Thank you for joining Nabtesco's Second Quarter of Fiscal Year 2025 Results B riefing. Please refrain from recording during the session. Presentation material is available on our website, www.nabtesco.com. Please note that this conference is being recorded. First, let me introduce today's speaker, Mr. Hiroshi Usui, Director, Executive Officer, Corporate Planning, Accounting and Finance, Information System, and Corporate Communication Department. Mr. Yasushi Minegishi, General Manager of Corporate Communication Department. Mr. Usui will give a presentation followed by a Q&A session. Before presentation, I'd like to touch on the precondition. Nabtesco announced notice concerning the company split of the hydraulic equipment business on July 31. This presentation mainly explains without the impact of the company split. There are differential numbers from the impact of the company split from page 16 through 23. We will disclose the hydraulic equipment as a discontinued business from the third quarter of this fiscal year onward. Usui, please make a presentation. Thank you very much for joining today. [Foreign language] Let me start from explaining the summary. [Foreign language] As for the first half results, we achieved increase in both the sales and profits for the first half of the year earlier. More specifically, the consolidated sales increased by 8.6%, and the consolidated operating profit increased by 65%. You can see that there was a tremendous improvement in our profit. [Foreign language] Next, regarding the full-year plan. [Foreign language] As I said, the first half results were very good, so we decided to revise up the full-year plan. [Foreign language] More specifically, the sales is going to be increased by 2.4% against the previous plan, and we're expecting this to be JPY 344 billion. Likewise, as for operating profit, with a 19.3% increase from the initial plan, we are now expecting this to be JPY 22.3 billion. [Foreign language] As for some of the highlights, Project 10 progress will be explained. We are going to talk about the U.S. tariff impact, the share buyback, and the company split of the hydraulic equipment business. [Foreign language] First, allow me to explain the details of the first half results. [Foreign language] This slide summarizes the details of first half results. [Foreign language] Both from the comparison against the previous year and comparison against the plan, we achieved sales increase and operating profit increase. [Foreign language] A couple of the factors here are the sales growth in the MRO business and also Project 10, which we have been working on since last year to improve the profitability, has been working out well, and that contributed to the profit increase. [Foreign language] As you can see, these columns, the gray one is showing the first half of last fiscal year, the blue part is the first half plan for this fiscal year, and the dark blue is indicating the actual results for the first half. You can see that the operating profit margin has improved very much. [Foreign language] Now, this slide shows the reasons behind those gaps. [Foreign language] In the sales, we achieved the increase earlier because we saw the good growth in the CMP, TRS, and ACB businesses. [Foreign language] Especially, we saw good demand for the precision reduction gears, PRG, railroad equipment, and marine equipment. [Foreign language] Next, regarding the operating profit. [Foreign language] As for the operating profit side, of course, we saw the good impact coming from the increased sales. On top of it, the Project 10 profitability improvement activities have been working out well, and we made the progress, which was exceeding our plan. The operating profit turned out to be higher than our expectation. [Foreign language] In the TRS, transport segment, the railroad equipment and marine vessel equipment MRO business grew very much. That pushed up the operating profit. [Foreign language] Now, I'd like to talk about the revision of the full-year plan for FY 2025. [Foreign language] Now, this slide shows the changes in the market trend. [Foreign language] I'm not going to go into the details here, but just to summarize what's happening, the market environment has not been seeing much change. However, due to the U.S. tariff policy, the uncertainty remains with us. [Foreign language] Based on such business environment and the actual performance of the first half of the year, we have revised the full-year plan as shown here. [Foreign language] Compared against the initial plan, we have revised up all those numbers. As for the sales, which we projected to be JPY 336 billion, it's now projected to be JPY 344 billion. As for operating profit, it was previously JPY 18.7 billion, but now it's raised to JPY 22.3 billion. Accordingly, the operating profit margin has been improved from 5.6% to now 6.5%. [Foreign language] As a result, the basic earnings per share, which was considered to be JPY 109.07 this year, is now raised to JPY 122.43. [Foreign language] As for the dividend