It is time to start, so let us begin. At this moment, we would like to start Hitachi, Ltd.'s web conference in Q1 of FY 2023 earnings briefing. First, we thank you very much for taking time out of your busy schedules to attend this briefing. The materials for the meeting are posted at Hitachi, Ltd.'s IR site, and also the news release site, so please have a look if necessary. Now, let me introduce the three speakers from Hitachi, Ltd. on the stage. Yoshihiko Kawamura, Executive Vice President and Executive Officer, CFO. Tomomi Kato, Vice President and Executive Officer, Deputy CFO. Masao Yoshikawa, Corporate Officer, Executive General Manager, Investor Relations Division. We have three speakers. First, our CFO, Kawamura, will provide an overview of the financial results. Please bear with us while we switch the screen. Kawamura-san, please. Thank you very much. Hello, everyone. Thank you very much for attending this meeting despite your very busy schedules. Today we'd like to give the consolidated financial results of the first quarter ending June 30, 2023 for Hitachi, Ltd. This is the table of contents of the materials. There are four items. I would like to give the key messages. Q1 FY 2023 results, and the third topic is the forecast for FY 2023, and appendix. I would like to cover each topic one by one. Please refer to page three. These are the key messages of the first quarter. Number one, the Q1 FY 2023 continuing consolidated business revenues are presented, and this is without just the three sectors. Business are included here. This is what we refer to as the continuing consolidated business revenues, which was JPY 1,828.3 billion, year-on increase of 12%. Most important KPI is the Adjusted EBITDA, which was JPY 156.29 billion, year-on-year increase of JPY 31.9 billion. We had increase in revenue as well as earnings. Hitachi Energy performed very well, and this has been reflected in the profitability as well. On the back of a strong demand, it grew significantly, and it was a driver for profitability. The second point is the large scale businesses, specifically, Digital, Hitachi Energy, and Railway Systems are included. Orders received were very strong in the quarter. As mentioned here, in the As you can see on the right-hand side, the backlog for Digital Systems was JPY 1.5 trillion. For Hitachi Energy, backlog was JPY 3.6 trillion. For Hitachi Energy, the revenue is around JPY 1 trillion, so we have a backlog of three years' worth of revenues. Railway Systems, backlog of JPY 4.6 trillion, revenue is around JPY 1 trillion every year. There is a backlog of around 4 - 5 years. Backlog has been very strong for the quarter. Number 3, against this backdrop, performance has been very strong, and our forecast for the full year in FY 2023 will remain unchanged from the previous forecast. There are three bullet points mentioned here. Major topics include that Hitachi Astemo in June of this year, it has become an equity method affiliate, not subject to consolidation anymore. Therefore, in terms of this budget, it is based on the assumption that it will become an equity method affiliate for the Thales GTS. This is included in the forecast for the second half of the year. JPY 100 billion is the share repurchase that we are conducting at the moment. Everything is proceeding very well, and by September, we should reach the level of JPY 100 billion in terms of the buyback. Those are the key messages, the qualitative messages for the 1st quarter. Please look at page 5. These are the highlights of the results of Q1 for fiscal year 2023. There are two messages here. The continuing consolidated business is the middle column. Mainly on Hitachi Energy, it has been performing very well, and there has been the absence of the impact of lockdown in China as well from the previous year. We have an increase in revenues as well as earning. Another positive factor is that the material prices are now largely offset by price pass-through. Therefore, we have been able to absorb the impact of inflation to a significant extent, leading to increase in revenues as well as earnings. Based on that, revenues was for continuing consolidated business was JPY 1,828.3 billion. The YoY percentage was a 12% increase. It says 9% in brackets to the left, this is mentioned in footnote 3. Yen is becoming weaker, and excluding the impact of FX foreign exchange rate fluctuation is Adjusted EBITDA was JPY 156.9 billion, and YoY increase of JPY 31.9 Adjusted EBITDA margin, 8.6% to YoY, 1 point increase has been recorded. The net income for the quarter was JPY 73.1 billion, increased by JPY 32.6 billion. Now, please look at the right-hand side, which is the core free cash flow. The core free cash flow was JPY 29 billion, and the year-on-year increase was JPY 23.6 billion. To the right is the consolidated business, specifically Hitachi Astemo, Hitachi Construction Machinery, and Hitachi Metals are included. Below, foreign exchange information is provided. This is the actual exchange rate for the first quarter. When the budget was formulated, was JPY 130, and was the assumption, but for the Q1 was JPY 137, and for Euro, JPY 149. The sensitivity will be shown later. The weaker yen is having a strong impact on the revenues. Please refer to page 6 and 7, which is the result of the business segment. The first quarter results are presented. First of all, referring to page 6, Digital System and Services at the top, for the first quarter. The revenues was JPY 545.9 Adjusted EBITDA was JPY 52.4 billion, and 9.6%. YOY basis is shown on the right-hand side, for revenues as well Adjusted EBITDA. therefore, we had an increase in revenues as well as earnings. There are three subunits performance shown as well. As you can see, the service and platforms below, was JPY 225.9 billion in terms of Adjusted EBITDA was JPY 16.1 billion, increased by 6% in terms of revenues, and -3% for Adjusted EBITDA. As mentioned on the right-hand side, the storage business has had an impact, which is causing a slight negative. As written below, GlobalLogic, the DX core company, is continuing to show significant growth, increase of year-on-year, 26% in terms of revenues, increase in revenues as well as earnings, remaining very strong. Green Energy & Mobility is shown below. Revenues was JPY 627.9 billion, and JPY 43.1 billion in terms of EBITDA. 23% year-on-year increase in terms of revenue, and EBITDA increased by 19%, increase in revenues as well as earnings. Hitachi Energy is shown here. As I mentioned earlier, our performance is improving very significantly for this business. The revenues was JPY 385.9 billion, and 29.3% in terms Adjusted EBITDA, to 7.6% for year-over-year basis. 