Teijin Stock

I will now explain the fiscal 2025 results and fiscal 2026 earnings outlook. First, regarding key points from the earnings announcement, fiscal 2025 adjusted operating income was JPY 25.8 billion, down JPY 1.8 billion year-on-year. In Healthcare, adjusted operating income increased due to growth in the number of rented home healthcare devices and licensing income from pharmaceuticals.

Fibers & Products performed steadily. In Materials, however, adjusted operating income declined due to a large-scale periodic maintenance at Twaron aramid operations as well as a deterioration in the sales mix for aramid and carbon fibers. Please note that the Aramid Paper business has been decided for divestiture and has therefore been excluded from adjusted operating income. Below the adjusted operating income line in nonrecurring items, impairment losses were recorded in Healthcare related to diabetes treatment sales rights and other fixed assets. Annual dividends have been determined at JPY 50 per share, unchanged from the previous announcement.

Next, regarding the fiscal 2026 outlook, we forecast adjusted operating income of JPY 30 billion, up JPY 4.2 billion year-on-year. Fibers & Products are expected to remain solid and integration with Asahi Kasei Advance is scheduled for October 1, contributing to profit growth. In Healthcare, although amortization expenses will decline following impairment losses recorded in fiscal 2025, we expect lower profits due to streamlining of the Pharmaceuticals business. In Aramid, the large-scale periodic maintenance that occurred in fiscal 2025 will not recur in fiscal 2026. And we expect profit growth driven by improved operating rates and progress in carbon fiber structural reforms. We plan annual dividends of JPY 50 per share.

Next, I will explain fiscal 2025 results in more detail. Revenue was JPY 873.2 billion, down JPY 132.3 billion year-on-year. Adjusted operating income was JPY 25.8 billion, down JPY 1.8 billion year-on-year. Other items were negative JPY 14.7 billion, deteriorating by JPY 11.3 billion year-on-year, mainly due to reversals of deferred tax assets. As a result, Profit Attributable to Owners of Parent was negative JPY 88 billion. As announced in our revised forecast on March 31, we guided net profit between negative JPY 85 billion and negative JPY 95 billion, and actual results came within that range. ROIC was 2.6%.

Looking at the overall summary, revenue declined by JPY 132.3 billion in total. The main factor was Materials, where revenue fell JPY 120.7 billion year-on-year to JPY 338.6 billion, primarily due to the divestiture of the North American Composites business on July 1, 2025. Revenue also declined due to the sale of Teijin Nakashima Medical. Adjusted operating income was JPY 25.8 billion, down JPY 1.8 billion year-on-year.

I will explain the details by segment shortly. Starting with Materials. Adjusted operating income declined from JPY 6 billion in fiscal 2024 to JPY 100 million with a decrease of JPY 5.9 billion. Regarding volume effects, as mentioned earlier, fiscal 2025 included a large-scale periodic maintenance in Aramid. Of the JPY 9 billion negative volume impact, operating rate deterioration accounted for negative JPY 8.5 billion. Spread effects were negative JPY 7.5 billion due to deterioration in the sales mix for aramid and carbon fibers. Positive factors included cost structure reforms, lower depreciation and amortization expenses following impairments recognized for Aramid in the second quarter and profit contributions from the North American business divestiture. As a result, adjusted operating income came to positive JPY 100 million.

Next, Fibers & Products performed steadily overall. There were some fluctuations due to front-loaded shipments and weakness in industrial materials, while headquarters expenses also increased. As a result, adjusted operating income declined slightly from JPY 17.8 billion to JPY 17.1 billion.

Next is Healthcare. In Healthcare, volume effects contributed positive JPY 1.5 billion due to strong performance in CPAP and ventilation. In addition, reduced fixed costs, lower amortization following impairment losses on type 2 diabetes products recorded in fiscal 2024, and pharmaceutical licensing income contributed to higher earnings. As a result, adjusted operating income increased by JPY 7.7 billion year-on-year from JPY 5.7 billion to JPY 13.4 billion.

In Others business, separators and membranes performed steadily. As mentioned earlier, the divestiture of the Aramid Paper Group company has been decided, and the business has, therefore, been excluded from adjusted operating income. This became a factor behind lower profits, resulting in adjusted operating income declining from JPY 7.1 billion to JPY 4.6 billion, down JPY 2.5 billion year-on-year.

Next, I will explain financial income and expenses and nonrecurring items. Regarding financial income and expenses, interest expenses improved by JPY 3.6 billion from negative JPY 10.4 billion to negative JPY 6.8 billion due to progress in repayment of interest-bearing debt. As for nonrecurring items, impairment losses totaled negative JPY 88.9 billion in fiscal 2025, including impairments related to aramid, Healthcare, and carbon fibers. In fiscal 2024, impairment losses for the North American Composites business and type 2 diabetes products totaled negative JPY 95.2 billion. As a result, nonrecurring items were negative JPY 93.8 billion versus negative JPY 94.7 billion in the prior year, effectively flat year-on-year.

Next is financial position. Total assets as of March 2026 were JPY 920.1 billion, down significantly due to the sale of the North American Composites business and impairment of fixed assets. Interest-bearing debt also declined from JPY 387.1 billion to JPY 336.4 billion, down JPY 50.7 billion as repayments progressed. As a result, the adjusted D/E ratio remained stable at 0.78 versus 0.77 previously, and we believe a certain level of financial soundness has been maintained.

Regarding cash flow, fiscal 2024 saw a substantial positive free cash flow of JPY 122.4 billion due to the sale of InfoCom. There was no similar gain in fiscal 2025, but working capital reductions contributed to an increase in operating cash flow to JPY 98.7 billion, resulting in positive free cash flow of approximately JPY 60 billion.

Next, I will explain the fiscal 2026 outlook. First, I would like to explain changes to our disclosure segments. The former Fibers & Products segment has been renamed Apparel & Industries. The former Healthcare segment has been renamed Healthcare & Life Solutions. The former Materials and Other segments have been partially reorganized. Resins from the former Materials segment and battery materials and membranes for Others have been integrated into a new segment called Electronics & Energy. Meanwhile, aramid and carbon fibers, including composites, previously under Materials, have been grouped into Specialty Materials. Other businesses now mainly consist of regenerative medicine and implantable medical devices.

Now let me explain the full year outlook. Please note that this forecast does not factor in the Middle East situation. Revenue is expected to decline by JPY 23.2 billion year-on-year, while adjusted operating income is forecast at JPY 30 billion, up JPY 4.2 billion year-on-year. As mentioned earlier, gains from the Aramid Paper divestiture were delayed until April 2026, and are therefore included in fiscal 2026 results. As a result, Profit Attributable to Owners of Parent is expected to reach JPY 45 billion. Accordingly, ROE is forecast at 12%, ROIC at 3% and the adjusted D/E ratio is expected to improve further to 0.7. Annual dividends are planned at JPY 50 per share.

Regarding the Middle East situation, certain impacts are expected on raw material and fuel prices and procurement. However, we intend to minimize the impact through agile responses. For raw material and fuel prices, we will first seek to absorb increases through internal efforts. Any costs beyond that will be passed on to selling prices to minimize the impact. As for raw material procurement, there are currently no significant impacts. But considering procurement uncertainty, we will focus on securing inventories. We also plan to flexibly adjust production plans in response to customer conditions.

For the full year outlook, revenue is projected at JPY 850 billion. Apparel & Industries is expected to achieve revenue growth due to integration effects with Asahi Kasei Advance. On the other hand, Specialty Materials is expected to see lower revenue because the North American Composites business contributed through June fiscal 2025. Adjusted operating income is expected to total JPY 30 billion, up JPY 4.2 billion year-on-year.

I will explain details by business on the following pages. Starting with Apparel & Industries, both apparel fibers and industrial materials are expected to remain solid. The management integration with Asahi Kasei Advance is expected to contribute gradually from the second half onward. Although some integration-related promotional expenses will increase, adjusted operating income is expected to rise from JPY 17.1 billion to JPY 19 billion.

Next is Healthcare & Life Solutions. Volume growth is expected from CPAP and rare disease-related businesses. However, streamlining of the Pharmaceuticals business, including lower volumes and the impact of NHI drug price revisions is expected to negatively impact earnings by approximately JPY 7 billion. Although amortization expenses will decline following impairments, adjusted operating income is expected to decline from JPY 13.4 billion to JPY 10 billion.

Next is Electronics & Energy. Resin and plastic, battery and semiconductor solutions are expected to continue performing steadily, though some spread deterioration is anticipated. As a result, adjusted operating income is expected to decline from JPY 18.9 billion to JPY 15 billion.

Next is Specialty Materials. Adjusted operating income is expected to improve significantly from negative JPY 9 billion in fiscal 2025 to positive JPY 3 billion in fiscal 2026, an increase of JPY 12 billion. As mentioned earlier, the absence of the large-scale Aramid maintenance system in fiscal 2026 is expected to improve volume effects, particularly operating rates. Spread improvements are also expected due to better sales conditions for carbon fibers, including increased aerospace demand. Lower depreciation and amortization expenses following impairments, along with structural reforms are also expected to contribute to improved earnings. As a result, adjusted operating income is expected to improve from negative JPY 9 billion to positive JPY 3 billion.

Interest-bearing debt is expected to decline further due to improved cash flow generation. Equity is also expected to increase due to net profit generation, and the adjusted D/E ratio is expected to improve from 0.78 to 0.7. Regarding dividends, we aim to maintain stable dividends of JPY 50 per share. This concludes my presentation.

Next, I, Uchikawa, will explain the medium-term management plan covering fiscal 2026 through fiscal 2028. Today's agenda is as shown here, but there are 3 key points I would like to discuss. First, we have slightly changed our wording. Previously, we referred to a customer-focused approach. But today, we will discuss establishing a business model driven by customer issues and achieving sustainable profit growth through that model.

