Sojitz Stock

Good afternoon. This is Kosuke Uemura, CEO. I would like to explain results for the FY '25 that ended March 2026 and progress of the Medium-Term Management Plan 2026 or MTP 2026. After that, our CFO, Makoto Shibuya, will explain details of the financial results. FY 2025 was year 2 of the current 3-year medium-term management plan or MTP 2026. We posted a net income of JPY 103.6 billion for an ROE of 10.1%, both falling short of the plan that was published together with the MTP. Business expansion and earnings contribution centered around Energy Solutions and Healthcare, chemicals trading as well as defense and marine product-related businesses.

On the other hand, structural reforms in Automotive and the Australian coking coal business, had a temporary negative impact. During the year, we continuously implemented various measures for growth towards our next stage. By implementing new investments that contribute to high-quality growth, we have been able to steadily build out clusters of businesses with clear path to success. We have also implemented measures to address underperforming businesses. It may have had a temporary negative impact on profit figures but allowed us to surely transform our learning space into one that generates stable profits into the future. In FY '26, we will build on the achievements and aim for JPY 130 billion in profit for the period and 12% ROE. This slide was first presented when we announced the MTP 2026. Our approach towards the next stage remains unchanged even with the situation in the Middle East and the progress we have made to date. We will focus on both scale and capital efficiency. By creating the Sojitz growth story, we aim to achieve our target of JPY 200 billion in net income or profit for the period and 15% ROE and JPY 2 trillion in market cap.

MTP 2026 remained positioned as a Phase II build the footing for that next stage of growth. Our assessment at this point after 2 years is that we are making steady progress towards the next stage along with business portfolio transformation. Let me explain some specific initiatives and progress made. The Sojitz growth story is realized by expanding new investments and enhancing existing businesses, which in turn drive business portfolio transformation. New investments are expanding in business areas where we can leverage our competitive edge. We are successfully building businesses that have clear and scalable path to success as well as Katamari or revenue-generating clusters of businesses that organically work together and deliver sustained profit. For existing businesses, we are bolstering earnings power while enhancing functions, utilizing our existing strengths. We are also expanding earnings power through co-creation with external partners. At the same time, for loss-making and underperforming businesses, we are working with a sense of urgency to improve profitability or make necessary judgment through coordinated implementation, we are realizing earnings growth and improving capital efficiency at the same time. Our business portfolio is transforming into one with an earnings structure conducive to sustainable growth.

Let me now provide specific examples. When formulating MTP 2026, we set forth the KATI model, KATI, as the core concept of our growth strategy. based on this model, our growth strategy is centered on developing multiple businesses or business domains where we can leverage our competitive edge. The KATI model starts with businesses in which we have expertise and proven track records, expand them by extending or deepening existing functions and increases earnings power at Katamari scale. During the current MTP period, we have not just accumulated individual projects or businesses but have also steadily developed a number of Katamari through linkages with existing businesses and enhancing our expanding capabilities. The unique point is that by explicitly defining path to success, we have shifted our focus from onetime individual business opportunities to a model that structurally develops businesses and business domains capable of delivering sustained growth.

In Energy Solutions business in the United States, competition is intensifying around renewable energy generation. While our starting point was power production and the insights in human capital developed through experience, we shifted our perspective to the power reduction side. This led us to focus on energy efficiency, where competition is limited, and we can still leverage our strength. Through the acquisition of McClure, we entered the ESCO business or energy saving service business. We also made a bolt-on investment in Free State Electric, which brings in additional strength and client base all different from McClure. We are thus expanding breadth and aggregating into a new Katamari in this area. This approach in the United States is now being replicated in Australia, where we seek to develop another Katamari of Energy Solution businesses. This slide shows the infrastructure development business in Australia. Prior to full-fledged participation in the PPP business, we were only a joint developer. It meant we were challenged in our ability to proactively develop new opportunities or create multilayered earnings opportunities.

The acquisition of Capella, a major lead developer in the PPP field has allowed immediate functional transformation and enhancement. We can now leave the full process through development, investment and operations. In Australian PPP Capella has competitive advantages such as top-tier development track record, extensive know-how and high-level professionals. With the addition of financial strength and operational capability of our group to Capella's functions, speed and potential of growth of the business is reinforced substantially. Also by using our global network, we are working toward expanding into new domains and areas. In chemicals domain, based on a strong customer base of over 5,000 companies and trading capabilities by forecasting environmental changes, such as industry restructuring and geopolitical risks, we've been enhancing trading functions, including supply chain rebuilding. In the areas in which we accumulated in size through trading, we are expanding into manufacturing and creating synergies with trading businesses. Acquisition of Nippon A&L in the battery material area is exactly the embodiment. In the same way, in area of rare earths, we ensure KATI model forecast changing international situation and materialize Sojitz's growth story by committing to path to success. There is something common to these initiatives, namely, we move beyond the starting point, find our path to success, transform functions, expand the scope of our business by applying the functions and aggregate businesses for discontinuous growth. As a result, the producibility and scalability of profit is enhancing, which is leading to sustainable earning base resilient to external environment.