28% increase, and 11.9 increase, just 1.8 point increase. In particular, the short delivery products is increasing. In the first year, there were many that were not included in the PL. Strategically, we are capturing the short delivery products, which is making significant contribution to our revenues. Railway systems, as was JPY 185.7 billion, JPY 13.7 billion in terms Adjusted EBITDA, and 0.4%, and 19% increase in revenues. Overall, the two sectors are showing revenues increase as well as earnings increase. Next is the connective industry. The revenues was JPY 695.3 Adjusted EBITDA to 67.8%, 9.8%. YOY revenues was +4% increase in revenues as well as earnings here as well. Now, looking below, Building System is -3% on a YOY basis. This is mainly the elevator business in China, accounting for a large portion, and there has been adjustment taking place in the Chinese real estate market, showing a negative number here. High tech measurement and analysis system YOY, -2%, or JPY -8.4 billion, is shown here. This is because of the semiconductor manufacturing equipment, a recession is taking place, so it is an adjustment phase. Therefore, revenues are decreasing. Last year, there have been significant orders received, so there is a reactionary decline. Industrial, digital, water and environment, industrial products, please refer to the numbers on this page. Page 8. These are the results of the business segments, consolidated basis, Hitachi Astemo, JPY 0.941 Adjusted EBITDA was JPY 14 billion. The ratio is 2.9%, rather low. YOY revenue, 27% increase, so 18.7 increase Adjusted EBITDA. last year, we struggled, and so, so there is a reactionary increase this year. Hitachi Construction Machinery, and Hitachi Metals, will no longer be subject to consolidation, so they are zero. Page 9 is showing the factors affecting changes in revenues as well as Adjusted EBITDA. Showing the trajectory. Now, looking at revenues first, at the left is the first quarter of last year, JPY 2.569 trillion. We will no longer have the Hitachi Construction Machinery and Hitachi Metals, so that will be negative. I mentioned the foreign exchange impact previously, which is reflected here. It was a 130 JPY, 137 JPY per U.S. dollar, and 149 JPY per euro, having an impact. Others is JPY 236.9 billion. This is organic M&A divestitures, without divestitures. The organic growth is JPY 236.9 billion. Currently, in the midterm management plan, we have rearranged the portfolio. We are going to be focused on the organic growth going forward according to the midterm management plan. JPY 2,322.4 billion on the right, this is without Hitachi Construction Machinery and Hitachi Metals. It is a decline in revenues. Look at Adjusted EBITDA. last year was JPY 154.8 billion. That is a starting point, divestiture of Hitachi Construction Machinery and Hitachi Metals. There is a foreign exchange impact shown on the right-hand side. Otherwise, there is organic growth, and we have ended at, at JPY 170.9 billion, which is an increase in earnings for the quarter. Next page, please, page 10. This is looking at the financial position as well as the cash flow. The middle column is as of June 30th, 2023 balance sheet and the cash flow. At the very top, the total assets was JPY 13,155.3 billion. Changes from last year was JPY 653.9 billion. You can see a significant increase has been recorded. Looking below, the total liabilities increased by JPY 3,350.9 billion. This is effect of the foreign exchange. It isn't as if there have been changes, significant changes in the balance sheet, but rather it has increased as a result of foreign exchange fluctuations. Looking below, cash conversion cycle, there has been an improvement of 2.8 days. Please look at the cash flow now. Cash flows from operating activities, JPY 118.1 billion, increase of JPY 12 billion from last year. Cash flow from investing activities should be noted as well. The improvement of JPY 30.1 billion free cash flow, JPY 78.2 billion, increased by JPY 44.1 billion improvement. Core free cash flow was JPY 29 billion, improvement of JPY 23.6 billion. For all these cash flow items are proceeding well. So far, I have talked about the first quarter situation. Next, I would like to discuss FY 2023 annual forecast. Please have a look at page 12. As is in the bullets, at the top, as I said, the forecast for the year has not been changed from April, so it remains unchanged from the previous forecast. As I said upfront, Hitachi Astemo will be deconsolidated, and Thales GTS is included in the forecast for the second half of the year. Please have a look at the table below. Revenues, JPY 8.8 trillion, and these have not been changed. To the right, continuing consolidated business, JPY 7.82 trillion for the year, up 2%, excluding FX impact, +3% Adjusted EBITDA, JPY 800 billion, so 10%. And Adjusted EBITDA margin, net income, JPY 502 billion. EPS, 537, ROIC, 7.5%. Core free cash flow, JPY 310 billion. The numbers have been the same. FX sensitivity is shown in lower right, and the assumed FX rate, JPY 130 to the USD, JPY 140 to the EUR. Sensitivity is shown to the right. As you can see, when yen depreciates by 1 yen, what will be the impact on revenues Adjusted EBITDA? with 1 yen change, JPY 10 billion in Adjusted EBITDA, j PY +1 billion. These are the increases as a result of the impact from JPY 1 cheap depreciation. Page 13 shows highlights and forecast for FY 2023. Not all the BUs are shown, the large ones are plotted. DSS, Green Energy, Mobility, and Connective Industries. At the very top, Digital Systems and Services, the annual forecast, JPY 2.45 Adjusted EBITDA, JPY 308 billion, 12.6% in terms of margin. YOY increase in both revenue and income forecast remains unchanged, so 0% from the previous forecast. Global Logic, as I said in the beginning, it's going through a high growth. Revenue of JPY 252 billion, Adjusted EBITDA, JPY 52 billion, 20.6%. YOY, 22% growth. Green Energy and Mobility. JPY 2.58 trillion of revenue, JPY 173 billion Adjusted EBITDA, and margin of 6.7% YOY, both increase in revenue and income. No change from the last forecast. Hitachi Energy on a standalone basis, JPY 1.502 trillion of revenue, JPY 122 billion Adjusted EBITDA, 8.1%. Railway, JPY 925.1 billion of revenue, JPY 57.9 billion Adjusted EBITDA, 6.3%. Connective Industries, a revenue of JPY 3 trillion. Well, the top two, around JPY 2.5 trillion of revenue, as opposed to Connective Industries having revenue of JPY 3 trillion in our forecast, and Adjusted EBITDA, JPY 330 billion, and expecting increase in both revenue and income. As I said, for the first quarter results, building systems are affected by China's correction in real estate. YOY it's down, and Hitachi High-Tech's