Mitsubishi Electric Stock

This time, we'd like to now start the financial results briefing of Q1 of fiscal year ending March 2027 of Mitsubishi Electric. Let me introduce the speaker today, Executive Officer, CFO, Kenichiro Fujimoto. Mr. Fujimoto, please start.

[Interpreted] This is Fujimoto of Mitsubishi Electric. Thank you very much for attending this financial results briefing. First of all, I'd like to express deepest condolences to the victims of 2026 Kumamoto earthquake and extend heartfelt sympathies to affected people. Entire Mitsubishi Electric Group sincerely pray for swift recovery of affected areas and will start the initiative to support the people who are affected. In relation to the Kumamoto earthquake, let me share with you the current status of our business.

We have 2 production sites in Kumamoto for Semiconductor & Device business. There were no significant impact on buildings, processes that completed the equipment inspection and start-up gradually resumed the operations since yesterday. Now let me start my explanation on the fiscal '27 Q1 consolidated financial results. Please turn to Page 4. Those are the key points of the financial results. Driven by the growing demand and others, Q1 revenue increased year-on-year in all segments, especially Industry, Mobility and Life segments. This was the record high Q1 revenue, JPY 1,497.1 billion. In FA Systems, Defense & Space Systems, Air Conditioning Systems and Home Products, the business scale increased and there were price improvements in mass production businesses, and there was a weaker yen effect.

Adjusted OP grew JPY 50.4 billion year-on-year to JPY 144.3 billion, which was a record high as Q1. As for full year fiscal '27 forecast, in Factory Automation System, AI and semiconductor-related demand increased, leading to bigger business scale and the yen weakened in Q1. So the previous forecast is revised upward by JPY 70 billion, revenue of JPY 6.27 trillion and adjusted OP of JPY 620 billion, up JPY 30 billion from the initial forecast.

Page 6, this is the results of the Q1. As explained, revenue was up 14% year-on-year. Adjusted OP up 54%. The net profit attributable to MEC stockholders increased 21% year-on-year to JPY 109.8 billion, the highest number as Q1. Page 7. So, this shows the waterfall chart showing the Q1 revenue and adjusted OP year-on-year changes. The weaker yen pushed up the revenue by JPY 85 billion and pushed up the operating profit by JPY 22 billion.

Excluding the FX impact, there were price -- procurement price increased, revenue in FA System, Defense Space System, AC System and Home Products increased and also there were price improvements in mass production businesses. And there was an effect of the next-day support program implemented last fiscal year. The AOP increased by JPY 28.5 billion. This shows the consolidated statement of financial position and cash flow. Total assets declined by JPY 109.2 billion from the end of last fiscal year.

Inventories increased with the progress of construction in the individual production businesses, but there is a progress in collection of the account receivables. Total equity increased by JPY 88.6 billion from the end of last fiscal year. The MEC stockholders' equity was JPY 4,571.15 billion (sic) [ JPY 4,571.5 billion ] , up JPY 87.2 billion from the end of last fiscal year, reflecting the dividend payment of JPY 61.4 billion, but the booking of JPY 109.8 billion in net profit.

And the percentage of this against the total asset increased to 63.1%, plus 2.2 points. Next is the free cash flow. There were increase in the expenses of the inventories, but with the higher net profit and also the return of the retirement benefit trust assets, the free cash flow -- excuse me, the cash flow from operating activities was an inflow of JPY 388.6 billion, up JPY 195.1 billion. There was an increase in the tangible fixed assets. And as a result, the cash flow from investing activities increased JPY 67.7 billion year-on-year.

And free cash flow was positive JPY 301.5 billion, up JPY 127.4 billion year-on-year. Next is year-on-year comparison of revenue and operating profit by segment. Revenue increased in all segments. AOP increased in all segments, except for Digital Innovation. I would explain the details on the following pages by segment. And sub-segment-wise numbers will be shown in supplementary materials on Page 20.

Please turn to Page 10. I'll start with Infrastructure segment. Demand continued to be robust across all businesses. And for the whole segment, orders, revenue, and adjusted operating profit were up year-over-year. In Public Utility Systems, while orders was up year-over-year, thanks to large orders for UPS systems in North America, revenue fell due to a decline in the domestic transport business. Adjusted operating profit was also down year-over-year due to changes in our project portfolio and absence of one-off factors, which was present in the prior year.

