Mitsui Chemicals Aktie

Hello, everyone. This is Yoshida, CFO of Mitsui Chemicals. Thank you very much for joining in our earnings announcement today. Today, we announced our financial results for fiscal year 2025 and our financial outlook for fiscal year 2026. Now I will explain based on the materials. This is today's agenda. First, I would like to present a summary of our financial results for fiscal year 2025, followed by a summary of our financial outlook for fiscal year 2026.

Please see Page 1. This page summarizes key takeaways from our financial results for fiscal year 2025. Operating income before special items for the entire group decreased to JPY 100.0 billion in fiscal year 2025, down JPY 1.0 billion from the previous year. While profit rose in the Specialty Chemicals domains driven primarily by volume growth, this was outweighed by negative factors in Basic & Green Materials, including weaker demand, lower facility operating rates and inventory valuation losses reflecting lower naphtha prices.

Operating income before special items in the Specialty Chemicals domains rose to JPY 122.1 billion, up JPY 6.2 billion or 5% year-on-year, largely due to firm sales volume in ICT Solutions. As for Basic & Green Materials, we recorded an operating loss before special items of JPY 18.4 billion, which was down JPY 7.0 billion year-on-year. This was due to continued low operating rates, mainly at crackers stemming from weaker demand, along with factors such as inventory valuation losses reflecting lower naphtha prices, deteriorating market conditions and major regular maintenance at Ichihara Works.

The impact of U.S. trade policies was negative approximately JPY 3.0 billion in fiscal year 2025 as Mobility Solutions saw a slowdown in automotive production in North America, among other factors. Compared with the February 5th forecast, operating income before special items for the entire group decreased by JPY 3.0 billion, primarily due to production cutbacks linked to the Middle East conflict, mainly in Basic & Green Materials as well as slow demand recovery in automotive applications in the fourth quarter.

Please see Page 2. This page summarizes key takeaways from our financial outlook for fiscal year 2026. Operating income before special items for the entire group is expected to be JPY 105.0 billion in fiscal year 2026, an increase of JPY 5.0 billion or 5% from the previous year. We expect positive contributions from business growth in the Specialty Chemicals domains as well as from business restructuring and the elimination of temporary factors in Basic & Green Materials to more than offset the negative impact of the Middle East conflict.

Operating income before special items in the Specialty Chemicals domains is expected to be JPY 130.0 billion, an increase of JPY 7.9 billion or 6% year-on-year. We expect firm sales in Life & Healthcare Solutions, mainly in Vision Care and Agrochemicals. Growth in EBITDA in Mobility Solutions despite higher depreciation expenses resulting from capacity expansion and sales volume expansion in ICT Solutions driven by demand growth in the cutting-edge semiconductor market.

As for Basic & Green Materials, we anticipate an operating loss before special items of JPY 3.0 billion, an improvement of JPY 15.4 billion from the previous year. This is due to expected benefits from business restructuring and the elimination of temporary factors as well as price increases and cost reductions.

We expect the impact of the Middle East conflict to result in losses of approximately JPY 15.0 billion arising from reduced sales volume due to production cutbacks as well as deterioration in production yields and energy efficiency, mainly in Basic & Green Materials. This negative impact is reflected in operating income before special items of the Others segment.

As there remain many uncertainties, we will provide quarterly updates on our business conditions as appropriate. As our group's businesses are essential to supporting social and industrial infrastructure, we will make every effort to ensure stable product supply and will reflect rising raw material costs and selling prices in a timely manner.

Please see Page 4. This section describes trends in the key markets related to our business for fiscal year 2025 and fiscal year 2026. First, the ophthalmic lens materials market related to Life & Healthcare Solutions remained firm in fiscal year 2025 with particularly increased demand for high refractive index lenses. We expect the market environment to remain firm in fiscal year 2026 as well.

In the Agrochemicals market in fiscal year 2025, although we saw inventory level adjustments in some regions, the market as a whole remained firm, mainly in Japan. Demand is expected to remain firm in fiscal year 2026 as well despite inventory level adjustments remaining in some regions. Next is the state of global automotive production volume related to Mobility Solutions. While there was no significant change in global automotive production volume in fiscal year 2025, there were regional variations.

In particular, in North America, automotive production volume decreased due to the impact of U.S. trade policies, the semiconductor supply shortage and an aluminum plant fire. We expect global production volume for fiscal year 2026 to remain at the same level as the previous year.

Next is the state of the semiconductor and smartphone markets related to ICT Solutions. In the semiconductor market in fiscal year 2025, in addition to increased demand in the cutting-edge semiconductor market such as AI and data centers, demand also recovered in other applications such as consumer, industrial and automotive applications. We expect the market environment to remain firm in fiscal year 2026 as well.

Demand in the smartphone market in fiscal year 2025 remained on par with the previous year despite the trend towards more sophisticated functionality. In fiscal year 2026, smartphone production volume is expected to decrease compared to the previous year due to supply shortage concerns of memory chips.

Finally, regarding Basic & Green Materials. Due to the unfavorable supply-demand environment, in fiscal year 2025, operating rates of naphtha crackers remained low at approximately 70% throughout the year. In fiscal year 2026, operating rates are expected to further decrease due to the impact of the Middle East conflict. Please see Page 5. This is about the status of our major investment projects. The items in yellow are projects that start commercial operation or undergo optimization and restructuring from fiscal year 2025 or 2026.

Those in blue are projects for which decisions were made in fiscal year 2025. We will continue to make proactive investments and swiftly pursue restructuring and optimization projects.

Please see Page 6. This is the summary of our financial results for fiscal year 2025. Sales revenue for fiscal year 2025 was JPY 1,668.8 billion, a decrease of JPY 140.4 billion or 8% compared to the previous year due partly to lower naphtha prices and the withdrawal from certain businesses as part of business restructuring. Operating income before special items was JPY 100.0 billion, a decrease of JPY 1.0 billion or 1% year-on-year.

Net income attributable to owners of the parent was JPY 34.4 billion, an increase of JPY 2.2 billion or 7% year-on-year. The exchange rate was JPY 151 to the dollar, representing an appreciation of JPY 2 year-on-year. Domestic standard naphtha price per kiloliter was JPY 65,300, a decrease of JPY 10,300 year-on-year, resulting in lower raw material prices. We expect the impact of the Middle East conflict to become more pronounced from April onward.

Please see Page 7. This is the summary of a year-on-year comparison about operating income before special items in fiscal year 2025. In terms of volume, sales of vision care materials increased due to firm demand and sales of agrochemicals also increased due to firm demand mainly in the domestic market. Sales of semiconductor applications increased due to demand growth in the cutting-edge semiconductor market and overall recovery in semiconductor markets.

On the other hand, sales of automotive applications decreased due to the decline in automotive production caused by the impact of U.S. trade policies, the semiconductor supply shortage and an aluminum plant fire in the U.S. Terms of trade were negative overall. While sales price revisions in PP compounds provided a temporary improvement, this was outweighed by losses from yen appreciation, inventory valuation losses due to decline in raw material prices and decreased energy efficiency due to low operating rates of crackers and derivatives.

Fixed costs and others contributed positively to overall operating income before special items as the positive effects from improvement in equity and earnings and business restructuring more than offset higher repair and maintenance costs. Looking at the results by factor, within the JPY 1.0 billion decrease in operating income before special items compared to the previous year, the volume difference was plus JPY 5.7 billion. Terms of trade were minus JPY 8.5 billion and fixed costs and others were plus JPY 1.8 billion.

Please see Page 8. Sales revenue and operating income before special items by segment. In the Specialty Chemicals domains, sales revenue accounted for more than 60% of the group's total sales revenue, and the ROS exceeded 11% in fiscal year 2025. We will continue working to expand profits and consequently, improve profit margins. The following pages provide a detailed explanation of the increase or decrease factors for each segment.

Please see Page 9. Life & Healthcare Solutions reported operating income before special items of JPY 34.2 billion for fiscal year 2025, an increase of JPY 0.1 billion compared to the previous year. The volume difference was plus JPY 3.4 billion. This is mainly due to the firm sales of vision care and firm sales of agrochemicals mainly in the domestic market. Sales volume of oral care decreased slightly due to inventory adjustments. Terms of trade worsened by JPY 0.5 billion due to the impact of losses from yen appreciation on agrochemicals.

Fixed costs and others were negative JPY 2.8 billion due largely to the impact of gas leakage at Omuta Works and an increase in registration maintenance fees in agrochemicals, which more than offset benefits from business restructuring in Oral Care.

Please see Page 10. Mobility Solutions reported an operating income before special items of JPY 51.0 billion in fiscal year 2025, a decrease of JPY 4.1 billion compared to the previous year. Volume in terms of trade deteriorated as U.S. trade policies, the semiconductor supply shortage and an aluminum plant fire in the U.S., among other factors, had a combined negative impact of approximately JPY 4.0 billion. Fixed costs and others were minus JPY 0.8 billion due to an increase in inventory fixed costs.

Please see Page 11. ICT Solutions reported an operating income before special items of JPY 36.9 billion in fiscal year 2025, an increase of JPY 10.2 billion compared to the previous year. Volume difference was plus JPY 6.7 billion as sales volume increased in semiconductor and optical materials and ICT films and sheets due to the demand growth in the cutting-edge semiconductor market and overall recovery of the semiconductor market. Terms of trade were plus JPY 2.7 billion, driven by an improvement related to fluctuations in raw material prices for some products despite the impact of losses from yen appreciation.