measurement and analysis system is affecting the forecast, down 1%. Hitachi Astemo, JPY 980 billion of revenue, JPY 35 billion, 3.6%. Down 49%, down 38.4%. This will be deconsolidated in the second half, and thus, a major reduction. On a YOY basis, this is the extent of reduction. Moving on to page 14. Just like we saw in the first quarter results, factors affecting changes in revenues Adjusted EBITDA. from FY 2022 to 2023, the trajectory is shown. Looking at the revenues, top left, JPY 10,881 billion, HCM and Hitachi Metals are deconsolidated. Hitachi Astemo is also going to be deconsolidated, so there's negative impact. Thales Railway Signal is going to be acquired, a positive factor, and a foreign exchange, a negative number. JPY 130 is the assumption, and thus this number. If it's going to be JPY 139, JPY 140, it's not as large a negative number as this is. This includes a buffer. Organic growth, JPY 206.7 billion, and so far right, JPY 8.8 trillion forecast for FY 2023. HCM, Hitachi Metals, and Astemo are going to be deconsolidated. Therefore, they're going to contribute negatively for revenue. Adjusted EBITDA, last year, JPY 884.6 billion. This year, JPY 835 billion. The factors are likewise. HCM and Hitachi Metals and Astemo are deconsolidated, therefore, negative impacts. Thales has a positive impact. Foreign exchange, JPY 7.5 billion. Organic growth impact of JPY 78 billion, and thus, the number forecast is JPY 835 billion Adjusted EBITDA. if you could go to page 15, details about Lumada. There are four charts. On the far left, Lumada business revenues are growing, and that is shown. On the far left, first quarter of last year, and next, first quarter of this fiscal year, and FY 2022 annual result, and the forecast for this year. Looking at the circles at the top There are legends describing Adjusted EBITDA, a margin of 14%-15%. As you saw earlier, most of the other businesses at around 10%, so Lumada is shown to have higher profitability. As our strategy, we would like to increase the component of Lumada business because it will push up our profitability, and that is what we're working on. As you can see, from Q1 2022 to Q1 FY 2023, 30% increase was recorded, and on an annual basis, 14%-15%. Lumada is growing very strongly, very briskly. To the right, we are trying to increase the ratio of Lumada business. On the left, revenues. On the Adjusted EBITDA. FY 2021, FY 2022, FY 2023, the three-year numbers are given. Revenue ratio is increasing from 21% to 26% to 29%. EBITDA, the same. The red portion is Lumada business. You can see that the portion of Lumada business is still steadily increasing. A horizontal bar chart below shows Lumada business revenues composition by segments: Digital Systems, Services, Green Energy, Mobility, Connective Industries. Connective Industries is increasing as a proportion. It's now up to JPY 910 billion, a very large portion. It's almost close to DSS in terms of Lumada business. At the bottom, shown are topics in terms of business expansion. Irish digital engineering company, Sidero, is to be acquired, and alliances are going to be crucial. With AWS, Microsoft, and others, we are pursuing alliances. Number 3, this is about Honolulu, Hawaii. a fully automated urban rail system. This was covered in a major way in Japanese media as well. Behind this is Lumada. This is a huge project, over JPY 200 billion. In Honolulu, there's no major railway. There are eight or nine stations, for 17 km- 18 km. For about 50 minutes or so, the train will be operated fully automatically. We just had a ceremony. It was covered extensively in the local media as well. In terms of strengthening our digital infrastructure, we have set up generative AI center. We have started various activities around this. We also have a third, a corporate fund, investing in generative AI as well. That was about the annual forecast. Now, let me briefly explain the appendix. If you could please have a look at page 17. On the far left, Q1, a comparison, last year versus this year, on the right-hand, annual comparison. FY 2023 shaded in gray, revenue of JPY 8.8 trillion, adjusted operating income, JPY 675. The numbers have not changed. On the far right, a ± 0, because we have not changed the forecast from the last time. Please have a look at page 18. This shows the Q1 revenue by market. If you could look at the bottom, the composition or ratio, 35% comes from Japan, and overseas, in total, 65%. Japan versus overseas has come to this level. What is characteristic this time is China right next to Japan. Please have a look at this column. Minus 28% in digital, green energy and mobility, ±0. Connective industries are down 5%, total minus 12%. China's economy is in correction, having difficult times, that is reflected in our revenues. Now, moving on to page 19, orders by a business segment focusing on Q1. Orders are very brisk. From the left, DSS, digital, 11% year-on-year growth in orders, green energy and mobility, Hitachi Energy, 69% increase. Railway systems, 149% Y o Y. To the right, connective industries, building, down 14%. Hitachi High-Tech, down 12% year-on-year, that's because of the factors I explained earlier. Those are the Q1 results and the annual forecast for this year. That concludes my presentation. Thank you for your attention. Thank you very much. We would now like to proceed to the Q&A. If you wish to ask a question, please use the raise hand button on the web system. When your name is called, please unmute, state your name and affiliation before asking your question. If you no longer need to ask the question, please release the raise hand button on your side. We will not be showing the video of the person asking the question today. We will take questions from the Japanese channel and then followed by the English channel. We will take questions from media, institutional investors, and analysts at the same time on the Japanese channel. Those of you who have questions, please indicate by the raise hand button. Yusawa-san, please. Please unmute and ask your question. Question. Regarding the Q1 actuals, as well as the full-year plan, I have a question regarding the progress being made. First of all, regarding the actual EBITDA is very good. According to the forecast you had internally, what have been upsides and downsides? Please elaborate further. Second question, regarding Lumada, toward the end, Kawamura-san, you mentioned this business. In terms of actual Q1 EBITDA margin, the annual plan is shown here. Do you have the actual margins which is in line with this plan? For Lumada, toward the fiscal year forecast, is it doing better than expected or otherwise? Please elaborate further on the performance of Lumada business. If