This is Takeshi Horikoshi, CFO. I will explain the overview of the Fiscal 2024 Q2 Business Results. Page four shows the highlights for fiscal 2024 Q2 on a three-month basis. The exchange rates were JPY 152.4 to the dollar, JPY 165.6 to the euro, and JPY 101.5 to the Australian dollar. Compared to the same period last year, the yen weakened against the dollar, euro, and Australian dollar. Net sales increased by 9.2% year-on-year to JPY 1.082 trillion, while operating income decreased by 2.3% to JPY 146.4 billion. The operating income ratio decreased by 1.7 points to 14.5%. Net sales increased due to the positive impact of a weaker yen and improved sales prices, but operating income decreased due to the negative impact of increased costs and changes in product and regional mix. Despite the positive impact of a weaker yen and improved sales prices, net income decreased by 8.1% to JPY 92 billion. Q2 net sales were the highest ever on a second quarter basis. On page five, I will explain net sales and profits for each segment in Q2. Net sales in construction, mining, and utility equipment increased by 8.7% from the corresponding period a year ago to JPY 935.9 billion, while segment profit decreased by 4.7% to JPY 135.7 billion, and the segment profit ratio decreased by 2 points to 14.5%. Retail Finance net sales increased by 27.2% from the corresponding period a year ago to JPY 31.3 billion, and segment profit increased by 8% to JPY 7.2 billion. Sales in the Industrial Machinery and Others segment increased by 14.9% from the corresponding period a year ago to JPY 51.2 billion, and segment profit increased by 12.7% to JPY 2.8 billion. I will explain the factors behind the changes in each segment later. Page six shows the sales by region in the Construction, Mining, and Utility Equipment segment. Net sales in the Construction, Mining, and Utility Equipment segment increased by 8.4% from the corresponding period a year ago to JPY 933.2 billion. By region, sales increased in all regions except Europe and the Middle East, and sales in Oceania increased significantly due to increased sales of mining equipment. Out of the regions where sales increased, sales in North America, Latin America, and Africa decreased when excluding currency impact. Page seven shows highlights for the first half of FY 2024. FX rates were JPY 153.9 to dollar, JPY 166.5 to euro, and JPY 101.7 to Australian dollar. Yen depreciated against dollar, euro, and Australian dollar year-on-year. Net sales increased by 8% year-on-year to JPY 1,968.1 billion. Operating income increased by 2.2% year-on-year to JPY 303.4 billion, and operating income ratio was 15.4%, down by 0.9 points year-on-year. Net income attributable to Komatsu Limited decreased by 1.9% to JPY 201.7 billion. Net sales, segment profit, and operating income posted record highs for the first half. Interim dividends per share is JPY 83, as initially planned. Ongoing cumulative donation and free-of-charge supply of construction equipment for the restoration from the Noto Peninsula disaster is JPY 1 billion as of the end of September. Page eight shows the segment sales and the profit for the first half. Sales of construction, mining, and utility equipment increased by 7.2% year-on-year to JPY 1,830.2 billion. Segment profit decreased by 1% to JPY 278 billion. Segment profit ratio was 15.2%, down by 1.2 points. Sales of retail finance increased by 30.1% year-on-year to JPY 61.8 billion, and segment profit increased by 14.1% to JPY 14.8 billion. Sales of industrial machinery and others increased by 13.8% to JPY 96.8 billion, and segment profit increased by 77.3% to JPY 7.8 billion. I'll explain the causes of difference in each segment later. Page nine shows the sales results for the, you know, construction, mining, and utility equipment. In this section, actually, the revenue actually went up by 7.1% year-on-year, JPY 1,824.5 billion. By region, North America, Latin America, and Oceania, in these regions, actually, we had growth. But in Europe and in CIS and Asia, we had a drop. Among the growth areas, the North American and the Latin American, Africa, excluding the foreign exchange, actually, it came down. Page ten shows actually, you know, the sales and the segment profit in this the construction, mining, and utility equipment. The sales side, the negative impact and the decline in the volume was overcome by the cheaper yen and also the sales and the price improvement. Year-on-year basis, actually, it became JPY 122.6 billion. In terms of segment profit, the cheaper yen and also the selling price improvement, we had a positive impact, but again, due to the decline in the volume and the cost increase, as well as the change in the product mix, we suffered from the JPY 2.8 billion decline year-on-year basis. Segment profit actually declined by 1.2 points, becoming 15.2%. Page 11 shows the status of the retail finance in the first half of the year. Although the new contracts increased, assets decreased year-on-year due to the impact of the yen's appreciation at the end of this fiscal year compared to the end of the previous fiscal year. New contracts increased year-on-year due to the positive impact of the weaker yen and an increase in the financing utilization rate. Sales increased by JPY 14.3 billion year-on-year to JPY 61.8 billion, due to an increase in interest rates received, the positive impact of the weaker yen, and increase in financial receivables, and the segment profit increased by JPY 1.8 billion year-on-year to JPY 14.8 billion. Page twelve shows the sales and the segment profit of the Industrial Machinery & Others in the first half of the year. Sales increased by 13.8% year-on-year to JPY 96.8 billion. Segment profit increased 77.3% year-on-year to JPY 7.8 billion, and the segment profit ratio increased 2.9 points to 8.1%. In the automotive industry, sales increased mainly for large presses and machine tools, and in the semiconductor industry, sales of excimer laser maintenance recovered, resulting in increased revenue and profit. Now, please refer to page 13 for the consolidated balance sheet. Total assets were JPY 5,558.6 billion, down JPY 78 billion from the end of previous year, mainly due to the appreciation of the yen at the end of the fiscal year compared to the end of the previous fiscal year. Inventories increased JPY 18 billion from the end of the previous fiscal year, mainly due to the increased inventory for mining equipment. The shareholders' equity ratio was 52.8%, down one point from the end of the previous fiscal year. The repurchase of treasury stocks resolved at the Board of Directors meeting on April 26th, 2024, was completed by August 8th, 2024, with the acquisition of JPY 100 billion worth of treasury stock. Shareholders' equity as of the end of September includes the impact of the repurchase of the treasury stock. Net debt ratio was 0.29. That's all from me. Next, Mr. Hishinuma will talk about the fiscal 2024 business outlook. My name is Hishinuma, General Manager of the Business Coordination Department. From here, I will explain the projection for fiscal 2024 and conditions in major markets. Page fifteen shows an outline of the projection for fiscal 2024. From the left, you can see the fiscal 2023 results, the latest projection for fiscal 2024, and the forecast from April. The year-on-year comparison shows the difference between the latest forecast for fiscal 2024 and the results for fiscal 2023. The latest forecast for fiscal 