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Good afternoon, everyone. This is Iizuka speaking. And so I will explain the financial results for the first quarter of the fiscal year ending March 2027. Please turn to Page 5 of the presentation material. This is an executive summary of our first quarter results.

In the first quarter, strong growth, particularly in the Americas, combined with the positive impact of the weaker yen resulted in significant increases in both sales and profits. Sales were JPY 130.6 billion, up 23.6% year-on-year. Operating profit was JPY 14.8 billion, up 39.5% year-on-year.

Quarterly profit attributable to owners of the parent was JPY 8.6 billion, up 90.9%. The main drivers of sales growth were a significant growth in the hematology field in the Americas as well as solid growth in EMEA and AP, Asia Pacific.

On a local currency basis, sales increased across these regions by 26.1% in the Americas, 11% in EMEA and 7.6% in AP. In China, on the other hand, sales declined 33.8% year-on-year on a local currency basis due to the continued impact of the challenging market environment. However, this was within our initial expectations. On the profit side, we achieved a significant increase driven by higher gross profit resulting from increased sales as well as the absence of the impact of the inventory valuation review recorded in the previous fiscal year.

As for SG&A expenses, while we continue to invest in business expansion, we have kept the increase in expenses within the rate of sales growth, resulting in an improvement in operating margin. Cash generation also remained at a high level with operating cash flow of JPY 35.5 billion and free cash flow of JPY 17 billion.

Please turn to the next slide. On Slide 6, I will explain our earnings forecast. In light of strong business performance in the Americas as well as recent foreign exchange trends, we have revised upward our earnings forecast for both the first half and the full year.

First, our forecast for the first half. We forecast sales of JPY 265 billion, operating profit of JPY 25 billion and interim profit of JPY 15 billion. Compared with our initial forecast, this represents upward revisions of JPY 10 billion in sales, JPY 2 billion in operating profit and JPY 1 billion in interim profit. The main factors are continued solid demand, particularly in the Americas as well as the positive impact of the weaker yen.

At the same time, although nothing has been finalized at this point, there is a possibility that we may incur onetime expenses related to a business review during the second quarter and our forecast factors in this possibility.

Next, our full year forecast. We forecast sales of JPY 545 billion, operating profit of JPY 60 billion and profit for the year of JPY 37 billion. So at this point, we have left our initial forecast for the second half unchanged. We are continuing to assess the impact of developments related to the standardization of testing prices in China and our business portfolio review. So the revised full year forecast, therefore, reflects only the expected upside in the first half performance. We plan to provide details of the business portfolio review at our first half earnings presentation in November.

Please turn to Slide 8. This slide shows a year-on-year comparison of our income statement. Although the cost of sales ratio increased slightly year-on-year, partly due to foreign exchange effects, our operating margin improved by 1.2 percentage points to 11.3%, supported by our control of SG&A expenses, and the details will be explained in the factors behind the change in operating profit in the following slides. Please turn to the next slide.

Slide 9 shows the factors behind the change in sales by business and field. Please look at the year-on-year figures on the right-hand side of the table. Company-wide sales increased 12.6% year-on-year, excluding foreign exchange effects and 21.6%, excluding both the impact of China and FX effects. This shows that our underlying business continues to perform strongly despite the challenging business environment in China.

Sales in hemostasis field declined overall but increased 38% when excluding the impact of China and foreign exchange. And the business continues to expand steadily, particularly in the U.S. and Europe.

And please turn to the next page. Slide 10 shows the factors behind the change in sales by region and product category. I will discuss the regional results in more detail from the next slide onwards. In the first quarter, growth in the Americas, EMEA, AP and Japan, together with the positive impact of weaker yen resulted in a significant increase in sales. In China, meanwhile, the challenging market environment continues, but performance has been broadly in line with our initial expectations.

By product category, excluding the impacts of China and FX, the year-on-year growth rates were as follows: instruments, up 48%; reagents, up 13%; services, up 9%; and others up 74%. Again, instruments up 48%, reagents up 13%; services, up 9% and others up 74%. These are the respective growth rates.

Please turn to the next slide. Slide 11 covers the Americas. Performance remained strong, particularly in North America and Brazil, with sales increasing significantly by 26.1% year-on-year on a local currency basis and 38.9% on a yen basis. All product categories, instruments, reagents and services recorded growth with instruments, in particular, increasing significantly by 94.7% year-on-year.

In hematology, installations of the XN-Series previously ordered in North America progressed, driving sales growth in both instruments and reagents. In hemostasis as well, both instrument and reagent sales grew, particularly in North America. We expect these instrument installations to lead to further growth in reagent sales going forward. Amyloid beta testing reagents also continue to perform well. Please turn to the next slide.