We continue to discover our path to success in each business, enlarge the scale of Katamari centering around KATI model to expand earnings. Based on KATI model, we are growing businesses with competitive advantages into Katamari through addition and transformation. If competitive advantages are not expected, we maintain stable profit generation at earning base, implement initiatives or enforcement or conduct a review, including the possibility of replacement and withdrawal in each business. Even if we can all strengthen competitive advantages on our own, when we charge leveraging partner strength will lead to sustainable growth. We form a business or capital alliance. For example, in Marine vessel business, Railcar leasing business in North America and commercial facility business through capital alliance or co-creation with external partners, we can enhance probability of scale expansion and profitability improvement. In businesses, where establishment of competitive advantages is difficult, even with various initiatives or reviews for business improvement, we determine withdrawal promptly and shift resources to growth areas. By executing these in parallel, we will enhance profitability and capital efficiency of existing businesses.

For business portfolio review and withdrawal, we already set exit strategies and will complete them early in this fiscal year. We are promoting digital in all as a foundation to support the transformation. Specifically, we enhanced the precision of strategies and execution by running a cycle of data-driven accurate understanding of the current situation, hypothesis setting execution and verification. Given advancements in AI, firstly, we are promoting AI utilization in the field and visualization of insights and experiences accumulated within the individual. Through these initiatives, we will review our business process itself and enhance business quality and speed by incorporating the necessary AI. Besides, through sharing and horizontal development of insights gained through this process will establish competitive advantages and aggregate businesses. In addition, through cultivation of DX experts, we will reinforce our business foundation, enabling us to anticipate environmental changes and define and execute our path to success.

Under MTP 2026 stores achieving next stage, we are focusing on the enforcement of human capital, social competitiveness of Sojitz Group, centered on strengthening individuals and organizations utilizing individual potential we are transforming human capital and organizations. In a laboratory changing environment, it is important for each individual to think try and keep learning through that process. We basically think such autonomous thinking and actions enhances individual potential. To translate individual potential strengthened with autonomous thinking into growth organizations and empowerment of the frontline, we value 2-way and multidirectional feedback to create an environment in which we support growth as a whole company. Through insights obtained by actively listening to and accepting each other and thinking through dialogue, we create a cycle of growth opportunities and sense of growth to strengthen frontline capabilities. In this way, in FY '25, aiming for next stage, from various perspectives, we've been steadily implementing actions for growth. In this fiscal year, the final year of MTP 2026, we aim to add at least 3 business clusters new Katamari. Through this, we will complete solidification of foundation for next stage, including structural reform. The path to reach next stage by further expanding businesses, which are becoming Katamari and realizing this continuous growth is our story for next stage. That concludes my presentation.

Good afternoon. This is Makato Shibuya, CFO. My part will be using the presentation materials part titled Financial Results for the year ended March 31, 2026 and Full year forecast for fiscal year ending March 31, 2027. Slide 15 summarizes FY '25 results. Consolidated profit for the period was JPY 103.6 billion, down JPY 7 billion year-on-year and 90% of the full year forecast of JPY 115 billion. Core operating cash flow rose by JPY 1.2 billion year-on-year to JPY 136.4 billion, 97% of the full year forecast. ROE came to 10.1%, although we were expecting the number to be in the 11% range.

During the fiscal year, while various initiatives for growth made progress, onetime losses were recorded in the process of structural reforms and the numbers still short of the full year plan. In FY '26, however, now that the negative factors for FY '25 have been addressed, we will reaccelerate our efforts towards the next stage. The full year forecast is for JPY 130 billion in consolidated profit for the period, up JPY 26.4 billion year-on-year. Core operating cash flow is expected to rise accordingly. For ROE, we aim for 12%. The FY '25 year-end dividend is JPY 82.5 per share as planned. The full year dividend forecast for FY 2026 is JPY 180 per share, reflecting shareholders' equity at the end of March. Further details are provided on Slide 16 and onwards. Slide 16 shows a summary balance sheet. Total assets came to JPY 3,648 billion, up JPY 560.7 billion from the end of March a year ago. Operating assets increased due to trade or transactions related to aerospace, defense, tobacco and marine products. acquisition of new consolidated subsidiaries and the effect of foreign currency translation at overseas affiliates also pushed up the number.

Total liabilities increased during the year by JPY 415.5 billion to JPY 2,494.2 billion. In addition to new financing, there were an increase in operating liabilities and increase in newly consolidated subsidiaries and the effect of foreign currency translation at overseas affiliates. Total equity attributable to owners of the company increased by JPY 121.4 billion during the year to JPY 1.090.4 billion. The number exceeded JPY 1 trillion despite dividend payments and stock repurchase, thanks to accumulated profits. Shareholder equity, which is the basis for dividends increased by JPY 39.2 billion to JPY 818 billion. Slide 17 shows key financial indicators and the FY '26 forecast. Overall, the balance sheet will expand, but net DER will be managed at around 1x. ROE declined in FY '25, but we aim to raise it to 12% by increasing profit for the period. Towards the 15% ROE target for the next stage, improving ROE in the current year is one of the management's priorities. Slide 18 is a PL summary. Gross profit rose JPY 20.7 billion year-on-year to JPY 367.5 billion.

