Thank you for participating in the investor meeting for Q2 2023 Results at Japan Tobacco Inc. today. Before we start the meeting, I'd like to ask you to make sure that your display name is accurate. Thank you for your cooperation. It's now my pleasure to introduce our CFO, Mr. Kato, please. I am Nobuya Kato, CFO of the JT Group. Thank you for joining us today for the JT Group's financial results briefing for the second quarter of fiscal year 2023. I will begin by explaining our six-month consolidated results for the fiscal year 2023. Please refer to slide four. Adjusted operating profit at constant currency, our primary performance indicator, increased 4.7% year- on- year. This solid performance resulted from the robust pricing contributions in the tobacco business, outweighing the impacts of a deteriorating product mix, increased investment in HTS, and higher supply chain costs. Higher profits in the pharmaceutical and processed food businesses also contributed to the performance. On a reported basis, revenue increased 9.9% year- on- year, supported by continued top-line growth in the tobacco and pharmaceutical businesses, as well as continuous favorable exchange rate impacts in the tobacco business from a weaker Japanese yen. AOP grew 6.7% compared to the same period last year, supported by increased profits across all businesses and positive foreign exchange impacts in the tobacco business due to the weaker Japanese yen. Regarding FX, I would like to point out that in the tobacco business, the impact on core revenue in AOP became unfavorable in the three months from April to June due to the appreciation of the Japanese yen against selected local currencies, reducing the positive currency impact in the first half of the fiscal year. Operating profit increased 8% year- on- year due to an increase in AOP and a decrease in amortization of trademark rights as an adjustment item. Profit increased 8.7% year- on- year. In addition to the increase in the operating profit, the decrease in the corporate tax burden exceeded the impact of higher financing costs, mainly due to the change in the applicable exchange rate in Iran. Before I begin reviewing the results of each business, I would like to share my deepest concern about the recent unrest in Sudan, where many people are facing difficulties. I strongly hope for a quick and peaceful outcome. First, let's look at the volume results in the tobacco business. Please see slide five. Total volume, combining sales of combustibles and RRP, was strong in the first six months of the year, with a 2.5% increase year- on- year. Drivers in the combustibles category include an increase in industry volume in Turkey due to favorable year-on-year comparison, further accelerated by the impact of inventory buildup ahead of a price increase in June. In addition, the combination of continued volume recovery in Global Travel Retail as travel resumed across Asia and the positive momentum in several emerging markets drove a strong volume increase in the EMEA cluster. Outside the EMEA cluster, robust industry volume in Japan and share gains in the combustibles category, especially in the value price segment, also contributed to the volume growth. These positive factors outweighed the impact of lower industry volume in several key markets, including the Philippines and the UK, as well as the temporary suspension of operations due to the unrest in Sudan. In the RRP category, volume grew by 3.9% despite the disruption from one-off items impacting 2023, notably the discontinuation of Ploom S in Russia. Excluding these one-off items, RRP volume grew strongly driven by HTS, with Japan HTS volume increasing approximately 46%, plus the additional volume generated from new European market launches. Turning to slide six to review the financial performance of the tobacco business. First of all, the first half of the year showed a strong performance in core revenue, supported by pricing contributions from a number of markets, including Russia and the UK, and as explained earlier, strong total volume in the EMEA cluster, including Global Travel Retail, as well as in Japan. As shown on the slide, core revenue grew both on a constant currency basis and on a reported basis. Next, I will explain the AOP performance. As I mentioned earlier, AOP increased year- on- year both on a constant currency and reported basis due to the top-line growth driven by the strong pricing contributions and positive volume contribution. However, as shown in the graph, the volume variance on the AOP was negative year- on- year. This was due to a lower volume composition from high-margin markets such as the UK and other markets, a trend which also impacted the first quarter results. In addition, the negative product mix variance due to continued downtrading in Japan and the other markets reduced the top-line contribution to AOP. The business also experienced higher input costs due to higher raw material prices, logistics, and utility costs, as well as the increased costs associated with aggressive geographic expansion on Ploom X. Currency effects were positive for both core revenue and AOP throughout the first half of the year, but were negative for the three months of the second quarter due to the depreciation of several local currencies against the Japanese yen. In slide seven, I will explain the financial results in the three clusters and the performance in nine key markets. First, I'd like to explain about Asia. Despite positive volume contribution in Japan, negative price mix variance in the market resulted in lower core