2024 has been revised from the April forecast, as the actual currency rate for the first half of the year was weaker than expected, although sales volume and sales prices increases were lower than expected. The currency rate assumptions for the third quarter and beyond have not changed from the April forecast: JPY 140 t o the dollar, JPY 149 to the euro, and JPY 90 to the Australian dollar. The average exchange rates for the full year will be JPY 147 to the dollar, JPY 157.8 to the euro, and JPY 95.8 to the Australian dollar. The demand forecast has been revised partially, and I will explain this later. Taking these factors into account, we have revised our sales forecast upwards by JPY 127 billion from the April forecast to JPY 3.988 trillion. The operating income forecast was revised upwards by JPY 16 billion - JPY 573 billion, and the net income forecast was revised upwards by JPY 29 billion to JPY 376 billion. Net sales are expected to break last year's record and reach a new high. ROE is expected to be 12.6%. The annual dividend per share is expected to be JPY 167, unchanged from the forecast in April. The dividend payout ratio is expected to be 41.2%. On page 16, I will explain the outlook for sales and profits in each segment. Construction, mining, and utility equipment segment sales is expected to increase by 1.8% year-on-year to JPY 3 trillion, 679 billion. Segment profit is expected to decrease by 5.7% to JPY 541 billion, and the segment profit ratio is expected to decrease by 1.2 points to 14.7%. Retail finance sales are expected to increase by 13% year-on-year to JPY 117 billion, and segment profit is expected to increase by 9.3% to JPY 26.5 billion. Sales in the industrial machinery and other segment are expected to increase by 16.5% year-on-year to JPY 228 billion, and segment income is expected to increase by 133.8% to JPY 24 billion. I will explain the factors behind the changes in each segment later. Page 17 shows the forecast for sales by region in the construction, mining, and utility equipment segment. We expect sales to decrease in North America, Europe, and the Middle East, etc., but sales are expected to increase in regions such as Asia, due to demand recovery in Indonesia and Oceania, where sales of mining equipment are expected to increase. All in all, sales are expected to increase by 2.2% year-on-year to JPY 3,669.2 billion. Page 18 shows the factors contributing to the causes of differences in sales and segment income in the construction, mining, and utility equipment segment. Net sales are expected to increase by JPY 63.8 billion year-on-year, as the positive impact of a weaker yen and improved sales prices more than offsets the negative impact of lower sales volumes. Segment income is expected to decrease by JPY 33 billion year-on-year due to the negative impact of lower sales volume, cost increases, and changes of product and regional mix, despite the positive impact of a weaker yen and improved sales prices. The segment profit ratio is expected to decrease by 1.2 percentage points year-on-year to 14.7%. Page 19 shows the forecast for Retail Finance. Assets are expected to decrease by JPY 46 billion year-on-year, mainly due to the impact of the stronger yen at the end of the current fiscal year compared to the end of the previous fiscal year. The amount of new contracts are expected to decrease by JPY 2.7 billion year-on-year. Net sales and segment profit are expected to increase by JPY 13.5 billion and JPY 2.3 billion year-on-year, respectively, mainly due to an increase in the interest income ratio. ROA is expected to be 2%. Page 20 shows the sales and the segment profit forecast of industrial machinery and others. Sales will increase by 16.5% year-on-year to JPY 228 billion, mainly due to increased sales of large press machines and machine tools concerning presses, sheet metal machines, and machine tools for automobile manufacturing industry, and due to a recovery in maintenance revenues of the excimer laser for semiconductor manufacturing industry. Segment profit will increase by 133.8% year-on-year to JPY 24 billion. From page 21, I'll explain actual and projected demand for several major products. This slide shows the demand for seven major products, including mining equipment. FY2024 Q2 is our estimate at the preliminary demand figure. In Q2 FY 2024, global demand decreased 8% year-on-year, and the full year demand for FY 2024 remains unchanged from the projection in April, as between -5% and -10%. I'll explain the major market conditions from the next page. Page 22 shows actual and projected demand in Japanese market. In Q2 FY 2024, demand increased by 1% year-on-year, and the full year demand for FY 2024 remains unchanged from the projection in April as almost flat year-on-year. Page 23 shows the actual and projected demand in North American market. In Q2 FY 2024, demand decreased by 11% year-on-year. Demand for rental and energy decreased, but demand for infrastructure remained steady. The full year demand for FY 2024 was revised from the projection in April to between -10% and -15% year-on-year. In the United States, due to saturated vehicles in rental market, decline in demand for rental has become prominent, but we'll monitor the impact of interest rate cut, which started in September, on demand going forward. Page 24 shows the actual and projected demand in European market. In Q2 FY 2024, demand decreased by 25% year-on-year. Demand for construction equipment decreased, centering on Germany, the United Kingdom, and France, major European market as affected by high energy prices and others. The full year demand for FY 2024 was revised from the projection in April to between -10% and -15% year-on-year. In Europe, we cannot expect the demand recovery with a sustained sluggish economic sentiment even after the rate cut in June. Another interest rate cut was implemented in October, and we monitor the situation closely. Page 25 shows the actual and projected demand in Chinese market. This slide shows the demand for hydraulic excavators, excluding mini shovels. Demand, including Chinese local makers, are also shown as a reference. Demand growth is that of foreign makers. In Q2 FY 2024, demand increased by 19% year-on-year, and the total demand, including Chinese makers, increased by 22% year-on-year. The full year demand for FY 2024 was revised from the projection in April to between +/- 0% and +10% year-on-year, and the demand, including Chinese makers, will be between +10% and +20% year-on-year. Despite demand turnaround, the sluggish economic activities triggered by the weak real estate market remains unchanged, and we'll keep an eye on the development going forward. Page 26 shows the demand trends and outlook for the Southeast Asian market. The number of units demand in the second quarter of FY 2024 turned out to be up by 3% year-on-year. In Indonesia, the largest market, demand for mining equipment in the second quarter recovered to the same level as the same period last year. Demand for general construction machinery increased year-on-year due to the reduced risk of policy changes by the new government that was inaugurated in October. On the other hand, in countries other than Indonesia, demand decreased compared year-on-year due to political turmoil and falling resource and timber prices. The demand projection for the full FY 2024 has been revised from the projection in April to plus minus 0% to positive 5% compared to the previous