Newly consolidated subsidiaries contributed significantly to the increase, but the effect was offset by declines such as in the Australian coal business. SG&A increased by JPY 35.2 billion year-on-year, of which approximately 90% was attributable to newly consolidated subsidiaries. Other income and expenses included gains from the sale of businesses and assets as part of operating activities, gain on share out for co-creation with external partners, impairment losses in Australia for the coal business and used car sales business, both associated with the restructuring process, and gain on partial sale of equity stake in Sakura Internet. Share of profit or loss of investments accounted for using the equity method came down JPY 5.6 billion year-on-year to JPY 44 billion. With all that, consolidated profit for the period came to JPY 103.6 billion. For FY '26, the forecast is JPY 130 billion in consolidated profit for the period, up JPY 26.4 billion or 25% year-on-year.

Slide 19 and onwards provide information by segment. Let me go through this part with a focus on profit for the period. Slide 20 shows a year-on-year comparison of profit for the period by segment. The overall trend was similar to how it was up to Q3. Main factors driving year-on-year differences are listed on the slide. Earnings contribution mostly came from infrastructure-related businesses in aerospace, transportation and infrastructure and Energy Solutions and Healthcare as well as from chemicals. In retail and consumer service, profits from co-creation with external partners contributed to the increase. On the other hand, automotive posted loss, metals, mineral resources and recycling was significantly down due to impairment losses associated with restructuring. In the other segment, we recorded gain on a partial sale of equity stake in Sakura Internet as part of structural reforms. Slide 21 compares the results against the forecast as of Q3. The difference mostly comes from gains and losses related to structural reforms.

Slide 22 shows a breakdown by segment for the FY '26 forecast. Describes our current outlook based on FY '25 profit for the period. Let us go through each segment. Automotive expects an improvement in losses from the Australian used car sales business and unprofitable businesses in Japan, as well as earning contribution from no automotive sales business in Latin America. Regarding the Australian used car sales business, we reviewed our business plan at the end of the previous fiscal year, took stock of current business conditions and improvements made, and decided to book impairment loss. Profit margins are improving, and the focus will be on improving retail margins in the state of Victoria, which has been an issue for some time. Although we expect downward pressure on the market to continue with rising fuel prices and interest rates, we plan to turn to profitability during the first half of the fiscal year and then increase the number of vehicles traded.

For aerospace and transportation infrastructure. Existing businesses such as aerospace, defense, business jets and overseas industrial parts are expected to deliver solid profit growth including through broadening their operations into new areas. We also expect earnings contribution from new investments and improvements in loss-making businesses. In Energy Solutions and public infrastructure, as mentioned by our CEO, new Katamari that will drive earnings growth for the entire company are developing. This includes the Energy Solutions businesses in North America and Australia and the Australian infrastructure development business. In addition to existing hospital PPP and thermal and renewable power generation businesses, the electricity retail business is also expected to make solid earnings contribution. For the LNG business, while expecting while we expect an increase in cost for the Indonesian interest, the Australian interest are expected to contribute to earnings from the second half. The situation in the Middle East requires close attention, but we do not expect a major negative impact.

In Metals, Mineral Resources and recycling, we incorporated the improvement of loss in coal business structure reform. In Chemical, although we need to closely monitor the impact of the prolonging situation in the Middle East, we expect steady performance of existing businesses and profit contribution from Nippon A&L, consolidated newly in the previous fiscal year. This is one of the segments driving the entire company as Katamari of the continued growth business area. In April 2026, Industrial Minerals was transferred from metals, mineral resources and recycling. In consumer industry and agriculture business, the business of Sojitz foods previously included in retail and consumer service was transferred to this segment. In particular, food-related businesses, mainly meat businesses were consolidated in this segment to put more efforts. In this segment, expansion of food business as well as initiatives to strengthen sales in overseas fertilizer businesses that struggled in the previous year, optimization of selling prices and strengthening cost control will lead to increased profit in this fiscal year.

In Retail and Consumer service, higher profit is expected due to steady performance of money in products, tobacco and domestic retail businesses and partial asset replacement. Although retail businesses in Vietnam are sluggish, we aim to increase profit through growth of high-end food in commercial food wholesale businesses and portfolio review and improvement of other loss-making businesses. Slide 23 shows pathway from FY '25 to FY '26. First, there is a net negative impact of about JPY 10 billion from impairment losses in Australian coal and used car sales businesses booked in the process of structural reform and gain on sales of equity holdings in Sakura Internet booked in FY '25. Based on that, and we consider JPY 115 billion as a baseline, excluding restructuring impacts, we expect plus JPY 10 billion from of loss-making businesses, which booked impairment losses.

In addition, despite businesses, which will decrease profit year-on-year, such as LNG business, we expect plus JPY 6 billion from profit growth of existing businesses, such as overseas fertilizer, defense, tobacco and overseas industrial parts. As for profit contribution from MTP 2020 and MTP 2023 new investments, minus JPY 4 billion is expected due to profit impacts of asset replacement and restructuring in FY '25, despite profit increase in Energy Solutions businesses in North America and Australia. From MTP 2026 investments, profit contributions of about plus JPY 12 billion is expected due to accumulation of profit from Infrastructure Development businesses in Australia, aircraft-related businesses, including business jets and Nippon A&L. About 90% of this plus JPY 12 billion is profit from investments already made and decided. By deducting positive factors such as foreign exchange gain on asset recovery and tax cost reduction, we forecast profit for the year will be JPY 130 billion.