revenue in AOP for the Asia cluster. In Japan, combustibles volumes increased driven by category share gains, mainly in the value segment, fueled by Camel Craft launched in June last year and Mevius E-Series, which more than offset the category volume contraction. Total industry volume, including both combustibles and RRP, increased by 1.6% compared to the previous year. RRP grew year- on- year while combustibles declined, but in a moderate way compared to the past. Although it is difficult to pinpoint a clear reason for the increase, we assume that it is mainly due to an increase in the number of opportunities for consumers to go out and enjoy tobacco products, as well as the recovery of inbound tourism. We will continue to monitor the situation closely. Our total market share increased year on year due to the strong volume performance in combustibles and the continued growth of Ploom X. On the other hand, from a revenue standpoint, the Price Mix Variance negatively impacted the performance due to the ongoing downtrading, our decision to maintain prices for some HTS products during last autumn's tax hike. Moving to Western Europe, negative volume variance, mainly due to lower industry volume in the U.K., as well as higher input costs and increased investment related to Ploom X launches, were offset by strong pricing contributions notably in the U.K., resulting in higher Core Revenue and AOP. In the U.K., the large decline in industry volume is continuing due to the impact of multiple tax hikes since the second half of 2021 and the easing of travel restrictions. As a result, our combustibles volume decreased compared to the same period last year. Nevertheless, core revenue at constant FX was up, driven by solid pricing contribution. Lastly, on EMEA, the volume contribution led by Global Travel Retail and the strong pricing contribution significantly exceeded the impact of higher input costs, resulting in higher revenue and AOP. The volume performance for each market is shown on the slide. Slide eight describes the Ploom X performance in Japan. As we already announced, we renewed the Ploom X Mevius heated tobacco stick in March this year, launching higher quality products at more affordable prices. Our efforts to attract and retain more users continue, including a discount campaign for devices that last approximately two months starting in late May. Despite the aggressive measures taken by competitors, such as new product launches and coupon discounts, our market share in the HTS category increased to 9.5% in the second quarter thanks to these initiatives. The current offtake base share continues to show steady performance. On slide nine, I will update you on the progress of Ploom X geographic expansion. As announced at the Tobacco Investor Conference in May, we expect to launch Ploom X in a total of 14 markets by the end of 2023, with a focus on Europe, and 28 markets by the end of 2024. First, let me explain the progress of the most recent launch in the Czech Republic in June. We decided to launch in the Czech Republic at an early stage because the HTS category accounted for 15% of the total tobacco industry in 2022, and we foresee higher margins due to the lower tax burden on HTS compared to combustibles. We started sales in Prague and some key accounts in early June, and we will expand sales nationwide in early August. In addition, Ploom X will be launched in Switzerland, where the headquarters of our tobacco business is located, in early September. In Switzerland, HTS represented approximately 6% of total industry volume, with an even greater penetration in urban areas. There is an expectation of further category expansion, and due to the lower tax burden on HTS compared to combustibles similar to the Czech Republic, there is potential for margin expansion. The sales will start in Zurich, Geneva, and some key accounts from the beginning of September. In the UK, Italy, Lithuania, and Portugal, we are rolling it out in key cities first rather than launching it nationally. We estimate that the HTS industry volume in the areas where we are currently launching Ploom X covers approximately 60% of the total HTS industry volume in each country. This approach increases our ability to reach more consumers. In Italy, for example, as of May, Ploom X sticks are already available for purchase at more than 13,000 selected stores, which cover 70% of the HTS industry volume distribution. We will continue to work toward further sales expansion at an early date. In addition to expanding brick-and-mortar sales, we are also focusing on digital marketing. Ploom Club, a loyalty program with exclusive digital content for members, has gained new users since its launch in Italy. In order to promote HTS products, we believe it is important to create opportunities for customers to actually try out our devices. A good example of this is Portugal, where we started sales in May and where we have seen many smokers try Ploom X in a short period of time. We have received positive feedback from our launch market consumers regarding the amount of vapor, the device heating speed, the usable time per stick, and its price. We will continue to leverage our global knowledge gained in each market to attract and retain users. Slide 10 shows the results of the pharmaceutical and the processed food businesses. First, the pharmaceutical business. Revenue grew year- on- year due to the one-time income from the licensing of patented JT compounds and sales increases in the area of skin diseases and allergens at our subsidiary, Torii Pharmaceutical. AOP