I may, I would like to ask my third question regarding the consolidated EBITDA plan for the full year. There is going to be divestitures, therefore, it is like going to be a decline over the previous year. With foreign exchange, we believe that there is going to be an upside. Listening to your presentation, are there any possibility of increasing your forecast, which is, it could be flat or if anything, increase other than foreign exchange? Are there any factors that you can mention? Regarding EBITDA, as well as Lumada, will be answered by Kato-san. He has the materials. To your first question, for the first quarter, the likely result will be explained. Foreign exchange is the upside. We have a generally an upside. The, in most of the views, we are following according to the plan. Hitachi Energy, as mentioned, we have long-term projects and orders, we also have a transformer, short delivery, orders received as well. There has been a significant upside in terms of both revenues as well as earnings. Furthermore, downside will also be shared as well. Connected Industries, High-Tech, Home Appliances. Connected Industry is, building system was better than expected, so overall, it is according to plan. If you look at the details of the High-Tech, the semiconductors, the customer's plan has in did not do as well. Home Appliances underperformed against the plan as well. On the other hand, for building systems in the China business, the new buildings did not grow. In terms of services, maintenance as well as renewals were very strong, better than expected. All in all, for Connected Industries, we have been able to achieve the plan. To your second question, Lumada business. As you have rightly mentioned, on an annual basis, 15% profit is the plan or the forecast we have today. In the first quarter, we did not reach the 15% level. However, toward the latter half, profitability tends to increase, so we believe that the forecast is achievable. Thank you very much. Regarding your third question, on a full year basis, the consolidated outlook was what you have asked about. We have not changed the forecast. The most significant upswing factor, which is possible, is Hitachi Energy. For the first quarter, very high revenues and earnings have been posted. As I mentioned earlier, we have a significant back orders, backlog, and we are also making investment in terms of facilities, and we are trying to accelerate the conversion going from backlog into revenues. We are following the plan, if we're able to do a better job in terms of the conversion, this is likely to become the most significant upside Adjusted EBITDA. as you have rightly mentioned, the foreign exchange will be impacted by BOJ announcement made today. We are assuming JPY 130, there could be incremental impact as well. What is most significant is Hitachi Energy. How the backlog can be converted to P&L is the most important factor. However, having said that, there is no clear visibility yet. Therefore, that is the reason why we did not change the forecast at this point in time. That's all. Thank you. Hi, Thank you very much. Let's continue. Yasui-san, please unmute and state your questions, please. We're not hearing your voice. Can you hear me now? Yes, we can now. Thank you. I would like, like to ask three questions. First, regarding Hitachi Energy. There was an increase, so, so, Hitachi Energy seems to be a rather, the number has been rather, conservative, although it's doing very well. I think, you had a, a cautious, assessment of, Hitachi Energy's, revenue, initially, so I wonder why that was the case, because it's, doing very well. There has been, quality problems with respect, to, grid, networks, so what would be the impact on that, delayed, delivery, for, Hitachi Energy? My second question has, to do with elevator chart, on revenue, page 9. Excluding FX impact, JPY 236.9 billion, and on a full year basis, page 14, excluding FX impact, JPY 200 billion. In the 1st quarter, I think, you have already achieved the target. Revenue seems to be growing more successfully than you have planned, it appears. In Q1, over 10% growth, do you think this can be sustained? Well, apparently it seems possible, so I wonder what your views are. Question number 3, regarding the storage business. GlobalLogic is involved, and it is looking to increase our revenue, but storage is not good. A legacy server is being switched to AI server, which means that there's difficulty ahead. If you could elaborate on that, please. Thank you. Yasu-san, thank you for your questions. Question 1 and 3, storage, I would like to answer. The second question, what was the breakdown of organic growth? I would like to turn to Kato-san for an answer. First, regarding Hitachi Energy, as you rightly pointed out, when we came out with the plan at the beginning of the year, we had intensive discussions. Well, profitability was slow to show despite good orders. We had lots of discussions with the local management, but partially, there is still lingering impact from inflation. Sourcing of electric steel sheets is difficult, and labor coming back after the pandemic, at what time would that happen? We're not sure. There were uncertainties at the beginning of the year. All of these coming back at a very rapid rate, we were not able to see that upfront, so we were very conservative in formulating the plan. After three months, of course, there's impact from war in Europe, but labor is back, and resources, materials that can be sourced, and electric steel sheets are still expensive, but can be procured. A CapEx in a production capacity increase have happened. In three months, things have changed quite rapidly. The speed at which a backlog reflected in profit and loss that has hastened, and short delivery time products that are delivered and reflected in profit and loss in 1-2 years, we are strategically capturing sales from those products. Although those combined translated into a major increase this time that we're seeing after three months. We do believe that this will continue into the second half. Hitachi Energy, well, as we said before, so there's going to be a major positive impact from Hitachi Energy into the second half. That's where we are right now. Well, the second question will be answered by Kato. Kato speaking. What we explained earlier, if you could please look at page 13 once again. Here are the highlights of the forecast for FY 2023 on a four-year basis. GEM, Green Energy and Mobility, Hitachi Energy, in the first quarter performed very well, much better than our assumption. For the four-year forecast, it's increased revenue up 10% and income up JPY 9.5 billion, so upward revision is made. In terms of the