Itochu Aktie

Hello, everyone. I am President Ishii. Thank you very much for joining us today. I will explain our FY 2025 business results and FY 2026 management plan. First, for FY 2025 business results, please refer to Page 2 of the presentation materials, FY 2025 business results and FY 2026 management plan.

Consolidated net profit reached JPY 900.3 billion, while exceeding our initial plan of JPY 900 billion, marking a record high for the second consecutive years and achieving JPY 900 billion stage for the first time. Although FY 2025 started under highly uncertain and volatile conditions, including the impact of U.S. tariff policies and rising tensions between Japan and China, we steadily accumulated core profit by addressing each challenge arose, and successfully achieved our initial commitment driven by extraordinary gains from asset replacements, et cetera.

Next, core profit increased by JPY 11.5 billion year-on-year, reaching JPY 781.5 billion. As announced, there were negative factors in the first half of FY 2025 that we didn't expect in our initial plan, including delays in the coking coal projects, sluggish iron ore prices and underperformance in the finished pulp business.

However, prompt countermeasures and turnaround initiatives enabled us to recover to a normalized level in the second half. On the other hand, steady growth in our core group companies, including FamilyMart, DESCENTE, CTC, and North American power business, as well as in our medium-sized businesses in the non-resource sector contributed to accumulate core profit solidly.

By segment, 5 out of our 8 division companies, Textile, Machinery, Food, ICT & Financial business and the eighth achieved record high core profit, highlighting the strength of our stable non-resource businesses. Core operating cash flows reached a record-high JPY 940 billion, demonstrating our steadily strengthening earnings power.

As cash serves as the foundation for both growth investments and shareholder returns, we will continue to secure both cash and profit to achieve growth and enhance shareholder returns while maintaining a robust financial foundation. In FY 2025, we executed growth investments totaling JPY 838 billion on a gross basis, including projects already approved and scheduled for execution within FY 2026, the total exceeds JPY 1 trillion.

We continue to build up high-quality assets with strong growth potential. We also proactively implemented asset replacements, such as the sale of C. P. Pokphand, thereby securing solid cash inflows. Regarding shareholder returns, we increased the dividend per share to JPY 42, marking the 11 consecutive years of dividend increases and surpassing our initial plan.

Share buybacks were executed as planned, totaling JPY 170 billion, and the total payout ratio reached a record-high 52%. ROE remained at approximately 15%, sustaining a high level. Our group companies, strength for ITOCHU, also performed well, with the ratio of group companies reporting profits reaching a record high 93%.

In terms of profit contributions from group companies, we maintained the same high level as the previous year, which was also a record high, demonstrating the robustness of our group's earnings foundation. This concludes my explanation of the FY 2025 business results.

Next, I will explain FY 2026 management plan. Please refer to Page 3 of the presentation materials. For FY 2026, we are targeting consolidated net profit of JPY 950 billion, which would be a record high for the third consecutive years. As I mentioned earlier, we expect steady contributions to core profit from the turnaround of 2 businesses that were negative factors at the beginning of FY 2025, synergies from new investments such as Seven Bank and AND PHARMA and profit contributions from investments approved in FY 2025, and continued organic growth in major core group companies such as DESCENTE and CTC.

We will also actively pursue asset replacements for low-efficiency assets and businesses that have peaked out, realizing extraordinary gains and securing cash inflows. Our profit plan of JPY 950 billion includes a loss buffer of JPY 40 billion to address certain risk scenarios. Growth investments are planned to reach a record-high JPY 1.5 trillion. This includes ongoing annual CapEx of JPY 300 billion and approximately JPY 300 billion in projects already approved in FY 2025, such as Hitachi Construction Machinery, North American power business, ITOCHU-SHOKUHIN, and Sun Frontier Fudousan.

In addition to investments aimed at strengthening each business segment, we will also actively pursue investments to create new core businesses. Please refer to Page 5 of presentation materials for our approach to growth investment. Having entered the JPY 900 billion earnings stage, we will continue to pursue steady profit growth. In other words, raising the earnings level is essential.

The driving force for this earnings growth is, without question, proactive investments. As shown in the presentation materials, growth investments, excluding CapEx are planned at JPY 1.2 trillion for FY 2026, of which JPY 300 billion has already been approved. Accordingly, we are targeting over JPY 900 billion in new investments. We will focus on investments that will be able to raise earnings level. Key areas are indicated. We will pursue profit opportunities are shifting downstream raised in our management policy to strengthen and to expand the value chain.

Despite the potential for cross-industry collaboration in consumer-related sector, the reality is that each business currently operates in vertical silos. We believe that we will be able to create additional value through networking the current structure. This approach aims not only at our core group companies, but also the reorganization and efficiency improvement of food wholesalers, horizontal synergy expansions leveraging fintech with Seven Bank or real estate business with JR East and the creation of new businesses in generic and over-the-counter pharmaceuticals with AND PHARMA.

We will pursue these initiatives, including capital strategies to further enhance consumer convenience. To move to the next stage, we are also considering reallocating resources by reviewing and rebalancing our portfolio and reinvesting in resources and basic industry-related sectors. As a general trading company, we have supported Japan's basic industries and have developed expertise in areas such as metals, steel, mobility, power generation, basic chemicals, food materials and construction materials in our trading business.

We will take on new challenges in resource development, leveraging our past lessons. Please return to Page 3 of presentation materials. While accelerating growth investment, our policy remains to maintain the balance among growth investment, shareholder returns and control of interest-bearing debt. In addition, we will continue to manage our balance sheet with a focus on maintaining an A credit rating from rating agencies.