In Energy Systems, orders was up year-over-year, driven primarily by the domestic power generation business. Both revenue and adjusted operating profit were up year-over-year, thanks to the growth of our substation business in North America, among others. In Defense & Space Systems, while orders was down year-over-year, last year, we had large projects in the Defense Systems business, revenue rose by, sorry, 37% year-over-year, thanks to increased production capacity and adjusted operating profit was also up year-over-year.

Please turn to Page 11 for Industry & Mobility segment. In FA Systems, driven by increased demand for AI and semiconductor-related products in China, Japan, Taiwan and elsewhere, orders rose by 42% and revenue grew by 30% year-over-year. Adjusted operating profit was also up year-over-year, driven by higher revenue and price improvements despite factors such as rising procurement costs. In Automotive Equipment, despite a decline in car multimedia in North America, both revenue and adjusted operating profit were up year-over-year, driven by weaker yen and price improvements.

Please turn to Page 12 for Life segment. In Building Systems, orders, revenue, and adjusted operating profit were up year-over-year, driven by the weaker yen and the consolidation of an affiliate in the Middle East as a subsidiary. In Air Conditioning & Systems and Home Products (sic) [ Air Conditioning Systems & Home Products ], despite decline in North America, revenue was up year-over-year due to the weaker yen and solid demand for air conditioning equipment in Europe as well as in Japan.

Adjusted operating profit was up year-over-year, driven by the weaker yen, increased revenue due to higher demand and price improvements despite a rise in procurement costs. Please turn to Page 13. In Digital Innovation, demand remained firm, driven by system upgrades and digital transformation, resulting in higher orders and revenue year-over-year, while adjusted operating profit stayed flat. In Semiconductor and Device, demand stayed robust for products such as optical devices for data center communications. Orders was up 53% year-over-year for the whole segment due to growth in telecom optical devices and the power semiconductors for industrial as well as commercial use -- consumer use.

Both revenue and adjusted operating profit were up year-over-year, driven by stronger demand and weaker yen. Please turn to Page 14. Revenue by customer location. Revenue increased year-over-year in both domestic and overseas markets. Domestic revenue grew led by Defense & Space Systems, and the number was up 9% year-over-year. Overseas revenue rose by 18% year-over-year, driven by growth in China and Asia, primarily in FA Systems and in Europe, in Air Conditioning Systems & Home Products business.

The overseas ratio increased by 2 percentage points to 57%. Please turn to Page 16. Full year forecast for fiscal '27 has been revised from the previous announcement to project higher revenue and profit to revenue of JPY 6.27 trillion and adjusted operating profit of JPY 620 billion. FX assumptions from Q2 onwards remain unchanged at JPY 150 to the U.S. dollar, JPY 175 to the euro and JPY 21.5 to the Chinese yuan.

Revenue and adjusted operating profit by segment for the current forecast are disclosed in the supplement on Page 21. The forecast has been revised upwards for both revenue and profit to reflect higher growth in demand for AI and semiconductors in the FA Systems segment in China and Japan as well as higher revenue in Energy Systems in North America and weaker yen in Q1 compared to our assumption. Impact of the earthquake in Kumamoto Prefecture on our business performance is expected to be limited. That concludes my presentation.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

It is time. So we would like to begin Mitsubishi Electric Corporation's consolidated financial results briefing for the third quarter of fiscal 2026. So allow me to introduce today's speaker, Executive Officer and CFO, Mr. Kenichiro Fujimoto. Mr. Fujimoto, please begin.

This is Fujimoto from Mitsubishi Electric. Thank you for joining our financial results briefing today. I will now explain the consolidated financial results summary for Mitsubishi Electric's third quarter of fiscal year 2026.

So please turn to Page 3. These are the key points of my presentation. I will cover the results for the third quarter of fiscal year '26, which will be referred to as Q3. Revenue reached a record high of JPY 1,423.5 billion for the 3-month period of Q3, driven primarily by business volume expansion from increased demand in the Infrastructure business area and the Factory Automation Systems business.

Operating profit, excluding the impact of the Next-Stage Support Program for personnel structure optimization reached JPY 144.7 billion, driven by increased sales and the results of ongoing efforts to increase profitability and efficiency across all businesses. The operating profit margin of 10.2% marked a record high for the 3-month period of Q3, resulting in increased revenue and profits over the same period last year.