sector, railway, M&A is considered, and the timing has to be considered. In terms of the sector, it's not changed. JPY 170 billion of risk is being reflected in the revenue. Now, if you could have a look at page 14, as you rightly pointed out, JPY 230 billion in Q1, and a full year JPY 2.067 trillion. If we add the risk, JPY 380 billion, so it's not lower than what we're seeing in Q1. As Kawamura-san said, power grid, Hitachi Energy's business, we will monitor its performance in the second quarter and see how much upside we can expect. Thank you. Now, to address your third question regarding the storage business in the U.S. As you rightly pointed out, this fiscal year, and because of various development plans ongoing, we're not going to launch new products this year. We'll have to wait until next year. We're going to compete with the legacy products this year. What approach are we taking in that regard? We have reshuffled the top management. For one thing, we are restructuring our sales channels. We're trying to strengthen sales channels for storage. Reduction of fixed cost and R&D costs, not reduction, but reallocation of R&D costs strategically. We're performing cost control to respond. Next year, we will have a new product launch that will translate into market expansion. But this year we're having no products, therefore, difficulty will continue this year. That's what we're expecting. Well, Hitachi Energy's quality problems, a follow-up question, and storage is going to shift to AI, so is storage business likely to weaken? Well, I'm sorry I failed to answer that. Hitachi Energy's quality problems, there has been no report at this moment. Is that going to blow up into a larger problem? We do not believe so. There's no negative report so far yet. I don't think it will be a drag at this moment. Storage market growth-. Well, yes, so there's been negative impact from AI, but, so the market may not grow substantially, but, there's a shift to cloud and overseas business, and so, the pie overall is stable. Would the market shrink considerably all of a sudden? We do not believe so. With the launch of new products, we think we can still capture market. Would the market change all of a sudden structurally? We do not expect that to happen. Thank you. Hi, Thank you very much. Hiroi-san, please, please unmute and ask your question. Question? I hope you can hear me. I have two questions. First question is regarding the evaluation of the first quarter, especially organic growth, JPY 236.9 million. How do you evaluate this? This is the first result after the deconsolidation. I think it's a good result. What is your take? Now, in order to maintain the organic growth, the momentum, what do you think you have to do? In order to sustain this, are there prevailing risk? Please elaborate further. That's my first question. Thank you very much. Answer. Regarding the first quarter result, actually, the first half is not over yet, so it is difficult to say this in a fixed matter. I think the first quarter, we did very well, as there have been a foreign exchange impact that we have been discussing. Hitachi Energy made a significant contribution, making a significant change in our performance, which is related to the next question. It is organic growth. After taking over Hitachi Energy, integration is almost complete, and now, organically it is making contribution because it's working. As I mentioned at the outset, this is a very important part of the mid-term management plan. This is a good first step, a successful first step, in terms of achieving organic growth. Now, our intentions going forward, will now be addressed. Large asset business must is translating into revenues and earnings. There are four important points to bear in mind. There are different ways of thinking about this. We have four businesses that are JPY 1 trillion. Global logic, digital transformation related business is one. We have railway business and Hitachi Energy, as well as Hitachi High-Tech. These four businesses are the main engines for our group. Return must be generated, which is commercial to the asset, and that is going to be very important as we aim for organic growth going forward against the backdrop. What are the risks that we are contemplating? When the assets are increase, in terms of investment as well as business assets, as well as major contracts, can accumulate, that means that risk management will have to be strengthened as well. They must go hand in hand, so that four main engines can be fully operating and control the risk that may emerge. That is our intention for the second half. Thank you very much. Second question. BOJ said that yield curve control has been adjusted, so it's a virtually rate increase. What, what impact will this have for, for your business going forward? What is your take on this? Before coming here, I was looking at the news. It is not an official comment, it is only an impression that I can share with you at this point in time. According to the yield curve control of the BOJ, is that for 10-year JGBs, 0.5% to 1.0% of flexibility will be provided. The intention behind this is that having entered this week, in a 25 basis point rate hike, was conducted in Europe, as well as in the United States. Japan cannot do that because there's not the sector that is in inflation. The In some industry, there is more than 2%, in other areas, that is not the case. We cannot change the policy rate in Japan. That is the reason why difficult maneuvering is required by the BOJ. The JGB flexibility is being enhanced so that through the bond market, in terms of rate formation, flow is provided. This is under the very difficult inflationary environment in Japan, the policy was compelled because of this difficult environment. In the bond market, interest rate formation is going to be utilizing the market. Against this backdrop, what is will Hitachi do? It isn't as if the policy rate is going to go up immediately, or the funding cost is not going to increase immediately. For the time being, according to what we have heard today. The interest-bearing debt is we have JPY 2 trillion also on the balance sheet. Japanese yen debt is around JPY 200+ billion. That means that it is on a revolving basis, and there is refinancing at a new interest rate. Every year, JPY 200 billion interest rate, the ri- rise will have an impact every year. Under the It's on the same continuum as the yield curve control, so I think the impact will be very limited, but we are assuming that. Furthermore, foreign exchange is going to have a more significant impact for us. With the BOJ announcement, the impact on the foreign exchange market is not clear, because we're going to go into the