Although leverage will increase as growth investment expands, we plan to manage our net DER at around 0.6x. Regarding shareholder returns, we plan to raise the dividend for 12 consecutive years, targeting a record-high dividend per share of JPY 44 or higher. Share buybacks are also planned to exceed a record high JPY 300 billion or more. As a result, the total payout ratio is planned to reach a record high 64%.

Please refer to Page 15 of presentation materials for profit plans by business segment. All business segments are expected to achieve year-on-year profit growth. I will now provide a brief overview of each business segment. Textile: DESCENTE continues to perform well, driving growth through directly operating stores and strengthening manufacturing by new materials. The China business of DESCENTE is also performing favorably with strong demand among affluent consumers, even though overall consumer spending remains sluggish.

Furthermore, in the retail business alongside existing brands such as EDWIN, JOI’X, LEILIAN and CONVERSE, we will promote the introduction of new brands and collaboration with select shops to strengthen expansion of our business that stays ahead of trends. Our traditional manufacturing group companies are also recovering. Significant profit growth is expected as Textile.

Machinery, having established itself as a leading business segment, the Machinery is expected to deliver strong results in FY 2026 again. The increased shareholding ratio in Hitachi Construction Machinery to 33.4% is expected to drive further profit growth through the demand for resource developments around the world and construction of logistics warehouses and data centers. The North American power business continues to perform well by capturing robust electricity demand from data centers and generative AI, and we are strengthening local power plant operations.

AICHI CORPORATION, which was additionally acquired in FY 2026, is performing well. In addition, we will steadily build up our new investment in SWTS, a plant equipment maintenance company in Singapore, putting it on track for consistent earnings contribution. We are planning for significant profit growth again this fiscal year.

Metals and Minerals. The 2 coking coal projects have already reached a turnaround, and we will ensure that they make a solid contribution to profits. Also, we aim to expand businesses actively in cooperation with CM, the large-scale iron ore business in Brazil. Aluminum billet transactions in the UAE are expected to decrease in volume due to the impact of the Iran conflict until recovery.

Meanwhile, the low-carbon direct reduced iron, DRI project in the UAE is currently progressing as planned. We will continue to strengthen our competitive iron ore, nuclear power and uranium business. Energy and Chemicals, the Chemicals business remains strong with ITOCHU CHEMICAL FRONTIER, ITOCHU PLASTICS and others securing steady profits. High value-added products, including fine chemicals, pharmaceutical raw materials, semiconductor materials and reagents are performing well.

New investments by group companies are also under consideration. The Power Solutions business has been integrated into Energy division, and we are expanding medium to large-scale energy storage networks, particularly in collaboration with ITOCHU ENEX or by involving power and gas companies, municipalities and local governments.

Food, both quantitative and qualitative performance remained quite strong, especially in group companies generally maintaining steady growth. The restructuring of the confectionery wholesaler business and the conversion of ITOCHU-SHOKUHIN into a wholly owned subsidiary have strengthened our presence in the food distribution sector.

In addition, significant strengthening of profitability through synergies with NIPPON ACCESS is expected. Overseas business such as Dole and Blommer, which had been underperforming, are steadily implementing improvements, and our North American oil extraction business is expected to gain benefit from the rebound in fuel prices this fiscal year.

General Products & Realty, the Finnish pulp business, which had posted losses due to high log prices caused by the suspension of Russian timber imports and low pulp prices, has halted losses through a capital restructuring and is expected to show significant improvement. In addition to recovery of group companies such as North American Construction Materials business, ETEL, and DAIKEN, we expect to see profit contributions from the investment in a leading real estate fee developer in the U.S. and Japan.

We also anticipate benefits from the integration of ITOCHU Property Development and JR East's Real Estate business as well as from the new investment in Sun Frontier Fudousan, which is engaged in office revitalization projects. WECARS is also on track for rebuilding, working toward restoring its status as a provider of compulsory automobile liability insurance and certified vehicle inspection services.

ICT & Financial business, driven by robust digital demand, CTC is expected to achieve a record high profit for the fourth consecutive year as we advance our digital value chain strategy. Investments in PASCO, geospatial information services as well as collaboration with related companies engaged in consulting service are accelerating growth and expanding our capabilities. Such as HOKEN NO MADOGUCHI GROUP, which strengthened its store network and services through M&A with 4 peer companies last fiscal year.

Our leading core group companies are also expected to drive steady profit growth. The 8th, we aim to strengthen product appeal at FamilyMart and further develop exceptionally well-performing retail media business. And we will support profit generation and synergies from AND PHARMA and Seven Bank. This business segment is responsible for creating value by deepening synergies between investees and group companies and will lead new investments by leveraging its cross-organizational functions across the entire company.

That concludes my presentation on the FY 2025 business results and the FY 2026 management plan. In summary, for FY 2026, we are positioning this fiscal year as a gear shift or gear up to achieve a step change in earnings by accelerating growth investments. Our management policy of "No growth without investments" is reflected in the record high JPY 1.5 trillion growth investment plan, aiming to shift into a higher gear and accelerate growth through proactive investments.

We are also advancing comprehensive and multilayered initiatives, including strategic alliances and real estate business with JR East and Capital and business alliances with Seven Bank. It is important to note that unlike allocation-based investments reliant on market-driven earnings, realizing business synergies through hands-on management, one of ITOCHU's core styles requires time.

