Thank you very much for attending the Mitsubishi Chemical Group's earnings presentation. We would like to start the meeting now. First, Mr. Jean-Marc Gilson, President and CEO, will start with opening remarks. Then Ms. Yuko Nakahira, CFO, will present financial results for the fiscal year ended March 31, 2023. The entire conference, including the Q&A, is scheduled to last 60 minutes. I'd like to remind you that the presentation may contain forward-looking statements based on the current expectations, all of which are subject to risks and uncertainties. Actual results may differ materially from those discussed in the forward-looking statements. Please also note that the audio recording of today's conference, including the Q&A session, will be posted on our website. Let's start. First, Jean-Marc Gilson, please. Konnichiwa, konbanwa to all of you, and welcome to our fourth quarter and end of fiscal year 2022 earning presentation. My name is Jean-Marc Gilson. I'm the Mitsubishi Chemical Group CEO. Let me make a few non-financial introductory comments before I hand it over to Nakahira, CFO, and she will take it from me for a detailed review of our results for fiscal year 2022 and explain in detail our forecast for fiscal year 2023. I could choose to look at fiscal year 2022 as a glass half empty year. I could say, I mean, it was a really tough year. It was probably one of the worst year for the last 30 years for the chemical industry. There is a war in Ukraine that's driving high energy costs. There is low demand in China. We have high inflation everywhere and so on and so forth. Instead, I really prefer to look at a glass half full, and really focus on the progress and the positives that we made and we had in fiscal year 2022. Indeed, as a company, we delivered the highest ever sales in our history. We continued to grow fast internationally, both in sales and in profits, with international sales for the first time ever equaling our sales in Japan. Very importantly, also, in this time of high inflations and high prices, we also relearned on how to raise price quickly and aggressively. We also reduced our cost by 500 okuen, going beyond our promises and our initial targets for fiscal year 2022. Along the way, in 2022, we also made tough decisions to exit unprofitable business. These actions will contribute to generate another JPY 80 billion in savings in fiscal year 2023. With a very keen eye on cash management, we generated in excess of JPY 100 billion in free cash flow through strong working capital management and very high discipline across the company. We also invested into the future with our investment CapEx at JPY 290 billion, dedicated mostly for growth and primarily directed to our gas and specialty business. In our gas business, we won three large and profitable projects for hydrogen supply and other gases in Peru, in U.S., and India, showing again the global nature of our business. In our specialty materials, and that in line with our strategy, we invested into our anode business for electric vehicle. We also invested into our fast-growing specialty polymer business with significant capital outlay for SoarnoL in the U.K. and for Gohsenol in Japan. That is just to name a few. We also invested heavily in building a world-class digital infrastructure. As regards to our balance sheet, as promised, we continued to improve our net debt to equity ratio in these difficult times. Last but not least, we also got a complete victory in our Gilenya arbitration in our pharma business after a great work by our legal teams. Yes, it was a very tough year for us and for the chemical industry. All the actions that we executed and that I just covered demonstrate that we are relentlessly implementing our Forging the Future strategy, and that we are positioning MCG for great financial success as the economy finally and gradually recovers and goes back to normal over the next few fiscal years. Shifting now to fiscal year 2023, we all know that this coming fiscal year is full of unknown. We are all unsure about the world economy. Based on our market intelligence, we are forecasting a slow recovery for our key markets. While being conservative, we are also confident that a combination of sales increase in most of our businesses, coupled with continued cost re-reductions will lift our core operating income by 25% and up to 2,500 okuen in fiscal year 2023. Our confidence is also reflected in our preliminary plan to increase our dividend by about 7% and up to JPY 32 per share on an annual basis. In closing, fiscal year 2022 was full of accomplishment for our company. In 2023, we will continue on an accelerated pace as we implement all the elements of our Forging the Future strategy. Our team, like this year, is ready to deliver on all the challenges. Thank you for your attention, and let me now hand it over to Nakahira, CFO, for a detailed review