increased year on year as the revenue growth exceeded the increase in R&D expenses. As a reference, I would like to update you on some of the development compounds that we have outlicensed. As you can see on the slide, the outlicensed company announced that the development compound outlicensed from our company has obtained approval overseas. Moving to the processed food business. Revenue was almost flat year- on- year, despite the revenue loss resulting from the transfer of the bakery business as the top line in food service products grew due to a recovery in demand for food services, in addition to price revisions implemented in 2022 and 2023 in the frozen and ambient food segment. AOP increased year- on- year due to the effect of price revisions implemented in 2022 and 2023, as well as the top-line growth in the food service product, which offset the significant increase in raw material costs. From the next slide, I will guide you through our revised forecast for fiscal 2023. Slide 12 shows our full-year consolidated revised forecast. Core Revenue at constant currency has been revised upward by 1.2% from the previous forecast, reflecting the tobacco business volume upside and strong pricing contributions in the first half, as well as upward revisions in the pharmaceutical and processed food businesses. Core Revenue is now expected to increase 3.2% on a year-on-year basis. On the other hand, AOP at constant currency is kept broadly in line with initial expectations, reflecting the higher indirect costs, such as labor costs driven by inflationary pressure, additional investments in both combustibles and RRP, and one-off items, including the write-off due to temporary business suspension in Sudan. Regarding revenue and AOP on a reported basis, we have changed the assumed exchange rates of many currencies in the tobacco business to reflect a weaker Japanese yen versus initial expectations. As a result, revenue and AOP are now expected to be JPY 130 billion, and JPY 16 billion higher, respectively, than the initial forecast. Operating profit is revised upward by JPY 21 billion from the initial forecast due to the upward revision in AOP, as well as an increase in gains on sales of real estate, which is an adjustment item. Profit is expected to increase by JPY 17 billion, as the higher financing costs are more than offset by an upward revision in operating profit and a decrease in corporate income taxes. Free cash flow is expected to increase significantly from the initial forecast, mainly due to the expected increase in AOP and improvement in working capital. Slide 13 and the following slides explain the revised forecast of each business. First, let's look at the volume forecast for the tobacco business. Total volume, including both combustibles and RRP, has been revised upward to reflect the strong performance in Japan, Turkey, and Global Travel Retail in the first half of the year. Compared to the strong performance in the first half of the year, we expect a decrease in sales volume for the second half due to relative and temporary factors in markets like Turkey and Global Travel Retail, as well as the full impact from the temporary business suspension in Sudan. Consequently, total volume for the full year of 2023 is revised to approximately minus 1% versus the previous year. Turning to the financials, we have revised up our forecast for core revenue at constant currency by 0.9%, reflecting the upward revision in total volume, as I mentioned earlier, and the favorable pricing contributions in the first half of the year. On the other hand, AOP at constant currency remains unchanged from the initial guidance. Although we expect a stronger top line and a less adverse impact than anticipated from higher input costs driven by inflation, the forecast is expected to be essentially flat year on year, reflecting higher indirect costs such as labor costs due to inflationary pressure, additional investments in both combustibles and RRP, and one-off items, including a write-off of raw materials due to the conflict in Sudan. Specifically, in the second half of the year, we expect AOP growth to slow due to lower sales volumes and plans to accelerate the geo-expansion of Ploom X. On a reported basis, we have revised the assumed exchange rates for many currencies against the weaker Japanese yen. As a result, as shown on the slide, we have revised upward our initial guidance for both reported core revenue and AOP. Regarding Russia, while the operating environment remains very challenging, we continue to manufacture and distribute our products in compliance with all applicable regulations and international sanctions. There have been no changes in our stance. We will continue to take all necessary decisions in response to changes in circumstances and in accordance with our management principles guided by our 4S Model. Slide 14 explains the revised forecast for pharmaceutical and processed food businesses. The forecast for revenue in the pharmaceutical business has been revised upward by JPY 2.5 billion from the initial forecast due to an expected increase in sales at Torii Pharmaceutical and an upward revision in overseas royalty income driven by the depreciation of the Japanese yen. Meanwhile, AOP is expected to be in line with the initial forecast at JPY 13.5 billion, as an increase in R&D expenses is expected to offset the upward revision in revenue. Moving on to the processed food business, revenue is revised upward by JPY 7.5 billion from the initial forecast, incorporating top-line growth from an early recovering