The Next-Stage initiatives third quarter results, including the accelerated implementation at subsidiaries amounted to JPY 74.3 billion. Operating profit, including this impact, was JPY 70.3 billion. Furthermore, both revenue and profit on a net basis, excluding the impact of Next-Stage, reached record highs for the cumulative 9 months through Q3.

The full year fiscal year '26 earnings forecast reflects strong performance in the Infrastructure BA and FA Systems segment as well as changes in exchange rates. Revenue is projected to increase by JPY 900 billion over the previous forecast to JPY 5,760 billion.

Operating profit on a net basis, excluding the impact of Next-Stage, is projected at JPY 500 billion, an increase of JPY 30 billion from the previous forecast of JPY 470 billion. Operating profit, including the Next-Stage impact is forecast at JPY 400 billion, down JPY 30 billion from the previous forecast.

Our projection for the impact of Next-Stage has been revised from JPY 40 billion to JPY 100 billion. This reflects the accelerated implementation of the program at subsidiaries originally anticipated for next fiscal year and beyond. We will secure performance by implementing steady growth investments alongside measures to improve profitability and efficiency.

Now please turn to Page 5. This shows the group's performance for the 3 months of Q3. Revenue increased by JPY 66.7 billion year-on-year to JPY 1,423.5 billion, surpassing Q3 fiscal year '25 to reach the highest ever. Operating income, excluding the impact of Next-Stage, increased by JPY 17.8 billion year-on-year to JPY 144.7 billion, another record high. And operating margin improved by 0.8 percentage points year-on-year to a record 10.2%.

Now please turn to Page 5. This page shows the results for the first 9 months of the fiscal year. Revenue of JPY 4,156 billion, operating profit of JPY 369 billion on a real basis, excluding the impact of Next-Stage and the operating margin of 8.9%, all set new highs for the first 9 months of the fiscal year. Net profit also reached the highest ever, even including the impact of Next-Stage.

Please refer to Page 7. This waterfall chart shows the year-on-year changes in revenue and operating profit for the 3 months of the third quarter, as explained earlier. Despite the impact of a logistics subsidiary share transfer in the same period of the previous fiscal year, we achieved a significant year-on-year growth in both revenue and operating income on a real basis, excluding the impact of Next-Stage due to the weak yen, increased AI and smartphone-related demand in the FA Systems business, expansion of the infrastructure BA accompanying growth in UPS and power substation-related businesses for data centers in North America as well as in the Defense business in addition to price improvements and cost reductions.

Please see Page 8. This shows the fluctuation in revenue and operating profit for the first 9 months of the fiscal year. The foreign exchange rate negatively impacted revenue by JPY 5 billion and profit by JPY 11 billion. However, if you exclude the Next-Stage impact on a real basis, revenue and profit both increased year-on-year, primarily due to expanded business volume.

Please turn to Page 9 now. This is the consolidated statement of profit or loss for the third quarter 3 months. The cost of sales ratio improved by 1.7 percentage points compared to the same period last year, driven by the weak yen effect and improvements in the FA Systems segment and the Semiconductor & Devices group.

Selling, general and administrative expenses increased year-on-year, primarily due to an approximately JPY 6 billion increase in yen-denominated amount resulting from the weak yen. However, the SG&A ratio improved by 0.5 percentage points.

Other income expenses in the same period last year posted a gain on the sale of shares in a logistics subsidiary. While this year, we have recognized the expenses from the Next-Stage initiative. The deterioration in financial income expenses resulted from the recognition of currency gains due to a sharp yen depreciation in the same period last year.

The improvement in investment profits accounted for using the equity method includes the impact of the fair value assessment of existing equity interest in AG MELCO Elevator Company Limited, which was made a subsidiary in the Building Systems segment.

Please refer to Page 10 for the consolidated statement of profit or loss for the 9-month period of the first 3 quarters.

Now please skip to Page 11. Turning now to the consolidated statement of financial position. First, assets increased by JPY 284.2 billion over the end of the previous fiscal year. Inventories increased by JPY 125.5 billion due to the impact of yen depreciation and progress in construction of the made-to-order business. We will continue to work on improving asset efficiency such as by optimizing inventory placements.

Equity capital increased by JPY 225.4 billion over the end of the previous fiscal year. Of this, equity attributable to parent company shareholders, despite the impact of dividend payouts and the repurchase of shares, increased by JPY 212.4 billion to JPY 4.162 trillion over the end of the previous fiscal year, driven by a net profit of JPY 298.2 billion and the impact of currency conversion of the net assets of overseas subsidiaries due to the weak yen.