of our financial results. I'm Nakahira, CFO. I would like to present our financial results for the fiscal year ending March 31, 2023, and our full year forecast for the fiscal year ending March 31, 2024. The business environment surrounding the fiscal year 2022 was very challenging. We concentrated on activities that we could control, such as pricing, costs, and working capital to protect our core operating income and cash. We also took bold steps in portfolio management and structural reforms, as indicated in the Forging the Future, and made decisions such as closing the MMA plant in the U.K. and exiting from the COVID-19 vaccine business. Although the severe business environment has continued into this fiscal year, we will continue to manage prices, costs, and working capital with discipline and strive to secure profits and cash until the demand recovery is in full swing. We will also prepare for the coming recovery by making investments in a disciplined manner so that we will be able to capture the demand when it arrives. We will continue to implement key measures to achieve the financial targets outlined in our three-year action plan in Forging the Future. First, here are the results for the fiscal 2022. The average exchange rate for the full year was JPY 136, 20% lower than last year. The unit price of Naphtha was JPY 76,600, 35% higher than the previous year. Revenues totaled a record high of JPY 4,634.5 billion, up 17% from last year. Core operating income increased by JPY 325.6 billion, or 20%, due to the lump sum recognition of royalty income of JPY 125.9 billion in the current quarter following our arbitration award in Gilenya. The levels of revenue and core operating income are in line with the revised full year forecast for the fiscal year ending March 31, 2023, which was announced on February 16. Non-recurring items or special items totaled JPY 142.9 billion in losses, of which JPY 126.1 billion was due to impairment and provisions resulting from the closure of the MMA plant in the U.K. and the withdrawal of medical business. In the fourth quarter, a decision was made to discontinue the development of regenerative medicine products using Muse cells, and about JPY 5 billion was newly added here. As a result, income before income taxes was JPY 168.0 billion, and net income attributable to owners of the parent was JPY 96.1 billion, down 46% from the previous year. Revenues and core operating income are shown for each business segment. Revenue increased in all segments due to price pass-through and foreign exchange effects. In the sub-segments, revenue increased in all segments except MMA. Core operating income decreased 35% year-on-year in performance products. While polymers and compounds posted an increase of JPY 6.6 billion, films and molding materials was strongly affected by the sharp decline in the display market, especially in optical films, in addition to the difference in profit from the alumina fiber business, which had been already divested. Advanced solutions, which had outperformed the previous years through the first nine months of the fiscal year, was affected by the decline in demand for semiconductors in addition to displays in the fourth quarter, resulting in a decline for the full year. Chemicals posted a significant year-on-year decrease due to sluggish demand and worsening spreads in all sub-segments of MMA, petrochemicals and carbon. Of the JPY 93.0 billion decrease from the previous year, JPY 25.8 billion was due to reduced inventory valuation gains in petrochemicals and carbon. On the other hand, industrial gases and healthcare contributed to the company-wide core operating income with an increase of JPY 22.1 billion and JPY 22.9 billion respectively, even excluding the impact of arbitration in Gilenya. Here is the breakdown of core operating income. Royalty recognition from Gilenya contributed very much, JPY 53.3 billion. With profit and pricing activity, we were able to reduce the impact. The price difference was a positive JPY 33.6 billion, as shown on the right. Chemicals was down JPY 22.7 billion, and healthcare was down JPY 7.5 billion due to NHI price reductions and so forth. Performance products and industrial gases were able to generate a positive price difference. Volumes were all largely negative in performance products and chemicals. Healthcare was positive even excluding the impact from Gilenya revenue recognition. Cost reduction totaled JPY 49.4 billion, with approximately JPY 19 billion in Q4. We stepped up our efforts in response to rapid inflation and accumulated more than JPY 17 billion against the JPY 32 billion in annual reduction projected for the current fiscal year. We are proud of the results of our accelerated company-wide efforts amid the severe markets environment. Other factors include inventory valuation losses of JPY 27.1 billion, equity earnings of