Fixed costs and others had a net positive impact of JPY 0.8 billion as the effects of business restructuring in nonwovens and inventory impact more than offset increases in depreciation expenses due to capacity expansions.

Please see Page 12. This page outlines temporary factors and restructuring benefits in Basic & Green Materials in fiscal year 2025. First, please take a look at the restructuring benefits hatched in yellow. We have implemented 3 restructuring measures this fiscal year. Benefits from the restructuring have steadily materialized from the second quarter onward, improving losses from the 3 businesses, which were approximately JPY 3.0 billion in the first quarter before the restructuring. However, in fiscal year 2025, the full effects of these restructuring measures have not yet been realized, leaving room for a further improvement of approximately JPY 5.0 billion in fiscal year 2026.

Next, items hatched in gray are temporary factors in fiscal year 2025. The losses from these temporary factors totaled between JPY 7.0 billion and JPY 7.5 billion. In the fourth quarter, production and sales decreased due to the impact of the Middle East conflict, resulting in approximately JPY 2.0 billion to JPY 3.0 billion of losses.

When all of these negative factors are combined, they had a total negative impact of approximately JPY 12.0 billion to JPY 13.0 billion and together with major regular maintenance at Ichihara Works and levies. This resulted in an operating loss before special items of JPY 18.4 billion in fiscal year 2025. However, quarterly performance is gradually improving. As this has already been explained on the previous page, details are omitted here.

Please see Page 14. This is nonrecurring items. Nonrecurring items totaled minus JPY 26.2 billion, a deterioration of JPY 3.5 billion compared to the previous year. In fiscal year 2025, we incurred an impairment loss on an equity method affiliate in Life & Healthcare Solutions and an impairment loss on business restructuring in Basic & Green Materials. In addition, as a result of structural reforms in the Specialty Chemicals domains, we recorded losses in related business of JPY 4.0 billion.

Please see Page 15. This is the consolidated statement of financial position. Total assets were JPY 2,151.7 billion, down JPY 2.3 billion from the end of March 2025. This was mainly driven by a reduction in accounts receivable and inventories resulting from lower raw material prices. as well as measures to make the phenols business in China asset-light, which more than offset asset increase associated with plant constructions, major regular maintenance and other factors.

Please see Page 16. This is the consolidated statement of cash flows. Cash flows from operating activities were plus JPY 213.0 billion, up JPY 12.5 billion from the previous year due to improvements in working capital. Cash flows from investing activities were minus JPY 134.8 billion, while making necessary investments. We are also progressing with the sale of affiliates as part of our business portfolio transformation. As a result, free cash flows were JPY 78.2 billion.

Next, I will explain the financial outlook for fiscal year 2026. Please see Page 18. This is the highlights of consolidated financial outlook. For fiscal year 2026, we expect sales revenue to be JPY 1,900.0 billion, an increase of JPY 231.2 billion compared to the previous year due to the impact of yen depreciation and raw material prices.

Operating income before special items is expected to be JPY 105.0 billion, including the impact of the Middle East conflict. This is an increase of JPY 5.0 billion from the previous year. Net income attributable to owners of the parent is expected to be JPY 45.0 billion, an increase of JPY 10.6 billion from the previous year. The exchange rate for the year is expected to be JPY 155 to the dollar, a depreciation of JPY 4 from the previous year.

The domestic standard naphtha price per kiloliter is projected to be JPY 95,000, representing an increase of JPY 29,700 compared to the previous year. Please see Page 19. This is the summary of our outlook of operating income before special items for fiscal year 2026. Compared to the previous year, we expect sales volume to increase mainly in the specialty chemicals domains.

Sales of Vision Care are expected to remain firm and sales volume of agrochemicals is expected to increase globally. Sales volume of elastomers is expected to increase driven by the expansion in product applications and markets. As for semiconductor applications, we expect increased demand in the cutting-edge applications driven by the expansion of generative AI.

As for terms of trade, we expect positive contributions mainly from the elimination of negative temporary factors in fiscal year 2025 in Basic & Green Materials as well as sales price revisions and cost reductions. As for fixed costs and others, while we expect the full contribution of restructuring measures implemented in fiscal year 2025 and an improvement in equity and earnings, we anticipate an increase in fixed costs such as depreciation expenses, mainly due to capacity expansions in the Specialty Chemicals domains.

Regarding the impact of the Middle East conflict, we anticipate a decrease in sales volume due to the production cutbacks as well as a deterioration in production yields and energy efficiency. We will make every effort to ensure stable product supply and will reflect rising raw material costs and selling prices in a timely manner. Consequently, the projected increase in profit of JPY 5.0 billion over the previous year is attributable to a number of factors, including a positive volume difference of JPY 19.5 billion, a positive terms of trade impact of JPY 10.0 billion and a negative impact of JPY 24.5 billion in fixed costs and others, including the impact of Middle East conflict.

Please see Page 20. This is our outlook for sales revenue and operating income before special items by segment. In the Specialty Chemicals domains, we continue to expect sales revenue to account for more than 60% of the group's total sales revenue with ROS remaining above 11%. The impact of the Middle East conflict on sales revenue and operating income before special items is reflected in the Others segment. The following pages provide a detailed explanation of the increase or decrease factors for each segment.

Please see Page 21. Life & Healthcare Solutions is experiencing steady profit growth with operating income before special items for fiscal year 2026 projected at JPY 38.0 billion, an increase of JPY 3.8 billion compared to the previous year. Volume difference is expected to be plus JPY 5.5 billion, mainly due to a steady increase in the sales volume of Vision Care and Agrochemicals. We also expect the full contribution of restructuring measures in Oral Care implemented in fiscal year 2025.

Please see Page 22. Mobility Solutions consistently maintains operating income before special items exceeding JPY 50.0 billion. Operating income before special items for fiscal year 2026 is expected to be JPY 51.0 billion, about the same as the previous year. The volume difference is expected to be plus JPY 6.0 billion. This is mainly due to higher sales volume in elastomers driven by expansion of product applications and markets. We also expect firm sales globally in Composite Materials.

Terms of trade are expected to be plus JPY 1.5 billion due to cost reductions in raw materials and logistics. Fixed costs and others are expected to be JPY 7.5 billion, driven by higher fixed costs such as depreciation expenses due to the operation of a new facility, while are expected to more than offset the full contribution of restructuring in the Solutions business.

Please see Page 23. As for ICT Solutions, the recovery trend began in the latter half of fiscal year 2024, and this trend accelerated in fiscal year 2025, leading to an expansion in semiconductor-related sales volume. In particular, pellicles and ICROS tape have been driving our growth in the cutting-edge field. Operating income before special items for fiscal year 2026 is expected to be JPY 41.0 billion, an increase of JPY 4.1 billion compared to the previous year.

Volume difference is expected to be plus JPY 5.0 billion, as sales volume is expected to increase due to demand growth, particularly in the cutting-edge semiconductor market, driven by the expansion of generative AI. Terms of trade are expected to be plus JPY 1.0 billion due to improved productivity. Fixed costs and others are expected to be minus JPY 1.9 billion due to increased fixed costs such as depreciation expenses resulting from the operation of a new facility. Overall, while fixed costs are expected to increase, we expect this to be sufficiently offset by higher sales volumes.

Please see Page 24. This page outlines the breakdown of improvement factors in the fiscal year 2026 outlook for Basic & Green Materials. First, for the restructuring benefits shown in orange, we expect an improvement of approximately JPY 5.0 billion from the full contribution of the restructuring measures implemented in fiscal year 2025. Next, items shown in gray represent temporary factors in fiscal year 2025, and we expect the elimination of these temporary factors to total JPY 7.0 billion to JPY 7.5 billion.

In addition, we have factored in approximately JPY 4.0 billion from sales price revisions and cost reductions shown in blue to improve fundamental profitability, and we expect underlying earnings to be roughly breakeven. Before the impact of the Middle East conflict emerged, raw material prices have been falling, so we have also factored in a certain amount of inventory valuation losses. As a result, we expect an operating loss before special items of JPY 3.0 billion as we work to eliminate these temporary factors, in particular, to thoroughly prevent planned incidents.

We, as a group, will return to the fundamentals of safety first and make every effort to avoid recurrence and further strengthen safety awareness among all employees. Please see Page 25. As this has already been explained on the previous page, details are omitted here. Please see Page 26. Regarding our shareholder returns, at this time, we have maintained our annual dividend outlook at JPY 75 per share due to risks related to the Middle East conflict. That's all for the explanation about our financial results for fiscal year 2025 and our financial outlook for fiscal year 2026. Thank you very much for your kind attention.

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

Hello, everyone. This is Yoshida, CFO of Mitsui Chemicals. Thank you very much for joining in our earnings announcement today.

Today, we have announced our financial results for the third quarter of fiscal year 2025 as well as our forecast for the full year. Now I will explain based on the materials. Please see Page 1. This page summarizes key takeaways from our third quarter earnings announcement. In the Specialty Chemicals domains, sales have been firm, resulting in operating income before special items of JPY 83.0 billion for the April to December period of fiscal year 2025, and the full year forecast remains unchanged at JPY 124.0 billion.

Regarding the impact of U.S. trade policies, we expect a negative annual impact of approximately JPY 4.0 billion as Mobility Solutions saw a slowdown in automotive production in North America, among other factors. As for operating income before special items in Basic & Green Materials, we recorded a loss of JPY 12.8 billion for the April to December period, representing a deterioration compared to the same period of the previous year due to deteriorating market conditions and continued low operating rates, mainly at crackers, stemming from weaker demand for derivatives. We expect a loss of JPY 15.0 billion for the full year, which is below our previous forecast.