weekend. We have to look at what is going to happen next week. Yield curve control, it will have an impact on foreign exchange. This will have a more significant impact on our performance. The third point is internal. Interest rate going up. In the capital market, the equity cost may be impacted as well. That means that investment threshold within the company, the hurdle rate may have to undergo change. Therefore, in terms of investment, we will have to consider the rising interest rate environment. This will have an impact on our direction going forward. Interest-bearing debt, interest rate burden, as well as impact on foreign exchange, as well as impact on the investment criteria decisions will be impacted. These are my first impressions after looking at the report coming out of BOJ. At any rate, the interest rate will have an impact on market overall as well. Therefore, we have to watch the situation very carefully so that we can take appropriate measures going forward. Thank you. Hi, Thank you. To continue, Oyada-san, Oyada-san, please unmute and ask your questions. Thank you. Question. I have three questions that I wish to ask. Question number 1, regarding Lumada. 1st quarter revenue, your assessment of that year-on-year 30% increase, based on the Japanese yen. This is above your full-year forecast increase, so excluding FX impact, 1st quarter 30% increase, how will that look like? How is it different? There are three segments: DSS, GEM, CI. Of the three, which is growing most? It seems like Connected Industries is growing more. If you could offer a qualitative assessment. Yes, thank you for the questions. So answer, Lumada's Forex impact will be explained by Kato-san. Yes, on Lumada, 30% increase in Q1. There is not much FX impact. Even excluding FX impact, 27% increase was recorded, so only a 3% difference. Basically, even excluding FX impact, organically, it's growing strongly. Thank you. Lumada, in particular, what's going to grow? We have not attached this as part of today's presentation material. I do have some numbers, however. What's going to grow substantially? You may think that Connective is growing more, but year-on-year, sector by sector, they're going to grow digital, on a full year basis, 15% increase in revenue, GEM, 18%, CI, 17%. All of them are growing at a similar high level. Connective seems large, last year's Connective Industries number was smaller, so it appears large in terms of growth. Industrial, for example, was not large last year. It's growing. Overall, all three are going to grow at around 16%, 17%. Very similar. Thank you. Question number 2: Hitachi Energy's profitability was improved in Q1, and you talked about several factors behind that, what was the greatest factor impacting the upside in profitability? In a descending order, what are the greatest factors, and would they be sustained in the second half? We You talked about short delivery products, and what would be their impact on impact, and will the impact continuing into the second half? Well, thank you for the question. Answer: Hitachi Energy has a business size of JPY 1 trillion, so Hitachi, Ltd. is always involved in monitoring its business, and there are, are three main factors behind profitability improvement. For one thing. There are over 100 plants and factories, small and large, around the world. We have made an effort in consolidating these plants and factories, and driving down fixed cost, and it's showing its effect now. That's one. Secondly, we have narrowed down R&D strategically. Grid automation, especially software development, we have been concentrating R&D on that. Large transformer, large products, rather than doing R&D on those large products, we're shifting our R&D on software. Selective and strategic approach to expenditure, spending R&D. Number three, inflation is somewhat down, and so cost as well. Although cost remains high still, it has become stable, and cost increase is passed on to the customers, driving profitability. These are the three main factors behind profitability improvement for Hitachi Energy. How will this fare in the second half? There are still uncertainties, but what I just mentioned, for example, consolidation, streamlining of plants and factories, and procurement cost is stabilized. Cost is passed on to customers. I think they will evolve in a stable fashion, so I think these trends can be sustained into the second half. That's all. Thank you. Question 3 regarding Connective Industries, in your presentation, well, in the first quarter, high tech was low, you mentioned. Now, looking at your peers, projects are being extended, it seems. Downside risk of a high-tech business, how do you view that? Suppose there's a downside for Hitachi High-Tech, and if we look at Connective Industries segment alone, would there be any other upside impacts from anything else? Building a system business in China, for example. Any positive factors that would offset the negative, if you could share with us? Well, thank you for the question. Answer about a downside risk of high tech. This is because the semiconductor manufacturing equipment, Intel, has been suffering with AI. Well, there's been shift away from Intel to NVIDIA. NVIDIA is now the dominant player in the market, so very difficult condition has continued. By the end of this fiscal year, I think the correction in semiconductor manufacturing equipment market will end. There will be recovery next year, we're expecting. In terms of high tech, we also do a medical analytical instrument that we deal with Roche. For the past three years, because of the impact from pandemic, there has been very high demand for these instruments. Business has been very robust. Without this medical business, I think semiconductor segments business would've been down more severely for Hitachi High-Tech. Medical has been a positive factor, offsetting that impact, and thus, this number. Kato-san will share with you some numbers. Well, just to add to what was said, in the first quarter, well, customers plans have been changed and shifted in terms of timing, the plans themselves were not changed all that much, but it was lower in the first quarter. I think semiconductor equipment sales will be the same or flat as FY 2022. Medical equipment, in the first quarter, there was more upside than planned. For the full year forecast, we are seeing an increase. Semiconductor equipment, flat from the last time, but second quarter onwards for semiconductor equipment business, we would like to closely monitor the market. Overall, Hitachi High-Tech is in a difficult question. Are there any positive factors that we can look to? You asked. Well, high-tech business has a business of JPY 1 