affiliates and sales of the alumina fiber business, more than JPY 15 billion, and increases in labor costs and various expenses due to inflation and foreign exchange impact of overseas R&D and various activity costs. As for the core operating income of performance products, price pass-through activities were maintained despite cooling demand, contributing JPY 41.3 billion in price difference. Volume was -JPY 27.1 billion due to soft demand in the automotive and display markets compared to last year, as well as a sharp drop in demand in semiconductor market from the 4th quarter. By sub-segment, polymers and compounds reported higher earnings, while films and molding materials and advanced solutions reported lower earnings. In polymers and compounds, price difference improved as a result of price pass-through throughout the period. In the 2nd half of the year, in addition to a slow recovery in automotive market, there was a correction phase in display and semiconductor markets and a decline in demand from the spread of pandemic after lifting of zero COVID in China and softness in the building material market in U.S. and Europe, due in part to the impact of JPY 1.3 billion reduction in inventory valuation. Income increased only JPY 6.6 billion versus last year. Films and moldings was hardest hit by the drop in demand for displays. Although engineering plastics, mainly in Europe and the U.S., and carbon fibers offset the decline in profits from polymers. Engineering plastics and carbon fiber made up for that, but the fourth quarter was not as strong as first half of the year. In addition, amid the general trend of higher food prices in Japan, demand for films, for packaging material was also sluggish as consumers are reluctant to buy. Meanwhile, the company has been working to optimize its portfolio mix in this environment, including the decisions to withdraw from the acrylic fiber business following the melded fiber business. Advanced Solutions had been supported by the strong semiconductor-related business, separation materials and building material business, which had supported the sluggish display market until the third quarter, but was affected by a downturn in semiconductor demand in the fourth quarter. In Chemicals, the overall decline in profit was due to a combination of factors in both volume and price, resulting in a significant decrease of JPY 93.0 billion from the previous year. JPY 35.5 billion in MMA, JPY 42.0 billion in petrochemicals, and JPY 15.5 billion in carbon were recorded as a result of the decline in demand. Market price for MMA continued to deteriorate throughout the end of the period with ICIS Asia prices at a historic low of $1,520 in March. Market has recently recovered somewhat. We expect a moderate recovery in the future. Petrochemicals were affected by a significant deterioration in spread, especially for bisphenol A, amid generally weak demand. The impact of inventory valuation was JPY 15.9 billion. Carbon sales decreased by JPY 15.5 billion versus last year, of which JPY 9.9 billion was due to a deterioration in valuation of inventory. Although the coke market was soft, we were able to mitigate the negative impacts through structural reforms implemented from 2020 to 2022. In Gas business, core operating income increased to JPY 22.1 billion versus last year. Core operating income increased in all regions of the Gas business as a result of price management and productivity improvements to cope with rising fuel costs and inflationary trends. The US and Europe made particularly strong contributions. In the fourth quarter, Japan also saw the effect of price pass-through, while lower electricity prices also contributed to higher profit. In the Healthcare business, RADICAVA oral formulation in North America showed a very strong sales growth contributed to increase in profit. Structural reforms underway, including the withdrawal of Medicago business and consolidation and elimination of offices. With regards to the arbitration of Gilenya, which had been for some time, and lump sum royalty income for the past fiscal year was recognized after the arbitration award was issued. We will recognize royalty income every fiscal year from now on, but sales have been already declined significantly from the peak period due to the presence of competing products. Special items posted a net outflow of JPY 142.9 billion, including JPY 68.7 billion in losses related to the closure of the MMA Cassel plant and JPY 57.4 billion for the liquidation of Medicago. In addition, posted as special item expenses include about JPY 5 billion related to the discontinuation of development of regenerative medicine and other expenses related to structural reforms such as the elimination and consolidation of business sites. Cash flow from operating activities was an inflow of JPY 355.2 billion, and cash flow from investing activities was an