Although we need to monitor closely the impacts of the prolonged situation in the Middle East, we judged there is a reasonable probability in realization of the forecast. Slide 24 shows cash flow. Cash flow from operating activities recorded an inflow of JPY 16.8 billion due to accumulation of core operating cash flow despite increases in working capital. Cash flow from investing activities recorded an outflow of JPY 86.6 billion, mainly due to new investment. As a result, free cash flow recorded a net outflow of JPY 69.8 billion. Slide 25 shows cash flow management in the current MTP. 2-year aggregate core operating cash flow was JPY 271.5 billion, and investment recovery from asset replacement was JPY 108 billion, progress versus 3-year aggregate forecast in MTP is 60%, respectively. We continue to accumulate cash profit. In this fiscal year, we assume more than JPY 100 billion of investment recovery from asset replacement. 3-year aggregate is expected to exceed the plan. About JPY 300 billion of new investments were executed compared to plan of JPY 600 billion. There is visibility to cash outflow of about JPY 200 billion, and we will execute the remaining JPY 100 billion if there are good opportunities.

Main cases of new investments and asset replacement are shown on Slide 26. So please refer to that. Slide 27 presents status and outlook of earnings contributions from investments. As for return on investment under MTP 2020 and MTP 2023, earnings contributions are lower than expectations due to losses in Australian coking coal and used car sales businesses. ROI to year-end balance is about 7%, excluding the 2 businesses. As a return on new investments under MTP 2026 contributions are higher than expectations, both in scale of profit and profitability. For profitability improvement by segment, we set and monitor cash return on invested capital target. On Slide 28, you see progress by segment versus target ROE of 15% in next stage. In FY '25, although supported by investment recovery through asset replacement, profitability of aerospace, transportation and infrastructure and energy solutions and public infrastructure operating infrastructure-related businesses increased to the level of value creation targets in chemicals. High profitability is maintained while new investments are made. We will continue to enhance profitability by accelerating earnings contributions from new businesses and improving loss making businesses through ongoing structural reform and ensuring portfolio review of underperforming businesses.

Slide 29 is about dividend. There is no change to shareholder return policy. Our policy is progressive and predictable stable dividend. As a result, as I discussed in the beginning, annual dividend forecast for FY '26 is JPY 180 per share, up JPY 15. Please refer to Slide 30 for commodity prices, foreign exchange and interest rate results and assumptions and Slide 31 onward for segment information and supplemental information. Lastly, this fiscal year is the final year of MTP 2026. We need to assume the situation which cannot be controlled by one company such as the situation in the Middle East. However, even in such a situation as President explained, we will add at least 3 business clusters, which will be new Katamari, accompany structural reform and complete solidification of foundations for next stage. In performance, we aim at JPY 130 billion net in profit for the year centering around infrastructure-related businesses and chemicals. We also aim at ROE of more than 12%. I would appreciate your continued understanding and support. That concludes my presentation.

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

Good afternoon. This is Makoto Shibuya, CFO. Let me present today using the material titled Presentation Materials for Financial Results for the Third Quarter ended December 31, 2025, which is available on our website.

Slide 4 shows a summary for the 9 months up to Q3. Profit for the period came to JPY 80.4 billion, up JPY 4.3 billion year-on-year. This is 70% against the full year forecast of JPY 115 billion announced at the beginning of the fiscal year. Core operating cash flow was a net inflow of JPY 93.6 billion, 67% against the full-year forecast.

The stock price has been rising gradually since November, and our market cap finally exceeded JPY 1 trillion. We will continue to progress towards a JPY 2 trillion target in the next stage.

To summarize Q3 results, the trend was generally unchanged from up to Q2. Segments that have been gaining strength, especially Energy Solutions and Healthcare, Chemicals, Aerospace, Transportation and Infrastructure; are making strong contribution to profit, in some cases, involving asset replacement. On the other hand, segments working on business rehabilitation such as Automotive, Metals, Mineral Resources & Recycling have yet to achieve profit growth.

The outlook for the full year is similar. With 2 months left in FY 2025, we will surely accelerate both forward-looking initiatives as well as rehabilitation efforts as we approach the final year of the medium-term management plan and towards the next stage.

Let me provide further details starting with Slide 5. Slide 5 is the PL summary. Gross profit increased JPY 10 billion year-on-year to JPY 270.6 billion. Newly consolidated subsidiaries contributed significantly to the growth, but the positive impact was diminished by the decline related to coal mining interest in Australia, among others. Please refer to Slide 9 for a breakdown by segment.

SG&A increased by JPY 25.9 billion year-on-year. Approximately 90% of this comes from the acquisition of new consolidated subsidiaries. Other income and expenses, which is where onetime gains and losses come in, include gains on the sale of gas retail business in Africa recorded in Q3.