Slide 12 covers EMEA. Driven by double-digit growth in major countries, sales grew steadily, increasing 11% year-on-year on a local currency basis. Our key fields of hematology, hemostasis and urinalysis all grew with higher sales across all product categories, instruments, reagents and services. Instruments and the XR-Series grew in France and Austria, while the urinalysis field performed strongly in Germany and Italy. The hemostasis field also continued to grow steadily across the region, particularly in Germany and Italy.

Reagent sales increased in line with the growing installed base of instruments in our key fields. In hemostasis, performance was also strong, supported by large contracts in countries, including Germany and Saudi Arabia. Going forward, we expect the growing installed base of instruments to support continued expansion in reagent sales. Please turn to the next slide.

Slide 13 covers China. Sales declined due to the impact of health care cost containing policies, which became evident from the second quarter of the previous fiscal year as well as continued inventory adjustment by distributors. Sales decreased 33.8% year-on-year on a local currency basis, broadly in line with our initial expectations.

Instrument sales were affected by distributor inventory adjustment amid concerns about a potential expansion in the impact of health care cost containment policies. Reagent sales also declined primarily due to lower testing volumes in the hemostasis field, especially D-dimer as a result of the minimum necessary principle.

At this point, however, the impact of standardization of testing prices has not yet materialized. I will discuss the situation in the Chinese market in more detail on the following slides. Please turn to the next slide.

On Slide 14, I will explain the current situation and outlook for China. We have made no change to our initial full year forecast for the fiscal year ending March 2027, which assumes a 20% year-on-year decline. First quarter sales declined 33.8% year-on-year, which was within our expected range. This mainly reflected the significant impact of the minimum necessary principle and distributor inventory adjustments. For the second quarter, we forecast a 24% year-on-year decline, while our first half forecast remains unchanged at a decline of 28%. We expect the impact of the minimum necessary principle and distributor inventory adjustments to begin to ease.

For the second half, we forecast a 10% decline, assuming that the impact of minimum necessary principle will have run its course and that the impact of distributor inventory adjustment will become limited. However, as you are aware, the testing price standardization policy is scheduled to be introduced.

Although we conservatively factored this impact into our initial forecast, the standardized price levels have not yet been announced, and there is also a risk that distributor inventory adjustment could be prolonged due to an expansion of health care cost containment policies. We'll, therefore, continue to closely monitor the situation and provide timely disclosure if any material development happens.

So please turn to the next slide for more details. Slide 15 covers the recently announced second round of public consultation on the standardization of testing prices. Following the previous public consultation announced at the end of March, a second round was conducted from June 30 through June -- July 6. This second round sought additional comments on matters, including testing items and pricing.

Comments were solicited from a broad range of stakeholders, including not only hospitals, but also companies and industry associations. We understand that around 50 additions and revisions were proposed in total. As for the outlook going forward, China's provinces have been divided into 4 areas and pilot programs are reportedly planned or underway in 6 provinces. The final version and detailed implementation rules are expected to be announced at the end of August with a nationwide implementation scheduled between September and December.

Although this is referred to as a testing price standardization policy, it doesn't mean that prices nationwide will be uniformly set at the lowest level. Rather, each province is expected to set its prices in accordance with standardized pricing guideline, taking into account regional characteristics and developments in the pilot provinces. As I mentioned earlier, the actual price levels have not yet been announced and the impact on our business, therefore, remains uncertain.

Please turn to the next slide. Slide 16 covers AP Asia Pacific. Sales increased driven by strong growth in India as well as a recovery in Indonesia, where demand for medical devices had declined in the previous fiscal year due to budget allocations. Sales increased 14.2% year-on-year on a yen basis and 7.6% excluding the impact of foreign exchange rates. Instrument sales declined due to delays in some tenders in India and Philippines, while reagent sales grew significantly, supported by an increase in the installed base of instruments in the hematology, urinalysis and hemostasis fields in India.

Business also remained strong across Southeast Asia countries, including Singapore and Malaysia, contributing to growth in the AP region as a whole. In the medical robotics business, we obtained marketing approval in Vietnam in June. Please turn to the next page. This is Japan. The sales increased significantly by 57.9% year-on-year as both instruments and reagents recovered to normal levels with an additional contribution from the clinical chemistry business transferred to us in April. In instruments, although the hematology field was affected by the completion of a cycle of replacement demand, urinalysis and hemostasis fields performed well.

Reagent sales also increased mainly in the urinalysis, hemostasis and immunochemistry fields. Testing volumes grew steadily in line with the increase in the installed base of instruments, while the rebound impact associated with the system transition in the previous fiscal year was also resolved. In addition, the transfer of the clinical chemistry and immunochemistry businesses, which began in April contributed to revenue.