Second is structural reform to build a high-quality earnings base that supports this growth. Third, particularly in the Materials businesses, our business model will shift from simply supplying materials to becoming customer-driven. Accordingly, we will strengthen our corporate management foundation to support this business model. These are the 3 pillars of today's presentation.

Before explaining the new medium-term plan, I would first like to review the previous medium-term plan. We consistently emphasize strengthening our core earnings power and pursued this through 2 pillars: portfolio transformation and recovery of core profitability. Regarding portfolio transformation, we executed what we promised, including the sale of the IT business and the North American Composites business, not only withdrawing from unprofitable businesses, but also narrowing our business focus from a best owner perspective. As a result, total assets were reduced by 10%, including risk assets, and we believe we successfully stabilized our management foundation. Similarly, interest-bearing debt was steadily reduced and the D/E ratio improved to our target level.

On the other hand, regarding recovery of core profitability, although we executed what we had committed to, market conditions changed significantly during this period. In particular, aramid and carbon fibers businesses, which were heavily focused on supplying materials, struggled considerably. We responded by implementing structural reforms quickly without clinging to the past. While there may have been criticism previously that our responses were slow, we are now able to act decisively when issues emerge. Nevertheless, financial results did not meet expectations. However, businesses such as Fibers & Products and home healthcare achieved high profitability and delivered solid results. So while there were areas where we fell short, there are also areas where we fulfilled our commitments regarding recovery of core earnings power. As Shimai explained earlier, fiscal 2025 results unfortunately did not meet our numerical targets. While we regret not achieving our committed figures, we believe we did fulfill our qualitative commitments during the previous medium-term plan.

Next, I would like to explain the winning business model and growth strategy we have identified. On the left side is our recognition of the current environment. As written here, the commoditization of materials is accelerating significantly in the areas where we operate. We concluded that the traditional capital investment-led business model now requires fundamental reconsideration. To put it strongly, we believe the material-centric business model has reached its limits. At the same time, social issues have become increasingly complex. In the past, simply providing high-value materials often directly contributed to solving social issues. However, that is no longer sufficient. Since fewer social issues can now be solved solely through materials, we believe we also need to change.

Meanwhile, as mentioned earlier, businesses such as Fibers & Products and home healthcare possess overwhelming expertise in their respective fields and have built differentiated value chains and platforms that are highly valued by customers, patients and health care professionals. Through discussions with employees, we also confirmed that Teijin already has a corporate culture centered on growing together with customers. Based on these trends, we've concluded that pursuing growth through a customer-driven business model is the right direction.

On the right side is an Infinity loop style diagram, and I would like to explain it as clearly as possible today. It describes combining our tangible and intangible assets. The issues customers face cannot necessarily be solved solely by our proprietary materials. We possess diverse technologies, can utilize assets from other businesses, and businesses like Fibers & Products and home healthcare provide not only products, but also a wide range of services.

Teijin Frontier is an easy example to understand. Of course, it sells yarns and also procures and sells yarns. It can manufacture fabrics and also procure them externally. It has many supporting partners. If necessary, it can support sewing, design, brand launches, logistics, store operations, or even simply handle import operations. Because it has such a broad service platform, customers are highly satisfied. What we want to do now is take what were previously siloed businesses organized by material type and make those assets available company-wide, so we can create more solutions that satisfy customers.

Going forward, Specialty Materials businesses such as aramid, carbon fibers, and composites will also evolve into businesses that provide customers with the products and services they need when and where they need them without insisting solely on proprietary materials or production. Through this approach, we aim to increase opportunities for Suriawase, working closely with customers to understand key issues and co-create solutions, or Kumiawase, delivering solutions by combining technologies, services and partners to meet customer needs with customers.

Traditionally, materials businesses competed on how efficiently and accurately they could meet customer-defined specifications. Going forward, however, we want to listen to customer issues before they even become formal specifications as home healthcare and Teijin Frontier already do, and solve them through combinations of our capabilities. To achieve this, we will increase customer touch points and opportunities for collaboration. Through this process, we aim to create value and businesses together with customers and health care stakeholders. Since we already have business areas where this model is working, we now intend to expand it across the entire company.

However, to support this transformation, we must also fundamentally change our management and digital foundations. Previously, Teijin's growth in the 2000s was driven by siloed businesses focused on expanding each individual segment. Now, however, we need to break down those silos and make technology and assets company-wide resources rather than business-specific resources. This is what we aim to accomplish during this medium-term plan.

As a result and to achieve this transformation, we have reorganized our businesses into 3 strategic categories. To address customers' latent issues effectively, we believe businesses should be grouped more broadly. While we explained them earlier as segments, we enlarged the units for solution creation by grouping businesses together. The 2 pillars expected to drive sustainable growth are Apparel & Industries, formerly Fibers & Products; and Healthcare & Life Solutions, which combines home healthcare infrastructure with medical device services and rare disease pharmaceuticals. Electronics & Energy combines resins and battery and semiconductor solutions businesses, which have already generated high profitability and share overlapping customer bases. These businesses are expected to maintain stable earnings while identifying future customer issues in electronics and energy fields.

Meanwhile, aramid and carbon fibers businesses together with composites have been grouped into Specialty Materials for restructuring. First, these businesses must implement cost structure reforms as stand-alone materials businesses. Then in areas where these materials are still valued, they must identify customer-driven business opportunities. We believe broader customer and business coverage will make this easier, which is why aramid, carbon fibers and composites have been grouped together.

Finally, regarding conventional pharmaceuticals, excluding rare disease treatments, the Healthcare business had already begun integrating pharmaceuticals and home healthcare during previous medium-term plans in search of a new growth strategy. Since the sustainable growth direction has now been identified, we decided to separate existing pharmaceuticals as businesses requiring restructuring and consideration of new exit strategies. We intend to grow or restructure businesses according to these 3 strategic approaches.

To support this transformation, future profit growth will focus on customer-driven businesses. This will shift us from asset-heavy capital investment-led businesses to more asset-light businesses. In this medium-term plan, we are not aiming for aggressive top line growth. Instead, we aim first to become a more efficient company. To support this, we will establish a high-quality earnings base through structural reforms and renew our management foundation to match our changing business structure. Through these 3 pillars, we aim to achieve fiscal 2028 adjusted operating income of JPY 60 billion and ROE of 8%. While the increase from JPY 25 billion to JPY 60 billion over 3 years may appear ambitious, JPY 20 billion of the improvement is expected to come from structural reforms, while growth areas are expected to contribute JPY 15 billion.

We are not aiming for unrealistic growth, but rather achievable targets. Given our history of impairments on past investments, we believe disciplined investment and improving ROIC are more important than simply chasing top line growth. Accordingly, our goal is to demonstrate profit growth through improved business efficiency and achieve ROE of 8% by fiscal 2028.

Going forward, I would like to explain each of the 3 frameworks I mentioned earlier in more detail. First is Apparel & Industries, one of our growth drivers. As you know, we have integrated Teijin Frontier, which is strong in polyester, and Asahi Kasei Advance, which is strong in nylon, both of which operate integrated manufacturing and trading businesses. I believe this was announced today as well. The new company will begin operations under the name TA Frontier. T stands for Teijin and A for Asahi Kasei. We intentionally avoided using a name like Teijin Asahi because while respecting the cultures and corporate values of both parent companies, we wanted a name that reflects our ambition to become a core player in future industry restructuring. Based on employee feedback, we concluded that TA Frontier would better represent that vision.

Regarding the substance of the integration, as I mentioned earlier, the 2 companies possess different strengths in polyester and nylon. From Teijin's perspective, as shown on the right side, this integration provides new pieces for the combinations I discussed earlier, including nylon and Bemberg processing sites and processing technologies. At the same time, from Teijin's standpoint, the customer base in construction material applications, which Teijin Frontier previously did not have, has expanded significantly. Therefore, as indicated by the arrows, this integration not only creates synergies by utilizing materials and customer assets that each side previously lacked, but also greatly increases opportunities and building blocks for the Kumiawase and Suriawase approach we are pursuing. We intend to continue expanding the business in this manner.

Next is Healthcare & Life Solutions, our second pillar. As I repeatedly stated, we intend to expand the business by leveraging the existing home healthcare business platform and extending into adjacent areas where our strengths can be utilized. To achieve this, we believe expansion of our business foundation through alliances with other companies and M&A will be necessary. First, the images shown on the left is what we refer to as outpatient-type home healthcare. Patients visit hospitals roughly once a month for outpatient treatment and prescriptions, and our role is to support the medical care they receive at home. To support this, we have established contact centers, visiting nursing stations and nationwide sales, maintenance and support systems. These businesses constitute what we call our home healthcare business, and we now intend to expand into adjacent areas.

Compared with outpatient and clinic visit models, we would like to expand into visiting-type home healthcare where care is provided directly in patients' homes. To support this, we are also considering combining facilities that function as residential care bases. In essence, patients who have difficulty visiting outpatient clinics often require somewhat more invasive medical treatments and care. Therefore, we aim to expand into these areas as well, including through M&A and create new business domains there. This will be our second growth pillar.

Next is Electronics & Energy, which serves as a highly profitable business supporting these growth areas. We have not actively highlighted this business previously, but it is already highly skilled at promoting combinations across production, technology development, sales and marketing, including collaboration with partner companies. By integrating the previously separate resin business and battery materials business, we expanded the range of solutions we can offer to customers, particularly since the customer base is significantly overlapped. This business has always been strong at Suriawase collaboration with component manufacturers and finished product manufacturers. By increasing the range of available solutions, we believe the business will become even more stable and better positioned to identify new customer challenges. Although this is not a particularly large business area, we aim to pursue a niche-top strategy here.

