuclear power and data centers as well as new orders from major convenience store chains.

Sales of forklift batteries remained largely unchanged from the previous year. The surge in antimony prices has been partially reflected in selling prices. The primary factor driving the profit increase was the rise in demand for emergency field batteries. We recognize that the significant impact stems largely from improved profitability driven by strong performance in projects for nuclear power plants, data centers and government agencies.

Sales of automotive lithium-ion batteries reached JPY 40.4 billion, an increase of JPY 4.1 billion year-on-year. Operating profit was JPY 0.8 billion, a significant improvement of JPY 2.6 billion year-on-year. Sales increased for hybrid vehicle batteries, driven by a significant expansion in volume supplied to Honda.

Plug-in hybrid vehicle applications saw increased volume year-on-year with profits recovering substantially from the previous year's deficit to achieve profitability. For hybrid vehicle applications, profit increased substantially due to higher volumes, price adjustments and stabilizing raw material market conditions.

Specialized batteries and other products recorded sales of JPY 10.6 billion, a decrease of JPY 0.3 billion year-on-year, and operating profit of JPY 0.9 billion, a decrease of JPY 0.3 billion year-on-year. Sales of lithium-ion batteries for submarines decreased due to a revision in contract unit prices. Sales of lithium-ion batteries for aircraft decreased for both new installations and airline applications. Additionally, a slight increase in head office administrative expenses and research and development costs contributed to the decline in profit.

This is the balance sheet as of the end of September 2025. Total assets amounted to JPY 684.5 billion, representing a decrease of JPY 9.3 billion compared to the end of March. This decrease is primarily attributable to a JPY 23.4 billion reduction in current assets. Cash and deposits decreased due to investments in tangible fixed assets, specifically the BEV factory and increased production facilities for lithium-ion batteries for hybrid vehicles. Tangible fixed assets increased by JPY 11.7 billion, driven by growth in machinery and equipment and construction in progress. The equity ratio stands at 51.8%. Total borrowings amounted to JPY 105.1 billion.

Operating cash flow was positive JPY 14.6 billion. Investing cash flow was negative JPY 26.9 billion. Financing cash flow was negative JPY 11.0 billion and free cash flow was negative JPY 12.3 billion. Although operating cash flow showed a significant improvement from the previous year, overall cash flow was negative due to capital expenditures for BEV production facilities and increased production capacity for hybrid vehicles.

Please refer to this slide as supplementary material.

We shall now outline our assessment of the business environment for the second half of the fiscal year ending March 2026.

Automotive batteries in Japan. Price increases for raw materials such as antimony have been passed on to new vehicle customers, and sales volumes for both new vehicles and replacement batteries are progressing as planned. Replacement battery sales are showing a slight upward trend.

Automotive batteries overseas. While challenges persist in Turkey, the main market in ASEAN remains robust. This favorable situation for both new vehicle and replacement applications is expected to continue in the second half. Australia is also anticipated to maintain strong performance in the second half.

Industrial Battery and power supplies. Emergency use supplies remain strong as infrastructure enters a renewal phase with new projects increasing for government agencies, nuclear power, data centers and telecommunications. Unlike emergency use, regular use applications have longer lead times from order to delivery. Although delivery dates may fluctuate due to customer factors such as subsidies and project applications, continued strong performance is anticipated.

For automotive lithium-ion batteries, partial price adjustments have been implemented for hybrid vehicle applications. Against a backdrop of robust demand, volume growth is anticipated to continue in the second half. For plug-in hybrid vehicles, volume reductions beyond initial projections are expected to continue into the second half. However, production is anticipated to remain robust due to strong demand for batteries for energy storage systems, ESS, which are manufactured at the same facility.

For hybrid vehicles, we anticipate a partial revision of selling prices and an increase in volume for Honda, but we also expect an increase in depreciation costs for the newly established line set up for new projects. For specialized batteries and other products, we recognize no change in the demand environment.

This is the initial forecast announced in May. Although we anticipate steady progress in the second half, we have not revised our initial forecast due to the postponement of large-scale projects in the industrial battery power supply business's standard-use sector and the further negative impact of the Turkish operations.

Towards the Seventh Mid-Term Management Plan currently under formulation, under the Sixth Mid-Term Management Plan, we significantly expanded earnings in the automotive lithium-ion battery business and the industrial battery power supply business alongside our existing lead-acid battery operations. We believe the sixth midterm management plan successfully strengthened the foundation of our earnings structure as intended.

However, within the automotive lithium-ion battery business, significant shifts in market trends have necessitated addressing specific challenges for both hybrid and plug-in hybrid vehicles. Our commitment to contributing to society by solving social issues related to mobility and social infrastructure, as outlined in Vision 2035, remains unchanged. However, we will clarify the priorities for each business within the lead-acid battery and lithium-ion battery sectors, control capital allocation and advance measures to enhance our corporate value.

Under the Seventh Mid-Term Management Plan, within the mobility sector, we will strive to increase cash generation, both domestically and internationally for lead-acid batteries, which are expected to continue expanding due to the global increase in the number of vehicles in operation.

For lithium-ion batteries, we will meet new vehicle manufacturer demand with an annual production capacity of 70 million cells for hybrid vehicles. For BEVs, we will make investments commensurate with market demand and respond appropriately to our corporate scale. For 12-volt batteries, we will reliably serve Japanese new car manufacturers alongside lead-acid batteries, utilizing our expertise.

In the social infrastructure sector, robust demand exists in the regular field. We are advancing discussions to expand production capacity through the addition of new production sites. Alongside the development and introduction of new lithium-ion battery models, we will maximize sales opportunities and strengthen competitiveness. In the emergency use, replacement demand is increasing due to aging infrastructure. We will respond to backup demand and domestic and international data center demand with high-quality products and meticulous aftersales service.