year. Coal prices in Indonesia are currently stable, and the outlook for demand for mining machinery in FY 2024 is expected to be the same as the previous year. Page 27 shows the trends and outlook for major mineral prices related to mining equipment demand. Although the prices of major minerals have fluctuated recently, they remain at high levels on the long-term basis. Page 28 shows the demand trends for the mining equipment. Demand volume for the second quarter of FY 2024 appears to have decreased by 7% year-on-year. The demand outlook for FY 2024 is expected to be ±0% to -5% compared to the previous year, which is unchanged from the April projection. Demand in Indonesia is expected to be on par with the previous year, and other regions are also expected to remain strong overall. Page 29 shows sales of mining equipment. Sales for the second quarter, FY 2024, increased by positive 21% year-on-year to JPY 497 billion. Excluding the impact of exchange rates, sales would go up by positive 14%. We have revised our forecast for sales in FY 2024 from the April forecast and now expect sales to be JPY 1 trillion and 845.7 billion, up 7% year-on-year. Page 30 shows the sales forecast for the main body, parts, services in the construction, mining, and utility equipment. In the second quarter of FY 2024, part sales increased 7% year-on-year to JPY 267.2 billion, and the overall aftermarket sales ratio, including services, was 52%. Overall, aftermarket sales, excluding impact of exchange rates, increased 2% year-on-year. We have actually revised our forecast for parts sales for the full FY2024 from the April forecast and now expect them to be JPY 1,024.1 billion, up 5% year-on-year. The aftermarket sales ratio, including services, is expected to be 51%. From page 42 onwards, I now would like to explain the topics for the second quarter. Page 42, please. Komatsu exhibited at MINExpo 2024, held in Las Vegas from September 24 to 26, 2024. Under the theme of Sustainable Future Together, Komatsu introduced its latest products and solutions, including automation, remote control, and electrification, which help reduce greenhouse gas emissions and achieve zero emissions. Komatsu also exhibited products from GHH, which we acquired in July this year under the Komatsu brand. In addition, IR events were held for institutional investors and analysts, providing an opportunity for them to deepen their understanding through questions and answers. Page forty-three, please. Komatsu published its integrated report, Komatsu Report 2024, in September. Komatsu Report 2024 explains the progress of our sustainability and forecast management and growth strategies, including safe, productive, smart, and clean work sites of the future, as part of Komatsu's efforts to create customer value and our roadmap toward carbon neutrality by 2050. I do appreciate if you take time to read it. This concludes my explanation. Now we will move on to questions. First is from the audience. Mr. Ibara of Morgan Stanley MUFG Securities, please go ahead. Hello, I'm Ibara from Morgan Stanley. Thank you for taking my question. The first question is about your view on North America. Inclusive of currency impact, you revised the outlook down by approximately JPY 80 billion. Mr. Hishinuma mentioned earlier that the rental market is weak, so partially the revision was due to weaker than expected end market, I believe. And then there were also moves to reduce inventory on the distributor side due to their policies. So can you share with us what that breakdown looks like roughly? How much is an impact from the end market, or what led to the downward revision, and what's happening with current distributor inventory and so forth?... You also mentioned earlier that interest rates have started to fall, but are distributors planning to lower inventory levels further in the second half? Or are they not planning to make any major changes as current levels are optimal? Please share your view on these trends. This is my first question. This is Hishinuma speaking. First, regarding North American distributors and retail trends, according to what we have heard from distributors, et cetera, apparently order backlog from customers are still at high levels, and they are not in a situation where construction work is going to stop immediately. However, for rental equipment or the segment, whether it be us or rental competition, I have heard that fleet is sufficient at this moment, and that there are enough units available, and so rental prices are more competitive. In that sense, while it's true that there is no decrease in construction work now, we are in an environment where it's possible to rent equipment, and you don't have to necessarily buy new equipment. Furthermore, in terms of rental and our sales, we have expected that there would be a certain level of replenishment demand from our distributors, but we think that this buildup is not going to happen, and that inventories will stay around the same level as last fiscal year. That is why we have taken a slightly conservative outlook on sales, and although we are saying that housing and infrastructure-related sales are steady, there is also weakness in areas such as energy, so we have lowered the outlook on demand and sales for construction equipment. Thank you. I just wanted to confirm one thing. You said that for the year, it should be the same as at the end of last year. So are you saying that you are expecting no significant change in inventory in the first half or second half, and you are not expecting a decline? In terms of rental inventory, we are looking at same levels as the end of last fiscal year. But considering that the market is becoming more challenging, we need to reduce inventory of new equipment and overall inventory. And you started this from the first half? Yes, and we expect it to go down further in the second half of the year. Thank you. My second question is about mining equipment. It seems that sales in Latin America is brisk, and at the recent expo briefing, you said that you are still looking at a positive increase for capital investment next year. And Mr. Ogawa also said in the past that high levels are likely to continue. So can you tell us the backdrop to why you are seeing a higher-than-expected trend? And I may be rushing a little about the future, but I'm sure you're also talking with mining companies about next fiscal year already. So if you could share with us what kind of outlook you have, that would be appreciated. Thank you. Regarding mining, demand trends have not changed much, as I mentioned earlier, and we think that trends will continue to be brisk. By region, there are some slight differences, such as pushed out demand into the next fiscal year, but major deals are coming in, too, resulting in no major changes overall. While we expect to see an increase in Indonesia, we also expect trends are going to be brisk overall, including the aftermarket business. So we expect to see an increase in sales in the mining business. Regarding the CapEx outlook of mining majors, we have heard that they will continue to invest steadily, so we think that the external environment will also remain brisk. Thank you. Thank you. The next question is from Mr. Maekawa of Nomura Securities. This is Maekawa of Nomura Securities. Thank you very much for your explanation. I have two questions. First, regarding the page on causes of difference and the part about volume and product mix, you