In the Medical Robotics business, 2 systems were installed in the first quarter, bringing the cumulative number of installation to 108. Moving on to the next page. Page 18 shows the factors contributing to the change in operating profit. In addition to a JPY 6.86 billion increase in gross profit from higher sales, the elimination of the JPY 1.75 billion impact from the inventory valuation review in the previous fiscal year contributed to the increase in profit. As for the cost of sales ratio, while the increase in sales of instruments with higher gross margins had a positive impact, this was more than offset by negative factors such as product mix and the impact of tariffs, resulting in an overall deterioration of 0.5 percentage points.

Selling, general and SG&A expenses and research and development expenses increased in line with that, but we believe they remain under control. Other operating income and expenses had a negative impact of JPY 2.38 billion on profit due to the recognition of a provision for potential losses that may arise. Foreign exchange had a positive impact of JPY 460 million.

Moving on. From here, I will explain the key themes we are focusing on under the midterm management plan. Please turn to the next page, Page 20. First, please look at the left-hand side, accelerating expansion in the hemostasis field.

We had a very strong start with sales increasing 41% in EMEA on a local currency basis and 134% in the Americas. Because of the low volume percentage seems to be lighter. So it was a very good start. In EMEA, sales activities leveraging the customer base we have built in the hematology field have been successful driving growth in both instruments and reagents. And we are also making steady progress in initiatives to strengthen our competitiveness, including obtaining regulatory approvals for specialized testing items such as HIT IgG reagent.

In the Americas, we are expanding the installation of the CN-Series in North America, while in Latin America, we have gained regulatory approval for CN-Series in Brazil, among other initiatives, laying the groundwork for the largest sales.

Next is the business expansion in emerging markets. Overall, emerging markets are showing solid growth with sales increasing 22% year-on-year. In India, sales are growing on the back of an increase in the installed base and instruments in our key fields. As a future initiative, we are developing new products tailored to the needs of the Indian market with the aim of launching them during the period of midterm management plan. In Brazil, it's also performing well, particularly in the hematology and urinalysis fields. And going forward, as shown on the left, we aim to achieve sustained growth by expanding our business field.

Next is the Slide 21 that shows the progress of our initiatives to improve profitability. First, I will explain our value chain transformation initiatives shown on the left. We are currently promoting a company-wide project to reduce reagent costs and accelerating our efforts to improve profitability. In the hematology field, we are reviewing and optimizing raw materials and manufacturing processes for reagents such as staining solutions and hemolytic agents.

Although the gross profit margin is already at a high level, we expect a significant improvement given the large scale of sales. In the immunochemistry field, particularly for infectious disease assays such as HBV and HCV, we are improving production efficiencies through production scale-up and bringing the production of raw materials in-house.

Although the scale of the business is limited compared with hematology, reagent costs are higher than in other fields, and we believe there is significant room for improvement. Next, on the right is the productivity improvement through the use of AI and digital technologies. As part of our internal digitalization efforts, we have been standardizing business processes, and we -- and our internal systems have now accumulated a vast amount of operational data showing how many days and how much work each site spends on each standardized business process.

By comparing and analyzing this vast amount of operational data across our sites and benchmarking it against companies using the same systems, we are identifying which business processes offer potential improvements and the magnitude of those improvements and are now moving into the implementation phase.

Based on the results of this analysis, we are working on to shorten lead time and standardize and automate labor-intensive manual processes. Going forward, we will continue to enhance profitability through the 2 pillars of reagent cost reduction and greater operational efficiency through the use of AI and digital technologies.

Next page. From here, I will explain our earnings forecast for the fiscal year ending March 2027. Slide 23. I will first explain the revision to our first half earnings forecast. In light of strong business performance, particularly in the Americas and recent foreign exchange trends, we have revised our first half earnings forecast upward. We forecast revenue of JPY 265 billion, operating profit of JPY 25 billion and profit for the period of JPY 15 billion. Compared with our initial forecast, the represent upward revision of JPY 10 billion for sales, JPY 2 billion for operational profit and JPY 1 billion for profit for the period. We also expect to incur onetime expenses related to the business review in this second quarter, and these have been factored into the forecast.

Regarding our foreign exchange assumptions, reflecting recent trends, we have revised our assumed first half exchange rate for the U.S. dollar and renminbi. Please turn to Page 24. First, please look at the sales chart on the left. We have revised our sales forecast upward JPY 10 billion from our initial forecast. By region, the Americas make the largest contribution at JPY 5.3 billion, while we expect an upside of JPY 0.9 billion in other regions. Foreign exchange is also expected to have a positive impact of JPY 3.8 billion. In particular, strong business performance continues in Americas, mainly in the hematology field, driving this upward revision.