demand for the food service industry in the frozen and ambient foods business. AOP is revised upward by JPY 1.5 billion from the initial forecast, reflecting the upward revision of the revenue. In closing, please look at slide 16. To conclude my presentation, our first half results were strong, supported by robust pricing contributions, resilient industry volumes, and solid market share gains across the tobacco business. The pharmaceutical and processed food businesses also delivered higher profits, complementing the group's overall profit growth. As for the consolidated revised forecast, while we expect the current strong business momentum in the tobacco business to continue, we are holding the AOP at constant currency forecast broadly flat due to higher indirect costs associated with inflationary pressure, increased business investments, and one-off items, including the impact of temporary business suspension in Sudan, which are expected to offset the upward revision to the top line. On the other hand, AOP on a reported basis will be revised upward to reflect the depreciation of the Japanese yen, reducing the negative currency impact we expected at the beginning of the year. As planned, we are accelerating investments towards HTS for our future earnings growth. Ploom X geo-expansion is progressing steadily, and we are expecting to complete the launch of HTS in 14 markets by the end of fiscal 2023 and 28 markets by the end of fiscal 2024. Finally, regarding shareholder returns, we have not altered our forecast for the annual dividend from our initial projection of JPY 180 per share. Based on the revised profit forecast, our payout ratio for fiscal 2023 will be approximately 73%, which I believe is on a level that is in line with our shareholder return policy, as I've described in previous presentations. This concludes my presentation. Thank you very much for your attention. Thank you, Mr. Kato. We apologize for the erroneous slides for English. So we would now like to move on to the Q&A session. Let me introduce you to the speakers who will answer your questions today. Nobuya Kato, CFO of the JT Group, and Koji Shimayoshi, JTI Deputy CEO. We would now like to show you how to pose the questions. Please click on the raise your hand button. Please unmute yourself and start your question once you're nominated. Those of you who are joining us through telephone, please press the star nine. If you're nominated, please press star six to unmute yourself and start your question. Because of the constraints of time, we would kindly ask you to pose one question only. We may not be able to answer all the questions. We appreciate your understanding. Thank you very much for waiting. I'd like to introduce the first person, Morgan Stanley MUFG, Miyake-san, please. Thank you very much. This is Miyake from Morgan Stanley MUFG. So I'd like to ask about your full-year guidance. I'd like to hear more of details. So on a constant currency basis, AOP, so tobacco business, you expect to stay flat for the full year. So with the inflation, there's a rise in indirect costs. And I was wondering if you can offset that for additional pricing. And also for combustibles and RRP, you mentioned there will be additional investment. So what are the actual necessities? What is the reason behind you made those decisions? What is the kind of impact are you expecting? So if you can give us more color towards that end, that would be highly appreciated. Thank you very much for that question. On a full-year basis, our guidance, AOP on a constant currency basis, is flat, and the indirect cost is on the rise. Is it possible to offset that through pricing? And also, the additional investment for combustibles, what are the necessities and what are the importance of that? Shimayoshi would answer that. Thank you very much. This is Shimayoshi, Miyake-san. Thank you very much for your question. On a full-year basis, on a constant currency basis, AOP is staying flat. So I'd like to give you more details related to this. Let's talk about volume first. So Sudan, and also in comparison to the previous year, various noise is in place. So we expect to see some, it appears as if it is decelerating in terms of volume. However, the underlying performance, volume-wise, we continue to be confident. Also in terms of core revenue, there are some changes because of the volume impact. However, the pricing impact, we expect to see that to be realized in the second half of the year. But there's more skew towards the first half of the year in terms of pricing. So Russia and the UK, these are the major markets. There is a tax increase, and the pricing that has taken its toll. There's no actual change in our confidence toward pricing. Another point related to cost, last year and the second half of the year, or let's just say starting in autumn onwards, we have purchased and sourced the leaf tobaccos. We have seen inflation in fertilizers and also the labor cost. So the input raw materials, we shall see increase in the usage starting the second half of this year. Therefore, the negative impact from the cost will be larger in the second half going forward in comparison to the first half. Also, Ploom X introduced markets, 12 markets, that is the expectations in terms of the market that we launched. So four in the first half, and eight in the second half of the year. So the promotional cost for Ploom X is skewed again to the second half of the year. Another point relates to cost. To give you more color, starting this year, we have the EU Single-Use Plastics Directive and also increase