Our forecast for operating income before special items for fiscal year 2025 is revised downward to JPY 103.0 billion. While the forecast for the specialty chemicals domains remains unchanged from our previous outlook, as I mentioned earlier. This reflects the weaker outlook for Basic & Green Materials. Accordingly, net income attributable to owners of the parent is also revised downward to JPY 42.0 billion.

Regarding shareholder returns, we plan to repurchase JPY 30.0 billion of our own shares. In addition, upon completion of the repurchase, we plan to cancel treasury shares so that the number of treasury shares we hold at that time will be approximately 5% of the total number of shares in issue.

Please see Page 2. Operating income before special items decreased to JPY 68.0 billion for the April to December period of fiscal year 2025, down JPY 7.8 billion or 10% compared to the same period of the previous year. While ICT Solutions saw profit growth driven by firm sales, this was outweighed by negative factors, including inventory valuation losses reflecting lower naphtha prices, major regular maintenance at Ichihara Works and lower facility operating rates in Basic & Green Materials.

In the specialty chemicals domains, operating income before special items declined to JPY 83.0 billion, down JPY 1.8 billion year-on-year. Although sales volume in ICT Solutions was firm, this was more than offset by sales schedule changes in overseas agrochemicals, decreased sales volume in Mobility Solutions associated with U.S. trade policies, semiconductor supply shortage and an aluminum plant fire in the U.S. as well as losses from yen appreciation.

Please see Page 3. Regarding the outlook for fiscal year 2025, we expect the operating income before special items for the entire group to be JPY 103.0 billion, an increase of 2% or JPY 2.0 billion compared to the previous year, which is down JPY 7.0 billion from our previous outlook announced on November 11. In the Specialty Chemicals domains, operating income before special items is expected to be JPY 124.0 billion or an increase of JPY 8.1 billion year-on-year. This is mainly due to firm sales in Life & Healthcare Solutions and Vision Care and Agrochemicals and sales expansion in ICT Solutions driven by demand growth in the cutting-edge semiconductor market and overall recovery in semiconductor markets.

Basic & Green Materials continues to face a challenging situation with a full year forecast of minus JPY 15.0 billion, down JPY 3.6 billion year-on-year. This is because negative factors such as inventory valuation losses due to decline in raw material prices, major regular maintenance at Ichihara Works and the impact of low operating rates are expected to more than offset the positive effects of business restructuring.

Please see Page 4. Regarding shareholder returns, we have decided to repurchase our own shares totaling JPY 30.0 billion and cancel treasury shares to improve capital efficiency and enhance shareholder returns. Through this, we aim to improve our ROE and ultimately, our corporate value and price-to-book ratio. There is no change to the dividend outlook, and the full year dividend per share is expected to be JPY 75 after the stock split.

Please see Page 6. This section describes the trends in the major markets related to our business in the third and fourth quarters. First of all, the market environment for ophthalmic lens materials in relation to life and health care solutions remains firm in both the third and fourth quarters. In relation to the agrochemicals market, although there still remain the effects of inventory adjustments in some regions, demand continues to remain firm in the second half of the year, primarily in Japan, and we expect this trend to continue. There have been no major changes since our previous announcement on November 11.

Next is the outlook for global automobile production volume related to mobility solutions. While there has been no significant change in global automobile production volume, there are regional variations. In particular, in North America, automobile production volume has decreased due to the impact of U.S. trade policies, the semiconductor shortage and an aluminum plant fire.

Next is the state of the semiconductor and smartphone markets related to ICT Solutions. In the semiconductor market, in addition to increased demand in the cutting-edge semiconductor market such as AI and data centers, demand is also recovering in other applications such as consumer, industrial and automotive applications. On the other hand, demand in the smartphone market is expected to remain on par with the previous year despite the trend towards more sophisticated functionality.

As for Basic & Green Materials, operating rates remained low at around 70% in the third quarter and are expected to be around 70% to 75% in the fourth quarter due to the continued unfavorable supply-demand environment in fiscal year 2025. We had previously expected the operating rates to recover to around 80% in our November 11 outlook, but they have declined since then.

Please see Page 7. This is about the status of our major investment projects. The items in yellow are projects that start commercial operation or undergo optimization and restructuring from fiscal year 2025. Those in blue are projects for which decisions were made in fiscal year 2025. All projects are progressing smoothly. Since our last announcement, in addition to capacity expansion of MDI, we have decided on a joint project to promote decarbonization and optimization of ethylene production facilities in Western Japan. We will continue to make proactive investments and swiftly pursue restructuring and optimization projects.

Please see Page 8. This is the summary of our financial results for the April to December period of fiscal year 2025. Sales revenue for the April to December period of fiscal year 2025 was JPY 1,218.7 billion, a decrease of JPY 120.1 billion or 9% compared to the same period of the previous year. Operating income before special items was JPY 68.0 billion, a decrease of JPY 7.8 billion or 10% year-on-year.

Net income attributable to owners of the parent decreased by JPY 15.1 billion year-on-year to JPY 22.6 billion due to losses on nonrecurring items associated with business restructuring. The exchange rate was JPY 149 to the dollar, representing an appreciation of JPY 4 year-on-year. Domestic standard naphtha price per kiloliter was JPY 65,000, a decrease of JPY 11,400 year-on-year, resulting in low raw material prices.

Please see Page 9. This is the summary of a year-on-year comparison about operating income before special items in the April to December period of fiscal year 2025. In terms of volume, sales of vision care increased due to firm demand and sales of agrochemicals also increased due to firm demand mainly in the domestic market. Sales of elastomers increased as we expanded our products into multiple applications in growth markets. Sales of semiconductor applications increased due to demand growth in the cutting-edge semiconductor market and overall recovery of the semiconductor markets.

On the other hand, sales of automotive applications decreased due to the decline in automobile production caused by the impact of U.S. trade policies, the semiconductor shortage and an aluminum plant fire in the U.S. Terms of trade were negative overall. While price revisions in PP compounds provided a temporary improvement, this was outweighed by losses from yen appreciation, inventory valuation losses due to decline in raw material prices and decreased energy efficiency due to low operating rates of crackers and derivatives.

Fixed costs and others contributed positively to overall operating income before special items as the positive effects from improvement in equity and earnings and business restructuring more than offset higher repair and maintenance costs.

Looking at the results by factor, within the JPY 7.8 billion decrease in operating income before special items compared to the same period of the previous year, the volume difference was plus JPY 2.2 billion. Terms of trade were minus JPY 12.2 billion and fixed costs and others were plus JPY 2.2 billion.

Please see Page 10. Sales revenue and operating income before special items by segment. The return on sales or ROS in the Specialty Chemicals domains has remained at a level close to 11%. We will continue working to expand profits and consequently, improve profit margins. The following pages provide a detailed explanation of the increase or decrease factors for each segment.

Please see Page 11. Life & Healthcare Solutions reported operating income before special items of JPY 17.0 billion in the April to December period of fiscal year 2025, a decrease of JPY 3.5 billion compared to the same period of the previous year. The volume difference was plus JPY 0.8 billion, mainly due to firm demand of vision care and firm sales of agrochemicals mainly in the domestic market. This includes some impact from changes in sales schedule of overseas agrochemicals from the third quarter to the fourth quarter. Terms of trade worsened by JPY 2.0 billion due to the impact of losses from yen appreciation on agrochemicals. Fixed costs and others worsened by JPY 2.3 billion due to the impact of gas leakage at Omuta Works.

Please see Page 12. Mobility Solutions reported operating income before special items of JPY 37.5 billion in the April to December period, a decrease of JPY 5.7 billion compared to the same period of the previous year. Volume difference was minus JPY 2.7 billion, with sales declining due to a decrease in automobile production volume resulting from the impact of U.S. trade policies. Terms of trade worsened by JPY 3.1 billion due to the impact of losses from yen appreciation despite positive effects from time lag in PP compounds.

Please see Page 13. ICT Solutions reported operating income before special items of JPY 28.5 billion in the April to December period, an increase of JPY 7.4 billion compared to the same period of the previous year. Volume difference was plus JPY 5.0 billion with sales volume increasing due to the demand growth in the cutting-edge semiconductor market and overall recovery of the semiconductor market in semiconductor and optical materials and ICT films and sheets. Terms of trade were plus JPY 1.4 billion, driven by an improvement related to fluctuations in raw material prices for some products despite the impact of losses from yen appreciation.

Please see Page 14. Basic & Green Materials reported an operating loss before special items of JPY 12.8 billion in the April to December period or a JPY 5.5 billion decrease in profit year-on-year. Although the positive effects of business restructuring were seen, these were outweighed by the impact of inventory valuation losses from lower raw material prices and decreased energy efficiency due to low operating rates. The volume difference was minus JPY 0.9 billion, affected by sluggish demand. Terms of trade worsened by JPY 8.5 billion due to inventory valuation losses resulting from fluctuations in raw material prices, the impact of low operating rates and worsening market conditions. Fixed costs and others had a net positive impact of JPY 3.9 billion as the benefits from business restructuring more than offset higher repair and maintenance costs.

Please see Page 15. This is the year-on-year comparison for the third quarter by segment. Operating income before special items for the third quarter of fiscal year 2025 increased by JPY 0.5 billion compared to the same period of the previous year. In the Specialty Chemicals domains, ICT Solutions reported an increase in profits, but Life & Healthcare Solutions reported a decrease in profits. mainly due to changes in sales schedule of overseas agrochemicals from the third quarter to the fourth quarter, and Mobility Solutions also reported a decrease in profits due to a decrease in automobile production. Basic & Green Materials saw an improvement, although still in the red, thanks to the effect of business restructuring.