have revised your outlook for the year. So can you confirm the details of volume and product mix? I presume you have revised down your outlook for sales volume for the year. So can you walk us through the key factors? This is Horikoshi. First, regarding first half numbers, volume, product mix, et cetera, impact was JPY 53.7 billion. Out of this amount, volume negative impact was JPY 25.1 billion, and regional product mix impact was JPY 21.9 billion, which was very big. The remaining amount, roughly JPY 6.7 billion, were one-off losses. This all adds up to JPY 53.7 billion. For the first half of the year, the impact from product and regional mix was very large. First, for regional mix, compared to last year, profitability in Indonesia, a high-margin market, declined, resulting in negative regional mix. Also, for product mix, there were shipments of some original equipment that had poor gross margins.... Also, at KMC, the services ratio was relatively low this year compared to last year. It was around 82% last year, but 73% this year. Moreover, in the first half, mining sales increased, but most of that was from original equipment sales. Therefore, compared to services, original equipment profitability is lower, and that is why there is such a large difference in product mix. As for the full year, if you can look at page 18, the impact from volume and product mix is JPY 62.3 billion, but the pure volume impact is JPY 28.9 billion. Also, JPY 22.3 billion is the impact from product and regional mix. Other one-off costs are JPY 11.1 billion. Product mix impact is big here as well, and for regional mix, it's about the same as last year, with barely any difference. The majority of the JPY 22.3 billion is due to the product mix, due to low margin business deals that led to losses and the aftermarket ratio declining at KMC compared to last year. Therefore, due to these two reasons, we saw a significant, significant negative impact in product mix. So for this year, the impact for product and regional mix is quite large. I see. You mentioned that part of the worsening product mix impact was attributed to mining, but is this something that will only happen this fiscal year, or is it likely to continue? We don't think this will be an ongoing trend. For this fiscal year, we have had relatively low margin deals materialize, but we don't think this will happen again next fiscal year. Okay, thank you. One more thing I'd like to ask about is about volume. It looks like volume impact alone is a little positive when you just look at the September quarter, and negative volume impact is contracting gradually in the second half. You also talked about Indonesia picking up. I wonder whether volume impact will gradually turn positive over the next fiscal year. Looking at the full year forecast, many regions have been revised downwards, including the U.S. and Europe. But if we look at the quarterly trends, it looks like the negative volume impact is gradually shrinking. So I guess this is a matter of how you view demand. However, I would like to ask whether management is expecting wholesale volume to head towards a gradual recovery or not? Well, regarding volume impact, when we look at the first half of this year, volume impact was about JPY 74 billion in terms of sales. On a full year basis, volume impact is likely to be JPY 28 billion less than the original plan. So yes, it is gradually improving. However, the composition of it is quite different. Out of the JPY 74 billion shortfall in the first half of the year, roughly JPY 60 billion is from the construction equipment. And out of that amount, roughly close to JPY 50 billion is attributed to North America. The shortfall in North America was significant. In addition, Europe and other regions turned negative. On the other hand, in the first half of the year, as I mentioned, the first quarter, there was a significant sales push out for original equipment, and for the first half of the year, the mining business's shortfall was about JPY 13 billion. Therefore, for the full year, we think that for construction, the shortfall of JPY 61 billion will expand to around JPY 76 billion. And for mining, we expect a substantial recovery by about JPY 48 billion. This is because Indonesia or Asia is doing well, Oceania is doing very well, and Latin America, which experienced some bad weather in the first half, will catch up, and North America, which was behind, is likely to trend in line with expectations. So overall, although construction will not increase as much as expected and will actually decrease, mining is likely to catch up and increase, and that is why we have this outlook. Thank you for that. Regarding your second point, it's more about next fiscal year, but during this fiscal year, you said that mining volume will catch up... but for example, in the U.S., there is talk that interest rates will fall down from here. So are you assuming that demand will pick up next fiscal year? I also presume you're holding back on production right now, but when are you going to accelerate production? Can you share your current view on this, about your policies? Well, in terms of construction equipment, up until now, demand has generally been going up and down in a two-year cycle. The previous decline was in the third quarter of 2022, when it turned negative. So from that point of view, it wouldn't be strange for demand to turn positive from around the fourth quarter of this year, or actually from the third quarter of this year. But for the time being, as I said earlier, our view is that North America and Europe are going to do worse than before, and Southeast Asia and China is contributing positively, on the other hand, with the net impact being neutral. However, we're not really sure about North America right now. As for retail, as Mr. Hishinuma said earlier, it's not that bad, so we don't think we need to be that pessimistic. As for mining, I think it will depend on how many orders we receive in the second half of the year. Also, in North America, there's good amount of excess inventory for rental. Rental utilization rates are declining, and the prices of low-cost rentals are also struggling to grow. So I think it's fair to say that the rental business is clearly in decline, with the purchasing appetite of rental companies declining and depressed demand for replenishing rental, rent-to-sell fleets by distributors. Also, the North America market is generally very highly correlated with housing starts, and housing starts are hovering around 1.3 million units, which is not that good. In July, it even went below 1.3 million. Also, rig counts are also lower by more than 10% compared to last year. So I think that in terms of energy and rental, if you simply look at economic indicators, it's not likely to pick up that easily. Mr. Horikoshi just talked about the two-year up and down cycle, but the pickup cycle last time around coincided with post-COVID. Therefore, although people say that it's two years to go up or down, meaning a four-year cycle, I think that's a little short. Looking back at the past cycles, I think it's more like a six-year cycle. So from that point of view, demand is likely to gradually pick up from the second half of fiscal 2025. Also, as there's a possibility that interest rates will fall further once we enter fiscal 2025, demand for construction equipment is likely to pick up. When it comes to mining, the mining majors have not said that they will reduce