Share of profit or loss of investments accounted for using the equity method came to JPY 31.2 billion, almost unchanged from the same period last year. With all that, consolidated profit for the period came to JPY 80.4 billion.

Slide 6 shows a summary balance sheet. Total assets at the end of Q3 came to JPY 3,431.5 billion, up JPY 344.2 billion from the end of March. About 50% of the increase came from acquisition of new consolidated subsidiaries. About 25% was due to foreign currency translation differences for foreign operations.

Total liabilities came to JPY 2,327.1 billion, increased JPY 247.4 billion from the end of March due to new borrowings, acquisition of new consolidated subsidiaries and foreign currency translation differences for foreign operations.

Total equity attributable to owners of the company came to JPY 1,057 billion, up JPY 88 billion from the end of March. Despite dividend payments and the share buyback, the total exceeded JPY 1 trillion, thanks to accumulation of profits.

Slide 7 shows key financial indicators and the forecast for the end of the current fiscal year. Some of these numbers have been revised in light of latest results.

Slide 8 shows cash flow. Cash flow from operating activities was a net inflow of JPY 75 billion, thanks to core operating cash flow despite an increase in working capital. Cash flow from investing activities was a net outflow of JPY 76.6 billion, mainly due to new investments. As a result, free cash flow was a net outflow of JPY 1.6 billion.

Slide 9 to 11 show results and full year outlook for profit by segment. Slide 9 shows gross profit. We maintained the full-year forecast of JPY 380 billion, which we revised with Q2 earnings.

Slide 10 shows year-on-year difference in profit for the period by segment. Slide 11 shows the full year forecast and current outlook.

First, on Slide 10, and let me go segment by segment. For Automotive, automobile sales businesses in Latin America, including the dealership business in Brazil, made strong progress. However, segment profit increased only slightly due to weak performance in the domestic dealer businesses and delayed recovery in the used car sales business in Australia. Aerospace, Transportation and Infrastructure was up year-on-year, thanks to growth in defense-related and aircraft-related transactions and gains from the partial sale of railcar leasing business in North America in Q2.

Energy Solutions and Healthcare was up significantly. This was mainly due to new consolidations and increased transactions in the energy saving service businesses in North America and Australia, contribution from solar power generation-related business and gains from the sale of gas retail business in Africa.

For Metals, Mineral Resources & Recycling, profit decreased significantly. Market prices of coal declined from a year ago, and there was not sufficient production volume or efficiency to offset that impact.

Chemicals was almost unchanged from a year ago. Methanol prices were sluggish, and there is an artifact of the special dividend from an investee in the previous year, but there was also profit contribution from various trading businesses as well as from the newly consolidated Nippon A&L.

Consumer Industry & Agriculture business was down due to decreased transaction volume in overseas fertilizer business. Retail & Consumer Service was slightly down. Domestic retail business and Marine products business remained strong, but wholesale business in Vietnam was down due to a temporary increase in costs. There was also an artifact of onetime gains booked in the same period previous year.

For others, there was an artifact of a onetime gain in the same period last year on changes in equity following the public offering by SAKURA Internet.

Next, I'll explain full year forecast and the current situation on Slide 11. For automotive, profit contributions are expected in Latin America from dealership business in Brazil and distributor and dealership business in Panama. On the other hand, used car sales business in Australia is still on the way to recovery despite improvement in profitability. We expect we may miss full year forecast of JPY 3 billion slightly.

Aerospace, Transportation and Infrastructure is progressing firmly. Towards the end of the fiscal year, we expect to generate profit steadily. For Energy Solutions and Healthcare, we expect profit contributions, mainly of energy saving service and LNG businesses. We also expect profit contributions from the Infrastructure development company in Australia.

For Metals, Mineral Resources & Recycling, challenging situation is expected to continue mainly in coal business. For Chemicals, steady progress is expected in line with the progress up to the third quarter. At newly consolidated Nippon A&L, battery materials are performing well. For Consumer Industry & Agriculture business, it is slightly difficult to achieve full year forecast.

For retail and consumer service, profit contributions are expected mainly from firmly performing domestic retail and marine products businesses as well as partial asset replacement. Others are as described. Please refer to Slide 12 for cash flow management.

Slide 13 shows progress of investments and asset replacement. New investments, mainly in essential infrastructure were JPY 112 billion after the third quarter and will be JPY 200 billion for the full year on a cash outflow basis. At the end of this fiscal year, we plan to execute approximately JPY 300 billion of new investments, which is the half of MTP target of JPY 600 billion.

The Sojitz growth story is described from Slide 14 to 18. Slide 14 to 16 show what we already explained, I skip explanation. Please refer to the slides.

Slide 13 (sic) [ 17 ] is about infrastructure businesses in Australia within building up. By acquiring a 50% stake in UGL Transportation division in Australia, capable of providing end-to-end services covering operation and maintenance manufacturing on rolling stock and transport system development, we newly acquired rail operation capabilities in Australia.

In recent years, our group participated in energy saving service business and infrastructure development businesses in Australia. Within Australia has area-wide infrastructure development environment such as infrastructure demand driven by population growth, political and economic stability, mature public-private partnership infrastructure development model, strong Japan-Australia partnership and strong policy execution capability of the Australian government.