Please see Page 16. This is nonrecurring items. Nonrecurring items totaled minus of JPY 13.4 billion. This represents a deterioration of JPY 4.5 billion compared to the same period of the previous year. In addition to the impairment losses of JPY 7.9 billion following the transfer of our equity interest of the Phenols business joint venture in China, we recorded losses of JPY 2.9 billion in related business by advancing structural reforms in the specialty chemicals domains.

Please see Page 17. This is the consolidated statement of financial position. Total assets were JPY 2,209.1 billion, up JPY 55.1 billion compared to the end of March 2025, mainly as a result of increased assets associated with a major regular maintenance at Ichihara Works, despite reductions in accounts receivable mainly due to fluctuations in raw material prices and decreases in assets resulting from measures to make the Phenols business in China asset-light.

Please see Page 18. This is the consolidated statement of cash flows. Cash flows from operating activities were plus JPY 141.0 billion, in line with the same period of the previous year, largely due to improvements in working capital. Cash flows from investing activities were minus JPY 97.0 billion. While we continue to make active investments, we are also progressing with the sale of affiliates as part of our business portfolio transformation. As a result, free cash flows were JPY 44.0 billion. We manage our cash balance by using this to provide returns and repay interest-bearing debt.

Next, I will explain the overview of our financial outlook for fiscal year 2025. Please see Page 20. This is the highlights of consolidated financial outlook. Sales revenue of fiscal year 2025 is expected to be JPY 1,675.0 billion, a decrease of JPY 134.2 billion from the previous year due to the impact of yen appreciation and raw material prices. Operating income before special items is expected to be JPY 103.0 billion, an increase of JPY 2.0 billion year-on-year, and net income attributable to owners of the parent is expected to be JPY 42.0 billion, an increase of JPY 9.8 billion year-on-year.

The exchange rate for the full year is expected to be JPY 150 to the dollar, an appreciation of JPY 3 from the previous year. The domestic naphtha price per kiloliter is projected to be JPY 65,000, representing a decrease of JPY 10,600 compared to the previous year. The dividend outlook for the full year is JPY 75 per share. We conducted a stock split in January 2026, but the total dividend amount remains unchanged.

Please see Page 21. This is the summary of our outlook of operating income before special items for the fiscal year. As with the results for the April to December period, we expect sales volume to steadily increase from the previous year due to increased sales volume in the specialty chemicals domains. On the other hand, terms of trade are expected to be negative due to the impact of yen appreciation, inventory valuation losses and a decline in energy efficiency due to low operating rates of crackers and derivatives as well as worsening market conditions in Basic & Green Materials.

We do not project fixed costs and others to significantly impact profit for the year. While we anticipate an increase in fixed costs due to major regular maintenance at Ichihara Works, we expect this to be offset by the positive effects from improvement in equity in earnings and business restructuring. As a result, of the JPY 2.0 billion increase in operating income before special items compared to the previous year, the improvement in the specialty chemicals domains is expected to be JPY 8.1 billion.

Looking at each factor, we expect a positive volume difference of JPY 9.5 billion and a negative terms of trade impact of JPY 9.0 billion. The explanation is not significantly different from the financial results for the April to December period of fiscal year 2025, so I will omit the details. But the specialty chemicals domains continue to maintain a profit margin of around 11%, and we will strive to further expand it.

Please see Page 22. This page outlines temporary factors and restructuring benefits in Basic & Green Materials in fiscal year 2025. First, please take a look at the restructuring benefits patched in yellow. We have implemented 3 restructuring measures this fiscal year. Benefits from the restructuring have steadily materialized from the second quarter onward, improving losses from the 3 businesses, which were approximately JPY 3.0 billion in the first quarter before the restructuring.

Next, items patched in gray are temporary factors for this fiscal year. The losses from these temporary factors total between JPY 6.5 billion and JPY 7.0 billion. In fiscal year 2026, we aim to return to profitability by realizing improvements from temporary factors and the full benefits of restructuring as well as price increases, rationalization and the integration of polyolefins business. Furthermore, to thoroughly prevent planned incidents. We, as a group, will return to the fundamentals of safety first and make every effort to avoid recurrence and further strengthen safety awareness among all employees.

Please see Page 23. This is our outlook for sales revenue and operating income before special items by segment. The following pages will provide an explanation of the factors behind the increase or decrease in each segment. The explanation is not significantly different from the financial results for the April to December period of fiscal year 2025, so I will omit the details.

Please see Page 24. Life & Healthcare Solutions operating income before special items has been steadily growing since fiscal year 2021, showing an approximate 20% growth per year in CAGR. Operating income before special items in fiscal year 2025 is expected to be JPY 35.5 billion, an increase of JPY 1.4 billion compared to the previous year. Volume difference is expected to be positive JPY 5.0 billion, mainly due to a steady increase in the sales volume of vision care and Agrochemicals. Terms of trade are expected to be negative JPY 1.0 billion due to yen appreciation. Fixed costs and others are expected to be negative JPY 2.6 billion due to the impact of gas leakage at Omuta Works and other factors, although we are making progress in business restructuring in oral care.

Please see Page 25. Mobility Solutions operating income before special items experienced a significant decline during the COVID-19 pandemic in fiscal year 2020. However, it has steadily recovered since then, showing an approximate 10% growth per year in CAGR. Operating income before special items in fiscal year 2025 is expected to be JPY 53.0 billion, a decrease of JPY 2.1 billion compared to the previous year. Volume difference is expected to be negative JPY 1.5 billion for this fiscal year due to factors such as a decrease in automobile production volume caused by the impact of U.S. trade policies in North America. Terms of trade are expected to be negative JPY 2.0 billion due to losses from yen appreciation despite an improvement resulting from sales price revision, reflecting fluctuations in raw material prices.

Please see Page 26. Regarding ICT Solutions, the semiconductor market experienced a boom around fiscal year 2021 due to the stay-at-home demand brought by the COVID-19 pandemic, but has since entered a prolonged adjustment phase. However, the recovery trend began around last year, and this trend accelerated in the first half of this year, with semiconductor-related materials expected to show growth for the year.

In particular, PELLICLE's and ICROS tape have been driving our growth in the cutting-edge field. Operating income before special items in fiscal year 2025 is expected to be JPY 35.5 billion, an increase of JPY 8.8 billion compared to the previous year. Volume difference is expected to be positive JPY 8.0 billion as sales volume is expected to increase due to demand growth in the cutting-edge semiconductor market and a recovery in demand for semiconductors. Terms of trade are expected to be positive JPY 1.0 billion, driven by an improvement related to fluctuations in raw material prices despite the impact of losses from yen appreciation.

Please see Page 27. Basic & Green Materials operating income before special items in fiscal year 2025 is expected to be minus JPY 15.0 billion. I have already explained this earlier, so I will omit details.

Please see Page 28. Next, I will explain by segment the changes compared to the second half of the previous year as well as changes from the third quarter to the fourth quarter of this fiscal year. Operating income before special items in the third quarter was JPY 23.5 billion, and the forecast for the fourth quarter is JPY 35.0 billion. So we expect an increase of JPY 11.5 billion from the third quarter to the fourth quarter.

In the Specialty Chemicals domains, we expect to see an increase in profit of JPY 14.8 billion overall, mainly due to an increase in profit of JPY 14.5 billion in Life & Healthcare Solutions, thanks to the high demand season for domestic agrochemicals and the effects of business restructuring and increased sales volumes in oral care.

In Basic & Green Materials, although we expect an increase in fixed costs due to levies such as property taxes, we will increase operating rates to secure inventory in light of the impact of the major regular maintenance at Osaka Works scheduled for next fiscal year. Compared to the second half of fiscal year 2024, operating income before special items is expected to increase from JPY 48.2 billion to JPY 58.5 billion in the second half of fiscal year 2025, up JPY 10.3 billion.

In the Specialty Chemicals domains, we expect profit growth driven by an increase mainly in ICT Solutions and sales expansion in Life & Healthcare Solutions, mainly in vision care and Agrochemicals. In addition, operating loss before special items in Basic & Green Materials is expected to be reduced due to the effects of business restructuring and others.

Please see Page 29. This is the cash flow outlook. Cash flows from operating activities are expected to be positive JPY 200.0 billion, while cash flows from investing activities are expected to be negative JPY 155.0 billion. As a result, free cash flows are expected to be positive JPY 45.0 billion. As we place importance on cash generation, we will continue to work on optimizing inventory and other measures to enhance our cash generation capabilities, aiming for a level of JPY 200.0 billion or more.

That's all for the explanation about our financial results for the third quarter of fiscal year 2025 and our financial outlook for fiscal year 2025. Thank you very much for your kind attention.

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

Good afternoon. I'm Hashimoto, President and CEO of the company. Thank you very much for coming to this session of CEO presentation despite your busy schedule. And I also thank you for your continuous strong support to our company and the business.

As introduced, based on the material presentation slide, I would like to give an explanation. First of all, on July 27, we had Omuta [ TDI ] plant accident or the gas leakage. So to those who really suffered in the health condition, and so we really caused the sort of troubles and anxieties, and we sincerely apologize for that.

Our company has been depleting sort of this type of trouble in past years. We sincerely sort of take this matter -- seriously take this matter, and we are pretty much determined to prevent the reoccurrence of this type of incident and -- by changing the sort of our organization structure by setting up the sort of task force and with those task force teams with mid- to sort of long-term sort of countermeasures and also the sort of frontline sort of countermeasures are made and to be executed to prevent the reoccurrence of this kind of matter.