Next, please look at the operating profit chart on the right. We have revised our operating profit forecast upward by JPY 2 billion from our initial forecast. The increase in gross profit associated with the higher revenue is expected to have a positive impact of JPY 3.4 billion, whilst subsidies in China will contribute JPY 0.6 billion, and we will have the good control of SG&A. The chart shows JPY 2.28 billion positive impact from the improvement in the cost of sales ratio. On the other hand, we have factored in a negative impact of JPY 4.5 billion in the second quarter as onetime expenses associated with business review. Foreign exchange is expected to have a positive impact of JPY 1.3 billion.

Moving on to the next page. Slide 25 covers the revision to our -- for our full year earnings. For the full year, we forecast sales of JPY 545 billion, operating profit of JPY 60 billion and profit for the JPY 37 billion. Compared with our initial forecast, these represent upward revision of JPY 10 billion, JPY 2 billion and JPY 1 billion, respectively. In other words -- and please note that we have maintained our initial forecast for the second half.

For the second half, we are currently assessing the impact of factors such as the standardization of testing prices in China. So based on that, the revised full year earnings forecast reflects the upside in the first half performance and others are shown here as written.

As mentioned at the outset, we plan to explain the details of our business portfolio review at the earnings briefing in November. Moving on to the next page. Slide 26 for reference shows our sales forecast by business field, and region. In particular, we expect very strong performance in the Americas.

That concludes my presentation for today. And also hematology in the Americas has been very strong. So that has been the result that we have, and we expect to see this trend continue from Q2 and onwards. And now we are under the process of reviewing the portfolio. So we try to incorporate -- we try to incorporate the risks as much as possible in our projection. Thank you very much. That's all.

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

Good morning. Once again, this is Matsui, the President. This is going to be my first appearance of financial results briefing since taking office in April. Today, I would like to frankly explain the summary of our previous midterm management plan, our current performance and our policies under the new management structure.

Please proceed to Slide 3. First, I would like to outline our approach as a new management team. The previous midterm management plan, which was completed at the end of last fiscal year, ended up significantly below its initial targets. We acknowledge that there were contributing factors, both in the external environment and in our own response and that we have received harsh comments from our shareholders and investors regarding our disclosure and our approach to dialogue with the capital markets.

As a new management team, we take this seriously. As we launch this new structure, what we consider most important is recovery of performance. And next is rebuilding trust with the capital markets. We will make transparent information disclosure and accountability, the fundamental principles of our management, and we will continue to engage in dialogue with everyone.

Furthermore, the following 3 policies are a clear answer to our past challenges. The first one for selection and concentration, disciplined capital allocation, ROIC IRR and payback period will be explicitly applied at hurdle rates in accordance with business characteristics as a response to the challenges of capital efficiency. The second, returning to fundamentals. This move will shift our management focus back to our diagnostic business, which is our true strength and restrengthen our earning power.

The third point, expansion of shareholder returns. This means maintaining progressive dividends even in the face of downturn in performance and further strengthening this policy by combining it with share buybacks. Through these, we will further strengthen the strength and earning power of our Diagnostics business and sustainably improve our corporate value.

Please proceed to Slide 4. Today, I will explain those 4 points.

Please proceed to Slide 6. For the previous fiscal year ending March 2026, sales were JPY 500 billion, OP was JPY 51.8 billion, and net profit was JPY 35.4 billion, resulting in a decrease in both revenue and profit. We take this fact seriously as a result of our previous midterm management plan. I would like you to understand that the main reasons for this decrease in revenue and profits are divided into 2 distinct factors.

The first is an external environment factor. the continued impact of China's health care cost curtailment policies. The second is the booking of goodwill impairment for consolidated subsidiaries in new business areas, which is a decision based on a reevaluation of the business plan under new management structure. We will explain the details of each later.

On the other hand, I would like to emphasize that excluding China, our Diagnostics business remains competitive. The 3 main regions of the Americas, EMEA and AP all showed strong growth in local currency terms. In China, the demand for hematology testing remains strong, and we believe our brand value is still intact. Furthermore, we have increased our annual dividend from last year's level. Despite the decline in profits, we maintained our progressive dividend policy and fulfilling our promise to return profits to our shareholders as indicated in our initial forecast.