This approach involves dispatching personnel to work closely on-site, collaborating directly to enhance corporate value. While it takes time, the synergies we build will serve as long-lasting stable sources of profit over the long term. With the start of the new fiscal year, as in previous years, Chairman and CEO, Okafuji, and I held meetings with the managements of 37 core group companies.

18 of these group companies achieved record high profits in FY 2025 and 30 companies reported forecast year-on-year profit increases for FY 2026. These reports have further strengthened our confidence in the earning power of our hands-on group companies. Although there are still uncertainties such as the situation in the Middle East, we have incorporated sufficient loss buffers into our FY 2026 plan, and we believe the JPY 950 billion target is fully achievable.

Finally, in FY 2026, we expect market conditions to remain volatile in the near term, driven by the situation in the Middle East and subsequent fluctuations in resource prices. While the impact of these resource price changes on business results will vary by company, ITOCHU will continue to steadily implement management measures and growth investments with a long-term perspective, adapting to changing circumstances like water.

Even as we look ahead to the new world that lies beyond, we will continue to demonstrate ITOCHU's full strengths and steadily pioneer business fields where we can achieve robust growth. We are committed to shifting gears now and showing that ITOCHU is ready to reach the next stage of earnings.

I conclude my explanation. Thank you for your attention.

I am CFO, Naka. I would like to provide supplementary explanation on 2 points: our approach to plan formulation and visibility in achieving the plan. First, regarding our approach to plan formulation. As basic policy on Page 3 of the presentation materials, the KPIs we prioritize most are ROE and EPS. Our fundamental policy to pursue sustainable enhancement of corporate value by driving earnings growth while maintaining efficiency remains unchanged.

There is also no change in our cash allocation policy, which continuously maintains a solid financial foundation by balancing 3 factors: growth investments, shareholder returns and control of interest-bearing debt. However, we recognize it is important to flexibly manage this balance within the boundaries of financial discipline in response to changes in the business environment and management conditions.

While we continue to deliver record high profits, we are fully aware that the market perceives the degree of our profit growth is insufficient. Accordingly, under our management policy of no growth without investments, we will place even greater emphasis on growth investments in FY 2026. We have built up a solid pipeline with highly feasible projects that will contribute to the creation of new core businesses, and we expect to achieve growth investments totaling approximately JPY 1.5 trillion in FY 2026.

Please note that the JPY 1.5 trillion is not a preset allocation. At the same time, we will further enhance shareholder returns with share buybacks planned JPY 300 billion or more. This is intended to enhance EPS and should be regarded as a reflection of management's strong commitment to maintaining high ROE. However, our fundamental approach is that high ROE should be achieved through the increasing of consolidated net profit, the numerator rather than by adjusting total shareholders' equity, the denominator through share buybacks.

For FY 2026, our plan is based on the concept of leveraging debt to achieve profit growth through growth investment while maintaining highly efficient management. Next, regarding the visibility in achieving the plan. Please refer to Page 14 of the presentation materials. Some may have the impression that core profit growth was somewhat sluggish in FY 2025. For FY 2026, it is essential that we demonstrate solid growth in core profit.

Starting from FY 2025's core profit of JPY 781.5 billion, we have adjusted for current assumptions on resource prices, Forex, and the impact of the Middle East situation. We expect an increase of JPY 25 billion from the turnaround of previously underperforming businesses and an additional JPY 65 billion from new investments. In addition to JPY 15 billion profit increase from investments executed in FY 2025, approximately half of the JPY 50 billion profit increase anticipated from investments to be executed in FY 2026.

Approximately half has already been secured through executed investments such as the additional acquisition of Hitachi Construction Machinery. The conversion of ITOCHU-SHOKUHIN into a wholly-owned subsidiary, the additional acquisition of North American power business and investment in Sun Frontier Fudousan.

In addition, for the remaining investments of approximately JPY 900 billion scheduled for execution, several projects are already at the final stage of negotiations or are being negotiated under basic agreement, and we expect these investments to be realized successively, contributing to profit in the second half of FY 2026. We also plan to steadily accumulate core profits in each business segment. Major items for which the amounts are disclosed in the materials include DESCENTE, plus JPY 5.8 billion; CTC, plus JPY 4.4 billion; North American Construction Materials business, Dole, Aerospace business, NIPPON ACCESS and ETEL with a total profit increase of over JPY 20 billion expected from these 7 businesses.

In addition, although the amounts are not disclosed, we anticipate higher profit contributions from businesses such as CM, primarily due to significant improvements in Forex valuation losses and Marubeni-Itochu Steel and Tokyo Century. We also expect steady growth in our medium-sized companies, an area of strength for ITOCHU.

As for extraordinary gains, several projects are already nearing closing, and we expect to realize more than half of the JPY 90 billion incorporated in the plan within the first quarter. Furthermore, we have incorporated a loss buffer of approximately JPY 40 billion to address risk scenarios such as prolonged geopolitical instability in the Middle East and its indirect effects.

Based on these considerations, we are confident in the high certainty of achieving our profit plan. For FY 2026, we remain fully committed to delivering another record-high consolidated net profit of JPY 950 billion. This concludes my explanation.

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

Good morning, everyone. I am President Ishii. Thank you very much for joining us today. I will explain 3 highlights from our first half business results announcement, solid earnings progress, dividend increase and share split. Please refer to Page 2 of the FY 2025 first half business results summary presentation materials released on November 5.

The first point is the progress of financial results for FY 2025. Consolidated net profit for the first half reached JPY 500.3 billion, an increase of JPY 61.8 billion year-on-year, reaching a record high level. While extraordinary gains from asset replacements contributed, our strong performance was primarily driven by the robust results in non-resource sector, which is one of our key strengths. Progress toward the full year forecast of JPY 900 billion has reached 56%, exceeding our initial expectations and has been demonstrating steadily.