The third category consists of businesses requiring structural reform. First is Specialty Materials. Ultimately, we want this business to transform into a customer-driven business model. However, first and foremost, the aramid and carbon fibers businesses must implement cost structure reforms as materials businesses and establish a foundation capable of generating stable profits. At the same time, in applications where these materials are still highly valued, such as aerospace, personal protection, defense and infrastructure, our recognition among customers remains very strong.

Leveraging our market positioning, we want these businesses to shift from simply selling materials to identifying customer challenges and solving them. We expect them to uncover as many customer issues as possible. Ideally, by the end of the medium-term plan, profitability in each materials business will have recovered, and we will be able to report that we have established new business approaches in at least some of these 4 areas. If we can achieve that, we would consider this medium-term plan successful. To put it simply, selling proprietary materials remains an important business today. However, even in this area, we want to move away from a focus solely on our own materials and instead prioritize solving customer challenges.

I would now like to discuss structural reforms in more detail. For aramid and carbon fibers, including previously announced measures, we are planning significant workforce reductions alongside reviews of production structures and other reforms. Through these actions, we aim to further strengthen the business structure and establish a framework capable of providing value to customers at appropriate costs for materials that continue generating value even after transitioning to a customer-driven business model. At the same time, in the application areas highlighted in red, where our materials already have a certain level of recognition and customer acceptance, we will also explore the creation of customer-driven businesses. This is one reason why we group these businesses together on a larger scale.

Meanwhile, regarding existing pharmaceuticals, as I mentioned earlier, the pharmaceutical and home healthcare businesses had already begun integration around 2 medium-term plans ago in search of a winning strategy. As I explained earlier, the winning strategy has already been identified. Therefore, for existing pharmaceutical products that we believe no longer contributed to that strategy, we intend to identify best owners and further accelerate our focus on rare disease and intractable disease areas as previously promised.

At the company-wide level, as shown at the bottom, we also plan additional cost reductions across the group through workforce reductions. Of course, this is partly about reducing costs, but more importantly, we believe we must become a more productive company in preparation for an AI-driven era. Therefore, rather than simple cost cutting, we intend to proactively reduce functions that are deemed unnecessary, while strengthening functions needed for customer-driven businesses through the use of AI. Taken together, we intend to execute and realize the numerical targets shown here during this medium-term plan period.

As I mentioned at the outset, the nature of the company will change significantly. Until now, we believe it was appropriate for each siloed materials-based business to grow independently. That approach supported Teijin's growth during the 2000s. So it was not necessarily wrong. However, now the major transformation of our business structure is required, we believe we must fundamentally change our management strategy in order to truly operate as one unified company. We will implement technology strategies that take siloed assets out of individual businesses and reposition them as shared company-wide assets. We believe this is essential for promoting combinations across businesses.

Likewise, to support this transformation, we must integrate knowledge dispersed globally. Therefore, we intend to unify our IT infrastructure and establish a one data platform within approximately 1 year. On top of that, over the next 3 years, we intend to build systems that maximize the use of AI to digitally promote Suriawase and Kumiawase. In addition, we believe we must further develop systems that enable optimal global talent allocation, and we will continue identifying and assigning personnel capable of supporting these initiatives.

Summarizing this numerically, this page outlines our targets. The management team, including myself, debated extensively how to disclose these segments. Ultimately, we decided that disclosing the large fiscal 2025 loss in Specialty Materials was important as a demonstration of our determination and commitment to taking a do-or-die approach. Accordingly, we adopted the segment disclosure structure. Overall, we aim for revenue of JPY 970 billion and adjusted operating income of JPY 60 billion. As I mentioned earlier, we are not seeking aggressive top line growth. Instead, we are prioritizing profit growth and improving ROIC to become a more efficient company.

As shown here, businesses such as Apparel & Industries and Electronics & Energy already demonstrate strong ROIC. We intend to maintain those ROIC levels while supporting company growth and stable earnings. At the same time, we aim to improve Healthcare & Life Solutions further and transform Specialty Materials from a loss-making business into one capable of generating ROIC above WACC by fiscal 2028.

Next is capital allocation to support these initiatives. We expect to generate cash through earnings from business activities, asset sales contributing to ROIC improvement, and flexible financing arrangements. We intend to allocate that cash toward business reinvestment and shareholder returns.

Regarding the content of our growth investments, we have decided to focus first on growing Apparel & Industries and Healthcare & Life Solutions. We intend to concentrate investments in these priority areas. In addition, even in the case of M&A, rather than pursuing new markets through entirely new technologies as we have done in the past, we intend to limit investments to areas such as rolling up existing businesses through horizontal integration and expanding customer bases by extending existing technologies into adjacent areas. We would like to proceed while reflecting on lessons learned from the past. These are the primary areas for growth investment.

To support this strategy, as I mentioned earlier, we believe substantial digital investment will also be necessary. On the other hand, regarding shareholder returns, our basic policy remains stable dividends. Although we recorded a significant net loss in fiscal 2025, we maintained dividends as promised. By maintaining stable dividends, we hope that both existing and new shareholders who are willing to support our transformation over the medium to long term will continue to invest in the company.

Going forward, we also intend to steadily improve ROE and demonstrate ROE improvement backed by profit growth, along with decreases in DOE (sic) [ D/E ] before considering the introduction of DOE around fiscal 2027. These are the basic principles behind our shareholder return policy. In any case, the most important point is that we must first achieve a significant improvement in ROE, moving from negative territory to at least 8%, which we believe is the minimum level at which shareholders will feel comfortable in trusting management with executing its strategy. To achieve this, we will place disciplined investment and efficient business operations at the center of our management approach. In terms of investment, we will focus on making disciplined investments in areas where we can compete and win. Through these efforts, we intend to steadily execute on the commitments we have made.

Finally, to summarize, we aim to combine all assets across the Teijin Group and strengthen Suriawase collaboration through our numerous customer touch points, transforming ourselves into a company that creates businesses and value together with customers. The 4 business domains shown on the left will serve as the areas where this strategy is implemented. We will work steadily toward making these businesses the new Teijin Group by fiscal 2028. This concludes my presentation.

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

I will explain the results of the third quarter and the full year outlook. Please see Page 1 of the document.

First of all, as for the third quarter results, adjusted operating income landed at JPY 23.8 billion. It decreased by JPY 1.8 billion year-on-year. In the Healthcare business, income increased due to an increase in the number of printed home medical devices and income from licensing fees in the third quarter. On the other hand, in the Materials business, there was a large-scale periodic maintenance for aramid in the first half, and there was a deterioration in the sales mix.

In addition, we decided to sell the aramid paper business. So the profit on the business has been excluded since September. Including these, we had an overall decrease in income of JPY 1.8 billion. In addition, impairment losses were recorded in the third quarter related to the temporary suspension of the carbon fiber plant in the U.S. This will also be explained in detail later.

The full year outlook remains unchanged from the previous outlook of JPY 25 billion in adjusted operating income. We plan to pay an annual dividend of JPY 50 per share, which is also unchanged from the previous forecast. As a topic, we announced the business integration of Teijin Frontier and Asahi Kasei Advance in December. Moriyama will explain this later as well.

Please see Page 4 of the document. First, I will explain the highlights of actual results in the third quarter. Revenue was JPY 659.9 billion, down JPY 96.2 billion year-on-year. And adjusted operating income was JPY 23.8 billion, down JPY 1.8 billion year-on-year. The nonrecurring items recorded a very large negative figure of minus JPY 74.9 billion, which I will explain in more detail later. Due to this impact, profit attributable to owners of the parent for the third quarter was minus JPY 59 billion.

Please see Page 5. The page shows revenue and adjusted operating income by segment. Revenue, as I mentioned earlier, was JPY 659.9 billion, down JPY 96.2 billion year-on-year. The main reason for this is the large difference of minus JPY 82.9 billion in materials. As you know, the sale of Composites business in North America was completed on July 1. Accordingly, the sales of the Composites business in North America have been removed since the second quarter. This is the main reason for the decrease in revenue. Adjusted operating income on the right side landed at JPY 23.8 billion. By segment, the Healthcare business achieved an increase of JPY 4.9 billion, while the Materials, Fibers & Products Converting and other segments recorded a decrease, resulting in an overall decrease of JPY 1.8 billion. The following pages will explain the changes in adjusted operating income.

Please see Page 6. First, Materials. Adjusted operating income landed at JPY 0.5 billion, down JPY 1.4 billion year-on-year. The latter chart in the middle of the page shows the structure of the increased decrease in income. The situation continues to be difficult due to the large negative difference in sales volume and spread. In light of this situation, we have taken measures to improve profitability and have regained a certain degree of profitability.

However, we have fallen slightly short of the previous year's level, landing at minus JPY 1.4 billion for the first 9 months of the fiscal year. The table at the bottom shows the situations by subsegment. In order from the best to the worst, the composites business secured an increase in income. The resin business was almost unchanged year-on-year, while carbon fibers and aramid business saw a decrease in income year-on-year.

In the composites, the effects of the profitability improvement reforms implemented in the previous fiscal year have taken root and the deficit has been eliminated following the transfer of the North American business, resulting in a large year-on-year increase in income. In the resins business, sales declined slightly for equipment applications, but this was offset by the maintenance of spreads and other factors, resulting in earnings at about the same level as in the previous year.

On the other hand, the carbon fibers business experienced a decline in sales volume, which had the effect of lowering factory capacity utilization. The decline in sales prices, mainly in general purpose applications has also had an impact. Although cost structure reform efforts have covered this to a certain extent, the efforts have not been enough to fully offset the impact, resulting in a decrease in income year-on-year.