Please proceed to Slide 7. Next, here is our earnings forecast for the fiscal year ending March 2027. The first performance plan under the new management structure is we are planning to return to increased revenue and profits. However, what I want to emphasize here is that we have incorporated the uncertainty in China. On top of the continued impact of the minimum necessary principle, we have also factored in the impact of the newly implemented unification of inspection prices or testing prices.

We are taking a critical view of the uncertainty surrounding China. However, the policy details regarding unifying testing prices have not been officially announced, and it cannot be ruled out that the assumption may change depending upon policy developments. We will promptly inform you of any significant changes as they occur. This is a concrete promise that new management will have a transparent dialogue.

This growth is supported by the expansion of our Americas, EMEA and AP regions as well as the contribution of the biochemical business, which we acquired from JEOL in April of this year. We will steadily work to build a business foundation that is not affected by the uncertainties in China alone. We will further strengthen our shareholder returns by increasing our annual dividend and proceeding with the share buyback program that we have already announced.

Please proceed to Slide 8. Next, I will explain the detail of the financial results for the completed fiscal year, the fiscal year ending March 2026.

Please move to Slide 9. This is a year-on-year comparison of the income statement. The main reasons for the decline in profits are a decrease in sales, excluding foreign exchange, a deterioration in the cost ratio, an increase in SG&A and an impairment of goodwill. We will break down and explain the details of each of these factors later on respective pages about the factors.

Please move to Slide 10. This slide first shows the year-on-year moves in sales by business segment. On this page, I want to draw your attention to the rightmost column of the table, where it says excluding China. First of all, company-wide sales, excluding China, grew by 5.1% year-on-year. The fact is that our business is indeed on a growth trajectory outside of China.

Secondly, our core business, hematology. Overall, there was a slight decrease, but excluding China, there was a positive growth. The core of core continues to be competitive.

Thirdly, the field of hemostasis. At first glance, it appears to be a significant decrease in overall revenue. But excluding China, we see a positive growth trend, too. The overall figures are largely due to a decrease in the numbers of tests in China and the hemostasis field, particularly in Europe and United States, it is growing and not slowing down. In fact, as I will explain later, we will now enter a full-fledged growth phase.

The main point I want to make here is that we would like our business foundation to be evaluated separately from the issues of China alone. We'd like you to clearly distinguish between the structural adjustments in China and our inherent competitiveness when assessing our services and business.

Please proceed to Slide 11. This slide shows the year-on-year increase or decrease in sales by region and product category. Regionally, the Americas, EMEA and APAC regions showed steady growth, while overall revenue decreased due to the impact of Japan and China. Japan's decline in revenue is due to a temporary factor. We will provide more detailed information about China on the following pages.

Please proceed to Slide 12. Starting with the Americas. The Americas are important strategic market for our company. In addition to strong performance in North America, Central and South America, including Brazil, continues to see double-digit growth and both instruments and reagents are expanding steadily.

I would like to particularly mention the field of hemostasis. Currently, we are in the stage of equipment and instrument installation, and we anticipate that full-scale growth in reagent sales will come later. As the number of operational equipment and instruments increases, the highly profitable reagent sales will grow afterwards, and we believe this will significantly contribute to improving profitability in the future.

Please proceed to Slide 13. This is regarding EMEA. EMEA sales increased by 5.2% in local currency terms. Major countries and Eastern Europe drove the increase in revenue. While the region as a whole is experiencing steady and robust growth, significant structure changes are underway. The success of the shift to a direct sales system are becoming apparent, leading to significant growth in Italy, and now we are able to secure more large-scale deals. Furthermore, in the hemostasis field where direct sales began in FY '24, we have secured large-scale deals in Germany, France and other countries. So they are becoming new growth drivers in EMEA.

Please proceed to Slide 14. Next is China. China is the region I want to focus the most today. We take the decline in sales in China very seriously. Please understand that the decrease in revenue is due to 2 different factors. One is reducing the number of tests based upon the principle of minimum necessary testing. This impact particularly evident in the field of hemostasis. Another one is inventory adjustments due to the deterioration of distributors' business. This has an impact not only on the field of hemostasis, but also on the field of hematology.

In other words, this indicates that adjustment phase is continuing, not so much in the demand for testing at hospitals themselves, but rather in the distribution stage. All of those area adjustments are due to the market structure resulting from policies to cut down health care costs, and this does not damage our competitiveness or brand value.

Please proceed to Slide 15. This is the outlook for China's future. To put it simply, we anticipate that negative impact will continue throughout the entire fiscal year. So we cannot easily say that things have normalized yet. The new factor will be incorporated is the impact of standardization of testing prices. This is a new policy being pursued by the Chinese government. And at this stage, it is highly uncertain. While we have our baseline projection in place, we must say that we cannot roll out further downside risks depending upon the policy developments. We will disclose any significant changes in a timely manner.