Regarding the full year consolidated net profit forecast, there is no change from the initial announcement. It remains at JPY 900 billion. However, we have revised our full year core profit forecast to a range from JPY 800 billion to JPY 820 billion. At the beginning of the fiscal year, our core profit plan was set as a broad range from JPY 770 billion to JPY 850 billion. However, given the steady progress in the first half, we have raised upward the lower limit of this range.

Regarding the forecast by segment, we have revised forecast downward for Metals & Minerals due to difficult circumstances in the first half. On the other hand, we have revised the forecast upward for Textile, Food, ICT & Financial Business, The 8th and Others. All these upwardly revised segments belong to non-resource sector, particularly in consumer-related businesses, which are among our key strengths. This demonstrates that profitability in these businesses continues to steadily increase with core profit accumulating solidly.

In addition, while the outlook for reciprocal tariffs was uncertain at the beginning of the fiscal year, the situation settled at a manageable level in September, and we expect a recovery in transactions in the second half. One negative factor is the ongoing price declines caused by dumping exports from China, which has excess production capacity. The extent to which this will continue requires close monitoring.

The second point is shareholder returns. At the beginning of the fiscal year, while we recognized market expectations for dividend increase, our initial plan for dividend per share was JPY 200 as same as the previous fiscal year. This decision reflected the highly uncertain business environment at the time, which included undetermined U.S. tariff policies and more uncertainties than usual. However, as I mentioned earlier, as the outlook regarding tariffs gradually became clearer and overall uncertainty began to subside, our first half results also showed steady progress. With solid accumulation of core profit, particularly in non-resource sectors, we decided to increase the dividend per share by JPY 10, resulting in JPY 210 for the 11 consecutive years of dividend increases with confidence in our profit growth.

The third point is share split. We plan to conduct a share split of our common shares at a ratio of 1:5 with the effective date set for January 1, 2026. While a share split does not inherently enhance corporate value, we have carefully considered this matter over time. As Japan government promotes Japan as a leading asset management center, the Tokyo Stock Exchange is recommending share splits to lower investment units and thereby broaden the investor base, including individual investors. Respecting this recommendation, we decided to implement a 5-for-1 share split with the hope that it will encourage more people to become shareholders and in turn, further support the increasing of our corporate value. Through this share split, we strive to embody the spirit of Sampo-yoshi. Good for shareholders, good for ITOCHU, good for society, in the stock market as well. We hope that even more people will become fans of ITOCHU as a result.

That concludes with my explanation of the highlights.

Next, I will explain the other 2 points, our robust core profit base and the status of turnarounds in businesses facing challenges. Regarding core profit for the first half, please refer to the slide currently being displayed. In resource sector, persistently low prices have continued to weigh on results as has been the case for other companies. This has been especially notable in coking coal, where core profit declined more than anticipated. Additionally, the ongoing delay in the production recovery of our Australian coking coal project since the end of last year has placed further pressure on earnings.

Meanwhile, in non-resource sector, the impact of the Trump administration's tariff policies, whose outcome remained uncertain until September, led to export adjustments, especially in vehicles and machinery destined for the United States, resulting in continued instability. Additionally, our pulp business in Finland also experienced sluggish performance.

Regarding situations of these 2 turnarounds and businesses facing challenges, I will explain later. Despite these circumstances, our domestic reliable group companies, one of ITOCHU's key strengths, made a significant contribution to the accumulation of core profit during the first half. As shown in the slide, core profits in non-resource sector have continued to accumulate steadily, reaching a record high in the first half following strong performance in the first quarter. For core profits in non-resource sector, the proportion of our domestic group companies generating profits of JPY 2 billion or more has been increasing and now stands at approximately 60% in addition to domestic core group companies and consumer-related businesses, such as DESCENTE, CTC and FamilyMart. Midsized group companies with profit levels between JPY 2 billion and JPY 10 billion are also steadily strengthening their earnings power year after year.

Next, please refer to Page 17. Over the past few weeks, CEO, Chairman, Okafuji and I have had review meetings with the presidents of approximately 40 group companies and heard strong reassuring comments from each of them who have thoroughly embraced ITOCHU's unique management approach, such as hands-on management, the principle of earn, cut and prevent and commitment-based management regarding their recent business performance and forecast for the second half. Even amidst global uncertainty at the beginning of fiscal year, our group companies have recorded 87.1%, near record for ratio of group companies reporting profits. And it is noteworthy that around 1/3 of these companies achieved record high profits in the first half.

I believe these results show the soundness and resilience of group companies. The company operates under the principles of frontline capabilities and hands-on management, continuously nurturing and refining our group companies. It is important that those who have learned management philosophy from CEO, Chairman, Okafuji and implemented management approach are presidents for many group companies and that they can communicate appropriately, understand management advice promptly and take actions quickly. Especially, our steady growth foundation consists of the group companies highlighted in light blue with profits between JPY 2 billion and JPY 10 billion, and we are willing to further enhance these group companies.

We believe that proactive enhancing businesses are unlikely to fail, precisely because we understand the industry and the business well. It is a highly feasible strategy that will support the company's sustainable organic growth going forward. Then we believe it is crucial to foster a stronger sense of unity and closer ties between headquarters in these group companies. This is achieved through unannounced site visit by CEO, Chairman and me as well as through exchange meetings with employees of group companies, seminars and networking events for top management of group companies. We will achieve reliable business strengthening and growth through the sharing of strategies, the allocation of necessary resources from headquarters and the steady execution of key growth initiatives such as M&A and business reforms.