With regard to aramid fibers, there was a decline in capacity utilization due to large-scale periodic maintenance mainly in the first half of this fiscal year, resulting in a decrease in income. Also, there was a decrease in sales prices. These 2 are major factors for the decrease of income, but we worked on cost structure reforms and we recovered some of the losses.

In the second quarter, we recorded a major impairment on our fixed assets. Because of this, the effect of reduced amortization expense has occurred since the third quarter. Although raw material and fuel prices also contributed to the increase in income, the aramid business as a whole saw a year-on-year decrease in income in the third quarter.

Fibers & Products. The Fibers & Products Converting business was JPY 13.2 billion, a year-on-year decline of JPY 1.9 billion for the first 9 months of the fiscal year. We have commented below. Sales continue to be strong, but there were some factors contributing to the decline in income for both Fiber Materials and Apparel and Industrial Materials.

In Fiber Materials and Apparel, there was some impact from the advanced shipment of textiles for China in the previous fiscal year. In addition, Industrial Materials were affected by softening demand in automotive applications. The difference of minus JPY 1.5 billion was recorded in volume as a result of these factors. But on the other hand, there was an improvement effect of about JPY 1 billion in spread. However, as of the third quarter, the increase in sales expansion costs, labor costs and others could not be fully covered, resulting in an overall decrease of JPY 1.9 billion year-on-year.

Healthcare was JPY 12.9 billion, an increase of JPY 4.9 billion year-on-year. The negative impact of the drug price revisions was offset to a certain extent mainly by CPAP and increased sales of OSTABALO. In addition, the measures to improve profitability that have been implemented since the previous fiscal year had a certain degree of effect in reducing fixed costs. And there was the impairment of intangible fixed assets of the sales rights for diabetes treatment drugs at the end of the previous fiscal year.

These factors resulted in a decrease in amortization expenses. In addition, licensing income was received in the third quarter. These factors compensated for the increased cost of home devices, and there was an increase of JPY 3.9 billion in income in others, resulting in the overall income of JPY 12.9 billion, an increase of JPY 4.9 billion.

Other segment was JPY 4.2 billion, a decrease of JPY 2.5 billion year-on-year. Sales of separators and membranes have remained strong with sales almost on a par with the previous year. On the other hand, there was a difference in others. This is a decrease in profit of equity method affiliates. The main reason for this is the exclusion of P&L in the aramid paper business from adjusted operating income due to the decision to sell the business. Mainly due to the negative effect of exclusions since September, there was a decrease of JPY 2.5 billion in others. Because of this, the overall income saw a decrease of JPY 2.5 billion year-on-year. This is finance income and costs, nonrecurring items.

As for finance income and costs on the left side, expenses were almost the same as in the previous year. On the other hand, there is a large number of nonrecurring items on the right side. I'll explain details for this. First, impairment losses totaled JPY 60.8 billion in the third quarter of the current fiscal year. As I explained in the second quarter, the impairment loss of fixed assets in the business is JPY 49.5 billion, which is included in this amount.

On the other hand, an impairment loss of JPY 7.3 billion was recorded for the carbon fibers business in the third quarter. Mainly due to these 2 factors, the impairment loss was JPY 60.8 billion. Loss on sales of shares of subsidiaries and affiliates was minus JPY 10.6 billion. The main factor for this is the loss from the sale of the Coms business in North America. In addition, a loss of JPY 4.6 billion was incurred in others. This is due to cost of structural reforms in the aramid and carbon fibers businesses.

In total, a large loss of JPY 74.9 billion was incurred in nonrecurring items. Including this, the net loss for the 9-month period ended in JPY 59 billion. Balance sheet. Total assets amounted to JPY 989.6 billion, a significant decrease of JPY 71.6 billion from the previous year. The main reason for this is that following the sale of the comps business in North America, the related assets were taken off the balance sheet. Also, the impairment losses I just explained. Fixed assets decreased due to impairment losses on fixed assets in the A business and carbon fibers business. These 2 factors resulted in a decrease of JPY 71.6 billion.

Net assets saw a decrease of JPY 47.3 billion. Net assets decreased mainly due to the net loss of JPY 59 billion in the third quarter. With a D/E ratio of 0.86 on a gross basis and 0.69 on a net basis, we believe that we have maintained a sound financial health. As for cash flows, operating cash flow was JPY 73.2 billion, a JPY 32.3 billion increase year-on-year.

Cash increased year-on-year. We comment that the main reason is the improvement in working capital. The major factor is that the aramid business underwent large-scale operating maintenance in the first half of this fiscal year and the inventory accumulated in the previous fiscal year was sold in the current fiscal year, leading to an improvement in cash flow. This resulted in an operating cash flow of JPY 73.2 billion.

Next, I'll explain the full year outlook. Please see Page 14. Here is a summary. The annual sales revenue is JPY 860 billion. Adjusted operating income is JPY 25 billion and loss attributable to owners of parent is JPY 10 billion. The outlook for all of them is unchanged from the previous outlook, a decrease of JPY 145.5 billion in revenue year-on-year. As I explained in the third quarter results, this is due to the exclusion of revenue of the composites business in North America from PL because of the sale of the business.

As for the JPY 10 billion loss for the year, the annual forecast is that the loss will be improved from the JPY 59 billion loss for the first 9 months of the year to a loss of JPY 10 billion. This outlook remains unchanged at this time. A major factor is that, as announced in August, we have decided to sell our shareholding in a joint venture company in the aramid paper business, which is scheduled to be executed by March. We have incorporated the effect of this sale.

In addition, some nonrecurring income is expected to be incurred. When these are included as the current announcement, the loss attributable to owners of parent of JPY 10 billion will be maintained. The page shows revenue and adjusted operating income by segment. There is no change in the revenue outlook from the previous outlook. We have not changed the bottom line for adjusted operating income, but we made adjustments of JPY 1.5 billion between the Materials and Other segments. I will explain situations in adjusted operating income.

As for Materials, the income for the year is expected to be JPY 1.5 billion. Year-on-year, we forecast a decrease of JPY 4.5 billion. Please see the latter chart. The structure has not changed significantly from the 9-month total. There are large decreases in sales volume and spread, mainly for aramid and carbon fibers. Although we will recover some of this amount through measures to improve profitability, we will not be able to fully recover it. We expect to post a JPY 1.5 billion income, a year-on-year decrease of JPY 4.5 billion.

The table below shows the situation by subsegment. This also shows no major structural change from the 9 months total. We forecasted income will increase for composites remain unchanged from the previous year for resin and decrease for carbon and aramid. As for the factors behind the income increase for composites, as I explained earlier, the firmly established profitability improvement effect and the elimination of the deficit associated with the sale of the North American business result in a large increase in income. We expect that resin will maintain income at the same level as the previous year as spread will be successfully maintained in response to the decline in sales volume.

As for carbon fibers, we expect that the effect of lowering capacity utilization due to a decline in sales volume will remain until the end. Although cost structure reforms will recover a certain amount, we will not be able to fully recover it. Income for the full year will be lower than the previous year's level.

As for aramid, the impact of the decrease in capacity utilization due to the large-scale periodic maintenance will unfortunately remain until the end. In addition, the impact of the decline in sales prices has been significant. Cost structure reforms are being implemented to address this. As there were impairment losses in the second quarter, there is the effect of reduced amortization expense. Also, this is the impact of lower raw material and fuel prices. The sales volume itself has increased compared to the previous year, and this has had a positive effect. However, we expect that we will not be able to fully recover and see a year-on-year decrease in income.

Please see Page 17. In the Fibers & Products Converting business, we forecast JPY 18 billion, an increase of JPY 0.3 billion year-on-year. In sales volume, as I explained earlier, there were some negative factors occurring in both Fiber Materials and Apparel and Industrial Materials. On the other hand, we are working to improve the sales mix by frequently withdrawing from low-profit businesses and taking other measures. We expect to see an increase of about JPY 2 billion in the spread difference in the end.

In others, there is an impact from sales expansion costs and an increase in labor costs, but we are working to cover these costs and ultimately reach JPY 18 billion. Healthcare is expected to reach JPY 12.5 billion, an increase of JPY 6.8 billion year-on-year. We expect that the impact of the drug price revisions will somehow be covered by the sales volume. We expect to achieve this goal by increasing number of CPAP rentals and sales of OSTABALO. We continue to take action to reduce fixed costs and expect to achieve an annual effect of JPY 2 billion.

Then in others, there was the effect of lower amortization expenses due to impairment losses recorded in the previous fiscal year as well as licensing income, which I explained earlier. This will cover the increased cost of home medical devices and generate an increase of JPY 4.8 billion in others. We expect an increase of JPY 6.8 billion year-on-year. In others segment, adjusted operating income will be JPY 3 billion, a decrease of JPY 4.1 billion year-on-year.

Sales of separators and membranes have remained strong. The spread difference has a slight decrease and the volume difference cannot fully cover it, but the overall situation has been solid. On the other hand, because of decrease in profit of equity method affiliates in the year and initial costs associated with the fuel conversion for power generation, as you can see in the comment, there will be a decrease of JPY 3.6 billion in others. We expect JPY 3 billion for the year, a decrease of JPY 4.1 billion.

This is all from me for now, and I would like to pass the baton to Moriyama.

Now I would like to explain the topics on the next 4 pages. The first page summarizes Teijin's business portfolio transformation that we have. On the left, in 2024 and 2025, we work to divest underperforming and less focused businesses. We have completed the closing of the businesses on the other side.