In the medium to long term, we will rebuild our competitiveness by adding value through strengthening our direct sales system for Class III hospitals and expanding our portfolio. We would like you to clearly distinguish between the short-term market structure adjustment phase and the medium- to long-term phase of rebuilding competitiveness while evaluating the situation.

Please proceed to Slide 16. Let me now explain the changes in the Chinese market environment from a more medium- to long-term perspective. China has a population of over 1.4 billion people, and it is aging at a rate unmatched in the world. Under these circumstances, the current policies being pursued by the government are essential for building a sustainable health care system.

In the future, the role of testing instrument will shift from being a revenue-generating tool to a tool for improving productivity and patient satisfaction. We anticipate that within this context, the negative impact on our company will be increased cost pressure. But on the positive side, we expect increased demand for our system products due to advancements such as the sophistication of the testing workflows and consolidation of testing operation.

Our strengths are know-how for improving productivity in developed countries and detection capability for abnormal specimens and academic support as well as high-quality customer care. These will make us valuable in the new market environment. Customer satisfaction at this year's China Medical Industry Data Conference showed that we gained the first place. And I think this is a further support for this direction.

You see a picture at the right bottom of this page, and this is where we were awarded. By strengthening direct sales, we will be able to deliver our strength directly to our customers in China, which will lead to increased added value and rebuilding our competitiveness in the mid- to long-term basis.

Please proceed to Slide 17. This is AP region. We positioned AP as a key growth engine. The company performed strongly throughout the year, driven by India's strength and also showing strong performance across all sectors in Southeast Asia, including the Philippines and Malaysia. As we move towards reducing our dependency on China, AP's presence will become increasingly important.

Please proceed to Slide 18. In the Japan region, sales decreased by 86.5% compared to the previous year. The factors contributing to the decline in revenue were all temporary, and there are 2 main points. The first is a decrease in instrument sales. This is a reaction to the significant demand for upgrades to new products resulting from the discontinuation of service for older products in the hematology field in FY 2024.

The second reason is the decline in reagent sales. The timing of this rebound is due to the impact of system switchover implemented in April '25, which resulted in reagent sales being booked earlier in the fourth quarter of FY '24. On the other hand, our urinary medicine business is performing well, and we have launched the sales of several new products in the immunology field, steadily strengthening our business foundation in the mid- to long term.

In summary, our recognition is that the decline in revenue in Japan is temporary and does not indicate a structural weakening of our business.

Please move to Slide 19. This slide provides a detailed breakdown of the factors affecting the increase or decrease in operating profit compared to the previous year. The new management recognized that structurally disclosing the details of profit decline is an important initiative for our transparent disclosure.

There are 4 main reasons for the decline in profits, but their nature is -- there are transient factors and structural external environment factors, and please understand they are 2 separate things. First, let's consider transient factors. The goodwill impairment loss of JPY 11.2 billion was recorded as a part of redesign of resource allocation that prioritizes profitability and capital efficiency in line with a review of the business plan under the new management structure. This factor will not be present in the current fiscal year.

In addition, of the 2.2 percentage point deterioration in the cost ratio, 0.4 percentage points was due to the revision of inventory valuation, and this can be treated as a onetime factor. And next, we have the remaining 3 items, which are structural and environmental factors. The first reason, the decrease in gross profit due to a decline in sales, and this is primarily due to the continued impact of health care cost reduction policies in China, and we recognize it as an external environment factor.

The second is the permanent portion of cost ratio deterioration. We disclosed these costs by breaking them down into product mix, service costs, impact of U.S. tariffs and logistics cost. Of these, tariffs and logistics are external factors, while product mix and service costs are structural issues that we will address.

The third reason is the increase in SG&A. The main reasons for this increase are increased personnel due to the expansion of our direct sales region and increased depreciation expenses due to the operation of our core system. These are considered positive investments aimed at strengthening our business foundation for the future. We hope you will evaluate both the natural interference of transit factors and our response to the structural issues as areas for future improvements.

Please proceed to Slide 20. Let me go over the goodwill impairment losses at subsidiaries. This was a symbolic decision by the new management team, reflecting our clear discipline around capital allocation. After the new management structure was launched, we reassessed the business plans of each consolidated subsidiary in line with the direction of the midterm plan and the capital allocation discipline of the new management team.

As a result, we decided to recognize full impairment losses for 3 companies. I want to make clear that we still recognize the technological and market significance of each business. It doesn't mean that we are rejecting the businesses themselves. At the same time, going forward, we'll apply financial discipline such as ROIC, IRR and payback period as hurdle rate according to the characteristics of each business.