their CapEx that much. They're actually saying that CapEx is likely to increase in 2025, so there will be almost no change here. It should be steady. Also, in Indonesia, the tide has clearly turned since the inauguration of the new government in October. This is true not just for mining, but for construction and for agriculture, which has already increased considerably in the second half of the year in light of the new president. The Food and Energy Security Program under the new president, there was a large business deal for sugar cane plantations. This project is in Papua New Guinea, and there was demand for around 2,000 units of 20-ton excavators, of which Komatsu won around 1,000 units. The other 1,000 units went to SANY. We have received orders for 800 units so far. Also, regarding mining, the coal prices are relatively stable. Prices have stayed around $52-$54 for a while now, and there are no factors that would cause it to decline. China import demand for coal has not fallen at all. Import volume was the greatest last year, and at this point, import volume is growing even higher, which is a positive for mining. Also, the validity period of coal production permits has been extended from one year to three years, so there are fewer worries for contractors. I think mining is doing well because of these reasons. Also, as I mentioned earlier, regarding the sugarcane plantations, since Indonesia is known for its biofuel, B35, it seems that they are considering producing bioethanol derived from sugarcane as a biofuel, and I think that this will lead to an increase in the number of agro businesses in the area. Also, about construction, as the new government is now in place, the risk of a production shift has disappeared, so this will also have a positive impact on customers' peace of mind. So looking out into next year, with the second half of this year recovering significantly, I personally believe these trends are likely to continue. Thank you. Next, Mr. Isayama of Goldman Sachs, please. Thank you for your presentation. I'm Isayama of Goldman Sachs. First, I'd like to ask about the production cost in causes of difference analysis. The negative figure contracted from the initial negative figure, but Mr. Horikoshi and Mr. Hishinuma talked about the production cut, and the impact of utilization was already considered. You seem to have larger production reduction. Where did the negative impact of production cost decrease? So please share the magnitude of production reduction. And I also ask about the inventory in the balance sheet. Because of the very volatile effects, it is hard to see the level. Is your current inventory level in the balance sheet healthy, or do you think it better to reduce a bit? Please comment on these points. Production cost in the first half were shown as JPY 9.9 billion year -on -year. Steel price is almost flat year-on-year, and that cost increase impact will be negligible. Logistics cost and shipping cost will affect somewhat in the first half, and for the full year, it will worsen by close to JPY 2 billion year-on-year as a part of the production cost. The remaining part of production cost includes the procured products besides steel and the wage increase of partner companies. Production reduction is certainly increasing, but not much. When production reduction accelerates, allocation of internally processed products into inventory is down, and that will lead to loss. This is the current structure, and that is not happening much. On the contrary, inventory is up, then we have higher allocation, and that leads up to the push-out profit. And we think the current level of inventory is an issue. And toward the end of this fiscal year, we are going to reduce inventory by about JPY 150 billion. Thank you. You talked about the target, production reduction by about JPY 150 billion. Well, it's hard to describe, but, do you expect to achieve that by any means in the tough demand environment to lower the hurdle of the following year? Or do you regard it as a mere target? We are not cutting back as we expect the demand to decline next year. But as we think the current inventory level is the issue, so by the end of the fiscal year, we'd like to adjust to the appropriate level. Thank you. The second question is about selling prices, also in the causes of difference analysis. I assume this is partly because of tough demand in the United States, and we revised it from JPY 105.1 billion - JPY 90.6 billion this time. The price increase is less than 3% or so, according to the penetration of the price adjustment, which explained by segment of mining and construction equipment. In the U.S. local market, it is said that dealers of Japanese construction machinery makers are pushing with the depreciation of yen, and I don't think that your wholesale is declining. However, there are various views, so would you let us know the reason why it is down? Would you comment on price trend of construction equipment and mining equipment, respectively? At the beginning of the year, we said that we would have an increase of JPY 105.1 billion, and the selling price hike was shown as 3.1%. We said then that the price increase is larger for parts rather than equipment, and it is larger for mining equipment compared to construction equipment. Current projection is JPY 90.6 billion for this year, and selling price increase is down by JPY 14.6 billion compared to the initial forecast. Where did the decline happen? Mostly in the United States, in equipment. We raised prices for equipment in the U.S. by 2.5% in April, and since then, we have refrained from raising prices further. As Mr. Hishinuma and the president explained before, there is a sense of excessive inventory in rentals and the competition intensified there. For example, American competitors are trying to clear inventories with zero interest rate campaigns. To counter them, we refrain from further price increases… but even in North America, we raise prices of parts. Thank you. Thank you very much. Next question, please, from Mr. Taninaka of SMBC Nikko Securities. Thank you. I am Taninaka of SMBC Nikko Securities. On page 18, production cost impact is shown as minus JPY 22.2 billion. I wonder if there was any change in your view of steel? Steel prices are down to the lowest since the beginning of the year. Do you have the positive impact by this or negative? Please let me know about any changes in the status quo and the future projection. I said that the steel price is almost flat in the first half, and for the full year, it is also flat or edged down a bit, and the impact of steel price is not material. The majority of this JPY 22.2 billion is other procured goods, other than steel, and the personnel cost increase of partner companies. Thank you. I have one more question. You talked about refraining from price hikes in North America with declined demand. So would you comment on the share change, positive or negative, any story with regard, please? In North America, when supply chain disruption happened in 2021 and 2022, because supply of Komatsu was relatively better than the other competitors, we gained share by 2 points, and we see that share is sustained in this October. Thank you. That is all from me. Thank you. Participants on the conference call raised their hands, so I'd like to take their questions. Mr. Sano of J.P. Morgan Securities, over to you. I'm Sano of J.P. Morgan. Do you hear me? Yes, please. I have two questions. First, I'd