We will accelerate initiatives to capture growing infrastructure demand as a large Katamari revenue-generating clusters of businesses. We'll continue to work actively, mainly in Energy Solutions & Healthcare and Aerospace, Transportation & Infrastructure.

Slide 18 introduces co-creation with Royal Holdings. When Royal Holdings faced with difficult business environment during the COVID pandemic, both companies started a capital and business alliance while strengthening financial base and existing businesses, corporate value of Royal Holdings is rising significantly. During that time, sees for future growth of Royal Holdings and [ Sojitz ] have been some.

We aim at further enhancement of corporate value through co-creation, leveraging complementary strengths. We will accelerate promising initiatives such as business development overseas and business expansion under the new hotel brand.

Please refer to Slide 19 for shareholder returns, Slide 20 for commodity prices, foreign exchange and interest rate, Slide 21 onwards for segment information and Slide 36 onwards for supplemental information.

Lastly, as I explained earlier, results for the third quarter for the fiscal year ending March 2026 were almost in line with the forecast in total despite plus and minus by segment. Many initiatives are progressing steadily amid uncertainty in business environments. We will create multiple Sojitz growth stories within explaining and transform business structure and portfolio boldly in segments requiring restructuring.

By doing so, we'll make efforts to become a company with sustainable and highly profitable clusters of businesses with a sense of speed. As I said earlier, our recent market cap exceeded JPY 1 trillion with your support. Aiming for double corporate value profit of JPY [ 200 ] billion, ROE of 15% and market cap of JPY 2 trillion, we will keep up the pace and work hard. I would appreciate your continued understanding and support.

That concludes my explanation.

Good afternoon. This is Kosuke Uemura, President and CEO. Thank you for taking time out of your busy schedule to join us today. I will present results of the first half of the fiscal year ending March 2026 and progress made against the medium-term management plan 2026 or MTP 2026. And then I will give the floor to our CFO, Makoto Shibuya, for further details on earnings.

Consolidated profit for the first half was JPY 45.3 billion, 39% against the full year forecast of JPY 115 billion. This is in line with our expectations of around 40% in the first half. The full year forecast of JPY 115 billion remains unchanged from the beginning of the fiscal year. Better-than-expected progress was recorded for Aerospace Transportation and Infrastructure and Energy Solutions and Health Care, while recovery is taking time for some businesses in metals, mineral resources and recycling and in automotive. In light of this, we have revised some of the segment forecasts. CFO will later provide more detail by segment.

Core operating cash flow is generally in line with plan. Given the current situation, however, particularly for metals, mineral resources and recycling, we have lowered our full year forecast by JPY 5 billion to JPY 140 billion. Cash flow from non-resource businesses is growing steadily, and we continue to expect core operating cash flow of around JPY 450 billion over the 3 years of the MTP. U.S. tariffs are affecting some businesses, but the impact is expected to be within the JPY 5 billion buffer set at the beginning of the year.

Under MTP 2026, we strive to create the Sojitz Growth Story by forming multiple distinctly Sojitz its revenue-generating clusters of businesses or Katamari towards the next stage. By sharing this process with our stakeholders, we hope to build growth expectations and improve our price-earnings ratio. As we presented at the beginning of the year, we are focusing on expanding new investments and enhancing existing businesses to accelerate the realization of the Sojitz Growth Story. We are now at the halfway point of MTP 2026.

To date, we have executed a cumulative total of about JPY 200 billion in new investments. We are steadily building competitive businesses by focusing on areas where we can leverage our strengths. An increasing number of investment projects are in double-digit billions of yen each. Major investments to date include Capella, a major infrastructure developer in Australia, Freestate Electric, an energy saving services company in the United States with strength in electrical equipment work, Nippon A&L, which produces materials used in lithium-ion batteries. All these businesses have potential to become foundations for future growth and are expected to grow significantly. The drive for new investments will continue.

In the essential infrastructure domain, we will expand breadth by rolling up existing businesses and acquiring and expanding functions. In the food value chain domain, the focus is on increasing the value of each project. And for Energy & Materials Solutions, we will strengthen our earnings base in areas where we have expertise. We have a sufficient pipeline of projects and expect to invest over JPY 100 billion in the second half and over JPY 300 billion in the next fiscal year.

We will continue to accelerate earnings growth towards achieving 2x growth. For existing businesses, steady progress has been made in strength augmentation and function enhancement. For chemicals, we have strengthened our trading businesses by anticipating changes in the supply chain. Additionally, we have stepped into new areas such as manufacturing and niches where we can become the leader. We aim for an annual profit of JPY 30 billion in the next stage through synergy of deepening trading functions and new investments. In the food value chain domain, in Vietnam, we are strengthening individual businesses and further connecting functions to expand sales channels and maximize profit opportunities.

On collaboration with external partners, following the partial transfer of shares in marine vessel trading business last year, we have established a joint management structure in the railcar leasing business in North America with Fuyo General Lease as a new partner. The intent is to further expand the scale of this business by increasing the number of cars leased at an accelerated pace and by diversifying services.