trillion. When it's sluggish, we need to have a counter factor, but because of the size of its business, it's very difficult. Overall, elevator business in China, it's true that it's not easy there, but we are dynamically reallocating our resources to service business, so constant revenue from that. Home appliances are recovering steadily, so we may be able to use that to absorb digital, water, environment, and industrial products. They are not large, but they are evolving in such a way that they would contribute more to the bottom line. Even if high tech continues to be difficult for CI overall, Connective Industries overall, we do hope that we will be able to absorb our negative impacts and achieve the planned numbers. That's all. Thank you. Well, Yoshikawa wishes to add a few comments. Semiconductor market conditions. U.S. etching companies financial results, I'm not sure if you're monitoring them, but WFE- I have made a upper revision to their forecast, which is a very good sign, we think. Nanotechnology solution, this segment is in the negative, but compared to the etching company in the U.S. year-on-year Q-on-Q, well, our business is moving almost in the same direction. Inclusive of that, WFE forecast was revised upward, so investment appetite, and as Kojima-san said in Investor Day, AI is going to be a boom. Processor-related business where Hitachi High-Tech is involved. Energy consumption with respect to that and a technology innovation will be activated as a result, and I think they will increase going forward. If that is going to be the case, and it depends on the manufacturer or the customer, of course, but, I think, we can expect the market to bottom out in the second half. That's our hope. We would like to closely monitor the market for nanotechnology business. In other industries, just add home appliances, GLS, Lumada business, there is to be grown, we're trying to do so. Lumada's business in the first quarter for industrial equipment, well, as a part of the midterm business plan, we have this narrative, so connected home appliances. And Hitachi Sanki's Lumada business in North America, that is ongoing. That is something that I would like to add. Thank you. Yes, hai. Thank you very much. Harada-san, please unmute and ask your question. Question. I have three questions. First question is, you said that the backlog of is quite significant, so please give me more detailed information regarding this in the business. Last year, a significant growth was shown. It seems that this year it is increasingly strong. Please elaborate further on this business. I'd like to ask, Kato-san to respond. Page 19, the orders are shown here, DSS, front business. For DSS, it's about 70%, which is being a very strong start. All these businesses are very strong. Financial BU, major deals have been achieved. Social BU, major deals have been won, in power, major deal has also been won. Compared to last year, last year was rather weak, but we have been able to receive orders. For the communication areas, we have had a prompt ordering of the orders received. That, that is the reason why for the front business we have achieved a 70% growth. Question, second question: for Lumada, connective has increased. You said that home appliance, as well as Hitachi Industrial Equipment system, has also grown as well. In terms of home appliances, it is becoming connected. However, I don't think it is going to translate to significant revenues, but connective is growing significantly. There must be other major factor driving this growth. Please elaborate. Connective and Lumada are in close affinity, so please elaborate further on the relationship between the two. I would like to ask Kato-san to explain first. Regarding connective, 1 in 20% has been achieved. What is characteristic is high tech first and foremost. Connected products in high tech, in hardware, data enabled and connected are increasing. They are not all Lumada products, or we refer to them as non-Lumada. Shifting from non-Lumada to Lumada is now occurring, so high tech is increasing this business. What is another characteristic is that home appliance, the GLS, and building system. In this area, connected products are increasing in terms of ratio and digital service business. In terms of business, the remote monitoring is enabled. The Lumada business is increasing, so from There is a shift occurring from non-Lumada to Lumada business, and that is the reason why connective products have increased. Next thing, let me give you a specific example. For home appliances, refrigerators and washing machines are increasingly becoming connected. What is more prevalent is the- inventory of the mass merchandises and the track record of the customer purchase as well as maintenance are areas where Lumada can be enabled, and providing control. In addition to standalone connected in terms of sales, Lumada is making a significant contribution for water. It's not just hardware, pumps and motors are not what we are only selling, and Lumada can provide in-house services in this area as well. It's going beyond the hardware. The operation per se can be covered by Lumada. This is the direction we are pursuing, having an impact overall. Thank you. Question regarding high tech. The connected means that you have Lumada for Hitachi. Compared to other manufacturers, do you think that this could be a differentiating factor? That's my take. Compared to other companies, may I understand this is a more advanced use case? Yes, that is a correct understanding. There are two reasons why I say this. Software and applications are sold by our company, but that's not all. We also have hardware products in the background as well. We can also operate factories, we can operate train systems as well. Data can be collected, and the management or know-how will be captured in Lumada. This is also the source of the competitiveness for Hitachi. It's not just software and applications. We have product as well as system operation capabilities of the as well, which is a source of our strength. Now, in terms of characteristic of Lumada products, it's vendor-free, vendor-agnostic. We can use Lumada for different applications. It's not just for simple jet engine for a company. We have multiple entry points, and Lumada can control the overall systems. This is also another source of the competitiveness on our part. For high-tech Lumada solution, using semiconductor co-creation site. We have the three such sites. We are working closely with our customers in 2022 in the United States. In Oregon, we have such a site. For this year in Taiwan, we have established a site, and Korea 2022. I think it's easy for you to imagine what kind of clients that we