like to ask about SANY in Indonesia and competitive environment. You said that in Papua New Guinea, you and SANY take half of the project, respectively. Then please tell me about the price difference. And in terms of the CE Series and after-sales services, how do you appeal to win project? My interest is not so much about the current project, but the competitive environment to foresee the future. I would appreciate if you can give us additional comment. As I talked before about the business negotiation for one thousand units and orders for eight hundred units, it was an order for CE Series, PC200. Due to the introduction of CE Series, we were able to go on par with SANY, and this time we were awarded orders of 1,000 units. In Indonesia, in FY 2023, share of Komatsu was about 28%, and Chinese maker share was about 23% or 24%. In Indonesia, we have higher share than Chinese makers, and by addition of CE Series, we gained 2 points of shares, and that was partially beneficial. In this year, not only in Indonesia, but also in Southeast Asia, we have been increasing solution business through Smart Construction, and we hope this will be another source of differentiation against Chinese makers. In the new capital of Indonesia, Nusantara, we are working on testing PoC of Smart Construction at the new airport. Thank you. Second, I see page 30 now. I think it is hard to foresee the demand environment, but the proportion of aftermarket, including parts and services, has been steadily increasing to a high level. Would you comment again on the profitability of parts and services and the background of this move centering on reman? And I'd like to have a comment from Mr. Horikoshi on free cash flow. As we see the growth of aftermarket business to this level, I think the conventional business model of Komatsu may be changing. So would you help us understand this? Talking about parts profitability, as I have been saying. Gross margin, parts and services is about 40%-50%, and margin of equipment is about 20%-30%. So with the growth of parts, profitability will increase. And as I said before, in addition to the paid guarantee, activity to promote genuine parts have made steady contribution. Talking about the free cash flow, there are some impacts on free cash flow. But in our case, the more impactful factor on free cash flow is how we can control the fluctuation of working capital. From the second half of the previous year, we started to use free cash flow for internal control, and that is increasingly becoming effective. For this year, I said at the beginning of the year, the free cash flow will be about JPY 270 billion, and we expect now that free cash flow generation will exceed that level. Understood. That is all from me. Thank you. Thank you. I'll take the next question from Mr. Fukuhara of Jefferies Securities. I'm Fukuhara of Jefferies Securities. Thank you very much. I have two questions. First, I see the BB ratio of mining. Up to September, it has been up in some regions. After October, you talked about Indonesia before, but how about the latest situation in other regions? I'd like to have your comment on this point first. For the next year, would you give us any colors for hard rock and soft rock separately, if you can, please? Regarding mining orders, at this point, we cannot see meaningful trend yet, neither for upside nor downside toward the next fiscal year. But only in South Africa, partly due to the restructuring of Anglo American, order has been slightly declining. On the other hand, in this year, Australia, in particular, has been very robust, and in the next fiscal year, we are closely watching how much orders will be coming from the region. Understood. Thank you. Second, it might be a bit too early, but when we look at the causes of difference in the next year, mining equipment will be presumably increasing. But talking about construction equipment and others, which item, including production cost and fixed cost, will be increasing and decreasing? Would you give us some colors, please? This is a difficult question. As for demand, as I said before, we are not very sure, to be frank with you. Regarding expenses, as for fixed cost, as I have been saying before, fixed cost has been almost flat from 2017 to 2021, although there have been wage hikes. Structural reform has offset the increase in wages and sustained the flattish fixed cost, and it started to increase in 2022. In the current midterm plan, fixed cost increase is about JPY 110 billion. This is mainly due to the large increase in personnel cost ratio and the large increase in research cost in the focus points for the future growth. Toward the next year, now we think we need to be cautious and control the fixed cost compared to the previous years. As demand for construction equipment has been sagging, even if it edges up in the next year, we still think we need to control fixed cost compared to the previous years. Thank you very much. Next question is from Mr. Motowaki of Nikkei. I'm Motowaki of Nikkei. Do you hear me? Yes, please. Let me ask this question again. There is a presidential election in the United States next week, which is in the close contest. I'd like to know its latest impact on construction equipment demand. Do you factor in the risk related to this in the forecast presented this time? What is your scenario in the case of victory of each candidate? Whichever side wins, it will not have material impact. If Republican wins, their energy policy will presumably change drastically. So for construction equipment demand, Republican government will give positive impact. For the others, for infrastructure and others, neither party will make much difference. But in North America, there is a general trend that demand falls in the election year, followed by the subsequent recovery. But in the last few years in North America, demand has been almost record high since the end of the COVID pandemic in 2021. Whether that will continue to grow in the next year onward, I'm a little suspicious. Regardless whether Trump or Kamala Harris will become the next president, that is my view. Put simply, due to construction demand for infrastructure, and as Hishinuma mentioned, due to backlog on the construction companies, impact on construction equipment will be small whichever party wins the election. But the difference in energy policy may make some impact. For example, pipeline projects are suspended now, but under Mr. Trump, they resume. But we do not know whether the coal business will grow. Probably, natural gas, which has a price competitiveness, will grow rather than coal, so we expect that the coal dependency will continue to decline. Thank you very much. If that's okay, we'll now take the next question. Mr. McDonald from Citigroup Securities, please. Yes, can you hear me? Yes, please. And thank you for this occasion today. Well, I would like to confirm page 25 and your comment on Indonesia. On page 25, it says that China's domestic market seems to be recovering, although it may be temporary. However, looking at the numbers, it seems that exports from China are declining. That's what I see there. President Ogawa made his comments earlier about the competitive landscapes by referring to Pengpu and SANY and others. What are you thinking about the situation of competition with the Chinese companies in other places besides Indonesia, such as Asia, Latin America, and perhaps Africa? I wonder if there are any situations