The ratio of equity attributable to parent company shareholders to total assets increased by 0.6 percentage points from the end of the previous fiscal year to 62.5%.

Please turn to Page 12 for the consolidated cash flows for the cumulative 9-month period. Cash flow from operating activities was an inflow of JPY 342.9 billion, an increase of JPY 34.7 billion year-on-year, primarily due to recording of net profit.

Cash flow from investing activities resulted in an outflow of JPY 138.4 billion, a JPY 4.4 billion increase in outflows. This was due to higher expenditures for acquisitions, which are weighted proceeds from the sale of securities. As a result, free cash flow was an inflow of JPY 204.4 billion, increase of JPY 30.2 billion year-on-year.

Turn to Page 13, please. I will now explain revenue and operating profit by segment for the 3 months of the quarter. During this period, all business areas, except Semiconductor & Device sales growth, while all business areas recorded profit increase.

On the next page, for the 9-month period up till quarter -- third quarter, revenue grew in all business areas, except Industry & Mobility and Semiconductor & Device Profit increased in all segments, except Life. The Next-Stage impact is included in Eliminations and Corporate. Details for each segment are on the following pages. A full list of segment's figures is available in the supplementary information on Page 23 and 24.

Skipping one page, please see Page 15. For the Infrastructure business area, all subsegments recorded year-on-year increase in both revenue and profit. In Public Utility Systems segment, order intake sales and profit all exceeded the previous year. This was driven by strong UPS business for overseas data centers and steady domestic transportation project.

And for Energy Systems segment, demand remains solid due to data center expansions, particularly in North America, orders revenue and profit all exceeded previous year. In third quarter, specifically, the operating margin improved due to the higher proportion of high-margin project.

In Defense & Space Systems segment, order intake, revenue and operating profit exceeded previous year due to expanding demand. Order intake remained high, and backlog has been increasing since the end of the fiscal half. And we expect steady growth in both sales revenue and profit going forward.

Page 16 discovers Industry & Mobility business area. In the Factory Automation Systems segment, driven by demand for smartphones and machine tools in China as well as continued AI-related capital investment in Japan and China, order revenue rose Y-o-Y basis. And due to higher revenue -- excuse me, the sales volume, price improvements and cost reductions, operating profit also increased from last year.

And Automotive Equipment segment, the sales fell year-on-year due to lower sales in Japanese automakers in China and decreased car multimedia for North Americas. However, profit increased through price improvements and cost reductions.

Page 17, please. This is Life business area. The Building Systems segment saw growth in order revenue and operating profit, led by increase in domestic renovation project.

The Air Conditioning Systems & Home Products segment, sales in North America fell as a rebound from last year's rush demand ahead of the recent transition. However, overall sales rose due to demand growth in Japan and Europe and weaker yen. And operating profit was impacted by rising material cost and stronger Thai baht and declined on a year-on-year basis.

Page 18, please. This is Digital Innovation segment. Demand remained solid with order revenue and profit all exceeded the previous year. The Semiconductor & Device segment, order rose due to the growth in power semiconductor for railways and power transitions and optical devices for the data centers. Revenue was flat year-on-year, but operating profit increased due to an improved sales mix, driven by optical devices.

Page 19, please. The revenue by location of customers for third quarter. While overseas sales were boosted by the weak [ yen ] and demand for Air Conditioning System & Home Product in Europe. And domestic revenue also grew, led by Infrastructure. And consequently, the overseas sales ratio over consolidated revenue remained at 51%.

Page 21, please. This is full year forecast for FY '26 -- fiscal '26. We have revised our revenue forecast upward by JPY 90 billion to JPY 5.76 trillion. Core operating profit is expected to increase by JPY [ 30 ] billion to JPY 500 billion, excluding Next-Stage impact. The segment, we revised the higher revenue and profit for Infrastructure business area, expected to expand.

And Factory Automation Systems was also revised upward, reflecting the weak [ yen] and continued demand growth. However, for Air Conditioning System & Home Products segment, we lowered the volume outlook for North America. While revenue will rise now, we expect a profit decline. We will also raise the forecast for Automotive Equipment and Business System for higher profit and revenue and for a profit forecast for Semiconductor & Device segment as well.

So this concludes my presentation.