Next, I will explain the status of turnarounds in businesses facing challenges. First, coking coal project in Australia. In March, the project transitioned to the first panel of the new mining site. Unfortunately, in April, production stalled after encountering complex fault and resulted in a 6-month delay in production. After that, the project finally managed to pass through that fault in September and have recovered production to normal levels, continuing shipments. The project plans to commence mining in the next second panel around mid-December, and the operation is expected to stabilize thereafter.

Next, let me explain the IFL, pulp business in Finland. Metsä Fibre sells pulp and paper products made from domestic log to Europe and China. However, the prolonged Russia-Ukraine situation led to the suspension of Russian log imports, causing supply and demand to rapidly tighten. In addition, driven by falling pulp prices and declining sales volumes due to sluggish paper demand in China, our largest market where the domestic economy and consumption remains sluggish, the first half yielded extremely tough results.

The combination of soaring log costs and sluggish sales led to production adjustments, causing production costs to surge sharply and developing into a structural problem. Locally, persistent efforts are being made to curb log prices, involving the Finnish government and outreach to log producers. In addition to implementing fundamental cost-cutting measures at Metsa Fibre itself, we are continuing negotiations to minimize future impacts, including diversifying sales channels and reviewing capital policies. We will promptly take these steps in order to minimize negative impact.

This concludes with the overview of our financial results for first half and the forecast for the full year. Our earnings are not derived from large-scale resource extraction, but rather from accumulating profits through each individual transaction and business, a collection of small profits. By combining hands-on management that works alongside Frontline and ITOCHU's distinctive management principle of earn, cut and prevent, we believe we can let profits of group companies solid and drive further growth. Such as DESCENTE and CTC, core profits have been expanded based on reliably predictable profits through the conversion from general investments to associated companies or from associated companies to subsidiaries.

Not every investment or business is guaranteed to succeed. However, by working together at the front line, we can gain insight into the people and industries involved. When anomalies are detected, we can correspond to solve them involving related parties at the earliest stage when the damage is still minimal. This is our hands-on management approach, and it is the feed of our frontline capability. We may encounter turnaround projects in the future, but we will resolve them without fail. We are determined to firmly achieve our committed full year forecast of JPY 900 billion and to steadily realize next phase of upward growth in ITOCHU WA.

That is all for me. Thank you for your attention.

Hello, everyone. My name is Naka, and I am the CXO. In the first part, I would like to explain the background of the establishment of the CXO role as well as its function in management. I hope this will help you to better understand ITOCHU's management policies and organizational structure.

The CXO or Chief Transformation Officer is a title that you may not often hear at other companies. This position was newly established in FY 2024. While the role is responsible for transforming our business scope and business model, I understand it may be difficult to envision this position. Although the CXO has various responsibilities, its most important and original purpose is the integration of management strategy and digital technologies.

Looking back, as a company, we recognize the necessity and importance of integrating management strategy and digital technologies, and began internal discussions in FY 2017. Some of you may remember that in the medium-term management plan announced in FY 2018, we disclosed the policy of reinvented business. However, this was before METI published the DX report, and before the term DX became widely [ TMX ] became widely [ like ]. More importantly, the plan itself was somewhat abstract and lacked concrete measures. We received criticism from analysts, the market did not accept it and the stock price declined. This is a bitter memory.

Nonetheless, we began taking internal actions from FY 2018 onward. First, under the Corporate Planning and Administration division, we formed the Business Innovation Unit, gathering elite members from the ICT and Financial Business division company and CTC. We then formulated policies, specific measures and time lines for the utilization of digital technologies. We intentionally placed this unit under the Corporate Planning and Administration division instead of the IT and Digital Strategy division because it needed to be closely aligned with management policies and strategy.

The following year, when Mr. Noda, former CSO and current President of ICT and Financial Business Division company was appointed CDO/CIO, we moved the Business Innovation Unit under the CDO/CIO and began in earnest with data visualization, analysis and utilization. As you can see from the fact that after Mr. Noda, former President, Mr. Suzuki concurrently served as CDO/CIO and later, I concurrently served as GM of Corporate Planning and Administration division and CSO, we have consistently advanced the integration of management strategy and digital technologies.

At most companies, corporate planning and IT divisions are separated and systems have been regarded as an indispensable platform for corporate operations classified as system expenses or necessary costs. Today, however, we view digital technologies and IT systems not as expenses, but as investments. I believe this is a concept similar to human capital, which has been widely discussed in recent years. In fact, we had a benchmark company when advancing these initiatives, Fast Retailing Co., Ltd., which operates UNIQLO.

The company has long pursued a thorough integration of business operations and IT systems, establishing departments such as Business Operating System division. And Mr. Yanai, Chairman, President and CEO; Fast Retailing Co., Ltd. refers to the IT function as the Digital Business Transformation Services division. They have embedded digital technologies into all operating workflows and generated apparent results. While our industries and business models differ, and we are not simply copying them, we were greatly inspired at a conceptual level.

Then, generative AI emerged in 2023, dramatically changing circumstances and accelerating the pace of change. Recognizing that as the ITOCHU Group including group companies, we must respond to these technological innovations or risk losing competitiveness. We determined it was necessary to accelerate transformation through the integration of management strategy and digital technologies with a dedicated structure. Thus, in FY 2024, we established the CXO role. Until then, we had the CDO/CIO roles, but the responsibility is not merely to oversee IT systems but rather to evolve the business model by integrating them with management strategy. I believe I was appointed to my extensive experience in corporate planning.