Regarding loss-making, underperforming businesses and strengthening headquarters functions, we're not leaving decisions solely to the field. Management is delving into the details so swiftly determine whether to withdraw or revitalize downsize or improve regarding fundamental structural reforms for underperforming segments, we will advance initiatives with a sense of urgency or speed. This includes projects are initiated in the first half, as well as businesses currently under negotiations or consideration will provide timely updates on progress going forward.

This time, Sojitz Growth Story, we present is our trading business capturing supply chain change. Under our mission to deliver goods and services where there is a need, we have been strengthening trading functions and growing by anticipating shifts in the supply chain and the resulting market needs. Recently, global supply chains have become increasingly fragmented due to changes in the international landscape and the resulting uncertainty.

Critical minerals like rare earths symbolize this trend and the structure of dependence on a specific nation poses significant risks to economic security. Since the 1960's, we have imported rare-off mineral scales in Japan and continuously supply them to Japanese customers concurrently to avoid dependence on specific nations and ensure a stable supply. We have diversified our procurement sources through our 2011 partnership with Australian company, Lynas, and the establishment of a robust supply chain network, we now hold over 70% of the domestic market share for neodymium, a key light rare earth.

Furthermore, alongside Lynas, we have built mass production capabilities for medium and heavy rare earth, highly scarce elements essential for next-generation energy and EV motors in addition to traditional light rare earths.

Furthermore, for gallium, minimal essential for manufacturing semiconductors and other products, we have commenced initiatives with Alcoa in Western Australia towards establishing the refining business. Moving forward, we will continue to look across the entire supply chain, anticipate and respond to its changes and realize Sojitz Growth Stories.

The second Sojitz Growth Story is Uzbekistan, where we are enthusiastically pursuing future growth. Since the 1990s, we have built strong relationships with trust with Uzbek government and companies through large-scale projects such as plant exports. Today, Uzbekistan is an extremely attractive market backed by Central Asia's largest population in high economic growth rates with robust infrastructure demand expected to continue.

We have quickly recognized this growth potential and are initiating projects in infrastructure sectors where demand will increase, such as power generation, airports and hospitals. This includes Syrdarya II gas-fired power generation project, 1 gigawatt scale wind power project and the Tashkent new airport, all in collaboration with our local government and key partners for the Samarkand Hospital PPP project. We're once again partnering with Rönesans, with whom we collaborated on a hospital PPP project in Turkey.

Thus, we are steadily creating projects where we can leverage the expertise cultivated internationally, viewed collectively. These projects represent an investment opportunity of approximately JPY 150 billion with an expected ROI of around 10%.

Finally, I'll explain the shareholder returns policy. With our dividend for the fiscal year ending March 2026, we plan to pay JPY 165 per share, a 10% increase from the previous year. This continues our policy of our progressive, predictable and stable dividend based on a DOE of 4.5% of shareholders' equity. Alongside long-time dividends, we continue to implement stock repurchases as another method of shareholder returns. The repurchase announced in May 2025 as detailed here.

Furthermore, in August 2025 we canceled 15 million shares from the treasury stock previously acquired. Going forward, through realizing Sojitz Growth Story, we'll continue to expand earnings accompanied by cash flow, thereby further increasing shareholder returns. Thank you very much.

Good afternoon. This is Makoto Shibuya, CFO. My presentation will be using the part of the earnings material that is marked Index 2 financial results for the first half ended September 30, 2025 and full year forecast of fiscal year ending March 31, 2026.

Page 12 is the PL summary. Gross profit in the first half was JPY 171.6 billion, up JPY 6 billion from the same period last year. The breakdown by segment is shown on Page 16. On a year-on-year basis, gross profit increased for Aerospace, Transportation & Infrastructure, Energy Solutions & Healthcare, Chemicals, and Retail & Consumer Service.

On the other hand, automotive, metals, mineral resources and recycling, consumer industry and agriculture business were down. Energy Solutions & Healthcare recorded large gross profit increased, thanks to contribution from newly consolidated energy saving businesses in the United States and Australia. A significant decline was recorded for metals, mineral resources and recycling, which was impacted by lower coal prices.

SG&A expenses increased by JPY 14.9 billion. Nearly 80% of this is related to changes in consolidated subsidiaries. The rest was mainly due to increased personnel expenses. Share of profit or loss of investments accounted for by the equity method was JPY 20.9 billion, almost unchanged from a year ago. With all that, consolidated profit for the period came to JPY 45.3 billion, as mentioned earlier by our CEO.

Page 13 shows the balance sheet summary. Total assets at the end of the period stood at JPY 3,249.4 billion, up JPY 162.1 billion from the end of March, mostly related to investments. Total liabilities increased by JPY 145.8 billion to JPY 2,225.5 billion. The increase comes from new borrowings and investments. Total equity attributable to owners of the company came to JPY 980.4 billion, up JPY 11.4 billion, thanks to profit for the period despite dividend payments and stock repurchase.

Please refer to Page 14 for key financial indicators and forecast for the end of the fiscal year. These forecasts remain unchanged from the beginning of the year.