outflow of JPY 247.6 billion, resulting in an inflow of JPY 107.6 billion in free cash flow. In response to the free cash outflow in the first quarter, which was partly due to the sharp rise in raw materials prices, the entire company worked to reduce working capital and generate cash. In the fourth quarter, we made production adjustments in many businesses and reduced inventories by more than JPY 60 billion from the end of the third quarter, raising free cash flow by more than JPY 100 billion. We'll continue to be highly disciplined in our working capital management. The financial cash flow spent JPY 60.8 billion. This is the balance sheet. Total assets were JPY 5,773.9 billion, up JPY 200 billion from the previous fiscal year, of which foreign exchange impact was JPY 179 billion. Inventories increased JPY 52.7 billion but were reduced by more than JPY 70 billion from the end of the 2Q. Total liabilities amounted to JPY 3,785.8 billion, up JPY 56.2 billion from the year before, and total equity amounted to JPY 1,988.1 billion. As a result, the net D/E ratio was 1.33, an improvement of 0.07 points from 1.40 at the end of the previous fiscal year. Next, I will explain about full year forecast for the fiscal year ending March 2024. The forecast assumes an exchange rate of 130 JPY to the US dollar and Naphtha unit price of JPY 67,000. Full year sales revenue is projected to be JPY 4,555 billion, down 2% from the year March 2023 and up 1% excluding the impact of Gilenya. The core operating income will be JPY 250 billion, down 23% year-on-year, but up 25% excluding the impact of Gilenya. Demand is expected to recover in the second half of the year in all businesses, we forecast an increase in profit from JPY 108 billion in the first half to JPY 142 billion in the second half. Operating income is expected to be JPY 239 billion, up 31% from the year before. Income before taxes is expected to be JPY 201.0 billion, up 20% year-on-year. Net income attributable to owners of the parent is expected to be JPY 97 billion, almost the same as the previous fiscal year. This is the forecast for each business segment. From this fiscal year, we have aligned our segment structure with that of our Forging the Future three-year business plan. Specifically, we will change our business segments to specialty materials, industrial gases, healthcare, MMA, basic materials, and others. In addition, some businesses were changed in segments they belong to, and the results for March 2023 have been reclassified for comparative purposes. In specialty materials, we forecast an increase of JPY 31.5 billion, taking into account an increase in the volume of each product reflecting a gradual recovery in the automotive display, semiconductor, and other markets, as well as an improvement in price gaps. Industrial gas is expected to increase by JPY 4 billion by continuing to improve customer satisfaction and productivity. In healthcare, we forecast an increase of JPY 1.7 billion, excluding the impact of one-time recognition of Gilenya. In addition, we expect negative effects including absence of gain on sale of intangible assets posted in the previous fiscal year, NHI price revisions, and changes in contracts with some in-licensed products to be offset by cost reductions from withdrawal from the COVID-19 vaccine business, as well as the launch of Mounjaro and oral ALS treatment drug in Japan. MMA is expected to increase by JPY 13.7 billion, including the cost reduction effect from the closure of the U.K. plant. Although ICIS prices are on the recovery trend after bottom, bottoming out at the end of the previous fiscal year, recovery during the first half is expected to be limited. On the other hand, we re-reduced inventories by JPY 10 billion at the end of the previous fiscal year so that the recovery and demand will quickly lead to profits. Although we expect a shrink of JPY 16 billion in inventory valuation gains in basic materials, we forecast an overall increase of JPY 10.2 billion. The following is breakdown of the core operating income. Of the JPY 325.6 billion in core operating income for March 2023, there was JPY 125.9 billion in one-time recognition of Gilenya. Core operating income, excluding this amount, was JPY 199.7 billion. This is the breakdown that leads to the JPY 250 billion forecasted for the current fiscal year. We assume a JPY 16 billion increase in price differences. We'll strive to maintain prices in the face of increasing downward pressure on prices in general due to falling Naphtha unit price and fuel costs. We assume a JPY 37 billion increase in the volume difference due to recovery and demand in each market. In terms of cost reduction, we'll continue to make steady progress toward the JPY 135 billion cost transformation target by fiscal 2025 and as indicated in Forging the Future. In an uncertain business environment, the JPY 82.7 billion