As for what we have done since 2018 in pursuing integration of management strategy and digital technologies, what effects and outcomes we have achieved, which stage we are currently at and what we will do -- aim to do going forward, these will be explained in detail in the next part by Mr. Urakami, General Manager of the IT and Digital Strategy division. So I will admit them here.

Next, I will explain the overall roles for which the CXO is responsible. Under my purview are the IT and Digital Strategy division, the Research and Business Development division and the in-house think-tank ITOCHU Research Institute Inc., through which I oversee information and IT systems. As a brief aside, among our corporate value enhancement measures in the management policy, the brand-new deal announced in April 2024, we also listed enhancement of corporate brand value. Increasing media appearances, TV, newspapers, magazines of the economists at the ITOCHU Research Institute is one of those efforts. And as you can see on the screen, it has increased dramatically over the past 2 years.

In addition, the CXO concurrently serves as General Manager of the Group CEO office, and I serve as Chair of 2 internal committees: the Investment Consultative Committee and the Group Finance Review Committee. The Group CEO office is an organization directly under the Chairman and CEO established in 2023 to further strengthen consolidated management. I have served as General Manager since 2023.

In consolidated management, group companies are extremely important. Group company presidents are often big name executives who have achieved strong results at ITOCHU. They are frequently older than the division company presidents and sometimes former superiors. This can create hesitation on the part of the division company presidents and make it difficult for group company presidents to consult with their former subordinates. To prevent such situations, the Chairman and CEO provides direct guidance and oversight, while under his direction, the Group CEO office provides support to both the division companies and the group companies.

Traditionally, our organizational structure was strongly vertical by division company, but this has led to smoother coordination of interests among operating companies, improved fairness in compensation and the exertion of greater overall strength. I feel it is functioning extremely well. As for the coordination of interest I mentioned, not much is needed these days and past cases would be too vivid to recount here.

Let me introduce 2 measures implemented by the Group CEO office. As I mentioned, improving fairness and compensation, our primary aim was to further enhance corporate value at individual companies by providing stronger incentives linked to enhancement of profitability. We revised the remuneration system for presidents of non-listed subsidiaries in Japan. Under the previous system, a certain portion was subject to qualitative evaluation. Criteria were unclear. And even with similar levels of profit contribution, remuneration levels differed depending on the division company. We address this by classifying companies by profit scale under a common company-wide standard, eliminating qualitative evaluation from remuneration and using only quantitative measures, budget achievement rate and core profit improvement rate since appointment as President. As a result, we have ensured fairness and equality and treatment, established a clear system where results are rewarded, and believe this is linked to boosting motivation across the group.

As I mentioned, improving fairness and compensation, our primary aim was to further enhance corporate value at individual companies by providing stronger incentives linked to enhancement of profitability. We revised the remuneration system for presidents of non-listed subsidiaries in Japan. Under the previous system, a certain portion was subject to qualitative evaluation. Criteria were unclear. And even with similar levels of profit contribution, remuneration levels differed depending on the division company. We address this by classifying companies by profit scale under a common company-wide standard, eliminating qualitative evaluation from remuneration and using only quantitative measures, budget achievement rate and core profit improvement rate since appointment as President. As a result, we have ensured fairness and equality and treatment, established a clear system where results are rewarded, and believe this is linked to boosting motivation across the group.

Next, let me explain the internal committees for which I serve as Chair. I have served as Chair since my appointment as CXO in FY 2024. My predecessor, CFO, Mr. Hachimura, served as Chair for 6 years. During that period, I also participated as a committee member, so I essentially took over. I continue to collaborate closely with management centered on the CFO, who also participates as a member, thoroughly assessing and selecting projects from a wide-range pipeline.

Under the policy, no growth without investments, we have shifted toward proactive investment, but we have not eased investment discipline. On the contrary, we partially revised investment standards this fiscal year and tightened them. As stated in our integrated report, the Investment Consultative Committee focuses on 2 key points when making investment decisions. The first point is whether the investment project can truly contribute to the returns and growth required for the company as a whole and whether it can broaden our business base beyond simply exceeding investment criteria. Second, the further evolvement of investment structuring. In other words, whether rights and mechanisms for creating synergies and exerting influence have been embedded in contractual terms. We are careful never to ease our negative checks to ensure control while consciously raising the sensitivity of our positive checks to structure for even better terms.

This fiscal year, decisions on investment projects had a slow start in April and May due to a wait-and-see stance regarding the impact of the Trump tariffs. But applications have increased since summer. The pipeline under consideration is plentiful, and we believe we can continue to accumulate beneficial investments that enhance corporate value this year as well.

For your reference, let me outline the internal approval process for investment projects. First, following deliberations at the project review meeting conducted by administrative organizations within the division company, the project receives presidential approval at the DMC, Division Company Management Committee. Projects of over JPY 5 billion undergo screening by the Investment Consultative Committee and then receive approval at the HMC, Headquarters Management Committee, i.e., the management meeting. Investment projects of JPY 20 billion or more additionally require approval by the Board of Directors. While we do not claim to know other trading companies' approval thresholds or monetary thresholds for submission to the management meeting, and the Board of Directors are set relatively low, which I believe demonstrates that senior management is deeply involved in decision-making.