We conducted divestment of businesses that were deemed to be less focused, such as e-commerce and artificial joints and composites business in North America, which was underperforming. aramid paper, logistics and others are also subject to the divestment, although the transfer has not yet been completed. The reason why we have conducted divestment is that we have limited resources in terms of human, material and financial resources.

We are planning to concentrate these limited resources in the growing areas such as the Fibers & Products Converting, the health care and resin and plastic processing in the 3 years of our next medium-term plan, 2026, 2027 and 2028. That's why we have conducted divestment. The common feature of all of these areas of growth is that although the fields of business differ, they are in the business of getting close to our customers' issues and solving them.

With regard to the Fibers & Products Converting, we have already announced the business integration with Asahi Kasei Advance last December. In the Fibers & Products Converting, we're engaged in a business where we solve a wide range of customer issues in the fields of apparel fibers and industrial materials and grow their business profits. We are working to expand the area we are good at through the integration with Asahi Kasei Advance.

As for the health care, our business areas are different, but we have been working together with patients, doctors and other people who are in need of solutions to their problems and have created the business of home medical care for 30 years. We intend to make the health care for which we have created such a foundation, the second pillar of growth.

Another candidate is the resin plastic processing business. We call the resin business compound. We don't stick to polycarbonate very much. By combining polycarbonate with various other resins, we are working to solve our customers' problems and various issues and create new businesses for them. While we will grow mainly with these 3 businesses, aramid and carbon fibers once were or rather still are very strong as materials. Various competitors such as China and Korea have emerged and the situation is very challenging. In the 3 years of the next midterm plan, we will continue to reform our cost structure in these areas and materialize customer-centric business by looking at these 3 businesses sideways and doing the same.

Our next page is about the business integration with Asahi Kasei Advance and the Fibers & Products Converting business. This is the same material used in December last year. We would like to start a new joint venture with Teijin 80% and Asahi Kasei 20% investment on October 1 of this year, 2026. We have announced a business integration. When the company is established, it will aim revenue of JPY 440 billion and consolidated adjusted operating income of JPY 22 billion.

As we announced in December, we expect 5 synergy effects. We have always thought that the customer-centric model of Teijin Frontier and Asahi Kasei Advance are quite similar. And we believe that features 1, 2, 3, 4 and 5 can be expanded. I'll explain 1 and 2 in particular. Naturally, we will be able to expand our sales channels, procurement sources and products. Also, we will have a variety of different products, so we will be able to respond to new markets and improve the ability.

We think of this as the power kumiawase, combination, and the power suriawase, co-creation. As you can see in a little more detail on the right side, through Teijin Frontier's strength, a very strong sales network centering on Asia, we will be able to provide Asahi Kasei Advance competitive products as something that will further contribute to solving the issues of customers in that area. We also believe that combining materials for both companies will allow us to make proposal that will solve different customer problems.

For example, if we combine nylon, which is Asahi Kasei Advances' strength with polyester fibers, which is Teijin Frontier's strength, although they are strong even now, we could make different proposals for global apparel, sports applications and various other users. In addition, the value chain of the airbag business can be unified. We will be thinking about how we can solve even different customer issues by reducing costs more robustly. I think we already have some things in mind, but we are going to continue to think about it.

We are also considering cross-selling civil engineering and construction materials, although the scope is a little narrower than the above 2. We have announced the integration and are now moving forward with it because we believe that will contribute to strengthening our model to solve customer issues.

This is a summary of our efforts to improve the future profitability of carbon fibers. At the top is our carbon fibers. We are still maintaining high profitability and strength in aircraft applications, where our products have been adopted by a wide range of customers. We will continue to concentrate on those things and do our best. There are very high entry barriers. Of course, safe operation is the most important thing for aircraft, just as it is for me when I am on board.

For safe operation, fibers that have a proven track record are reliable and have been used for a long time are valued. We have those fibers, so we will concentrate on this high profit area. However, there are various fields and there are strong competitors such as China and Korea in some fields. We would like to expand our intermediate materials business for industrial and recreational applications in these areas, regardless of whether we use our own or other companies' materials.

On the other side, I skip the explanation. In the area aircraft applications, we are making good progress in developing a program for next-generation aircraft with intermediate materials to combine materials and resins, not only yarn and materials. There are these 2 points that the implementation of structural reforms is essential. We have 3 bases in Japan, the U.S. and Europe, and we are promoting the optimization of production lines. Of these operation of the U.S. plant in South Carolina will be temporarily suspended. In addition, a fundamental review of the cost structure is also being conducted as a matter of course.

As you can see on the left side, we are retreating from low profit businesses as much as possible and decisively reducing the scale of production. As we mentioned repeatedly, as for our growth strategy, we are promoting prints for next-generation aircraft, high resistant preprints for aircraft applications, including defense in the U.S. as well as the intermediate materials business in Asia, where we are not limited to our own materials.

As summarized here as expected effects, we would like to reduce our workforce by 80 employees by temporarily spending operations at our South Carolina plant in the U.S. We also intend to reduce fixed costs by JPY 5 billion for the next midterm period. We are moving forward with this plan with the hope that by making these reductions over fiscal 2025 and fiscal 2026, we will be able to achieve a significant improvement in profitability from fiscal 2026.

This concludes my explanation.

First of all, I would like to cover 2 pages.

And this is what we are aiming at and the positioning with our resin business. In the first line, we state our characteristic. We are to meet the diverse needs of customers and patients. Every time I read this sentence, I believe that any company would have the kind of relationships based on trust. So this is a common sense. But then we do have a high expertise and professional know-hows, especially in fiber areas and also with the same degree of professionalism, we have our home care services or the health care business services. And I believe that is our characteristic. And with this, we are to meet our customers' demand.

So this is what we call a business model that is customer-centric. And we have to realize this model to support Teijin going forward. And as for the resin and plastic business, as you can see, now we have Suriawase (co-creation of solution) and Kumiawase (ideal combination of technologies) to understand and meet the demands of our customers.

And the fact that we are able to perform Suriawase proves that we are able to utilize our high expertise area in fibers. And also, we do have medical know-how, where we truly understand the needs of our customers.

So this is not only about the single material or the service, but we are able to offer many different combinations, hundreds of them. And then by creating or combining this expertise, we're able to create new businesses that our customers truly require.

And now in the area of fiber or home care health care services, we do have the power in our plastic resin business. So in the next term, we are aiming at increasing our profit level even further, and that's what we are aiming at. And we do have some history in the past. On the left side, now in '24 and '25 in 2 years midterm, we have been working on divestment of underperforming businesses, especially the e-comics businesses or the North America composites business, we have divested them. And also in addition to that, we have been active in divestment in the aramid paper and logistics business and the bromine business, which we have already divested.

And the reason why we have been working on this is because we have limited resources, human resources and materials and budget. So we are focusing on our expertise area. That means the fiber and healthcare and resin. And for the Fiber & Products that we have recently announced with Asahi Kasei Advance, we are to compensate each other and be integrated to expand our product areas even more. And another is an acquisition of UNITIKA'S spunbond business, although this is smaller in scale and also TOYOBO's airbag business acquisition in China.

So with this, we are expanding and strengthening our fiber products businesses. And Healthcare also, we are utilizing our home healthcare platform for further acceleration. And for the Resin & plastic, we are able to thoroughly practice our Suriawase and Kumiawase. So we are going to strengthen them further. And then we should not forget Aramid, where we are facing difficulties, but we are proceeding with the cost restructuring. And then we are to realize our customer centricity.

So this is what we are aiming at. And that is all for the explanation for now. And now Kitahama from our Resin Plastic business is going to explain.

My name is Kitahama. I'm General Manager of Resin Plastic Processing business unit. Thank you very much for giving me the opportunity to speak today. I'd like to provide you with the overview as well as the medium- to long-term strategy. First of all, I'd like to go over the overview and the characteristics and strengths followed by medium- to long-term strategy. I don't really have many opportunities to explain about our resin plastic business. So today, I will have to go over some basics.

So here is our overview-history. As plastic resin business back in 1948, we started manufacturing fumigants and then did polycarbonate resin and flame retardants and resin sheets. And as for polycarbonate, already we have over 60 years' history. And also around year 2000, we have been supporting our customers' global expansion. So we started going into the overseas as well. And as you can see in this chart, there's a factory in Singapore, and we stopped them in 2015.

And as for our business locations, the red colors indicate our factories and includes sales and marketing and research and development facilities. And as for R&D facilities, we support our customers' development and we have locations in Japan, China and Thailand.

And as for the sales, we are global and we support our customers and also support the materials. And as for the sales breakdown by region, we are concentrated in Asia, especially in China, it accounts for over 50%. And then our China exposure, now domestic China consumption is above 50% and the remaining 50% that is processing part. And now our customers are in Europe and North America. So there we are exporting. And then we are mostly in Asia. And for Europe and North America, our direct sales volume is quite small. So we are quite Asian-centric.

So here is about the performance trends. These bars indicate our revenues and profit. And this red line, this is our operating profit and orange color is our market polycarbonate and material BPA spread. And as you can see, since 2005, PC resins for CDs have been decreasing demand, also the costs are increasing, and it is deteriorating our PL. And this is quite volatile, as you can see. And also in 2015, we closed our Singapore plant and then we've been shifting to further cost cuts and higher value products. And then we've been able to stabilize our PL.

And then in China, we added PC resin facilities expansion. Then there's been increasing competition over there. And if you look at our PC-BPA spread, this is at the lowest level ever. But still, we are able to generate profit in a stable manner and our ROIC is now over 10%. And here, our major products, we are focusing on polycarbonate resin and we also have functional resin and functional chemical materials and resin processing material. And as for the functional resin, we have the special polycarbonate. And now we use known non-BPA in materials for smartphones and lenses and that is the special polycarbonate.