Page 15 is on cash flow. Cash flow from operating activities was a net inflow of JPY 31.3 billion, due to increased core editing cash flow despite an increase in working capital. Cash flow from investing activities was a net outflow of JPY 75.6 billion, mainly due to new investments. The resulting free cash flow was a net outflow of JPY 44.3 billion.

Pages 16 to 18 show PO-related numbers by segment. On Page 16, I won't discuss gross profit, except to say that given progress so far, we have downward revised the full year forecast from the initial JPY 400 billion to JPY 380 billion. We have revised segment forecast for automotive, metals, mineral resources and recycling and consumer industry and agriculture business.

Page 17 shows profit for the period and a year-on-year comparison. Page 18 shows the full year forecast and the current outlook. On Page 17, let me discuss the segments that have large year-on-year difference, namely Aerospace, Transportation & Infrastructure, Energy Solutions & Healthcare, metals, mineral resources and recycling and others.

For Aerospace, Transportation & Infrastructure, profit increased significantly as defense-related and aircraft-related businesses grew steadily and thanks to gains from the partial sale of railcar leasing business in the United States.

Energy Solutions & Healthcare enjoyed earnings contribution from newly consolidated energy saving businesses, as well as from existing businesses. The segment also benefited from increased production volume at the LNG operating company.

Metals, Mineral Resources & Recycling was down significantly due to the decline in the coal market and sluggish production efficiency. The decrease in others comes from a reaction to the gain on change in equity associated with the public offering of SAKURA internet, which was recognized in the same period last year.

On Page 18, we present our current outlook for the full year for each segment. The consolidated full year forecast of JPY 115 billion stands unchanged. However, given the current situation, we have revised the forecast for some segments. Let me briefly explain by segment.

The Automotive division is experiencing negative impact from U.S. tariff measures on its Puerto Rico operations, among other factors. Recovery in its Australian used car sales business is also slightly delayed. For this segment, we have initiated structural reforms, including improvements to underperforming businesses and have revised the forecast downward by JPY 3 billion to JPY 3 billion.

The Aerospace, Transportation and Infrastructure division expects continued solid performance in aircraft-related and defense-related transactions, including gains from the partial sale of the railcar leasing business, the forecast has been revised upward to JPY 17 billion. The Energy Solutions & Healthcare division, while showing a low progress rate has been steady progress across various businesses.

Factoring in significant second half earnings recognized from LNG companies and asset replacements, the forecast has been revised upward by JPY 7 billion to JPY 30 billion. The Metals, Mineral Resources & Recycling dividend has been significantly revised downward, reflecting the current situation in the core business. The Chemicals division is largely in line with our initial forecast, supported by steady performance in existing businesses and anticipated earnings contributions from Nippon A&L Inc.

The consumer industry and agriculture business division has been revised slightly downward based on current progress. The Retail and Consumer Services division expects to achieve its initial forecast anticipating profit contributions from marine products and domestic retail businesses starting in the third quarter, along with some asset replacements, others are as stated.

Page 19 details the cash flow management status. Please refer to it. Based on the segment-by-segment revisions to the profit forecast explained earlier, we have slightly adjusted the forecast for core operating cash flow, asset replacements and the resulting core cash flow. For core operating cash flow, we have revised the forecast downward by JPY 5 billion for fiscal 2025, but the cumulative forecast for the Midterm Management Plan 2026 remains unchanged.

As shown on Page 20, similar to profit for the period, non-resource businesses are expected to account for more than 85% of core operating cash flow indicating that our business structure is increasingly capable of generating stable cash flow.

Page 21 shows the investment contributions under the midterm management plan or MTP 2026. The contribution from MTP 2020 and 2023 has decreased compared to the initial plan for MTP 2026, primarily due to the Australian coking coal and the used car sales businesses not progressing as planned. Progress in all other businesses is generally on or above plan. We will, therefore, focus on thoroughly improving these two businesses to increase their earnings contribution.

Regarding the earnings contribution from new investments in MTP 2026, we have included the expected returns from the JPY 300 billion planned for execution by fiscal 2025. Even at this stage, we expect that we will be able to significantly raise earnings above the assumptions made at the beginning of the MTP, while we target executing additional new investments of JPY 300 billion in fiscal year 2026. The key to achieving the MTP 2026 and realizing the next stage early lies in how effectively we can further accumulate upside potential for earnings contributions.

Starting on Page 22, we have included investments and asset replacement. Commodity prices, foreign exchange and interest rates, segment information and supplemental information, please refer to these sections.

Finally, the second quarter of the fiscal year ending March 2026 marks the midpoint of the MTP 2026, despite uncertainties in the business environment, many initiatives are progressing steadily, and we are firmly on track to achieve our forecast for fiscal year 2025.

At the same time, it is also true that some segments require more vigor, while others need restructuring. As explained by the President, we will realize multiple Sojitz Stories. Simultaneously, we will boldly transform the business structure in segments requiring revitalization. This will establish us as a company with a portfolio of sustainable, high-performing businesses. We are committed to quickly achieving our next stage goals, doubling both reaching a profit of the period of JPY 200 billion, achieving an ROE of 15% and a market capitalization of JPY 2 trillion.

We sincerely appreciate your continued understanding and support. This concludes my remarks. Thank you very much.

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