As Chair of the Investment Consultative Committee for projects of over JPY 5 billion, I examine materials and the content of deliberations from an early stage at the division company's project review meeting to fully understand the project. If there are issues or concerns, I provide comments to the applying department and the President before the DMC.

Typically, roughly 2 to 3 projects per year are sent back and not permitted to be submitted to the Investment Consultative Committee even if they have been approved at the DMC. Among those that are submitted to the Investment Consultative Committee after DMC approval, a further 2 to 3 projects per year are sent back to the division company.

For your reference, let me outline the internal approval process for investment projects. First, following deliberations at the project review meeting conducted by administrative organizations within the division company, the project receives presidential approval at the DMC, Division Company Management Committee. Projects of over JPY 5 billion undergo screening by the Investment Consultative Committee and then receive approval at the HMC, Headquarters Management Committee, i.e., the management meeting. Investment projects of JPY 20 billion or more additionally require approval by the Board of Directors. While we do not claim to know other trading companies' approval thresholds or monetary thresholds for submission to the management meeting, and the Board of Directors are set relatively low, which I believe demonstrates that senior management is deeply involved in decision-making.

As Chair of the Investment Consultative Committee for projects of over JPY 5 billion, I examine materials and the content of deliberations from an early stage at the division company's project review meeting to fully understand the project. If there are issues or concerns, I provide comments to the applying department and the President before the DMC.

Typically, roughly 2 to 3 projects per year are sent back and not permitted to be submitted to the Investment Consultative Committee even if they have been approved at the DMC. Among those that are submitted to the Investment Consultative Committee after DMC approval, a further 2 to 3 projects per year are sent back to the division company.

As I have outlined, the CXO's role is to drive the integration of management strategy and digital technologies, provide support for group companies through the Group CEO office and promote growth investments through rigorous assessment and structuring of projects, while further deepening and expanding horizontal deployment and collaboration. In particular, we must enhance corporate value by responding group-wide to disruptive changes such as digital technologies and AI and by transforming and evolving our business model.

The PER, price-to-earnings ratio, of the general trading company sector has long trended at low levels and in fact, remains below the market average. As you are aware, the Nikkei average PER has now exceeded 18x, whereas our company currently remains at 13x. In recent years, however, many companies have seen their market valuations re-rated by leveraging digital technologies and AI as growth drivers. Hitachi, Ltd. and ASICS Corporation are prime examples. Their current peers are 29.

We are one of the 5 major trading companies to exceed a PBR of 2.0x. We understand that this achievement reflects the steady execution of our long-standing, high-efficiency management and our historically consistent high ROE, which are supported by quantitative results. We believe these factors have been duly recognized and valued by investors.

So what is required to further increase corporate value from here? Needless to say, stock prices calculated by multiplying EPS, earnings per share, by PER, price-to-earnings ratio. A higher PER is achieved through cultivating growth expectations. But above all, it is essential that we first demonstrate steady, visible growth. In addition to growth investments and the continued enhancement of existing businesses, we must significantly evolve our management foundation centered on consumer-related domains by responding to disruptive technologies such as digital technologies and AI. Leveraging the strengthened foundation, we must also accelerate horizontal deployment and collaboration to demonstrate further growth.

By steadily building a track record of business model transformation and evolution that supports growth, we aim to foster market expectations for growth. Across our group, there remain many growth opportunities that have yet to surface. By accelerating both our response to disruptive changes such as digital technologies and AI and our horizontal deployment and collaboration, we will find and connect these opportunities aiming for further growth. We will execute initiatives that realize our group's conglomerate premium and contribute to further improvement in PER. We would be grateful for your continued support and high expectations.

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

Hello, everyone. This is Hachimura, CFO. Today, I'd like to explain our results for the first quarter using the presentation titled Business Results Summary.

Let's begin with Page 3 of the PowerPoint showing the business results. Our consolidated net profit was JPY 283.9 billion. This was partly driven by progress made in our asset replacement strategy, and we achieved a record Q1. In terms of year-on-year, it was [ 137% ] of the same period last year, and we made 32% progress towards the JPY 900 billion consolidated net profit target. The numbers are not evenly spread throughout the quarters, but we made a good start in line with our initial plan.

There were a lot of one-off impact in Q1, but our business model tends to be concentrated towards the second half of the year. We have no concerns in achieving the annual budget and are making good progress in the various parts of our profit growth plan.

As for the impact from tariffs, as we highlight at the bottom point section, the impact in Q1 was minimal. And thanks to the agreement reached on reciprocal tariffs, there is now less uncertainty. However, that doesn't change the fact that there was a big increase in the tariff amount, and we need to continue to look out for the impact of Trump 2.0 policies on the economy, not just from tariffs. And we remain cautious because the subject of the negotiations could change at any time and are not yet final.

In terms of the year-on-year comparison, for the Textile, Energy & Chemicals, Food, ICT & Financial Business and The 8th did well, which are the nonresource businesses. And for others, which includes one-off profit items such as the CPP capital gain. Meanwhile, for Metals & Minerals, General Products & Realty and Machinery did not perform that well. As a result, the breakdown of nonresource to resource is 9:1.

On Page 5, we show our core profit. And you can see that there was a JPY 21 billion decline year-on-year because total was JPY 181 billion. But as we explained on Page 5, the main reasons for the JPY 21 billion year-on-year decline are the decline in resource prices, yen appreciation and the underperformance of the resource businesses, mainly Metals & Minerals. Those were the main factors.

As for the consumer-related sectors, there were some ups and downs, but overall, they did well. And these sectors offset the negative from the resource operations. In any case, we are still in Q1, and we plan to build up the numbers in Q2, 3 and 4 as we go along.