This is a declaration by the new management team that we are changing the very criteria for our investment decisions. Going forward, selection and concentration will be carried out with discipline based on these hurdle rates. We position this decision as the first step in disciplined capital allocation.

Please turn to Slide 21. So this is the consolidated statement of financial position. There are no particular points to note.

Please turn to Slide 22. Cash flow trends. Operating cash flow decreased from the previous year, but our underlying cash generation capability remains intact. Let me emphasize that cash generation capability is the very foundation of our business. It is a source of funds that supports both investment and shareholder returns and is an essential indicator of whether we can maintain our earnings power over the medium to long term. For this year forecast, we plan to recover both operating cash flow and free cash flow. This recovery will provide the financial foundation for the growth trajectory envisioned under the new management policy.

Please turn to Slide 23. For the fiscal year ended March 2026, we will increase the dividend as promised to you at the beginning of the fiscal year. Although the payout ratio will be high amid lower profits, we will maintain our progressive dividend policy and fulfill our commitment to shareholder returns regardless of fluctuations in performance.

Please turn to Slide 24. From here, let me go over the strategic themes that we focus on, which were discussed at the midterm management plan briefing in March.

Please turn to Slide 25. First, the hemostasis business. The hemostasis business is a growth driver for us, second only to hematology, and we are planning strong growth in both EMEA and the Americas. In 2024, we concluded a new global OEM agreement with our alliance partner, Siemens. This agreement has enabled Sysmex to sell directly in EMEA and the Americas, where we had previously been unable to conduct direct sales. In EMEA, we have won large-scale projects with a laboratory chain in Germany as well as in France and Switzerland. Going forward, reagent sales are expected to expand in line with the increase in instrument placements, and we forecast a growth of more than 20% on a local currency basis for this year.

In the Americas, we have obtained FDA approval for all reagent parameters, including specialty parameters. This fiscal year, we are ready to expand adoption in the upper-tier market centered on the CN-9000 system. Here as well, we forecast growth of more than 70% on a local currency basis, and we are now entering a full-scale sales expansion phase.

Please turn to Slide 26. Next is the business expansion in emerging markets. Emerging markets, including Asia, Central and Latin America, the Middle East and Africa are an important growth driver where we expect sales to expand to more than JPY 100 billion during the period of the midterm plan. This initiative also symbolizes our move away from dependence on China.

In India, at the new plant that began operations in April 2025, we are manufacturing products that support the Make in India initiative. We'll enhance our competitive advantage by expanding sales of these products, launching strategic models for India and preparing to start public health services, which are currently being verified in the country.

In Brazil, we will expand into the mid- to low-tier markets in the urinalysis and hemostasis fields. With the new plant in Brazil, which is expected to begin operations during fiscal 2027, we will strengthen our ability to ensure stable supply to Central and Latin America where demand is increasing.

Please turn to Slide 27. This slide shows the medium-term road map for the key fields of the diagnostics business. This is the concrete form of the return to fundamentals set up by the new management team. In the hematology field, we'll proceed with the launch of the XR series in North America and connect this to the next-generation flagship model, further strengthening our overwhelming position as the global #1.

In the hemostasis field, we now have a structure in place in the Americas to roll out a full lineup, including specialty parameters. Only instrument placements and a full-scale ramp-up of reagent sales will support strong growth from this fiscal year onward. Over the mid- to long term, we aim to achieve a share of more than 10% in Europe and the United States on a Sysmex stand-alone basis. Along with this road map, we'll steadily reinforce the strength and earnings power of the diagnostics business.

Please turn to Slide 28. And let me go over clinical chemistry business. We believe that taking over JEOL's clinical chemistry business in April is significant in terms of expanding our portfolio and creating a future growth driver. The key point is that we have acquired clinical chemistry analyzers with the top market share in Japan as well as technologies for reducing reagent volumes and enabling high-speed processing.

We'll be able to deploy these technologies and products by leveraging our sales network and our expertise in the reagent business. At the time of the transfer, the business is a low profit model based on a stand-alone analyzer sales. However, through collaboration with reagent manufacturers, we'll shift into a reagent business and achieve higher profitability.

Please turn to Slide 29. Our initiatives to improve profitability are built on 3 pillars: value chain reform, promotion of data utilization and review of the business portfolio. And I have more details in the following slides.

Please turn to Slide 30. I will now explain value chain reform, which is the core of our efforts to improve profitability. This reform is designed to structurally and sustainably raise the gross profit margin and consists of 3 elements. First is product mix improvement. We will increase the proportion of high-margin products such as reagents in hemostasis field in Europe and the United States, while also raising selling prices in line with the launch of new products.