And also we do have the polyester resin and PPS compounds.

And as for the functional chemical, we have brominated flame retardants and then polycarbonate sheets processing material as well. And polycarbonate resin accounts for about 80% of the revenues. And I think many of you might know, this is about characteristics of PC resin. And this is a comparison to other engineering plastics, especially they are excelling in transparency and impact resistance. And also there is a good balance. And also for the PC resin alone, what we call the natural for that kind of application, especially when it comes to transparency and impact resistance, this works really well and used in automobile headlights and optics.

Other than natural, we do have other compound in our business. So when it comes to resin compounds, based up on the base resin, we use the PC as a base resin and we combine with other materials to control the [indiscernible] for example, therefore, that we have some complementary characteristics by combining other material. This is the compounds. So we have several different types of the characteristics.

For example, because of this, that the -- well -- compatibility is different. So we do have some conflicting characteristics. That is why it is very crucial for us to decide the blending ratio of materials. This is where we have the know-how. This is a source of the value addition for us.

Next is that the trends of PC resin sales. So this is blue bar that indicates natural yellow compound applications. So as you can see from here, the natural applications has been [ trending ]. Well, because these are the general purpose areas, then we have seen some reductions. And just recently, we have been centering around compounds. So even in the case of natural, we have been centering around the more high-value-added area to stabilize sales.

The PC as a whole that we account for some 5% in resin chemical compound, our share is about 10% to 15%. And therefore, our share is not so high in this market. However, we have focused on the high-value-added products.

So now on, so I'd like to talk about our characteristics and our strength. So one of the major characteristics we hold is at three different areas. One of them is that the quality and also stabilization and also the competence. We actually maintained a high level of quality. We have contributing to the high yield of the customers.

Another one is the attention to the customers' needs. We have a very close communications with the customers in trying to resolve the challenges the customers are facing. And also the last one is a diverse product lineup. As I mentioned earlier, in addition to PC, the component chemicals, we actually provide several different products contributing to solving the customers' different problems.

So these are not very specific actually that about those 3 other areas, we have deepened our knowledge in those 3 areas. So that we have already created a good confident relationship with the customers in trying to help customers to solve the problems. So as a result, we can continue to carry out existing contracts. We have received new requests as well. So this is the cycle of the long-term business. This is a source of our strength.

So about quality stabilization, I'd like to give you more explanation. About the PC Resin, the natural and compounds, we have 2 segments. So first, the PC resin, so that we try to adopt a special polymerization method to control quality variations. And compared to Chinese manufacturer, we do have advantages in quality. More specifically, that the reaction proceeds uniformly, stabilizing the properties and also that the reaction temperature is low, suppressing the thermal degradation and discolorations. And also by washing, we are -- it is possible to remove unreacted raw material, so we can actually reduce that well for the matters.

And also the material can be utilized in compounds. So therefore, that we have the high level, high-quality PC resin manufactured by us. By using such PC resin that -- well, that we have the natural distribution, even distribution of the additives. And therefore, the compatibility of the different materials can be highly achieved. So because of our expertise in the compounds as well as the PC resin area. And also that we established technical centers in overseas production area. So that is why we can minimize the quality difference between prototypes and mass production.

Furthermore, that for a long time that we have customers who requires a high level of quality. We have held a very strong relationship with such customers. That is why we have improved the quality indicators well for a long time. That is why we can contribute to the stabilization of the production by customers and also the high yield of the customers' production.

So I just touched upon technical center overseas. So PC compound, development, production, I'd like to give you more additional explanations. As I had mentioned earlier at the very beginning, that well, in Japan, China and the ASEAN, we already established technical centers and production factories. So in each area that we have a close communication with the customers, so we try to understand the different customers' needs. And we have a good process, repeat process of that well, listening to the customers and also evaluation by the customers.

So once the [ grade ] is developed, we have -- we can establish a good production technology to continue the stable production. So in trying to realize this, we have 2 strengths, here are some examples and the descriptions. So we have the different types of lineups of PC and also compound. In other words, that in relation to the specification requirement by customers, we can establish the functionality required by the customers. And also, we have to accumulate so much recipes, including that the compatibility and also additives in a speedy manner, we can contribute to the resolution of the problem by customers.

So these are our strengths and also the points we have been evaluated by the customers. So we have repeated this process in a steady manner. This is actual production and also quality control we have exercised so far. As a result, in the PC, well, we have seen that the increase of the players. Our positioning is shown in this chart horizontally. Customers that -- well, ability to achieve properties required by customers, and on vertical axis quality stability, so that we try to listen to the requirement by the customers. I think we make every possible efforts to achieve the properties. We are ahead of others and also quality stability in trying to achieve the requirement of the customers, we have maintained at a very high level of stability in quality.

So that the -- well, of course, each company has its own strategies. We have seen that the emergence with so many players, but we have been chosen as one of the major players to contribute to the customers. So we do carry the different lineups of products. We already explained to you. So in principles, we utilize PC resin base, and we have a very unique characteristics of the lineup of the products. So as a base for the revenue, PC resin, which is followed by adaptive functional chemicals with retardants.

So this is the stable source of the PC business, the profit. So well, for the last years that we have made investment into functional chemical and resin processing materials. So these 2 will be the source of the sales and also the profit. When it comes to the retardants, I'd like to explain to you. So that this flame retardant business, we have stabilized sales. So this has been contributing to the stabilization business.

Our retardants, well, that we can utilize that one of the adaptive process of the production. So that the actually major products is Brominated Carbonate Oligomer, BCO flame retardants, which can be produced using parts of the PC resin production process. So this type of BCO flame retardant -- so this has a very high level of flame retards and also high flame retardancy and excellent heat stability. And also that we have a good compatibility with the PBT as applications that the automobile and also the electronic connectors. Just recently, we have application for the data service and electronic vehicles. We have a steady progress in the future. This kind of business is going to grow on a steady basis.

And also regarding the BCO flame retardant market, this is not a big market, but there are not many competitors. And our supply stability is very highly assessed, and we do have a larger share. And this is going to make a further contribution to stabilize our revenues and profit.

And from here, I'd like to discuss medium- to long-term strategy. Now we do have our vision to be a company that supports the society of the future. And that is what we are based upon. And we do have the mission value statement here on the same page. And as I mentioned earlier, we have our development capabilities for the high-performance material, and we have high trust and a strong customer base. And then using them, we are not already limiting ourselves to the particular application areas, we cover wide areas and leverage our capabilities to support our customers' manufacturing process and also sustainability of the society.

And as for our value, there are 3 points that we value since our foundation. We constantly pursue material development capabilities and also earn trust through market-oriented and customer-oriented approaches. And there are different requirements from customers and challenges. So with enthusiasm, we are taking the challenges. So this is what we are based upon in the past decades.

And this is our profit target image, and we can really quantify how much in amount. And we have PC resin and non-PC resin that is in the lighter color. And PC resin accounts for a high percentage in our profit. And then in 3 to 5 years' time, as for the PC resin, the competition is going to be even more fierce, that is for sure. And we continue to work on high-value-added products and realize circular economy to stabilize our profit.

And of course, we are aiming at achieving even higher growth. But at a minimal, we are going to protect our profit level. And then there have been investments in non-PC resin areas. So sales development activities have been making some progress. And in the upcoming 3 years, we are going to materialize what we have been working on to increase the non-PC resin part. And then for the 5, 10 years' time, we are to start new businesses and work on development now. So we are to nurture them to be the next pillar.

And we are now working on changing the profit structures of the entire resin business, and that's what we are working on. And this is about the understanding of the environment. And once again, we are facing some difficulties, and we recognize that. And as the first point, there has been changes in the PC resin market environment. There has been increasing capacity in China. And also there are new PC resin makers and they are now increasing their quality. And then here, you can see the supply-demand balance for the PC resin. And for the upcoming 3 years, already capacity is increasing, and that's already announced. So if they are going to materialize, then supply demand is going to deteriorate even more.

And as for the customers, there's been ASEAN shift from China, and this has been accelerating in the past years. And we see this as an opportunity. And about sustainability, growing demand, there's been a demand for the materials with low environment impact, and this is the opportunity for us. And then including PFAS, there are concerns about restrictions on the use of certain materials, substances. And this could be negative, but we see this as a positive factor.

And then electrification and autonomous driving and improved comfort of automobile and AI, these are all about new demand. So we have to capture them. And then also paperless operations. We do have printer manufacturers as important customers, there will be less equipment demand. So this could be negative for us.

And then in this environment, here we have some priority measures. In this severe environment, we are taking on these initiatives. And without these initiatives, we will have to lose out in competition. And here, we state 4 points, and we are to comprehensively execute these plans to increase our profitability.

For one thing, in growing areas, we are to develop and increase the sales of the high-value-added products. This is mostly about automobile and semiconductors, and we've been already working on this for several years by now. And in another area, there are some overlaps to the priority applications. There are different trends based on the region. So in each region, we are to capture customers' demand and that will have to be reflected in our sales activities.

And in past years in China and ASEAN, we've been strengthening our sales and development organizations. And another thing is about contributing to the circular economy. And this includes circular material product development and also PFAS-free product development. And this is something other companies are working on as well. And we are working upon since start, we'll be able to secure profit through these initiatives, and we are quite active in development.

And one more thing is about cost reductions. Now the first point is to promote sourcing raw materials at competitive prices. And also, we are not at the full operation. So we are to shift the cost structure that aligns to operation and then use automation process and the AI and DX to increase productivity. So we are to execute these 4 pillars of plans to get the tangible impact.

And as for the focus areas, now the growing areas may change depending on time. So for these changes, we are to pursue functions that are required. And currently, it's about automobiles and semiconductors and medical. These are our priority areas now. And that's focus in our sales activities and also in development.