decrease in other costs includes inventory write-downs of JPY 17 billion, as well as an increase in labor costs and other activity costs due to inflation. We'll strive to improve profitability through cost reduction effects of JPY 80 billion by promoting business structural reform, productivity improvements, supply chain optimization, and purchasing cost reductions. Lastly, but not least, I would like to talk about dividends. As announced on May 13th, 2022, the year-end dividend forecast for March 2023 is JPY 15 per share, which will be resolved at the board of directors meeting on May 19. For the fiscal year ending March 2024, we'll raise the 2nd quarter end and year-end dividend per share by JPY 1- 16 in line with the policy outlined in Forging the Future. As a result, the annual dividend forecast for the fiscal year ending March 2024 is JPY 32 per share. This concludes my presentation. Thank you for your attention. Now we would like to receive your questions. From Morgan Stanley, MUFG, Watabe-san. Go ahead, unmute yourself and ask your question. Watabe from Morgan Stanley. Thank you very much for the presentation. Thank you very much for the increased dividend. I have two questions. First, specialty materials. For FY22, you reduced the inventory at the end of the year. Fourth quarter, you have a loss and by the reduction of the inventory, the operations deteriorated. Is that a part of reason for the loss? For FY23, you do see significant recovery. Is that the background for Q4 to first half and second half? Can you elaborate on that? Thank you very much for your question. You are right. In Q4, we have made a correction in production and that decreased our income that is resulted in the fourth quarter. For example, utilization is lower, utility cost impact, and also absorption of fixed costs. Because of those factors, in the 1st quarter we have a minus, and the inventory level is now optimal. Q1 and onwards, that impact would disappear. We can capture the recovery. That is our expectation. Still, for the short term, in Q1, we will not see the impact of recovery. We don't incorporate that. For the short term, price and costs would be the main factors. When we start seeing recovery, we make sure that we capture the benefit of the recovery, and that is the basis for our assumption. Thank you very much. 2nd question, MMA. U.K. improvement, that seems like everything, but for the short term, you need a big recovery, otherwise average price spread is much lower than before. Second half, you would expect good recovery. For the short term, you do see some recovery compared to other products or segment. It looks like there is some recovery. What's the background here? MMA first and the second half, what is your market's outlook? Thank you very much. As you mentioned, for the year ended in the Q4 compared to Q3, volume-wise, we do see some recovery. As for the price, end of March compared to that for the short term now, there is some recovery. Going forward, demand in China has bottomed out and gradually there seems like recovery. Generally speaking, clear panel for home appliances in those segments and others is not in full recovery mode yet. In the first half, we don't see a full recovery. Having said that, we bottomed out and we are in the trajectory of recovery, and that is incorporated, and U.K. cost reduction is also incorporated. We don't have exceeding expectation. For the second half, what is your market outlook? In terms of the prices? Yes. In the first half, 1,500 JPY-1,600. For the second half, JPY 1,700 and hopefully JPY 1,800. That's the range. Thank you very much. I have high expectation. Thank you. Thank you very much. Next. SMBC Nikko Securities, Mr. Miyamoto, unmute yourself and ask questions. I am Miyamoto from SMBC Nikko Securities. I also have two questions. The first question is about healthcare. In the new fiscal year, JPY 20 billion core operating income seems to be a bit conservative. On page 44, Stelara, there is a significant decline expected and RADICAVA in the previous fiscal year. It had been increasing rapidly, but in the new fiscal year there is only slight increase expected. In healthcare, it doesn't seem to be much of a growth excluding Gilenya. You seem to be a bit more conservative. Can you explain about the background for this conservatism? Well, in terms of profits, we will continue to be subject to NHI price revisions. That's one factor. In terms of sales revenue, as you said, for example, RADICAVA in the U.S. was performed well last year. This year, we will continue our activities to make sure that will continue. In the last fiscal year, there have been patients that have been waiting for the launch, so there was a strong ramp up after the launch. That was taken into account. We have come up with this forecast. We have to closely watch the competitive landscape, so we haven't captured too