It's time to start the Mitsubishi Electric FY '26 Second Quarter Financial Results Briefing. Let me introduce the speaker, our Executive Managing Director, Officer, CFO, Kenichiro Fujimoto. So Fujimoto-san, please proceed.

Thank you. I'm Fujimoto from Mitsubishi Electric. Thank you for joining our earnings results briefing today. So let me explain the consolidated financial results for our second quarter of FY '26 year ending March 31, 2026. Please move to Page 3.

These are the highlights. Despite the impact of a stronger yen, particularly against the U.S. dollars during the first half of FY '26, revenue increased to JPY 2,732.5 billion and operating profit reaching JPY 224.3 billion, both record high, thanks to sales growth making -- mainly in the Infrastructure and the ongoing effort of profitability and efficiency improvements.

The FY '26 full year outlook projects revenue of JPY 5.67 trillion, JPY 270 billion higher than the previous forecast, reflecting the sales growth in the Infrastructure and the revised assumption of a weaker yen. And operating profit is projected at JPY 430 billion, no change from the previous announcement, incorporating increased retirement costs under the Next-Stage Support Program while reflecting increased sales, the FX impact and the realization of price pass-through for U.S. tariff. The -- excluding the retirement alliance income, it is JPY 40 billion increase from the previous announcement.

The interim dividend has been increased by JPY 5 from the previous yen (sic) [ year ], setting a record high of JPY 25 per share. The year-end dividend is planned to be JPY 30, resulting in an annual dividend of JPY 55. We will continue to return profits from our business growth to our shareholders.

Please move to Page 5. This is our group's first half performance. As mentioned before, revenue reached JPY 2,732.5 billion, an increase of JPY 88.9 billion year-over-year, exceeding the first half of FY '25 and set a new record high. Operating income increased by JPY 47.6 billion year-on-year, JPY 224.3 billion, higher than the first half of FY '25, setting a record high. The operating profit margin improved by 1.5 percentage point to 8.2%. Profit -- this also -- operating income is setting a record high, better than FY '18.

Page 6. In the second quarter, Q2 of FY '26, both revenue and income after tax reached record high for Q2. Operating income decreased due to a factor that boosted operating income in Q2 of the previous year and decrease in unrealized gains on inventories related to the intra-group transaction against the sharp appreciation of yen.

Please go to Page 7. So the waterfall chart shows the year-on-year change in the revenue and operating profit for the first half. The stronger yen resulted in JPY 31 billion decrease in revenue and JPY 15 billion decrease in operating profit. Excluding the impact of FX, revenue and operating profit increased due to growth in scale in the Infrastructure and FA Systems, price improvements in the Industry & Mobility and air conditioning systems, home products and gains on the transfer of subsidiary shares.

Please go to Page 8. I now focus on items not previously explained in consolidated statement. The cost of sales was 68.3%, improvement of 1.0 point from the 69.3% in the same period of the previous year. Although each business was impacted by stronger yen, efforts to improve pricing, profitability and efficiency are yielding results. SG&A expenses increased by JPY 27.1 billion year-on-year. This was due to increased personnel and R&D costs due to accelerating AI adoption and S&D business growth.

Regarding nonoperating side, the Q2 of last year saw a sharp yen appreciation leading to FX losses. This fiscal year, the yen remained weak, particularly against the euro, resulting in JPY 25.1 billion improvement in expense compared to the last year.

Please refer to Page 10. This is a consolidated financial position. First, the assets increased by JPY 69 billion compared to the end of the last year. Inventories increased by JPY 23.5 billion due to the weaker yen against the euro and Thai baht. In the made-to-order business, inventories increased due to the project progress, but in the mass production business, inventory optimization led a decrease compared to the year end of the last year. Capital increased by JPY 104.5 billion compared to the end of the last year, of which equity attributable to the owners of the parent increased by JPY 98.2 billion to JPY 4,047.9 billion, reflecting the net income of JPY 189.3 billion for the first half, while we had dividends paid to shareholders and share buyback. The ratio to total asset increased by 0.9 percentage point to 62.8%.

Please refer to Page 11. Cash flow from operating activities increased by JPY 73.2 billion to JPY 344.7 billion due to higher net income for the first half. Cash flow from investment decreased by JPY 71.7 billion, primarily due to higher proceeds from the sales of the securities and subsidiary shares. As a result, free cash flow increased by JPY 145 billion to JPY 297.9 billion.