And in addition to stable quality, we are able to secure the material that meet these new demands. And for these application areas, there are certain areas that are expected to grow. For the automotive, we are enhancing in-vehicle comfort and also more charging stands and daytime running light spreading. And these are the requirements. And then for that, we do have these actions to develop the products for the appropriate growth.

And then semiconductors that's still expanding and it is China's policy to promote domestic production and also faster and larger-capacity communication requirement is on the offering and we have to find IC tray manufacturers in China among other initiatives.

And medical also, there has been aging society in China, and we are working on new developments for the new aging population. And as for the circular economy, we are now behind requirements, ELV rules in Europe, where there has been a rapid increase in demand. So our sales volume also has doubled in past years. And now you can see this is the expected cost versus quality on horizontal axis. And our customers are requiring diverse circular economy materials. And now it's about material recycling and biomass, that's what we sell. And for these application areas, we are preparing the suitable grades. And then in addition to that, we work on cost-effective solvent-based recycling technologies we are now developing.

Coming to Solvent-based Recycle -- well, for example, we try to remove the polymer by the existing [indiscernible] technology. However, it is not always possible. That is why by using the solvent, we can achieve the quality, the same as equivalent to that of the virgin materials. That is why this is the -- we can actually contribute to the CO2 reductions and also that the recycle of the [indiscernible] resources.

So that for the mass production in 2026, this is the commercialization date and that we are working for this at this moment. So the foreign matters can be removed. So that is why in the current material cycle, we have some limitation of applications, but we can actually expand the applications. And also that the material sources can be expanded, that we can utilize a more broad range of the recycled materials. And also, we would utilize existing resin processes. Therefore, we don't have to have the large-scale investment. We can achieve the mass production in early stage. So towards mass production, we have been working for this.

Next, well, special polycarbonate. Smartphone lenses, for example, that you know that these are the combination of the different layers of the materials. In this particular area for the last few years or so, the other companies have been ahead of us, at this smartphone and also that the other application to the automobiles, perhaps we can utilize our technology base to such applications, so that this area, that the specific topic has been chosen as one of the focus area.

And also refraction is the vertical range that is if the refraction is high, we can manufacture the thin lens and also the materials. So in the case of the volume zone that the -- some of the companies are ahead of us. In our case that the high refraction materials will be our focus. We can actually that well -- we can attend to the high-quality needs. So we would like to differentiate ourselves from others.

And also that the -- well, AR/VR is going to rise in demand; by using our characteristics, we have already started the development. And for the future markets, in the case of smartphones, well, but we still foresee the slow growth, we have some -- we still have that requirement of our customers. And in the case of the VR device, which is going to grow that sharply, so by taking advantage of the technology, we'd like to catch up more -- pick up more the demand.

For the last 3 years, we have seen that the effectiveness of development. However, those achievement is not the one that we'd like to be proud of. So therefore, well, for the 3 years, we'd like to still make an effort. We'd like to expand the market other than smartphone applications. Lastly, about the PPS compounds and the Processed products, I'd like to give you some additional explanations. So in this area that by using our characteristics, we'd like to enlarge the market. About PC sheets, well, profitability of general applications has been draining. We are facing the severe [indiscernible] . However, we do have the [indiscernible] characteristics, for example, that appearance that resin modification capabilities. Last year that we started to manufacture the new sheet line, for example, that the hardness and also thing smooth the film.

So that -- for example, this kind of the film can be utilized in [indiscernible] and also that the decorations in the automobiles. We'd like to take such demand. And we have seen that the customer base increase. And also PPS compounds that we have a partner company in South Korea. For some time that -- well, we have seen delays in stabilizing the polymer plant operations. But now it has been stabilized. That is why we already started further user work, but we are still left behind. And therefore, we cannot actually compete against others only by the existing [indiscernible] method. But we do have a special methodology so that our product has very different types of the characteristics. That is why for the 3 years that our product has been highly appreciated by the customers.

And also PPS can be applied into the data servers and also the automobiles. We can still have a very good forecast for the high demand. So we'll be able to increase our profit in this field as well. Lastly, we already touched upon our long-term strategy business objectives. PC resin, we are going to maintain the profitability by high value-added products and circular economy. And also non-PC resin that well, we'd like to create new profit pillars by expanding profits in functional resin and processed products. So that these are the areas which actually sustain the profit of Teijin and also we have bright future perspective by using those. This concludes my presentation. Thank you very much.

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

I, Moriyama, will now explain our financial results for the second quarter of fiscal 2025 and our outlook for fiscal 2025.

On the first page, you will find a summary of this presentation in the upper and lower sections. The upper row shows the results for the second quarter of fiscal 2025. Adjusted operating income was JPY 13 billion, a decrease of minus JPY 5.6 billion from the same period last year. In the Healthcare business, adjusted operating income increased due to an increase in the number of rented home medical devices, but adjusted operating income decreased in the Materials, Aramid and other businesses due to large-scale periodic maintenance and other factors. Taking this opportunity, impairment losses on fixed assets were recorded in the Aramid business.

The bottom row shows the forecast for fiscal 2025. Adjusted operating income is JPY 25 billion, minus JPY 10 billion compared to the previous forecast of JPY 35 billion. This was due to a delay in the recovery of Business Performance Materials and the transfer of the Aramid paper business, among other factors. The annual dividend is planned to be JPY 50 per share. There is no change from the previous outlook.

I will now begin with the second quarter financial results. As a first summary, revenue decreased by JPY 56.5 billion from the same period last year. Adjusted operating income decreased by JPY 5.6 billion. Loss attributable to owners of parent was JPY 54.8 billion due to the recording of impairment losses in the Aramid business and costs of structural reforms undertaken. The figure is illustrated separately for each segment.

As on the previous page, overall revenue decreased by JPY 56.5 billion and adjusted operating income decreased by JPY 5.6 billion, mainly due to intensified competition in the area of Materials and the impact of large-scale periodic maintenance.

Here is a little more detail on the year-on-year comparison for the Materials area. Revenue was JPY 187.6 billion, minus JPY 46.9 billion from the same period last year. Adjusted operating income decreased by minus JPY 3.3 billion from the same period last year to minus JPY 1.6 billion. As for topics compared to the previous year, the transfer of the Composites business in North America was completed on July 1, 2025. And although cost structure reforms in Aramid and carbon fibers are progressing, large-scale periodic maintenance and a deteriorated sales mix have caused a decline in profits. The table below shows the status of each material by business.

The Aramid business has been optimizing its production volume and making progress in cost reductions and structural reforms, while lower raw material and fuel prices have contributed to the increase in earnings. On the other hand, we have seen a decline in capacity utilization, which is large-scale periodic maintenance, and we also experienced a fire in August, but we believe that the impact of this fire was negligible for the year.

Sales prices have been partially reduced due to the appreciation of the euro and sales expansion in areas where competition is very intense. Such were the reasons for the increase in profit. Sales of resin remained flat, maintaining the spread despite a slight decrease in sales volume for office equipment applications.

Regarding carbon fibers, we are vigorously advancing cost structure reforms, which are contributing to increased profits. However, the decrease in profit is due to lower capacity utilization resulting from lower sales volume and lower sales prices for some applications. Compared to the previous fiscal year, the Composites business is on track for an increase in profit due to the established effect of improved profitability and the elimination of the deficit resulting from the transfer of the business in North America.

This is an explanation of the Fibers & Products Converting business. Compared to the same period last year through the second quarter, revenue was JPY 170.4 billion, a JPY 3.5 billion decrease from the same period last year, and adjusted operating income was down minus JPY 1.1 billion. The resulting amount is JPY 9 billion. Overall sales have remained strong, but the decrease in adjusted operating income is due in part to higher head office costs from sales expansion efforts.

To be more precise, strong sales included textiles for North America and apparel textiles for domestic and Chinese markets. We are very good at polyester staple fibers for water treatment filters and household merchandise have maintained a good performance, which is a factor in our profit growth. On the downside, the main factor contributing to lower profits was textiles for the Chinese market. The decrease in profit was due to a slight decrease in the advanced shipment in the previous fiscal year.

The next page will be on Healthcare. Revenue was JPY 68.4 billion, a decrease of minus JPY 0.9 billion from the same period last year. And adjusted operating income was JPY 7.1 billion, an increase of JPY 1.7 billion from the same period last year. The increase in profit was due to 2 major factors: an increase in the number of rented CPAP devices and an increase in sales volume of OSTABALO, a drug used in the treatment of osteoporosis and continued reduction of fixed costs through business restructuring. In addition, the decrease in depreciation and amortization of the impairment of sales rights for diabetes treatments last year was a factor in the increase in profit.

On the other hand, factors contributing to the decline in profits included reduced sales volumes of pharmaceuticals, specifically diabetes treatments and FEBURIC. Additionally, the impact of drug price revisions continue to affect this fiscal year. Furthermore, increased depreciation expenses resulted from significant introducing CPAP devices while substantially higher usage of CPAP-related expendables also contributed to rising costs.

Next is the last, other areas. Revenue was JPY 24.7 billion, a decrease of minus JPY 5.2 billion from the same period last year. And adjusted operating income was JPY 3.3 billion, a decrease of minus JPY 2.2 billion from the same period last year. Overall, sales of separators and resist solutions for lithium ion batteries as well as membranes for various solutions have remained strong. On the other hand, there are several equity method affiliates and the decrease in their profits is a factor, resulting in adjusted operating income of JPY 3.3 billion.