In terms of the status regarding the turnaround, there may be some questions later, but we are making progress according to plan. As for the yen appreciation, in Q1 of last year, the average was JPY 155.8. This year, it's JPY 144.59. So the yen appreciated by more than JPY 11. There was a JPY 12 billion negative impact from that. And for resource prices, there was a JPY 9 billion negative impact, mainly from the iron ore prices. The JPY 4 billion negative impact to -- for resource core profit shown here includes factors such as the volume and cost impact from EMEA, iron ore and coal as well as CIECO Azer.

Going back a bit to Page 4, this shows the performance of each segment. The consumer-related segments did well. In terms of year-on-year, The 8th Company, Textile, Food, Energy & Chemicals did well. Meanwhile, Metals & Minerals, General Products & Realty and Machinery declined. And ICT & Financial Business was in line with last year. The 8th Company benefited from the daily -- increased daily sales in Family Mart, the expansion of new businesses as well as the strengthening of the business platform. Textile did well, thanks to the impact from acquiring an additional stake in Descente as well as apparel, mainly in the area of international sports.

In Food, the trading of provisions, such as rice and cocoa was strong and group companies such as Dole, Nippon Access and HYLIFE did well. Meanwhile, the businesses that were not that strong, Metals & Minerals, this was due to the decline in the market pricing, the weakness in mining operations, the FX valuation loss for the deposits owned by the Brazil iron ore CM as well as for Marubeni-Itochu Steel, there was the delay in recovery for demand for steel materials and steel pipes.

And for General Products & Realty, ITOCHU Fiber Limited, which is the Finland pipe-related entity did not do that well due to market impact as well as the lack of recovery in demand from China.

The North America housing materials business was also partly weak. On the other hand, in Q1 of last year, there were a lot of real estate disposals concentrated in that period. So there was the rebound from that. And in Machinery, there was negative impact from the suspension of operations in Asia IPP. For shipping, there was the gain on sale of ships in Q1 of last year, and there was also the decline in the shipping market pricing, which affected the earnings.

And for YANASE, in Q1 this year, unlike last year, there was a decline in market for the used cars and also weak numbers for both new and used cars in the first quarter.

For Construction Machinery, especially Hitachi Construction Machinery, as announced 2 days ago by Hitachi Construction Machinery themselves, there was a downward revision related to the situation in North America. Meanwhile, the international auto business was slow in general. This was not so much due to the number of cars exported. It was more to do with the strong yen, reducing the yen translated profit from our international operations.

And for ICT & Financial Business, which was in line with last year. For CTC, they did well or very well in each of the 5 segments. Meanwhile, although this was as expected, the number of contracts is declining in the mobile phone-related business. So on a net basis, there wasn't that much growth in ICT & Financial Business.

On Page 27, we show the one-off P&L items. The total is JPY 103 billion. There was the gain on the sale of CPP JPY 88 billion, and that was the JPY 8 billion from the disposal of Provence Huiles in Food Business. And for Machinery, there was the partial sale and revaluation of the stake in JAMCO. This was in the Machinery segment. And if you add them up, it was total JPY 103 billion.

As for investments on Page 10. Gross investments amounted to JPY 297 billion. Meanwhile, JPY 185 billion of that was already decided in FY 2025. So the new investment decisions amounted to JPY 50 billion, including IT Corp, Nishimatsu Construction and part of Hitachi Construction Machineries investment. There was JPY 62 billion of CapEx, leading to the total of JPY 297 billion. As for exits, it was mainly CPP and total of JPY 201 billion, the net -- making the net investment, JPY 96 billion.

In terms of shareholder returns, shown on Page 9. For share buybacks, JPY 40.1 billion as of June end. We've said that we will buy back from the market JPY 150 billion during the period of May 7 to December 31. And we recently announced the numbers as of July end, JPY 61.6 billion, 41% progress. We are making very good progress in buying back from the market. Meanwhile, as for the minimum dividend of JPY 200, which we announced at the beginning of the fiscal year and for which the feedback from the market was not all positive. As for this JPY 200 per share number, because our business is concentrated more in the second half of the year, we will monitor the progress in our earnings towards the second half and flexibly consider this number, and we expect discussions to take place at our Board as well.

In terms of our full year outlook on Page 8, we have some commentary on each of the factors. And things are going pretty much in line with our expectations. So we are confident that we can achieve the JPY 900 billion. And I'm happy to take any questions in the Q&A session for details.

And in terms of the points I'd like to consider and look out for in Q2 onwards, although agreement was reached for tariffs, the impact, including the passing on to prices in the U.S. is to be determined going forward. So the consumption trends in the U.S. is something I'd like to look out for.

In terms of the Japan and U.S. financial policy and monetary policy, the FRB and the BOJ agreed to maintain the status quo for the time being. But the impact on currency, which this could have is somewhat concerning. And as for China, the government is expected to implement more and more of economic stimulus packages going forward. So under these circumstances, the outflow from China, especially in this overcapacity situation is somewhat concerning.

On the other hand, the currency assumption is JPY 140, and the sensitivity is JPY 2.4 billion to a JPY 1 fluctuation. And as for the impact of the economic slowdown from President Trump's policies, which we assume to be JPY 40 billion, the actual impact in Q1 was at least in relation to tariffs, extremely minimal. So considering the impact of these items, although there is some upside, we need to make sure to turn around some businesses according to our initial plan in the coming Q2, Q3 and Q4.

And that concludes my presentation. And now I'll be happy to take your questions.