Second is improving the profitability of the reagents themselves. In immunochemistry and hemostasis field, we will promote in-house production of raw materials. In the hematology and urinalysis fields, we'll switch raw materials while also working to improve productivity through the use of digital information and optimize production scale.

The third is supply chain optimization. We'll review our reagent production sites and supply structure in order to reduce costs and shorten lead times. However, in some areas, changes to the production and supply structure require reapproval procedures by regulatory authorities in each country. Therefore, we'll move quickly where possible while proceeding steadily and systematically overall.

These initiatives will begin to have an impact in stages from the current fiscal year and will raise the gross profit margin over the medium to long term. Through these efforts, we will structurally improve the profitability and capital efficiency of the Diagnostics business and firmly reinforce its earnings power.

Please turn to Slide 31. The review of the business portfolio is an initiative to institutionalize selection and concentration as an ongoing management process rather than a onetime event. We have clearly set up 3 criteria for decision-making, the alignment with the midterm management plan, setting hurdle rate according to the characteristics of each business and assessing the market environment, regulations and uncertainties.

We started discussions in April of this year, and we will complete the status of reviews and implementation during the first half. We will disclose important matters in a timely manner and clearly communicate our progress to you. At this point, we're not yet at the stage of naming specific businesses. However, we'll evaluate each business against the hurdle rates from the perspective of competitiveness, growth potential, profitability and capital efficiency.

Please turn to Slide 32. Based on these initiatives, I will now explain our earnings forecast for the current fiscal year.

Please turn to Slide 33. For the current fiscal year, we plan to return to higher sales and profits. Here, I'd like to clarify the external environment assumptions underlying this forecast. This forecast incorporates 3 external environment assumptions. First is uncertainty in China. In addition to the continued impact of the minimum necessity principle, we have incorporated the impact of the newly advancing standardization of testing prices.

Second is U.S. reciprocal tariffs. We have already incorporated the tariff impact that we are currently aware of. The third is the worsening situation in the Middle East. We have factored in the impact of geopolitical risks on raw material costs and logistics costs. If there are any significant changes in these external environment assumptions, we'll promptly provide updates through timely disclosure, earnings announcements and other appropriate channels.

Please turn to Slide 34. Let me go over the factors behind the changes in our earnings forecast for the current fiscal year, respectively, for net sales and operating profit. For net sales, the structure is that the decline in China will be offset by growth in diagnostics business, the newly transferred clinical chemistry business and foreign exchange.

For operating profit, the positive factors are an increase in gross profit, the elimination of onetime factors, namely the absence of goodwill impairment losses and a positive impact from FX. The negative factors are U.S. reciprocal tariffs, deterioration in the cost ratio and SG&A expense increase and lower sales impact in China. I believe this shows the structure of a plan to return to higher sales and profit even after factoring in uncertainty in China.

Please turn to Slide 35. This page shows the overall picture of capital allocation discipline under the new management structure. This is one of the most important messages in today's presentation. We'll generate operating cash flow before deducting R&D expenses as our earnings power, combine this with an active use of debt and allocate it with discipline to 4 uses.

First, shareholder returns. In addition to continuing a progressive dividend with a target payout ratio of around 40%, we'll also combine this with share buybacks. This is a clear statement of intent by the new management team to further strengthen shareholder returns. For business and R&D, capital expenditure and strategic investment will give priority allocation to the diagnostic business.

Costs related to the business transfer from JEOL are also positioned under disciplined hurdle rates. Across all allocations, we'll maintain our principles of prioritizing the diagnostic business and applying discipline based on the hurdle rates. So this is the form of capital allocation under the new management structure.

Please turn to Slide 36. For the fiscal year ending March 27, we also forecast a dividend increase. We continue to maintain our progressive dividend policy, and this policy will remain firmly in place under the new management structure.

Finally, I would like to reiterate our commitment under the new management structure. We have take a sincere look back at the previous midterm management plan and under selection and concentration of return to fundamentals and disciplined capital allocation will reinforce the strength and earnings power of the diagnostics business.

As I've stated repeatedly in today's presentation, uncertainty remains in the external environment. The environment surrounding us is by no means straightforward, including structural adjustments in China, U.S. tariffs and the worsening situation in the Middle East.

However, the competitiveness of the key fields in our diagnostic business, including hematology, remains strong. Through diversification by region and field, disciplined capital allocation and value chain reform will steadily advance our path towards sustainable enhancement of corporate value.

And above all, by steadily building dialogue with investors one step at a time, we'll rebuild Sysmex into a company trusted by the capital markets.

Thank you very much for your attention today.