in the cost that would start to come on us in the second half of this year. So given all these events and reasons, the cost in comparison to the previous year, we expect to rise. Those are the reasons why we had AOP remain flat. So in the second half, in comparison to the year-on-year, on a relative basis, it seems to be decelerating. It appears to be decelerating. However, the underlying business momentum continues to be fairly strong, and we are confident. So the business fundamentals are still strong for the second half of the year. That is all from my end. Thank you very much. Perhaps I was not able to fully understand this. So in terms of the first half of the performance then, so I believe you are actually ahead of the plan for the first half. So for the full-year basis, so perhaps the second half is not as in line with the plan. So it seems as if you are making additional initiatives to reduce cost. Am I right in understanding this? So you mentioned about the increase in the cost of leaf tobaccos, and also there's more investment skewed towards the second half for Ploom X. And so all these, I believe you were able to expect this since the beginning of the year. So vis-à-vis the initial plan, perhaps the second-half outlook is perhaps not progressing as initially anticipated. So if you can give us more color, what are the expectations for the second half of the year? Thank you for that. I'd like to give more of an additional explanation so vis-à-vis our initial plan for the first half of the year, how we perceive it so the top line growth is there. In addition to that, cost increase has become somewhat moderate so as a result, AOP has actually been higher than the initial plan so why the cost increase was moderate? The reason is, as mentioned, EU single-use plastics-related costs that will start to be realized in the second half of the year. And also the volume that we have purchased in terms of leaf tobaccos that will start to have its impact in the second half of the year so because of all these reasons, the first half AOP is somewhat stronger. Also, another point about volume and also in terms of top line. Russia and Global Travel Retail and Japan, the volume was stronger than our initial expectation. This is on a year-on-year basis. For instance, Japan as an example, Camel Craft was launched last June. In the second half of the year, the volume impact has taken its toll. And because of that, the second-half volume appears to be weaker. Another point in terms of pricing, so U.K., Spain, Germany, and Russia, we are progressing better vis-à-vis the plan for pricing. So that should be continuing the second half of the year. Another point in terms of cost, likewise with volume. Sudan, unrest we did not expect it at the beginning of the year, so there has been a one-off cost increase that was not planned. In fact, Sudan, since June onwards, the negative impact started to be realized. And that will be continued in the second half for the full year. So because of all these reasons, the first-half performance may be stronger, or perhaps second half may appear to be weaker in comparison to first half. So apology, Sudan was May onwards, sorry, not June onwards. That is all from my end. Thank you very much. If that's the case in the second half of the year vis-à-vis the first half, so I understand they will decelerate on a year-on-year basis. But some of the new items is Sudan-related costs. That is the biggest factor. Am I understanding this correctly? In terms of Sudan, May onwards of this year, we have suspended the shipments and business as a whole. So on the second half of the year, the impact on the top line will become realized. So one-time cost has already happened in the first half of the year. However, in terms of the top line, the impact will be full-year impact starting in the second half. Understood. Thank you very much. Thank you, Ms. Miyake. Next person to ask a question is from Mizuho Securities. Mr. Saji, please. Thank you. The question for me is about Global Travel Retail, where we're seeing good momentum as well as regarding Russia. So the continuity of this momentum is my question. So for GFBs this time around, you made an upward revision for the year, and I presume that Global Travel Retail is contributing quite a lot. So for this, where do you stand right now, and how long do you think this is going to continue? So for illicit trading, for example, you didn't really talk about it in your presentation, but pre-COVID, I think it was happening quite a lot. So now cross-border transactions have resumed again. Is illicit trade down for Russia? On the other hand, after your pricing, demand continues to be strong. So demand in the Russian market, I feel that it continues to be strong. But regarding the Russian market, Camel has been increasing market share, is doing well. So in the Russian market, where is the market? Where does it stand? And why is demand so strong? Can you give us some flavor on that? Thank you very much for your question. For Global Travel Retail and its momentum continuity, as well as the conditions around illicit trade, as well as strong demand in Russia and the market conditions, will be answered to by Mr. Shimayoshi. This is Shimayoshi. Thank you very much for your question, Mr. Saji. First of all, about Global Travel Retail, let me start from there. So ever since COVID, travelers went down, and GTR sales volume went down substantially. And from January 21, gradually, we have been seeing a pickup. So right now, compared to pre-COVID, which is December 2019, we are