Next page, financial income and costs, nonrecurring items year-over-year. On the left side, financial income and costs, interest expenses decreased due to progress in repayment of interest-bearing debt. On the right side, nonrecurring items include impairment losses on the Aramid business and losses on the sale of shares in the Composites business in North America, which are minus JPY 11.1 billion. Although the financial position is compared to the previous year, total assets and liabilities decreased from the previous year due to the removal of the Composites business and the business in North America as well as impairment losses on fixed assets in the Aramid business. As for the other interest-bearing debt, we can see that the amount temporarily increased at the end of June 2025, that's been optimized to the level at the end of March 2025 following the completion of the transfer of the Composites business in North America. As for the cash flow position, there is an increase in operating cash flow due to improvement in working capital.

Next, I will explain our outlook for fiscal 2025. Firstly, the summary is explained in 2 ways compared to the previous outlook and compared to the previous fiscal year. Revenue is unchanged at JPY 860 billion and adjusted operating income is projected at JPY 25 billion, a decrease of JPY 10 billion. Since the Aramid business will undergo restructuring and impairment losses, we expect profit loss attributable to owners of parent to decrease by JPY 22 billion to minus JPY 10 billion. The annual dividend per share remains unchanged at JPY 50 per share.

The following figure shows a breakdown by segment. Revenue remains unchanged at JPY 860 billion and adjusted operating income is JPY 25 billion. This JPY 25 billion, minus JPY 10 billion is shown in the column on the right. The minus JPY 5 billion represents a decrease in earnings from Materials. There was a positive effect from reduced depreciation expenses due to impairment. However, for Aramid, the sharp appreciation of the euro, decline in capacity utilization and revaluation of inventory value resulted in a minus JPY 5 billion. Carbon fibers, minus JPY 5 billion due to a decrease in sales volume for aircraft and industrial applications. In Others, minus JPY 3 billion due to the transfer of the Aramid paper business. The elimination and corporate figure was minus JPY 2 billion due to an increase in expenses for various projects that are in progress.

The table on the next page shows the comparison to the previous fiscal year. Revenue decreased by about JPY 150 billion to JPY 860 billion due to the transfer of the Composites business in North America. Adjusted operating income declined by JPY 2.6 billion. I've shown a little more by segment here. And as I mentioned earlier, revenue was down due to the transfer of the Composites business in North America. As for adjusted operating income, Healthcare increased profit, partly due to an increase in the number of rented CPAP devices, et cetera. However, overall profit decreased due to intensified competition in the Materials, the impact of large-scale periodic maintenance and the transfer of the Aramid paper business, et cetera.

Let me elaborate a bit more on the adjusted operating income by segment. In the Materials area, revenue was JPY 330 billion, a decrease of JPY 129.3 billion from the previous fiscal year, and adjusted operating income was JPY 3 billion, a decrease of minus JPY 3 billion from the previous fiscal year. As for Aramid, the explanation below overlaps with the previous one, but there are factors for an increase in profit due to progress in cost structure reforms, a decrease in depreciation and amortization due to impairment losses and an increase in sales volume. The volume of sales has been secured through various efforts, which is the reason for the increase in profit.

On the other hand, the sales price has been decreasing slightly due to depreciation of the euro, sales expansion and other factors. The decrease in profit was also due to lower capacity utilization caused by large-scale periodic maintenance. The resin is the same as described earlier. For carbon fibers, production optimization continues to be optimized and cost structure reform is a factor for profit increase. However, a decline in sales volume has reduced capacity utilization, which is affected in lower profits.

In the Composites business, the elimination of the deficit following the completion of the transfer of the business in North America was a factor in the increase in earnings. As for Fibers & Products Converting, the explanation is similar to the previous one, but overall sales volume is expected to be firm and profits on a par with the previous fiscal year.

Revenue was JPY 350 billion, a decrease of JPY 1.9 billion from the previous fiscal year. Adjusted operating income was JPY 18 billion, an increase of JPY 200 million from the previous fiscal year, almost the same, but we expect adjusted operating income of JPY 18 billion. The explanation for the increase in profit is that industrial materials and water treatment filters are performing well, while the explanation for the decrease in profit is that textiles for China are slightly decreasing.

In the Healthcare, revenue was JPY 135 billion, a decrease of JPY 2 billion compared to the previous fiscal year. Adjusted operating income is expected to increase by JPY 6.8 billion to JPY 12.5 billion. The increase in profit was due to an increase in the rented CPAP devices and the sales volume of OSTABALO. We are strongly promoting business restructuring, so we are reducing fixed costs. The decrease in depreciation and amortization is the main reason for the increase. As for the reasons for the decrease in profit, the sales volume of pharmaceuticals is still decreasing. Although the impact of the drug price revisions is expected to have a negative impact of approximately JPY 1.5 billion for the year, we are forecasting adjusted operating income of JPY 12.5 billion.

Finally, other areas. As explained earlier, sales of separators and membranes have remained strong. As such, revenue was JPY 45 billion, a decrease of minus JPY 12.3 billion from the previous fiscal year. Adjusted operating income is JPY 1.5 billion, a decrease of minus JPY 5.6 billion. One of the reasons for this decrease is that we have several equity method affiliates, and we expect a decrease in profits at some of them of JPY 1.5 billion. This concludes my explanation.

Next, I, Uchikawa, will explain our initiatives for the next medium-term management plan. First, let me explain that we are currently working on key measures. First, I'll explain the [ second ]. As Moriyama just explained, the profitability of the Aramid business and the Carbon Fibers business is declining. In light of the above, we believe that it is very important to further advance cost structure reforms in light of changes in the external environment in order to stabilize our earnings, and we have been promoting these reforms since the beginning of the fiscal year. We will continue to implement drastic cost reductions by optimizing our production system. We will use this as the basis for making great strides during the period of the next medium-term management plan.

As for how we will grow, the development of the Customer-Centric Business Model, which is described in the upper part of this report, will be our main focus or at least we would like to make it our main focus. Until now, the company has tended to seek growth somewhat in isolated pockets. Our current management team is prioritizing areas where we can leverage our strengths. This involves accelerating the Customer-Centric Business Model, specifically downstream shift, capture peripheral markets and participating in industry consolidation. Through these efforts, we are shifting our core focus toward building a business model that progressively solves customer challenges, moving away from the traditional model of selling individual materials or products.

As explained, this initiative has been underway since the beginning of the fiscal year. We are currently prioritizing resource allocation for it. We are unable to provide details today. However, several collaborative initiatives with other companies are now taking shape. We plan to prepare these sequentially for the next medium-term management plan announcement and report them to you.

Regarding each business segment, in the Materials segment, we are optimizing production systems for the Aramid and Carbon Fibers businesses mentioned earlier to enhance profitability. Previously, our strategy focused on maintaining high market share across all segments. However, we now intend to make concentration on high value-added areas, one of our key pillars. And in the areas we've decided to prioritize, we intend to advance the creation of new businesses that originate from customer needs. This aligns with what is written on the left, 1, 2 and 3.

In the Fibers & Products Converting business, where we are already promoting the customer-centric business, our preparation for the future is to pursue further expansion of this business. Furthermore, in Healthcare, the home healthcare business model has already shifted toward providing services to patients. We aim to advance this further by focusing on the field of intractable and rare diseases. This allows us to concentrate on an area where we can leverage the business foundation cultivated through our core strength in home medical care.

We intend to accelerate the transformation of this business. By adding the optimization of the production system for Aramid and Carbon Fibers to these 3 pillars, we hope to build a base on which we can make a leap forward during the next medium-term management plan period. These are the core of our efforts to develop a medium-term management plan and to move forward into the next period.

However, as I just mentioned, profitability has significantly declined, particularly in Aramid and Carbon Fibers. Therefore, I would like to summarize and explain here what we are doing about these issues, focusing primarily on Aramid.

In 2022 to 2023, we had a fire at Aramid raw materials plant and natural gas prices in Europe rose abnormally due to the conflict in Ukraine. Furthermore, due to the spread of COVID-19 and other factors, it has become extremely difficult to secure workforce in Europe that can work 3 shifts at a fixed time in place. We have taken various measures to resolve these issues. And as previously reported, we have succeeded in achieving most of the goals as planned.

On the other hand, we had promised to make this even more robust from this fiscal 2024 to the next medium-term management plan period. And in the midst of this, we had to deal with a second small fire. In addition, the appreciation of the euro and the fact that our competitors are increasing their production capacity have caused an imbalance in the supply-demand balance. The current situation is that we are promoting fundamental cost structure reforms to address these issues. This review of the production system will entail a reduction in fixed costs, and we are currently working to cut costs by approximately JPY 15 billion by reducing the workforce by more than 400 people, among other measures.

Once we have achieved full realization of these goals, as I mentioned earlier, we will build a base for rapid progress by concentrating on high value-added areas, and we will further solidify this by collaborating with external partners to create new business based on customer needs, which will be carried out in parallel with these efforts. At the same time, new applications for aramid and carbon are still being developed and many new uses will emerge where the value of the material can be fully utilized.

One is that a very good amount of cable laying for transporting electricity across the seabed are expected in the future. For this, we hope to capture market growth by properly fitting our Materials. Aramid, which has been affected by external factors or has lost its profitability due to internal weaknesses and additionally, our carbon fibers business. Through addressing these factors, we aim to make tangible progress toward returning to a high profitability structure within this fiscal year, bringing the situation to a point where everyone can see that we have hit bottom. These are the progress of our efforts towards the next medium-term management plan.

As for returns to our shareholders to support us, we have fallen into a deficit in the current fiscal year, but we believe that the impairment losses of the Aramid business are a temporary factor that occurred in 2025. In addition, as we have always followed the policy of paying stable and continuous dividends, we intend to maintain the annual dividend of JPY 50 per share for this year as well.

That concludes my explanation.

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