and deals you are not aware of. Are there any signs for changes? This is Hishinuma. The competitive environment and for exports from China today remains as tough as ever, and as you said, they have expanded significantly, not just Southeast Asia, but also into Africa and Latin America as well, so I believe that tough competition is still going on in those regions. If you look at the numbers, export from China seems to be declining in terms of the data, but you are telling us that you don't get that impression at all, that the competitive situation has eased since the beginning of this year. We don't believe it has been easing at all. I see. So I would like you to further expand here. Unfortunately, I wasn't able to go to the MINExpo, but what do you think, are there any signs that China is becoming more prominent in the mining industry? This is Ogawa speaking. Well, at this moment, I don't think that China's presence in the mining business has increased that much. However, in regard to the dump trucks, China is now actively introducing wide-body trucks to Southeast Asian region. These trucks are based on on-road vehicles and can carry about 60 tons, and they are beginning to enter the quarrying industry. But, well, mining has always been a business with high barriers to enter. May I remind you of this? So if you ask if Chinese manufacturers are suddenly increasing their presence at this moment, I have to say no. Regarding the quarrying-related matter that you just mentioned, Mr. Ogawa, this was within China, or were you referring to the situations in each country? Well, the number of the wide-body trucks is increasing in Southeast Asia. This is in the vehicle electrification, including engines, but it is a truck based on on-road vehicles, and since it comes from on-road vehicles, its reliability and durability are lower than that of off-road... ... dump trucks. And we understand that, and its speed is also inferior to our off-road dump trucks. But, depending on the customer's application, there are some customers who find that wide-body trucks or WBT are more convenient for them to use, and since the initial cost coming from on-road vehicles is quite cheap. So customers who want a cheap car are starting to buy this WBT truck. That's the situation in Southeast Asia. Understood. Thank you, indeed. And now allow me to ask a different topic. It relates to Mr. Horikoshi's portion. You showed us ups and downs analysis. There were many items, including one-time cost, first half, as well as on a full year basis. Mr. Horikoshi, now, what I would like to know here is, what are included in this one-time expenses besides production costs and product and regional differences? Yes, and I was talking about these one-time expenses in general and relative terms. For example, when we had temporary and bad debts, and we had provisions for them, or the scope of consolidation have changed, in part, resulting in a structure in which operating profit is lower compared to last year, or there were changes in the segments and so on. That is what I was talking about. Understood. Finally, one more thing. I think Mr. Asano raised this question earlier. I think you said that six months earlier your cash flow forecast was about JPY 370 billion. I'd like to know, what's the exact amount now? Well, our current forecast is JPY 380 billion. Yes. So it is expected to be almost the same as the initial forecast at the beginning of the fiscal year. Understood. But, having said that, this figure does include, for example, the purchase of GHH this year. So even if we factor in that negative GHH value, the figure is what you see there. This portion was not included in the beginning of the fiscal year, so even if we subtract that amount, it is still JPY 380 billion. So in reality, if we make a comparison apples to apples, it is going to be expected to be roughly, I would say, JPY 390 billion or close to JPY 400 billion this fiscal year. Sorry, talking about the GHH, for the first half, you have JPY 13.5 billion for the acquisition of subsidiaries and equity method and affiliates, but is this JPY 13.5 billion coming from GHH? Yes, you are right. Okay, understood. Thank you. Thank you very much. We'll now take the next question. River Davis from The New York Times, please. Yes, and thank you, indeed. Can you hear me? Please go ahead. Yes, I also would like to ask you one question related to the U.S. presidential election. We actually talked quite a bit about your company when President Trump was in office. I wonder if you could further tell us a little bit about what you have learned about running your business in the U.S. during that period, and how you are going to plan to leverage those lessons if Mr. Trump gets re-elected? Well, Komatsu's position in the United States, if you look at the trade balance, exports from the United States have been greater than imports for the past ten years or so. Actually, it's about JPY 1 billion a year, so exports exceed imports by about JPY 100 billion. This is especially because we produce extra-large and large mining machines in North America, and Komatsu is recognized as an exporter in the United States. Also, now we're currently employing about eight thousand people in the United States, and we continue to invest about $300 million a year in the United States. So in that sense, I would like you to recognize that Komatsu, we are an exporter in the United States. Also, the current situation of imports and domestic production in the United States is about half and half. The sales of the main body is about JPY 400 billion, half of which is domestic production. That is production in the United States, and the other half is in imports, based on the number of units. In this situation, I think it is necessary to gradually increase the local procurement rate in the North American region. However, since we are having a substantial amount of procurement from China, so I think that there will be a significant impact if the president changes and the Chinese tariff rate is going to be raised in the future. Currently, American factories import about $200 million per year. So if the tariff goes up, I think it will have a certain impact. But, on the other hand, since we are doing a multi-sourcing and cross-sourcing, even if the tariff rate on imports from China increases, we have a system in place to purchase parts from other countries such as Indonesia, India, or Thailand, instead of China. So I think, we should be able to respond accordingly. I hope you are with me? Well understood. Thank you indeed, and thank you very much. We'll now take the next question. Question from Mr. Tai, from Daiwa Securities. Yes, this is Tai. Thank you indeed. I have two questions. First, I'm sorry to ask something a little, trivial, question to Mr. Horikoshi, but, like you helped me in the first quarter, I'm wondering if you could give us an analysis of how the actual sales and operating profit compared to the company's plan. If you have such analysis, then please share it with me. Yes, I think you're asking about construction machinery. Yes. Am I right? In the first half of the year, we are above the plan by JPY 83.5 billion in revenue. The breakdown of this is a gain of JPY 158.5 billion, due to the exchange rate differences, which resulted in an increase in revenue. On the other hand, the volume difference was a shortfall of JPY 74 billion. The price difference was a shortfall of JPY 5 billion, and the remaining