back to 90% of volume that we saw back then in December 2019. Especially, I would like to note that in Asia, the recovery ever since this year, or actually from the second half or the end of last year, we have been seeing a pickup. The majority are Chinese travelers, and we are seeing a gradual pickup. But Taiwan, I think it was this year in May when restrictions of travel from Taiwan were lifted. So we're still in the midpoint of recovery for the first half, but in the second half, we expect that we can presumably go back to where we used to be pre-COVID. That's our view. To that end, so from a momentum perspective, from the second half of this year, we'll probably go back to pre-COVID levels, and then we'll probably go back to business as usual for GTR volume. Moreover, regarding illicit trade, the situation differs by country. For example, for the high-end markets, high-unit price markets like the U.K., the number of travelers, when they increase, it's not just illicit trade, but non-duty paid, which means people who travel abroad and go to lower tax regions to make a purchase and bring it back to their own countries. There are a certain level of travelers like that. To that end, for the first half, sales volume in the U.K., total demand was, let me confirm, the U.K., industry volume went down by 17%. For Taiwan, it hasn't materialized that much yet. However, for non-duty paid volume, we are expecting that the volume is going to increase. It's a correction. Industry volume went down by -14% year- on- year for the U.K. Correction was down by -14%. That's where we are with GTR. Next, regarding Russia and what's happening in the market. For the first half, regarding our sales volume, Ploom S, we discontinued its sales. We were impacted by that, and total sales volume was -1%. For combustibles, for share of market, Camel Compact was able to win some share and Winston increased share due to down trading, and we have been seeing an increase year- on- year, but the assumptions, meaning total industry volume in Russia, when we gave out guidance in February, we were saying that we were expecting the decline of - 5%, but in our latest update, we're expecting a - 4% decline, so the situation is less than we expected. It's because in the case of Russia, there's a lot of illicit trade, and we were presuming that we were going to see a pickup in illicit trade. However, compared to our initial expectations, the illicit trade did not increase as much, and currently, there's about 10% of illicit trade. That's our view, but total industry volume continues to be brisk. Finally, regarding the pricing environment in Russia and downtrad ing in Russia, and as a result, regarding the value segment, competition continues. The pricing environment continues to be competitive. For fiscal 2023 pricing, initially, we were thinking about 4% tax increase in January was the base of our pricing. But then there was an additional tax increase in March. In light of that, although we can't refer to the details, we will be taking flexible pricing strategies. For pricing, it may impact sales volume, including illicit trade. It may affect industry volume, and it will depend on where the competitors are, as well as the penetration of our pricing. Those are the factors that we would like to watch closely. Whatever the case may be, at this moment, the pricing environment, we believe, is manageable and controllable. That is where we stand. Thank you. Thank you very much, Mr. Saji. Next question comes from Daiwa Securities. Mr. Morita. This is Morita from Daiwa Securities. Thank you for the opportunity. Can you hear me? Yes, we can hear you. I'd like to ask about free cash flows. So this time is in a fairly favorable situation. So working capital is improved. I believe that is the background. So if you can give us more color on this particular timing, why is it improving? How sustainable is this? Please give us more background information. Also, another question, as we see expansion in the free cash flows, would there be any change in the business strategy? That is the second question. And the third question related to that, shareholders' return policy, would that also pose any change? So in terms of dividend, you are committed to the dividend payout ratio, and I do believe you have the range that you're committed to. But you haven't been conducting share buybacks recently. Now that you have this fairly strong improvement of the balance sheet, perhaps this may be the timing you may explore again the possibility of share buybacks. So in conjunction with the improvement of free cash flow, how do you perceive the optimal state of balance sheet? If you can also comment on that, that would be helpful. Thank you very much for that. So the question was related on the increase in the free cash flow. That is because of the enhancement of the working capital. And how sustainable is this? Would that actually pose changing in the business strategy? And also, would it also pose changes on the shareholders' return? Our CFO Kato would answer that. Thank you very much, Mr. Morita. In terms of free cash flows, as we see improvement in free cash flows, we did see improvement in the working capital. Could I just interpret this for the full-year basis then? Could I just assume your question is related to the full-year impact? In terms of working capital, the improvement comes from the tobacco business. The turnover days for the tobacco business have been on the decline for the inventory. Also, the sales volume was stronger than initially expected. Because of that, the