And together with that, in terms of our long-term sort of business plan, so as for the sort of our target of the sort of 2025, the current condition or the current numbers are really sort of different far apart from the reality, so that we review those numbers.

And especially sort of due to the external environment changes recently, one of them is the -- with the emergence of the very strong sort of competitor like sort of China with the market changes, we really need to change the sort of our development of R&D sort of system. So even though it's the middle of the year, as of October 1, we separated the sort of R&D division. And R&D sort of function is now included as a part of the sort of business sectors.

And also in terms of the sort of B&G, due to the sort of overcapacity in China, market has been impacted significantly. So our B&GM sort of business environment has been sort of tough. Under the circumstances, in my last time, the CEO presentation, I explained about idea about the sort of separating our portfolio with sort of B&GM and the specialty chemicals domain. So we are continuing the sort of two-way the business management.

So as we made explanations of the last time, so this time, so I would like to explain about the progress of that idea. And first of all, as for the most recent sort of performance update, as described, in terms of the FY 2025, so ongoing fiscal year, as we made announcement just recently, so today, we expect JPY 1.7 trillion in sales and JPY 110 billion in operating income and the net income of JPY 55 billion.

In last year, in 2024, so the sales was JPY 1.8 trillion with a core operating profit of the JPY 101 billion and the net profit of JPY 32 billion. From last year, the numbers are improving. However, I think the sort of issue is in terms of the core operating profit and the net profit, the gap between the two are really large.

So basically, we really sort of need to improve the capital efficiency. So we are striking the sort of measures to make that sort of improvement, and I would like to explain more in detail later about that point.

Then in terms of the sort of measures to prevent the reoccurrence of these troubles, within our company, we set up the sort of project team with the expertise -- experts. And with them, we make plans -- sort of mid- to long-term sort of plan to prevent the reoccurrence. But -- so the members of those committees are not really sort of enough. And so we are going to move down sort of these measures to the sort of line managers and the line staff.

And also in terms of the issue in front of us, so line managers and line staff are sort of executing the countermeasures for the prevention. And also, we have been experiencing those issues in the sort of chemical plant. But as we are sort of working and collaborating and together with the other companies in the industry, and we also sort of use the sort of other companies sort of knowledge and sort of learnings.

So we are striking this wide range of measures to prevent the. And also in addition to that, as AI is really advancing very much, so plant operation is really changing very much. Based on this background, so we -- by adopting the AI and sort of robotics, we are building up the sort of very strong and sort of robust system.

Anyhow, the troubles we have been experiencing sort of every year for our -- really the core plan, so we really never should have experienced this. So we are striking measures.

In terms of the shareholder returns, we explained this slide as our B&GM restructuring has been really progressing so far. And also for the sort of growth domains, and we are going to accelerate our growth.

And based on this growth, we decided we are going to start the sort of stock split so that the investors can feel really easy to buy our stock. So we are implementing sort of two-for-one stock split. With this stock split, so retail market investors and other investors sort of feel easy to sort of buy our stock, and we have a wide range of stock shareholders.

And in terms of dividend, so JPY 75 interim and JPY 75 year-end, so the full year is going to be JPY 150. But as we explained at the beginning of the year, at the beginning of the year, so there were actually the factors of the impact of Trump tariff, sort of we stayed the amount.

And in the first half of the year, so there are some sort of parts we were not really able to achieve. But in the second half, if we were able to build up this good enough profit, so we are also going to sort of consider about the opportunity to increase and to pay more sort of dividend.

In terms of the return policy, we have not really made significant changes. So this is our shareholder return policy. And as for the buybacks, so depending on the conditions and the situation, by looking at the sort of balance, and we are going to use the return and flexibly.

And also, as the cash flow improvement is sort of progressing and if we were sort of able to sort of progress the sort of cash flow improvement in a steady manner, of course, for the DOE, we are saying the 3.0% or more DOE as a target, but 4.0% could be an option for that.

Now in terms of our long-term vision, one of the core is providing a solution to the social challenges. And as nonfinancial indicators, we have Blue Value and Rose Values. In this regard, we are making betterment in numbers. For 2030, we have a 40% sales ratio, which is quite aggressive.

In light of that target, the new businesses and new product development has to be promoted and expanded. That's an unavoidable route for us. In this regard, the reorganization of the R&D will help us to accelerate this endeavor.

As I said earlier, on May 30, when we had a CEO presentation last time, I told you that for the specialty chemical domains has to be considered separately from B&GM business because two business domains have different goals for FY '30.

In specialty chemicals, we would strive to become a high-growth, high profitability global specialty company. And in B&GM, we try to be a strong basic and green material company that supports Japanese industry. Quite different goals.

We see the emergence of strong rivals. We have first to compete intensively. And we would like to take various measures to be a survivor in it. And we would like to be a global specialty company with a reasonable scale in the global market.

On the part of B&GM, so far, we worked on our own restructuring. Going forward, we would like to collaborate with other partners, including the industry alignment. And finally, we would like to serve as the essential industry players that support Japanese industries. We would like to speed up the pace of such restructuring.

As I said in our long-term vision, we set forth JPY 200 billion as the operating profit target for FY '25, but we are behind. So we revised our strategy last year. We did the rolling of that business plan. And as is shown with the letters, we revised our strategies.

Performance-wise, as you can see on the slide, in the specialty chemicals domains on left-hand side, ICT, Mobility and Life & Healthcare, back in 2020, when I became the President, we've made profit growth steadily year-by-year. On a CAGR basis, we've achieved 11% so far.

And looking into the details, Life & Healthcare nearly doubled. [ In April ], it achieved 18% growth, and Mobility and ICT has achieved 8% to 9% growth so far. For FY '25, the pace of the growth has slowed down somewhat, but still the profit is expected to grow further.

On the part of B&GM, unfortunately, as you can see on the graph, we saw a big fluctuation. Especially over the past 3 years, business was in quite a difficult situation. One misjudgment on our part was the incidents that occurred in our production plant. But to turn this into profitability as quickly as possible, so as to hit the JPY 35 billion level of profit so that this can be a self-propelled entity is our goal.

So far, things are moving reasonably well. In the first half, there still was a big losses. But more recently, it's almost profitable. In the second half, we would like to make positive profits as we had targeted.

Resultantly, overall ROIC for the company is shown on the right-hand side. Operating cash flow has grown, but the investment cash flow also was quite active. And from that bottom, we are working with the various measures to improve our capital efficiency. So ROIC, we would like to make an improvement on it as well.

Regarding the cash flow, it's shown on the slide, post great financial crisis, it was around JPY 50 billion, and then it expanded to JPY 120 billion. Now last year and this year, we are looking at JPY 200 billion level of operating cash flow.

On the other hand, investing cash flow, we've switched our gears to a more aggressive investment since 2020. We need to make an recovery of the investment. But by having a dynamic cash flow for investments, we would like to achieve the further growth. So this chart depicts the cash flow management, both in terms of generation and allocation.

From the business, we expect to harvest the cash. And we take an asset-light approach, and we would diversify our financing means. We aim to produce this much cash, and it will be used to reinforce the existing businesses. And that's about JPY 900 billion together with the growth investment and another JPY 150 billion will be spent on the enhancement of shareholder return. If we can continue to generate that much cash flow, we would like to consider to improve our DOE to 4% level.

Let's talk about asset-light approach. If I were to give you a breakout, it would look like this. The low-earnings capability business will be dealt with. We've already set a certain milestone to manage those businesses better. We check the results every year.

Especially in oral care and ARRK and nonwovens, these main product business as well as affiliated companies, we are severely managing their milestones in the turnaround to see through their business liabilities.

In terms of B&GM, what we can do on our own regarding the restructuring has nearly done, we need to move into the Phase 2. And in terms of CCC improvement by reducing the inventory and shortening the AR correction time. We aim to reduce the asset by JPY 50 billion. And we are also working on to reduce the core shareholdings.

These are the way with which we take the asset-light approach and reduce assets tied to our businesses. Through these capital efficiency improvement measures, I've already talked about ROIC, but we aim to improve our ROE as well. Ultimately, we would like to achieve a 10% or over 10% ROE. And further out, we would like to exceed 13% in ROE.

By different business sectors, there are strategies depicted in this page. There were a rolling of the strategies. We are revisiting some of these strategies. But with regard to growth or specialty chemical domains, our key scenario is volume growth, i.e., organic growth. And to make it happen, we have to deliver new product and new brands through development activities to add the new values. Through the reorganization and other measures, we'd like to deliver this growth.

And in terms of M&A, we described it here. And for large ones, we have some opportunities in the shopping, restaurant, but we have not included the name. For the business sector or the business division level, M&A are listed. And those opportunities are included in this chart.

And in terms of the organization changes we implemented in the middle of the year, so this is about the R&D sort of system. And in order to secure the competitiveness, the R&D divisions are now sort of part of the sort of business sectors. With this, we are going to respond to the sort of customers in a speedy manner and by really working closely with the sort of customers.

And in terms of R&D, so enhancement of the platform to accelerate the R&D and also sort of seeking the sort of real terms sort of innovation is necessary. So R&D is going to be implemented from the long-term sort of viewpoint.

Another point is sort of seeking for the localization. As competitions are sort of now intensifying and the economies are sort of to be really the sort of [ block ] economy, and so from R&D to sort of sales, so in each region, so that those sort of flow should be sort of completed within the region.

So for the R&D resources currently in Japan could be sort of spread and assigned into the sort of U.S., India and Korea and Taiwan. So we are going to allocate those R&D resources for those business sectors.