much of expectation in the forecast. For Jardiance, there are generics available, so it's... we're not expecting as much sales as we had enjoyed previously, and that's the reality. Can you also comment on Stelara? I would like to hand this over to Mr. Kobayashi. Kobayashi from pharma. I will talk about the Stelara. As you know, it's for Crohn's disease and ulcerative colon disease, IBD. From 2022- 2023, there are five competitive products that have been launched or are expected to be launched. Oral drug, there are two, and also antibody drugs, two of them. Those are different mechanism action, but there will be subcutaneous drug that is expected. About five competitive products are coming out or are expected to come out in two years. We may seem a bit conservative, but that has been taken into account. I see. My second question is about petrochemicals. In the fourth quarter that ended, there was, you are behind the forecast. Phenol market prices are very strong, but JPY 6.8 billion deficit. In this first half, but you are getting into the profitability in the second half. Can you explain more about the profitability curve that you're expecting and the background for that? As for the fourth quarter, as I've been saying, inventory reduction has been done and production has been reduced significantly. That's why we have seen worse results than forecast. In the forecast going forward, there will be recovery in the demand, but the polyolefin margin or spread will improve and that has been taken into account. Still, compared to fiscal 2021, was still weak, but that has been taken into account partially. In the fourth quarter, production adjustment and inventory reduction was significantly done. There was a there's production that has been started in the full scale in the first quarter. Is there any quantitative one for utilization for fourth quarter? The other companies, 80% utilization ratio was seen and we don't think you have gone down too much. Phenol chain or polyolefin, anything that you can comment on capacity utilization ratio? Well, for each of the products, we cannot comment because there is a variation from product to product. The utilization ratio is mostly according, in accordance with the production volume. In terms of capacity utilization, about 20% reduction is more or less the average. In the new fiscal year, it is going to be 10% decline. Is that correct? Well, in some cases that is the truth, and in some cases, some other cases, the full capacity. There was a significant production adjustment in the fourth quarter. That is correct. Thank you. Thank you. Next, Mizuho Securities, Yamada-san, please ask your question. Yamada from Mizuho Securities. I have two questions. First is about healthcare budget. Page 44. Jardiance royalty is not mentioned, but you do have numbers. It's just not mentioned here. For FY 2022, Jardiance's royalty is at about JPY 20 billion, I suppose. The patent is not expired yet, so for a few years you will have some royalty revenue. What's the situation here? The GLP-2 inhibitors, GIP, GLP-1 receptor agonist is coming out and that is good news. Cannibalism may be happening. canagliflozin is expected to grow. What's the situation? What is your idea here? Thank you. Thank you. First, about the royalty revenue. Well, this is as we do, we do not disclose forecast, we disclose actuals. On page 44, numbers are not mentioned, but as you mentioned, there will be some numbers included here. Another question that you asked would be answered by Kobayashi. Kobayashi speaking. canagliflozin, NGLP and others, and cannibalization. Canagliflozin, as you know, is for diabetic nephropathy. It's indication expansion, and that will give us growth. Combination therapy is possible, so we don't think cannibalization would happen. Globally, the same idea, you said regarding royalties, not your company, but the GIP/GLP-1 receptor agonist will increase and that would not be a negative factor for you. There are various MOA in diabetic trend, diabetic drugs. Recent trend, the GLP-2 inhibitor, GLP-1, those are globally in growing. I see. Insulin activity and excretion, so mechanism is different. That is right. I forgot to ask one question, news related, you have JPY 5 billion in impairment loss. Kanagawa CPC and other impairment are all included in this number. R&D in the past, they are all zero now. If not, there would be additional impairment loss going forward. More or less, everything is settled. R&D and CPC book value all are included in this impairment loss. There would be no additional losses regarding this. That is right. Thank you very much. The second question, specialty materials or chemicals. Specialty materials. Well, in Q4 of FY 2022 inventory adjustment, yes, quarter-on-quarter shows lower by JPY 60 billion company-wide. You reduced inventory to a much lower level. In Q4, then you will have, of