raw materials for these products, the inventory has come down more than expected. That has led to the improvement in the working capital, as I have just explained, in terms of sales volume, it was stronger than our initial expectation. Of course, that was stronger than our initial plan. But in terms of continuity, perhaps it is more of a one-time, one-off impact. That's how we perceive it. Now, in terms of the inventory turnover and the reduction in the number of days, of course, the optimal inventory level or the turnover days, we monitor those, the level for each market. And we intend to hold inventory that is appropriate. We do have intention to improve the working capital so we can grow the free cash flows. This has been a continuous effort on our part. In terms of free cash flows improvement, also we need to consider how we manage the balance sheet and also our thoughts on share buybacks. So related to these topics, in terms of balance sheet, as you have looked through our balance sheet, you may consider our cash balance is fairly large or perhaps it's low in leverage. You may have those impressions after looking at our balance sheet. But in terms of the cash on the balance sheet basis. So we have the low liquidity, the deposit. It's quite large in terms of the amount that is inclusive vendor. So restrictive sort of non-liquid, less liquid deposited, it takes up a large portion. Also in terms of balance sheet, we intend to build a robust balance sheet. That is the basic strategy we have. To give you the background to this, of course, we need to consider the geopolitical risk, inflation, and also the economic downturns on the global basis. Also, there's some uncertainty within the business performance. Given all those into perspective, it is essential we keep a robust financial foundation in the balance sheet, so because we have such robust foundation, we can conduct a flexible investment into our businesses, and also, we can look at the entire supply chain to continue our business, so from all these points, we do believe this is essential. Now, in terms of share buybacks, so for our shareholders' return policy, dividend forms the core part in terms of our commitment. Therefore, dividend payout ratio, we do actually perceive that as the key index to decide on the shareholders' return, so dividend payout ratio, we do have a committed level, and also in the mid to long-term basis, we intend to sustainably grow the AOP, and at the same time, we would like to continuously enhance the shareholders' return. Now, in terms of share buybacks, whether we will execute that or not, as we have shared with you in the past, so we will look at the financial situation for the current fiscal year. And also, we need to look at the demand and free cash flow on the mid- to long-term basis, as well as the state of balance sheet. Also, the level of bottom line, investment into business, and how well the initiatives are implemented. Those need to be considered when we make a decision in terms of whether we will conduct share buybacks and at what size will they conduct. So our basic strategy has not changed. That is all from my end. I have an additional question related to balance sheet. I understand what you're trying to say, but I think this is all about the degree of. In terms of the optimal, the ideal state of balance sheet, how do you intend to quantify these? How do you manage these? Because from outside, I do understand that you have some illiquid funds in there. But this year, it seems as if you will turn into net cash. It appears as if the net cash level is quite high. This is all about striking the right balance. From your position as CFO, what is the fair state and level of cash? If you can have more of a quantitative explanation, that would be helpful. In terms of quantitative level, as mentioned, we talked about once we turn to net cash, you mentioned that point, and also beyond that, how much cash is expected to grow, and what is the degree of the net cash level. That is definitely one point that we need to consider. As I shared, our policy on share buybacks, so within this fiscal term, we shall not reach net cash within this fiscal term. That is our expectation. However, next year onwards, as we turn into net cash, and we would consider how much of a cash increase we may have in our outlook on a mid to long-term basis, then we may explore share buybacks. So our general policy and our general attitude does not change. So as mentioned already, that is where we stand. But of course, we do like to listen to your opinions, and accordingly, we would like to explore the possibility. If that's the case, and in terms of working capital, then I understand that it improved this time around, but how sustainable would this be? So CCC, would that be improved cash conversion? or this is more of a positive cycle already? So for cash flows, can we have some additional sort of measures, additional turn to this? So in terms of working capital improvement, we talked about the inventory turnover days. So we have mentioned how we intend to improve this. Therefore, in terms of cash conversion cycle, CCC, we do intend to improve this as much as possible. So what are some of the initiatives that we take? We are exploring some of the options, and we would like to execute those accordingly. Understood. Thank you very much. Thank you, Mr. Morita. We have been receiving a lot of questions, but because time is approaching for the end of the hour, the next person will be the final person. Ms. Takagi from SMBC Nikko Securities, over to