per share, as we had been planning, we're planning to pay out JPY 80 per share. [Foreign language] Now, let me tell you the reasons behind the gap from the initial plan. [Foreign language] In the sales, since we are anticipating some impact from the U.S. tariff in the packaging business, this business alone was revised downward. [Foreign language] Other than that, the rest of the businesses, CMP, transport, and ACB, are considered to do continually better, continually well, so we revised upward. [Foreign language] As for the operating profit, with the expected sales increase, we are also revising up the operating profit accordingly. [Foreign language] On top of it, in the headquarter cost, you see this JPY 500 million improvement, and that's because we have been making good progress with Project 10. [Foreign language] As for the difference of the operating profit forecast compared against the initial plan. [Foreign language] We are expecting profit improvement because of the sales improvement. At the same time, we have been working out well with Project 10, so there will be further cost reduction. On top of it, there is the U.S. tariff impact. In fact, after the first quarter, we thought the full-year impact of the U.S. tariff would be around JPY 600 million. Now, with further efforts on our end, and also as the negotiation between the U.S. and Japan resulted in a little lower tariff than was initially expected, we are now expecting the maximum of JPY 300 million impact for the full year. [Foreign language] Based on such great performances that we have been enjoying, we decided to do the share buyback. [Foreign language] As shown at the top, let me recap the shareholder return policy that we have indicated in our midterm plan. We'd like to stick to the DOE, dividend on equity of 3.5% with a stable dividend and share buyback in accordance with the financial condition. [Foreign language] This time around, we saw this increase in operating cash flow and also the reduction in the investment cash flow. That led to the excess cash at hand of JPY 10 billion. We decided to use this in order to do the acquisition of our own shares up to JPY 10 billion. [Foreign language] Next is regarding the progress of Project 10. [Foreign language] Since 2024, we've been working on these cost reduction activities. [Foreign language] Ultimately, by FY 2026, we'd like to achieve the operating profit margin of 10% and refer as a target. We have also set the targets for FY 2024 and 2025. [Foreign language] In FY 2024, the actual profit margin was 4.6%. This year, FY 2025, we are now forecasting this to be 6.4%. We are making progress that is much greater than our plan. [Foreign language] Especially in these Project 10 activities, the one that would have the greatest impact would be the component solution segment profitability. [Foreign language] We have been making good progress according to the plan. Initially, for this fiscal year, this CMP segment margin was expected to be 4.8%, but now we have revised it up to 6.1%. [Foreign language] In fact, I'm going to explain that company split later for the hydraulic equipment business. If that hydraulic equipment business would be excluded from this number, the OP margin would actually be 6.8%. [Foreign language] By the next fiscal year, we're targeting 11% OP margin to be achieved by this segment. The probability of achieving that is higher. [Foreign language] Next, regarding the precision reduction gears order trend as well as the production capacity. [Foreign language] As for the second quarter order, on the Q1Q comparison, it was 9%+. On year-on-year comparison, it was 15%+. Basically, it's in line with our expectation. [Foreign language] Of course, it's always difficult to foresee the future, but we think it's going to be basically in line with this dotted line that we are showing here. [Foreign language] Now, on the right, we are showing the utilization ratio of each plant. [Foreign language] Since the order incoming trend has been improving, we are seeing the pickup in the utilization rate at each plant too. As for the major plant in Japan, the utilization, which was 60%, is now 65% in the second quarter. Likewise, in China, that of 95% was 110% in the second quarter. [Foreign language] Now, switching the topics, I'd like to talk about the future growth opportunities for the transport business and the MRO business. [Foreign language] In both the first and second quarters, the transport solutions business saw good sales and good profits. [Foreign language] The future outlook is also good. We're expecting both the sales and MRO business sales to be growing like this toward 2027. [Foreign language] With a good increase of the MRO business, we are also expecting the OP margin to be improved like this. [Foreign language] Now, within this transport solutions segment, there is the marine vessel equipment business. Here in this chart, we're showing the historical trend for this marine business. [Foreign language] For the total TRS segment, we're expecting the CAGR, the