Aerospace and Defense sector. We recognize the broad scope for application of our batteries installed on the International Space Station and artificial satellites. Amid heightened defense awareness within Japan, we will invest in production facilities to meet growing demand for large-scale lithium-ion batteries and thermal batteries for defense applications, leveraging our unique products and technologies. We will steadily expand profits in the aerospace and defense sectors through our unique technologies.

This concludes an overview of our positioning towards the seventh midterm management plan. We will now begin today's Q&A session.

Regarding the Industrial Battery Power Supply business, second quarter performance was slightly down year-on-year. Is it correct to understand this was due to exceptionally strong performance in the prior year? Also, on the full year forecast front, you mentioned that revenue recognition for projects scheduled for completion this fiscal year will fall into fiscal year 2026. What level of impact is anticipated?

As a trend within the Industrial Battery Power Supply business, projects tend to concentrate around the end of the first and second half periods. We have not factored in the timing shift for deliveries. Our view remains that the business continues to perform well. The impact of the timing shift directly affects both sales and profit. The impact is estimated at just under JPY 6 billion on a sales basis and just under JPY 500 million on a profit basis. We are currently negotiating with customers to see if we can somehow bring these projects within the current fiscal year.

Regarding the outlook for automotive lithium-ion batteries, the second half will also include depreciation charges for the new production line. However, the full year pre-depreciation profit of JPY 2 billion seems likely to be slightly higher. Is the upward trend expected to continue in the second half?

The second half will follow the upward trend seen in the first half. As President Abe explained, this does not constitute a full earnings revision. While it will be difficult to achieve a steep upward trajectory in earnings going forward, as we plan to manufacture products, while pausing out the automotive lithium-ion battery lines from next fiscal year onwards, it is reasonable to view the current situation as showing some improvement.

Please explain the second quarter performance by segment relative to the initial plan.

Automotive Batteries domestic: in line with the plan, slightly above target; the surge in antimony prices has been balanced by sales price adjustments.

Overseas Automotive Batteries: underperformance in Turkey is dragging results down; performance depends on how well other sites can compensate.

Industrial power batteries: slightly above plan for the first half. Full year operating profit of JPY 19 billion remains uncertain, contingent on the outcome of timing adjustments. Lithium-ion batteries for automotive applications: as stated in Answer 2.

Regarding the timing shift mentioned in answer 3, would operating profit of JPY 19 billion be achievable without this timing shift?

Regarding the timing discrepancy, it depends on whether the application procedures can be completed in time. If this period's procedures cannot be completed in time, it will be carried over to the next period. If there is no timing discrepancy, the operating profit target of JPY 19 billion is expected to be met.

Is the profit from automotive lithium-ion batteries a one-off? Also, will LEJ separate the PHEV and regular use ESS lines?

Cost reductions, yield improvements and sales price negotiations with new car manufacturers are bearing fruit. While the upside potential for the second half is considered somewhat limited, we recognize an overall upward trend for the full year.

Production lines are being managed at the LEJ Ritto plant. But as manufacturing cannot keep pace, we are considering new expansions that is significant capacity increases. Details will be clarified in the Seventh Mid-Term Management Plan.

Please clarify the positioning of the Seventh Mid-Term Plan within GY. Is this a period for growing profits or for consolidating foundations?

The Sixth Mid-Term Plan focused on solidifying the revenue base. The Seventh Mid-Term Plan will shift to an offensive stance, building upon this solid foundation. We plan to invest profits from existing businesses into our key focus areas.

Given the low demand for BEVs, there is concern that the new Shiga factory may become a financial burden. If there are measures to alleviate this concern, please explain them.

It is true that the BEV landscape is undergoing significant change. Regarding BEVs, we are proceeding with Honda in discussions to respond according to demand. We are examining with Honda, the prioritization of achieving full utilization of the Shiga plant, Yokoe. We are progressing in a manner that avoids it becoming a business that undermines the profits planned for the Seventh Mid-Term Plan. When explaining the Seventh Mid-Term Plan, we will ensure we can discuss these points in detail.

I wish to ask about the direction of the seventh midterm management plan. May I assume that management resources will be shifted towards industrial applications going forward?

Regarding the industrial sector, we have thus far utilized existing assets such as batteries and production equipment at the Ritto facility. We hereby explicitly state our commitment to making substantial investments in industrial lithium-ion batteries going forward. Details will be clarified in the Seventh Mid-Term Management Plan.

The GY report states that the next mid-term plan will focus on enhancing corporate value. Could you explain the rationale behind this? I believe your company has not previously made such explicit references to enhancing corporate value. Could you explain the changes in your company's current trends?

Enhancing corporate value is a fundamental principle. We believe that the collective effort of all employees diligently performing their individual duties to enhance corporate value is reflected in the share price. Based on the principle that people and business opportunities gravitate only towards organizations with high corporate value, we aim to strengthen our business resilience through unified employee commitment to strengthen our business operations.

Regarding the factors affecting the increase or decrease in automotive lithium-ion batteries, it states that the review of selling prices is having a positive effect. Is this for PHEVs or HEVs?

The primary focus of the sales price review was HEVs. For PHEVs, sales prices fluctuate based on a volume-dependent pricing table, so the impact is not significant. The reason HEV sales prices could be adjusted was that the lead-acid battery division has built long-standing relationships with new car manufacturers and conducted price negotiations over many years. We believe that applying this experience to lithium-ion batteries and securing the sales price adjustment led to this significant positive impact.

What aspects are being considered for the new lithium-ion battery?

We plan to strengthen our position in the industrial lithium-ion battery sector, specifically focusing on LFP, lithium iron phosphate and large-scale applications.

Thank you for taking the time off your busy schedules to view today's earnings briefing.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]