you. Hello, this is Takagi speaking. Can you hear me? May I go ahead? Yes. So I might be asking this question too early, but for 2024, I have a question regarding next fiscal year because we're already past six months for this year for the tobacco business and AOP. For the next three years, you're seeing low single-digit growth. That's what you're expecting for this fiscal year. It's pretty much flat year on year in line with our expectations. But for next fiscal year, from a profit growth point of view, are we going to expect greater growth? That's my first question. And compared to this year, going towards next fiscal year, are there going to be any improvements made? Are there going to be anything that's not going to change? And And so forth. So just can you share some thoughts that may be on your mind? Thank you for the question. The question was about AOP for the tobacco business and profit growth in 2024, as well as any changes that may occur going into next year. Our CFO, Mr. Kato, will take your question. Ms. Takagi, thank you for your question. We are past half of this year, and that's why you're asking about next year. It's really hard to talk about plans for next fiscal year onwards because that's something we would like to build up going forward. When it comes to details and specific numbers, we are not able to set forth anything. In our three-year plan that you refer to, low single-digit tobacco business, AOP growth at constant currency, that is the direction that is not really going to change in a big way going into next year as well as the following year. When you think about next year and what may change in a significant way or what may not change compared to this year, regarding changes that you can say not change, but Ploom X geo expansion, as communicated, by the end of this year, we're going to be covering 14 markets, and by next year, we're going to add on 14 more, so we should have 20 markets. Those are the number of launches we are expecting to complete, so of course, the more launches we have, the investments we make are going to increase as well, so in the second half of this year, we have a skew of greater cost, and next year, that's going to be contributing to the full year, and we will see more markets next year as well. So associated with Ploom X, investments are going to be greater in amount next year compared to this year. So for Ploom X expansion, the major concept is not going to change, but when it comes to financial impact and investments, the impact will be greater next year. Of course, we have created a three-year plan accounting for investments so that we can grow by low single digit. And that is the plan we have set forth at the beginning of the year, and we would like to ensure that we achieve it. And we will ensure we create a good plan for next year too from here on. Thank you. If that's the case, on one end, you're going to be seeing greater investments, and then on the other end, regarding cost inflation, you'll need to handle it. Cost increases have been continuing, although you've been able to absorb it through pricing. In the second half of the year, cost increases are still going to be impacting you adversely. Are we going to see a better positive impact next year, or what other positive factors can we expect next year? From a cost point of view for this year, compared to last year, costs have been up substantially for next year, and cost increases associated with inflation, where that's headed, is something that's hard to predict. However, based off our current assumptions, the cost increases this year compared to last is probably going to be greater than what we're going to be seeing next year compared to this year. For next year, although we're expecting greater costs, the magnitude of the cost increase, we believe, is going to be moderate. That's our assumption. Thank you. By the way, for Sudan, is the negative impact that large? Can you give us some quantitative flavor on this? That's my last question. Well, unfortunately, it's just one single market. So regarding our profit situation there, we don't disclose it. But as Mr. Shimayoshi mentioned earlier, for Q2 and raw material cost disposal loss, we have recognized losses associated to disposals. And also, since May, we have discontinued sales, so there will be an adverse impact on top line as well as profits. And we have accounted for that in our updated full-year guidance. And although we are not able to disclose the actual numbers, like we are communicating qualitatively, there is an impact by a certain degree. Thank you very much. This is Shimayoshi speaking. If I may add a comment, our outlook at this point in time is the surge in raw material costs for 2023 going into 2023 is probably going to be at peak, and in 2024, it's probably going to be staying at high levels, but inflation is expected to moderate globally. That is our view. So it should be in line. So this year from last year, because leaf impact comes with a one-year delay, therefore, we're expecting moderation, and because of our efforts, supply chain efficiency is something we're working on. In February, when we announced our results, we shared this with you, but up until 2024, approximately JPY 20 billion worth of efficiencies are accounted for. So regarding costs from that point of view, for cost increases, we would like to ensure that we contain its impact. That's where we stand right now. So that was an additional comment for me. Thank you. Thank you, Ms. Takagi. So this concludes our Q2 2023 results. Thank you for your participation today.