sales CAGR, to be 10% between 2022 and 2027. For the marine vessel equipment business, it is expected to be 15%, which is much higher. [Foreign language] In fact, when you look at the global trend, from 2027- 2036, it is expected that the global new ship building volume would be increasing by 2.5x from the current level. We can all expect to enjoy this dramatic increase of the marine vessel business as well. [Foreign language] Finally, I'd like to touch on the company split of the hydraulic equipment business. [Foreign language] Now, this slide shows the background behind this decision. [Foreign language] Now, this hydraulic equipment business was positioned as a business to rebuild for us. [Foreign language] Over the past years, we have been discussing, trying to figure out how we can improve this hydraulic business to the position that we desire to be in. [Foreign language] The conclusion was that as long as this business is within the Nabtesco Group, we cannot realize the maximum potential of this business. In order to go into the new market or develop new products and expand the business, we need to find a strategic partner. [Foreign language] As a result, we decided that having the best owner for this hydraulic equipment business shall be the best solution. [Foreign language] Now, this slide shows the details of the hydraulic equipment business, and I'm going to skip this slide. [Foreign language] This slide shows the transaction scheme. [Foreign language] We're establishing this new company, Comtesco Corporation, and to this Comtesco, we're transferring all the hydraulic equipment business. [Foreign language] We are going to transfer 70% of the stock holdings of Comtesco over to an Italian company named Comer Industries. [Foreign language] Now, this slide shows the impact on our business from this transaction. [Foreign language] The central column, this mid-blue one, this is the new revised plan that I just explained earlier. [Foreign language] This navy column is indicating the impact on the actual sales and operating profit after excluding this hydraulic business. [Foreign language] Since the hydraulic business would become a non-continuing business, the numbers will be excluded from the sales and operating profit. [Foreign language] With that, the OP margin would be improved from 6.5% to 6.9%. [Foreign language] As for net profit, it's going to improve from JPY 14.6 billion to JPY 14.9 billion, but it's going to be only a slight improvement. Basically, there's not going to be much impact for the whole company. [Foreign language] Next is regarding the cash allocation. [Foreign language] Of course, with the transaction and the transfer of stocks, we would be getting certain gain. [Foreign language] On the other hand, we would have to exclude the cash that we would have been generating from this hydraulic business in the three years' time. When you do this math, the plus and minus turn out to be about the same, so there is a ±0. [Foreign language] As a result, our midterm plan cash-in of JPY 160 billion would not have any changes. [Foreign language] Those investments for growth that we were planning to do throughout this midterm plan are going to be carried out according to that plan. [Foreign language] This is my final page. [Foreign language] First, regarding the expected outcome from this Project. [Foreign language] First, the hydraulic equipment business would have a potential for further growth under the new ownership. [Foreign language] As for us, Nabtesco, we can promote optimization of portfolio balance and build a resilient corporate foundation. [Foreign language] At the same time, we can concentrate our resources on the promotion of smart motion control, which is a very core project within our midterm plan. [Foreign language] As for the quantitative effects, as you see, we can expect to improve the consolidated operating profit margin, and also we can reduce the asset as shown here. [Foreign language] Finally, regarding the business portfolio management going forward. [Foreign language] Now that we would continue to focus on the major businesses, excluding hydraulic equipment, we can engage in appropriate activities to realize more optimal corporate value for the company throughout this midterm management period. We'd like to strive to do that. [Foreign language] On the other hand, we still have some other smaller businesses that are not the major businesses and that are not satisfying the internal criteria. We'd like to continue to work on these and consider what we can do to make them grow. [Foreign language] That concludes my presentation. Thank you very much. Now, let's move on to the Q&A session. If you have any questions, please raise your hand by volume and let me know. I will acquaint the questioner. If you are called, please unmute yourself and ask your question. Does anyone have any questions? If you have any questions, please raise your hand and let me know. Since we don't have any questions, we will now wrap up this meeting. Thank you very much for joining us.