course, recovery from Q4. Even compared to Q3, you expect the recovery in the second half. Were there any special factors or basically markets or recovery is incorporated? That's the difference between the first and the second half. Compared to Q2, Q3, well, excluding Q2, in the se cond half, there would be recovery on specific products that you expect good recovery. As for FY 2022 Q3, display was really hit hard and was very low. Compared to that, the display market in the second half is in a recovery trend. That is incorporated. Additionally, pricing and including product mix, those will be factors. Also cost reduction, well, we withdraw from non-profitable businesses. In the first half, those will support. In the second half, display and semiconductor recovery is incorporated. Having said that, the volume compared to the prior year is not fully recovered yet. I see. In the second half, from Q2, Q3, each subsegment looks strong. Compared to Q2, Q3 in FY 2022, display was weak. If the recovery realizes, so that could happen, but you can't expect very much in the first half. The second half is expecting more. Regarding the first half, we are rather cautious because there could be divided opinions as to the recovery. Thank you. Thank you very much. Next, Mr. Okazaki from Nomura Securities, please unmute yourself. Okazaki from Nomura Securities. Thank you for the presentation. I have two questions. The first one is also about performance materials, specialty materials. In the appendix to page 26, from Q3 to Q4 in 2022, I would like to ask about this carbon fiber and semiconductor-related business and engine and plastics are challenging. Well, it's just what you said, but engineering plastics are becoming challenging. What is the background behind that? Earlier, you talked about Q4, where the capacity utilization went down. What is the quantitative impact of that? From Q4 to Q1, the capacity utilization is expected to improve. What you're talking about is capacity utilization ratio. The financial settlement. Fixed rate, fixed cost has to be absorbed with the decline in capacity utilization, and utility cost has to be also absorbed, and the depreciation is also included. Also engineering plastics, up to third quarter, especially in U.S., things went quite well, and it was very strong. In the fourth quarter for semiconductor related applications, there was some decline, deterioration. For medical use and other applications, yes, performance continues to be good. The recovery in the semiconductor is not until the second half, but for other applications, things will continue to perform well. As for the operational adjustment, as for carbon fiber, in the third quarter, 85% or 86%, and in fourth quarter, it was reduced to 60% to optimize the inventory level. In accordance with the demand, production resumption is now being addressed. I see. If you look at just the operational adjustment of Q1, will be better than Q4, yes. It is seasonal, but the films and advanced solutions, the demand trend in Q4 and Q1. Q4, there was deterioration. Is there any risk of further deterioration in some products, or is there any products that can expect recovery? There may not be too much major change, but what about the final demand? Compared to fourth quarter, are you asking about the first quarter in comparison to fourth quarter? Yes. As for display, there is some improvements. That's what I heard. But, is it the real demand or the... Ahead of the e-commerce in China in June, this is just a tentative recovery. We are unsure which one is true yet. As for semiconductors, in the 1st quarter, the current quarter, the level is about the same as the 4th quarter, so we cannot expect recovery until the 2nd half. In the 3rd quarter and 4th quarter, food packaging materials, because of the decline in purchase by Japanese consumers, will see some improvements, and that is what we are seeing. Well, TSE, PBR improvement discussion is ongoing. You have achieved midterm, and you have been working to improve the assessment by the stock market. Do you have any additional comments on this? Well, conversely, The purpose of Forging the future is to improve corporate value. That's what we, where we started. There's no particular things that we are addressing as new, but we have to do the execution to produce results, and we have to be even better in terms of transparency in dialogues with the investors. We have some improvements made to the disclosure documents this time. Through these activities, we would like to work harder. Thank you. Thank you. Next, UBS Securities, Omura-san. Go ahead with your question. Omura from UBS Securities. Thank you. I have two questions. First is regarding Nippon Sanso. What is your idea now? In the beginning, three projects winning you mentioned, and the segment adjustment, and also industrial gas is the second from the top. Regarding the