And as for the R&D, collaboration with start-up, academia has been mainly in Japan, but with a sort of broader sort of perspective in the western part of the world or sort of company like Singapore, where the sort of start-up companies are concentrated; so we are looking for the collaboration opportunity there. So that we are going to promote the R&D activities there.

With that, so this page is about the sales breakdown in the specialty chemical domains based on our global strategy. After the Lehman shock or financial crisis, Japan accounted for 70%. But right now, so the Japan only accounts for 30%. And this trend really continues, this shift really continues. And so in 2028, the Japan should account for just 1/4 of the total.

And by each business sector in our basic markets, Asia, Americas and Europe, also in terms of our white space, the EMEA; we are striking sort of these measures in these major key markets and key areas. And in reality, in these EMEA sort of markets, our products are currently sort of on sale. We have this track record.

And sort of based on the sort of business conditions, we are going to start treating sort of these as sort of office space regions, so we -- by really sort of expanding our business with the sort of geographical sort of base, and we are going to expand the sort of total business.

And then I'd like to move on to the sort of subject of each businesses, each business. In terms of health care, I have been sort of explaining about this repeatedly, and the core in the health care business is the vision care and then the agrochemical businesses.

And -- but however, only with these two sort of we will not be able to achieve the levels that we want to achieve. So in the medical area, dental and medical diagnosis and also the sort of surgical sort of materials, and so these are the sort of we are working on. And by narrowing this down to the specific sort of ones, so we are going to build up the sort of another sort of third sort of core business area.

So as for the core vision care business, we are going to expand the sort of our value chain we currently own. So in addition to the sort of lens monomer, we currently own, we are also going to use coatings and coating equipment. So on surface -- on area by area, we are going to expand our business.

In terms of this type of business, especially for the lens monomers business, our polyurethane based monomers are in the market of the sort of China and India, U.S., there's more room for this expansion. We are not really taking the majority share yet in those markets. So there should be room for expansion, we are going to expand our sales in those markets.

And at the same time, as for the coating material and equipment, by growing the coating equipment, we are going to also increase the sales of coating materials. So Coburn, we recently sort of acquired. So this is a company with sort of very unique equipment. So in South America, Africa, so in those white space for us, we now expect the sales recognization in those areas. So coating materials with those equipment are also promoted in those markets.

And as this business overall, we are looking at the sort of 6%-ish growth based on the market condition today. And by expanding the value chain, we have sort of additional sort of expansion opportunities that are available.

Then in terms of agrochemicals, so there are sort of four important sort of ingredients and we identify as sort of growth on. And in each sort of region of the market, we are working on to register those ingredients. There are white space of the market we have not really registered, those ingredients. And so we're expanding this.

And by getting together with the basic pharma, and so bio related pipeline, so that to reduce the environmental sort of burdens, are also there. So with them, we would like to further expand this agrochemicals. And also in this market domain, there are several other sort of players in the market, many other players. So by looking at the sort of further opportunities are there, we are looking for the expansion.

And as for the oral care business, as I explained, so this is one of the candidates to expand the sort of next important pillar. Back in 2013, we acquired the Kulzer, it's a dental business. But unfortunately, we have not been sort of able to reach to the level we originally wanted. So back in 2018, we did really the significant restructuring, but that was not really sort of good enough. So we really sort of continued additional the restructuring works.

In our [ first ] restructuring sort of program, the profitability really improved. And so now we are able to make this double-digit sort of profit. But as for this acquisition, so company like Dentsply and [indiscernible], we really expect the sort of high-level profitability just like them there.

So with this current sort of additional sort of restructuring, we would like to improve the profitability even higher from today, so the sales office and the manufacturing plant sort of integration and also sort of sales staff, the restructuring, so that we are working on the execution to use those measures. Once -- so by implementing these, we have been sort of really improving the profitability.

Then we are going to expand this business further, in order to do that as a market that we expect the U.S. should be very important sort of promising market. So our U.S. President now sort of became the sort of Vice General Manager -- Deputy General Manager of this business sector. And so with M&A and alliance, we are going to expand this business in America. So this is the sort of story and scenario that we are thinking about.

And also in Europe, we are going -- we are really sort of strong. And in Asia, so some medicals that we own. And also, [indiscernible] we are going to collaborate with these companies. And together, we are going to expand this as a dental material.

Moving on to Mobility, well, I would touch upon elastomer later. We have to establish a collaboration with elastomers. When it comes to compound or composite materials rather, aside from BP compound, we have Admer, Milastomer, Arlen, Aurum. These are more functional compounds that we own as our products. In each site, excluding white spaces, we already have established business sites in an important market. And to be closer with our customers, we are striving to grow our sales.

And in our communication with our customers, the compound alone would not address their needs. And when it is discovered, we would work backwards to the upstream so as to develop necessary materials for them. And there, our R&D facilities are utilized to develop a polymer with new functionalities and capabilities. That's what we are working on now. And in this manner, we are taking advantage of the compound resources. And on the upstream, we are working to develop new polymers.

Especially [indiscernible] as a part of elastomer, there are various products, but the sales to solar sales did not materialize as we had anticipated. So we are reshuffling our portfolio of applications. But this value chain is working for us. Taking advantage of this value chain shifting from solar sales, we would supply products to auto sector or consumer or healthcare sectors. In such a way, we are strongly promoting the change in our applications.

And geographically speaking, plasma -- before the [ 6F ] in Singapore come into stream, there was some capacity shortage. So we had to allocate our capacity. We were not able to address the white space sufficiently. But including those white area or white space, we are working on the development. And the product portfolio, which were more skewed towards the sealant for solar sales have now -- is now being shifted. And thanks to such diversification, we were not as much affected.

Moving on to ICT, we have products for semiconductor and displays and eco-friendly packaging materials. One of them -- for semiconductor field, we have two main products. One of them is ICROS Tape. Conventionally, it was used for the back grinding of wafer, but it's now expanding into other processes like dicing and molding processes. We are working on the expansion of the applications in such a way, as we speak.

Through this, we managed to discover greater demands on the part of customers. We are expanding capacity in Phase 1 and Phase 2. The Phase 2 has been rather slow in ramping up, but now it's more utilized. We are now considering to further expand our capacity.

Furthermore, it's important to have a joint development with our customers, especially in Nagoya, we've opened up technological service basis afresh. And in Taiwan and in other locations, we need to set up such technological sites to accelerate the pace of development.

Moving on to PELLICLE, the conventional DUV pellicle to carbon EUV pellicle to carbon nanotube type, we have a whole suite of products with an eye on next-generation products as well. Looking towards CNT pellicles, we are setting up the new production capacity. And once it's done, we shall be able to produce CNT pellicles as well.

In the shift from DUV to EUV pellicles, the shift has not progressed as much as we had hoped, but we've had a business integration with the Asahi Kasei business in DUV pellicles. Driven by that, even with the delay of a shift from DUV to EUV, we are able to address a wider or broader-based customers. Going forward, working together with ASML and IMEC, we mean to strongly promote EUV pellicles and CNT pellicles.

Lastly, coating and engineering materials, which is a business for eco-friendly packaging materials. So unlike semiconductor and display, we cannot expect a jump up in revenue or profit like a product for semi or display, but it's more -- it represents a more steady growth.

The production region with the yellow bubble, we already have a production capacity and work with our customers. But in the blue bubble area, which is a white space for us, we do receive some inquiries, and we exported to a certain extent. But eventually, we would like to add capacity on those areas to address the local needs. Already, we've started our surveys of the local areas.

Another key point is now that we have Omote-san as CTO. We used to have more silo-like structure, but we have a wealth of technological know-how. By having a cross-functional organization, we should be able to provide diversified solutions to our customers.

With that in mind, we've established this cross-functional organization for the development. For example, in the eco-friendly packaging materials, PUD which belongs to ICT or POD as well and ADMER, TAFMER, which belongs to Mobility Solutions, we can combine these materials to satisfy customers' needs. So through the combination of multiple IP that we have or material that we have, we can address the customers' demand better and while raising the competitive edge and raising the bar for the new entrants.

Another example is AR or VR glasses and head-up displays or EOL display -- excuse me, OLED displays. So these are optical materials. We have some Cs for multiple products, Diffrar, APEL. In health care, we have MR or SDC.

By combining these, we should be able to deliver the functions and capabilities through multiple approaches in a sense that we can serve as the one-stop solution providers, which is a unique position that we can assume by raising the bar for the new entrants.

And we're working on the specific and concrete collaboration project with our customers for various applications, we are providing solutions, and we would like to be more aggressive and forthcoming in this regard.

Let's move on to B&GM. In terms of B&GM, as I have been explaining, what we really need to do is pretty obvious now -- by now. And then now sort of collaboration with others, other companies are there in front of us. They are going to be more specific now.

But one of them is the polyolefin. For polyolefin, so prime polymers, we are working with [indiscernible] now Sumitomo are joining. And so the range of this sort of activity is really wider. And so now we are able to the wide range of customers. And also, we can rationalize this further.

Osaka and Mizushima in the western part of those western sort of market, so we set up the LLP. And with this LLP, so the consolidation, so integration sort of actions program is accelerating. And so at the beginning of the year probably around that, I hope we will be able to give a more specific explanation about what we can do.

And so by promoting the sort of project like this, so we would like to sort of create the sort of basic chemicals of the company so independently running the company. Well, this is quite the essential industry for Japan. So we would like to make this company as an essential core player in this industry.

So by realizing this as quickly as possible, we build up the sort of strong foundation in the domestic Japan. And that means that we can really move forward for the further growth in the future.