JPY 4 billion was the impact of new consolidation, GHH, which had an impact. Adding this together, sales were above the plan by JPY 83.5 billion. On the other hand, in terms of profit, operating profit was above the plan by JPY 13 billion. This overachievement was due to the exchange rate, which had a gain factor of JPY 30.5 billion, and the volume difference I mentioned earlier was a factor in the decrease in revenue of JPY 24.5 billion compared to JPY 74 billion. On the other hand, in terms of the product mix, product and region mix, it was a gain of JPY 3 billion compared to the April performance. And then, the price difference of JPY 5 billion that I mentioned earlier will directly affect the operating segment profit, resulting in a loss of JPY 5 billion. Then there are the costs and fixed costs. In the first half, the expenses were relatively small, so we made a profit of about JPY 9 billion, and we overachieved by JPY 13 billion in the first half, and as I mentioned on this point earlier, sales were on a shortage of JPY 74 billion, but construction was short of JPY 61 billion, and mining was JPY 13 billion. About JPY 50 billion of the shortfall in construction of JPY 61 billion was due to the situations in North America. The rest were the shortfalls in Europe and Asia. Meanwhile, the shortfall of JPY 13 billion in mining was mostly due to the sales discrepancies in North America. There were also other factors such as recovery in Asia and in our overachievement in Oceania, but the biggest impact, which was about JPY 13 billion, was the sales discrepancy in North America. I'm just wondering if you have annual numbers? Yes. In terms of in the full year basis, sales will be JPY 126 billion overachieved. The biggest impact here is the exchange rate. We are now talking about the sales, but for sales, exchange rate impact was JPY 158.5 billion. So the difference in volume will be JPY 28 billion shortfall becoming smaller. So actually becoming smaller, it is JPY 28 billion. As for the price difference, as I explained earlier, it is JPY 14.5 billion, which is the shortfall compared to the beginning of the period, and the remaining amount is about JPY 10 billion, due to the impact of new consolidation. This is what sales are like. As for the profit and loss, the impact of exchange rate is JPY 38.5 billion, which is an overachievement factor. You may be wondering why there is such a gap between April and now, why JPY 30 billion for the first half and JPY 38.5 billion for the full year basis? This is having to do with the intermediate inventory, which was purchased when the yen was weak, so the impact is JPY 8.5 billion, and the impact of exchange rate will swell to JPY 38.5 billion in the full year basis. In addition, the volume will be a factor in reducing sales by JPY 10 billion. The product and the regional mix change will be a factor in reducing profits by JPY 11 billion, and the price will be a factor in reducing profit by JPY 14.5 billion, I mentioned earlier. The remaining cost, fixed cost and an impact of new consolidation, which I think were a factor in profits of about JPY 9 billion in the first half, but this is going to catch up over the full year basis. So I think they will be almost balanced out. I mentioned earlier that the JPY 28 billion in sales was a shortfall, but in terms of details, construction was JPY 76 billion shortfall, and mining was JPY 48 billion, actually, and overachieved. In net, we are going to look at a shortfall of JPY 28 billion. Of the JPY 76 billion shortfall in construction, we expect North America to swell to about JPY 70 billion in shortage. So lion's share goes to North America. We are also now looking at about JPY 20 billion due to the deterioration in demand in Europe. But on the other hand, we are looking at Indonesia now to recover that. As for mining, we expect North America now to go almost as planned, and the overachievement will expand in Asia, Oceania, and Latin America, and in total, we are looking at JPY 48 billion overall. Thank you indeed for the explanation. Well, Europe only has about one-third of sales compared to the United States, so its impact is not that big, but the outlook for the second half has gone down a little bit. And what about next year? Do you really need, not need to worry too much? Well, I guess you need to worry, but is the atmosphere now not so serious? Well, I have to say the situation in Europe is serious, to put it bluntly. Well, for example, some factories are restricting, and it's quite serious. However, this year in particular, we are trying to reduce the inventory that had ballooned actually last year, which is the inventory of distributors. So we are making that effort. In general, we are reducing about 230 units of construction machinery and about 1,500 units of utility this year. And as a result, the operating rate of factories has dropped quite significantly. We expect that by the end of the fiscal year, we will have completely returned to the appropriate level of inventory, and we believe that next year, wholesale sales will not be as bad as this year. Yes, understood. Just one more thing, changing the subject a little bit. I think you previously mentioned that you wanted to implement a strategy that considered the pricing in the parts business. But since there are many changes, like extended warranties for the main unit and the way life cycle, you know, business is conducted, it may not been rather difficult for you to launch this program immediately. But I wonder if you could share the latest updates in this space as my last question. Well, the initiative itself hasn't changed that much. As for the maintenance type, extended warranty, I think it's true, as you said, that the ratio is increasing. Well, not only the maintenance, extended warranty, but also, I would like to actually go through this process of reman and rebuild, overhaul the process. This is going to be a really good business for us to keep an eye on. So reman, rebuild the components, we like to have the customers to buy it so that we can actually offer them a lifetime warranty. So we'd like to increase this portion as much as possible. Also, as a business that utilize data, the new contract is being launched. So we have newly built this data platform as well as the movement management platform. So the contracts monitors the operating status of the machine, but not only that, we have launched a platform that digitizes all of the information about the dealers, such as the failure history and the parts sales history. So from that platform, we can make various recommendations to our customers. We are now building such applications, and we will have dealers use them to increase our business. Another thing we need to focus on is online sales. Online sales of parts, I'm talking about. In China, online sales accounts for about 30%- 40% of sales, and we want to expand this globally. We are currently focusing on online sales, particularly in North America, and we are currently in a building the systems required. Yes, well understood. Thank you indeed. I look forward to our future opportunities, and thank you. We are now coming to the end of the session, so if there are more questions, we will take the next question as the last question. There seems to be no further questions, so with this, I'd like to conclude the Komatsu Limited FY2024 Second Quarter Financial Results Briefing. I'd like to thank you all for your kind participation today.