industrial gas business, demand is growing higher. That's my impression. In December 2021, you explained your vision, there is not much synergy with Mitsubishi Chemical. You keep holding because the stock price is too low. What is your current idea regarding the Nippon Sanso? In February Three-year plan of Forging the Future was announced, and you can use it as a reference. In the three years, profit growth is driven by some factors. That includes specialty materials and gas business. Regarding those two businesses, they are the drivers of profit growth. That's how we position them. The CapEx for this year's budget, you would understand regarding those two business, Nippon Sanso Holdings and Specialty Materials. In those segments, we provide investment for growth. Most of our investment for growth is in those two, and so they are very important businesses for us. Thank you very much. Second question. For this year's plan, our financial level, financial income, you see a big minus compared to last year. There would be financial expenses about double last year. Unless it's, bond, sorry, debt and interest rates higher, is that those are main factors? Well, this is true for Nippon Sanso and European interest rate hike. That is more or less the reason for this. Thank you very much. Thank you very much. Now we're close to the ending time, so we'd like to take the last question. Mitsubishi UFJ Morgan Stanley Securities, Mr. Watanabe, unmute yourself and go ahead with your first question. Watanabe from Mitsubishi UFJ Morgan Stanley Securities. There are two questions. The last page 47, specialty materials, the sales revenue and EBITDA by market. The industrial, medical, and consumer goods and construction at the row, bottom row, the sales are going to increase. Well, sales are going to decline, but profit is going to increase. Can you explain more about this? We cannot specifically say which one is which because there is no numbers that I can show you at hand. In the market category, the top four are the most important. The core market for us and the bottom one is more of a extension, a broader market. In terms of priority, it's not about sales growth, but profitability improvement is the focus. Top four is for the growth, and we are making investments in growth. At the bottom row, we are going to selectively grow, but more focus is on profitability. Including those business that we are withdrawing from, and on a net basis, positive and the negative factors, we're seeing this. The unprofitable ones will be eliminated to reduce cost. That's what this is doing. Yes. Page 41, the foreign exchange impact on pharmaceutical business. In the actual business, yen's depreciation was positive for sales but negative for profits. Medicago reorganization, is there any change in the sensitivity in terms of foreign exchange? If there is any, please explain about that. With regard to Medicago, in the previous fiscal year, there was no sales posted, so it doesn't make sense to make any comparison there. For example, in the U.S., in North America rather, the sales recover is going to increase. There is going to be an impact. Why the profit was negatively impacted by yen's depreciation? Because minus JPY 9.8 billion in terms of operating income. Yen's depreciation. If you look at the yen's depreciation, there's R&D expenses incurred overseas. There is a great impact from there. For example, NeuroDerm in Israel, is one major factor which is subject to negative impact from foreign exchange. Without Medicago, your sensitivity will decline. Is that correct? Yes. If there is no Medicago, in terms of cost, R&D cost, yes, that is correct. The next time, if you can give us your monetary figures, that would be appreciated. Yes. Thank you very much. Now we have used up our times and we'd like to conclude this meeting. I'd like to ask Nakahira to give us closing remarks. Thank you very much for your attendance. FY 22 with several factors, the business environment was rather challenging. We were able to control the price, cost, and CapEx. We made effort company-wide in full portfolio management and restructuring shown in Forging the Future was executed. Free cash flow was improved and the financial status improved. Thanks to that, for FY 23, we expect the business environment will continue to be challenging. With this ability, we will try to manage cost price and also operations, and we need to capture demand when recovery is realizing. We will be focusing on the areas that we priority. In Forging the Future, we have the financial goals. To achieve that, we will continue to execute our actions. Thank you very much for your attendance, and thank you very much for your continued support. Thank you very much. Today's conference will be distributed as archived. I hope you visit our website. With this, I close the meeting. Thank you very much for your participation.