More specifically, in Ichihara with Idemitsu, so that we have had so much discussions already. And by the end of the year, I think that we will be able to explain the sort of specific sort of directions about what to do. So we set up the sort of LLP and sort of moving forward in western part of Japan.

Anyhow, we are improving the sort of foundation and also at the same time, so we turn those crackers to be sort of green ones. But also so that we have to pay attention to the sort of Anti-Monopoly Act. So we closely contact the regulators.

And by looking at the sort of future opportunities for industry consolidation and as I just explained, for the core petrochemical sort of company is to be really sort of created and sort of built up as a result of these actions.

And then this is about numerical sort of factors for the point just as explained. In the first half, we had a really difficult time. But in the second half, we have some positive factors. We are going to turn them into the blocking in the second half. And then beyond that, we are expecting sort of these benefit as an outcome.

To make it happen, the troubles we really sort of caused in the last sort of few years, once every year, so we need to prevent that reoccurrence. And so by making sure to prevent that reoccurrence, again, we would like to realize the numbers we showed you. So this is the summary of sort of what I explained.

So business portfolio reform, which is really the essential sort of starting point, and B&GM, we apply the sort of restructuring and to strengthen the sort of foundation. And in the Performance Chemical domains, for any sort of business or divisions which are not really reaching to the sort of our sort of target area, so that we are going to apply these measures to turn around.

And for -- and then so this might also include the sort of divestitures by finding out the best owner. And also improvement. So for B&GMs, by including this collaboration, we are going to move ahead.

As I explained the previous CEO presentation, by 2027 or in fiscal year 2027, so we are going to sort of turn them to the 100% subsidiary. And if possible, we are going to sort of work together with the other companies and with a partner to set up the sort of new entity. And so by the end of 2027, so we would like to realize this happen.

And in addition to that, in terms of the cash creation that I already explained and as for the capital policy, we have sort of stock split. And the DOE sort of target is sort of to be changed upward potentially by adding aggregating of these measures.

As I explained earlier, so one of the really important sort of management issue of the sort of capital efficiency improvement is going to be sort of realized. With the cash -- strong cash creation, those cash will be turned into the investment and for further cash creation. So this cycle sort of should be boldly implemented and -- to accelerate our growth.

So that's all from myself. So thank you very much for your attention.

Hello, everyone. This is Yoshida, CFO of Mitsui Chemicals.

Thank you very much for joining in our earnings announcement today. Today, we announced our financial results for the first quarter of fiscal year 2025 and our financial outlook for the first half of fiscal year 2025.

Before we begin, I would like to express our sincere apologies for the concern and inconvenience caused by the gas leakage that occurred at our Omuta Works on the evening of July 27. We deeply regret the impact this incident had on those who experienced health issues, their families, nearby residents, various authorities and our customers. We are currently conducting a thorough investigation in close coordination with the relevant authorities to determine the cause and assess the full scope of the impact. We are fully cooperating with their investigation and are committed to identifying the root cause as soon as possible. Based on the guidance provided by the authorities, we will implement all necessary measures to prevent a recurrence. We will provide updates as necessary in a timely manner.

Now I will explain our financial results for the first quarter of fiscal year 2025 and our financial outlook for the first half of fiscal year 2025 based on the materials.

Please see Page 1. This page summarizes key takeaways from our first quarter earnings announcement. Sales in the specialty chemicals domains have been firm, contributing to solid progress in operating income before special items. Regarding business restructuring, we recorded losses in nonrecurring items. This was due to the impairment losses recorded in the first quarter following the transfer of our equity interest in the Phenols business in China as well as losses on related business by advancing structural reforms in the specialty chemicals domains. As a result, net income attributable to owners of the parent was JPY 0.7 billion in the first quarter and is expected to be JPY 7.5 billion in the first half of fiscal year 2025.

Regarding the impact of U.S. trade policies, we did not observe a significant impact in the first quarter, and we consider that the direct impact we previously estimated to be limited. From the second quarter onward, we will closely monitor the indirect impact on demand, including the effect of pull-in of demand into the first quarter and work to minimize their impact on profit through cost reductions and other measures.

In Mobility Solutions, although the automotive production is slowing down, we will minimize its impact by leveraging our global sites. As for ICT Solutions and Life & Healthcare Solutions, we currently consider the effects to be limited. Regarding the gas leakage at Omuta Works, operation has been suspended for some plants, but there are no disruptions to product shipment for the time being. We will continue to assess its impact. Based on these circumstances, we are maintaining the dividend outlook announced at the time of our first quarter results. That is JPY 75 per share for the interim and JPY 150 per share for the full year. However, as the performance is progressing smoothly compared to the initial plan, we will continue to monitor the impact of U.S. trade policies closely. And if necessary, we will review the dividend amount at an appropriate opportunity.

Please see Page 2. Operating income before special items for the first quarter of fiscal year 2025 decreased to JPY 26.6 billion, down JPY 3.6 billion or 12% compared to the same period of the previous year, primarily due to inventory valuation losses from lower naphtha prices in Basic & Green Materials. In the specialty chemicals domains, operating income before special items rose to JPY 29.8 billion, up JPY 2.2 billion or 8% year-on-year due to generally firm sales volumes, mainly in ICT Solutions despite losses from yen appreciation.

Please see Page 3. Regarding the outlook for the first half of fiscal year 2025, we expect the operating income before special item for the entire group to be JPY 49.0 billion, down JPY 3.8 billion or 7% compared to the same period of the previous year. In the specialty chemicals domains, we expect the operating income before special items to increase by JPY 1.5 billion year-on-year to JPY 58.0 billion mainly due to an increase in sales volume as in the first quarter. Regarding Basic & Green Materials, operating income before special items is expected to decline by JPY 5.4 billion year-on-year. This is because negative factors such as inventory valuation losses from lower naphtha prices as well as the impacts of major regular maintenance at Ichihara Works and low facility operating rates are expected to more than offset the elimination of the negative impact of the Osaka ethylene plant failure in the previous year. We have not revised our outlook for the full year.

Please see Page 4. Starting from fiscal year 2025, we have revised the segment to which the Nonwovens business belongs from Life & Healthcare Solutions to ICT Solutions as well as that of certain other affiliates from Mobility Solutions to ICT Solutions.

Additionally, the segments for fiscal year 2024 are disclosed based on the reportable segment classifications after the revisions.

Please see Page 5. This section describes the trends in major markets related to our business in the first and second quarters of fiscal year 2025. First of all, the market environment for ophthalmic lens materials in relation to Life & Healthcare Solutions remains firm in both the first and second quarters. In relation to the agrochemicals market, although there still remain the effects of inventory adjustments in some regions, demand continues to remain firm. The first half demand also remains firm compared to the same period of the previous year.

Next is the outlook for global automobile production volume related to Mobility solutions. Regarding automobile production volume, we do not expect any significant changes in global production volume despite the impact from reduced production in the North American market due to the uncertainty caused by the U.S. trade policies.

Next is the state of the semiconductor and smartphone markets related to ICT Solutions. In the semiconductor market, in addition to increased demand in cutting edge semiconductor market, demand is also recovering in other applications such as consumer, industrial and automotive applications.

On the other hand, demand in the smartphone market is expected to remain at the same level as the previous year. As for Basic & Green Materials, operating rates are expected to remain low due to the continued unfavorable supply-demand environment in fiscal year 2025 and the impact of major regular maintenance.

Please see Page 6. This is about the status of our major investment projects. The items in yellow are projects that start commercial operation or undergo optimization and restructuring from fiscal year 2025. All projects are progressing smoothly. As part of our optimization and restructuring initiatives, in addition to the transfer of our equity interest in the Phenols business in China, we have also decided to shut down the phenol plant at Ichihara Works ahead of schedule in October 2025 instead of the originally planned fiscal year 2026. We will continue to actively pursue these efforts with a strong sense of urgency.

Please see Page 7. This is the summary of our financial results for the first quarter of fiscal year 2025.

Sales revenue for the first quarter of fiscal year 2025 was JPY 415.4 billion, a decrease of JPY 34.1 billion compared to the same period of the previous year. Operating income before special items was JPY 26.6 billion, a decrease of JPY 3.6 billion year-on-year. Net income attributable to owners of the parent was JPY 0.7 billion, a decrease of JPY 17.2 billion year-on-year due to losses in nonrecurring items associated with business restructuring. The exchange rate was JPY 145 to the dollar, representing an appreciation of JPY 11 year-on-year. Domestic standard naphtha price per kiloliter was JPY 66,300, a decrease of JPY 12,700 year-on-year.

Please see Page 8. This is the summary of a year-on-year comparison about operating income before special items in the first quarter of fiscal year 2025. In terms of volume, sales increased for vision care and agrochemicals due to firm demand. Sales of elastomers increased as we expanded our products in multiple applications in growth markets. And sales of semiconductor applications increased due to demand growth in cutting-edge semiconductor market and overall recovery in semiconductor markets. Terms of trade worsened due to losses from yen appreciation and inventory valuation losses from lower raw material prices despite a temporary improvement in terms of trade in PP compounds driven by sales price revisions.

Fixed costs and others contributed positively to overall operating income before special items due in part to an increase in equity and earnings. Looking at the results by factor within the JPY 3.6 billion decrease in operating income before special items compared to the same period of the previous year. The volume difference was plus JPY 2.9 billion. Terms of trade were minus JPY 6.6 billion and fixed costs and others were plus JPY 0.1 billion.

Please see Page 9. This is sales revenue and operating income before special items by segment. The following pages provide a detailed explanation of the increase or decrease factors for each segment.