Please turn to Page 12. From here, I will explain revenue and operating profit by segment. While Infrastructure posted year-on-year increase in both revenue and profit, Industry & Mobility as well as Semiconductor & Device posted decrease in revenue and increase in profit, and Life and Digital Innovation recorded increase in revenue and decrease in profit. We will provide a detailed explanation of each segment from the next page onward, and the table showing results by each subsegment is available on Page 21 in the supplementary materials.

Please turn to Page 13. First, Infrastructure segment. In Public Utility Systems, transportation systems, public utility systems businesses in Japan as well as the UPS business for overseas markets performed well and revenue increased year-on-year. Operating profit also increased year-on-year, mainly due to increased revenue, a shift in project portfolio and the recognition of onetime gains. In Energy Systems, both revenue and operating profit increased year-on-year, mainly due to the expansion of the power transmission and distribution businesses in Japan and overseas. In Defense & Space Systems, both revenue and operating profit increased year-on-year due to increased demand for the defense systems. We will continue to focus on the steady execution of construction projects and secure revenue and earnings steadily in the second half of the year.

Please turn to Page 14 for Industry & Mobility. In factory Automation Systems, both orders and revenue increased year-on-year as demand related to smartphones and industrial machinery in China and capital expenditures mainly for AI-related semiconductors in Japan, China and Taiwan continued to grow in the second quarter. Operating profit also increased year-on-year due to increased revenue and the improvements in product prices. In Automotive Equipment, revenue decreased year-on-year, primarily due to the impact of lower sales volume by Japanese car manufacturers in China and the decrease in car multimedia for North America, but operating profit increased year-on-year due to improvements in product prices and reduced expenses.

Please turn to Page 15 for Life segment. In Building Systems, both orders and revenue increased year-on-year, mainly due to an increase in the domestic renewal businesses and operating profit also increased year-on-year. In Air Conditioning systems & Home Products, revenue increased year-on-year due to robust demand for air conditioning systems in North America and Japan, along with signs of recovery in demand in Europe despite the impact of the strong yen. Operating profit decreased year-on-year despite higher revenue, mainly due to the impact of foreign exchange rates and the upfront investment into development, among others.

Please refer to Page 16. In Digital Innovation, both orders and revenue increased year-on-year due to robust demand for system upgrades and digital transformation-related efforts, but operating profit decreased year-on-year, mainly due to expenses related to the integration of affiliated companies. In Semiconductor & Device, demand for optical communication devices for data centers remained strong despite the stagnation in demand for power modules. Orders decreased year-on-year due to decrease in orders for power modules. Revenue decreased year-on-year due to decreases in power modules used for industrial and automotive applications despite an increase in optical communication devices. Operating profit, however, increased year-on-year due to an improved profitability resulting from an increase in sales of optical communication devices and the effective cost control.

Please refer to Page 17. This page shows revenue by location of customers. Overseas revenue increased by JPY 27.6 billion or 102% of the same period of the previous year to JPY 1,447.2 billion due to increased demand in Infrastructure and Life in North America as well as increased demand in Factory Automation Systems in China and Asia despite decreases in Automotive Equipment in China and North America. On the other hand, revenue in Japan increased by JPY 61.2 billion or 105% of the same period of the previous year. As a result, the ratio of overseas revenue to consolidated revenue was 53%, down 0.7 percentage points year-on-year.

Please refer to Page 19 for the full year forecast for the fiscal year 2026. Revenue is expected to increase by JPY 270 billion from the previous forecast, up to JPY 5,670 billion due to increase in demand for Infrastructure and Factory Automation Systems in China and Asia as well as increase in demand for air conditioning systems centered on North America and Europe, along with the revision of the foreign exchange rate assumption to a weaker yen. Operating profit is expected to be JPY 430 billion, unchanged from the previous forecast as increase in profit in each business segment is factored in while incorporating JPY 40 billion of retirement costs as a corporate expense associated with the Next-Stage Support Program.

Revisions were made from the previous forecast by segment, with increase in revenue and profit forecasted for each subsegment in Infrastructure due to increase in volume and increase in revenue and profit for each subsegment in Industry & Mobility, driven by higher volume in Factory Automation Systems as well as weaker yen and increase in profit in Semiconductor & Device due to weaker yen, among other factors. The forecast for revenue and operating profit by segment is on Page 23 in supplementary materials. That concludes my explanation.

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