Please see Page 10. Life & Healthcare Solutions reported operating income before special items of JPY 6.2 billion in the first quarter of fiscal year 2025, an increase of JPY 0.3 billion compared to the same period of the previous year. The volume difference was plus JPY 1.2 billion. This is mainly due to the steady demand for vision care and firm sales of agrochemicals, particularly in the domestic market.

Terms of trade worsened by JPY 0.9 billion due to the impact of losses from yen appreciation on agrochemicals.

Please see Page 11. Mobility Solutions reported operating income before special items of JPY 14.6 billion in the first quarter of fiscal year 2025, a decrease of JPY 0.9 billion year-on-year. The volume difference was plus JPY 0.2 billion, mainly due to the expansion of our products into multiple applications in growth markets. Terms of trade worsened by JPY 1.2 billion due to the impact of losses from yen appreciation despite positive effects from time lag in PP compounds.

Please see Page 12. ICT Solutions reported operating income before special items of JPY 9.0 billion in the first quarter of fiscal year 2025, an increase of JPY 2.8 billion year-on-year. Volume difference was plus JPY 2.9 billion, with sales volume increasing due to a recovery in semiconductor markets. Terms of trade were plus JPY 0.1 billion, driven by an improvement related to fluctuations in raw material prices for some products despite the impact of losses from yen appreciation. Fixed costs and others increased slightly due to the operation of a new plant.

Please see Page 13. Basic & Green Materials recorded an operating loss before special items of JPY 2.9 billion in the first quarter of fiscal year 2025. Although the positive effects of business restructuring were seen, these were outweighed by the impact of inventory valuation losses from lower raw material prices, resulting in a JPY 6.8 billion decrease in operating income of special items year-on-year. The volume difference was minus JPY 1.4 billion, affected by sluggish demand, including withdrawal of customers from Phenols business. Terms of trade worsened by JPY 4.6 billion due to inventory valuation losses resulting from fluctuations in raw material prices. Fixed costs and others also worsened by JPY 0.8 billion due to factors such as increased repair and maintenance costs caused by rising labor and material costs.

Please see Page 14. This is nonrecurring items. Nonrecurring items totaled minus JPY 13.8 billion. This represents a deterioration of JPY 10.8 billion compared to the same period of the previous year. In addition to the impairment losses following the transfer of our equity interest in the Phenols business joint venture in China, we recorded losses in related business by advancing structural reforms in the specialty chemicals domains. The total impact of this equity interest transfer for the full year is projected to be a loss of approximately JPY 8.0 billion as a realized gain of approximately JPY 4.5 billion is expected in the second half of fiscal year 2025 from translation adjustment related to the sale of the Phenols business.

Please see Page 15. This is consolidated statement of financial position. Total assets were JPY 2,108.3 billion, down JPY 45.7 billion from the end of March 2025, mainly due to a reduction in accounts receivable and inventories driven by the impact of lower raw material prices and regular maintenance as well as measures to make the Phenols business asset-light.

Please see Page 16. This is consolidated statement of cash flow. Cash flows from operating activities were positive JPY 45.4 billion. Compared to the same period of the previous year, we saw improvements mainly in working capital. Cash flows from investing activities were negative JPY 24.7 billion. While we continue to make active investments, we are also progressing with the sale of affiliates as part of our business portfolio transformation. As a result, free cash flows were JPY 20.7 billion.

Next, I will explain the financial outlook for the first half of fiscal year 2025.

Please see Page 18. This is highlights of consolidated financial outlook for the first half of fiscal year 2025. Regarding the outlook for the first half of fiscal year 2025, we expect sales revenue to be JPY 818.0 billion, a decrease of JPY 72.4 billion compared to the same period of the previous year. Operating income before special items is expected to be JPY 49.0 billion, a decrease of JPY 3.8 billion year-on-year and net income attributable to owners of the parent is expected to be JPY 7.5 billion, a decrease of JPY 14.7 billion year-on-year. The exchange rate for the first half of the year is expected to be JPY 145 to the dollar, an appreciation of JPY 8 year-on-year. The domestic standard naphtha price is expected to be JPY 65,650 per kiloliter, a decrease of JPY 12,300 year-on-year.

Please see Page 19. This is our overview of the outlook of the operating income before special items in the first half of fiscal year 2025. The volume has been steadily increasing due to the increase in sales volume in the specialty chemicals domains compared to the same period of the previous year. On the other hand, terms of trade are expected to be negative due to the impact of yen appreciation, inventory valuation losses in Basic & Green Materials and a decline in energy efficiency due to low operating rates of crackers and derivatives.

We do not project fixed costs and others to significantly impact profit in the first half. While we anticipate an increase in fixed costs due to major maintenance at Ichihara Works, we expect this to be offset by the positive effect from improvement in equity in earnings and business restructuring. Consequently, the projected decrease in operating income before special items of JPY 3.8 billion year-on-year is attributable to a positive volume difference of JPY 9.0 billion and a negative terms of trade impact of JPY 13.0 billion. The explanation is not significantly different from the financial results for the first quarter of fiscal year 2025, so I will admit the details.

Please see Page 20. This is our outlook for sales revenue and operating income before special items by segment. From the next page onwards, we will explain the factors behind the increase or decrease for each segment. But as the explanation is not significantly different from financial results for the first quarter of fiscal year 2025, I will admit the details.

Please see Page 21. Life & Healthcare Solutions operating income before special items has been steadily growing since fiscal year 2021, showing an approximate 20% growth per year in CAGR. Regarding the outlook of this segment's operating income before special items for the first half of fiscal year 2025, we expect it to be JPY 14.0 billion, a decrease of JPY 1.3 billion from the same period of the previous year. The volume difference is expected to be plus JPY 1.0 billion. We expect sales volumes to increase steadily, primarily in vision care and agrochemicals. Terms of trade are expected to be negative JPY 2.0 billion due to yen appreciation. As for fixed costs and others, we are making progress in business restructuring in oral care.

Please see Page 22. Mobility Solutions operating income before special items experienced a significant decline during the COVID-19 pandemic in fiscal year 2020. However, it has steadily recovered since then, showing an approximate 10% growth per year in CAGR. Regarding the outlook of this segment's operating income before special items for the first half of the year, we expect it to be JPY 27.0 billion, a decrease of JPY 1.4 billion year-on-year. Volume difference is expected to be positive JPY 2.0 billion due largely to expanded sales of elastomers. Terms of trade are expected to be negative JPY 3.0 billion, mainly due to losses from yen appreciation. We are also steadily making progress in restructuring, such as rationalizing administrative functions in our Solutions business.

Please see Page 23 regarding ICT Solutions. The semiconductor market experienced a boom around fiscal year 2021 due to the stay-at-home demand brought by the COVID-19 pandemic, but has since entered a prolonged adjustment phase. However, the recovery trend began around last year. and this trend is expected to accelerate in the first half of this year with semiconductor-related materials showing growth primarily in terms of volume. We expect the outlook of this segment's operating income before special items for the first half of the year to be JPY 17.0 billion, an increase of JPY 4.2 billion year-on-year. We also recognize the need to closely monitor the trend of U.S. trade policies. Volume difference is expected to be positive JPY 5.5 billion as sales volume is expected to increase due to a recovery in demand for semiconductors. Terms of trade are expected to be negative JPY 0.5 billion mainly due to yen appreciation. Fixed costs and others are expected to be negative JPY 0.8 billion due to an increase in fixed costs associated with the operation of new plants for coating and engineering materials.

Please see Page 24. Basic & Green Materials has been in a tough situation since falling into a deficit in the second half of fiscal year 2022. We also anticipate the outlook of this segment's operating loss before special items for the first half of the year to be worsened to JPY 8.0 billion, down JPY 5.4 billion year-on-year, mainly due to significant impacts by lower naphtha prices, major regular maintenance and low operating rates. Although there will be an improvement of around JPY 7.0 billion from the elimination of the impact of the ethylene plant failure that occurred in 2024, we expect this to be outweighed by negative factors such as inventory valuation losses from lower raw material prices, the impact of major regular maintenance at Ichihara Works and a decline in energy efficiency due to low plant operation.

Please see Page 25. Next, I would like to explain the increases and decreases from the first quarter to the second quarter by segment. Operating income before special items in the first quarter was JPY 26.6 billion, and the outlook for the second quarter is JPY 22.4 billion. Therefore, we expect a decrease of JPY 4.2 billion from the first quarter to the second quarter. In the specialty chemicals domains, we expect to see a decrease in profit of JPY 1.6 billion overall. While Life & Healthcare Solutions is expected to see an increase in profit due to the high demand season for agrochemicals in overseas markets, Mobility Solutions is expected to experience a decrease in profit following the elimination of the gains from time lag in PP compounds in the first quarter.

In ICT Solutions, despite solid sales performance, we anticipate a decline in profit mainly due to a rise in fixed costs associated with the operation of a new plant. In Basic & Green Materials, we expect a decrease in profit, mainly due to the impact of major regular maintenance at Ichihara Works.

Please see Page 26. This is the cash flows outlook for the first half of fiscal year 2025. Cash flows from operating activities are expected to be positive JPY 116.0 billion, while cash flows from investing activities are expected to be negative JPY 70.0 billion. As a result, free cash flows are expected to be positive JPY 46.0 billion. We will continue to work to optimize inventories and increase our cash generation capabilities.

That's all for the explanation about our financial results for the first quarter of fiscal year 2025 and our financial outlook for the first half of fiscal year 2025.

Thank you very much for your kind attention.

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