are working closely with. In the area of the growth, we can have a laboratory jointly with our customers, so we are close to our customers. That is the DNA of Lumada, the strength of Lumada that is being brought to bear in a specific manner. Third question, regarding energy, I want to clarify the following. You said that backlog is increasing for energy, and you cannot correspond to that. That is the reason why you are trying to enhance your capacity, and you're also introducing the short del ivery products. Have you been able to ramp up the capacity faster than expected, and is that the reason why you are able to increase revenues in this area? Answer: For investment in factories, it's not immediate in terms of impact. It takes about one year to make such an investment. Capacity ramp-up will come later, but the pandemic is now over, and although we have inflation, the procurement is becoming more stable, and capacity utilization is increasing because the manpower has come back, and now we are reverting back to the normal level. The impact of making a further investment will come later. With the local management, we are looking at the overall portfolio, not just long-term projects, but also on transformers, which is short delivery. We have been able to make those changes. Thank you very much. That's very clear. Thank you. Thank you. To continue, Umegaki-san, please unmute and ask your questions. Yes, thank you. Can you hear me? Yes, thank you. I would also like to ask a few questions. First, about the situation of late. We're at the end of July. Hitachi Energy, Hitachi High-Tech, there are both negative and positive factors that you explained about. Have there been any changes since the end of the first quarter? If you could offer qualitative comments. Thank you very much for the question, and so. Q1 is over, and we're at the end of July, and half of the second quarter is almost over. The greatest change from the end of Q1 is Forex. First quarter actual rate was JPY 137 to the dollar. How will the rate change? Will it go up or down? We have come to a turning point, if you will. Up until recently, I think, there was a forecast that yen will further depreciate, but we no longer know whether that's going to be the case because of BOJ announcement and other developments. Forex is very uncertain. That's one change. Secondly, in terms of the business, have trends changed in the market away from Q1 to Q2? No. The four engines of growth that I talked about, where there's large asset base, they are moving. They're operating more or less as planned. In terms of the substance of business, is there going to be any major change in the second quarter? I do not think so. Well, thank you for the answer. My second question, at page 9, Adjusted EBITDA, others, so increase in business scale, changes in selling prices, there are several factors noted here. Is this in descending order, the largest at the top? If you could show the size of the number for each. Well, Kato will answer the question. Well, as you said, yes, this is in descending order, the largest at the top. Changes in business scale. JPY 236 billion. In correspondence to that JPY 68 billion, that's change in business scale. JPY 33 billion for selling price change and rising material prices, impact thereof, a negative JPY 10 billion, and the remainder is the rest. In line with the increase in revenues, we are reinforcing structure, which has a negative impact, but roughly, that's the breakdown for this. Thank you. Lastly, I would like to ask about Thales GTS. In terms of a forecast, Thales is going to be included in this second half forecast. The status of review and approval, you may not be able to share very much, but to the extent that you can, if you could please share with us the update. Well, thank you for the question. As you know, acquisition of Thales, well, that is for Thales railway signaling system, so European continent and the U.K. From the competitive authorities of both, we have heard opinions, and we're in the final leg of negotiation or coordination with the U.K. CMA or competitive competition authority. Well, Thales has a signaling business, and, well, they're telling us that they would like to coordinate the competitive condition by changing the scope of signaling system. We have offered a counterproposal to what the authorities have said, and they're looking at our counterproposal. Whether confirmation go or no-go, that will be heard in around October, according to the media. The actual deal will be done into the new year, or at the end of December at the earliest. By the end of August, we were looking to close the deal, but because of our coordination with the U.K. authorities, it's taking time. Therefore, we're looking to close the deal year-end or early into the new year. There's been some, a delay of several months, but, we are able to acquire, and, that's, it's included in the forecast. That's where we are. You're including Thales, in the, second half. That's three months' worth of business, but, it could be reduced. Is that correct? Yes. If, it cannot be closed in September, if it's going to be closed in, December, yes, 3 months' worth of, business, to be subtracted from the forecast. That is correct. Thank you. Now, at this time, we would like to now take questions on the English channel. Those of you with questions, please use the raise hand button. Any questions on the English channel? Please use the raise hand button if you have a question on the English channel. There seem not, so we will revert back to the Japanese channel. Takizawa-san, please unmute and ask your question. Question. I also have three questions. I have three questions. First of all, regarding building system, revenue was better than expected. In terms of, backlog, minus 14%? how can we evaluate this? In terms of real estate, the market is in a correction period, and has there been any changes in the competitive landscape? Taking into all the orders into consideration, is it still on the course of increasing revenues based on services? Thank you. Answer. Kato-san will answer. Regarding the building system in the first quarter, as you've rightly mentioned, for building system, minus of 14% in terms of orders. This is mainly a reduction in China. For new builds, the number of units is decreasing compared to the previous year, so that is a decline. As I have, we have explained, in terms of service business, so maintenance as well as retrofitting elevators for existing buildings and renewals are very strong. For the first quarter, the performance was good. For the new buildings, has decreased. There is also a time lag in terms of posting sales. Therefore, with the first quarter orders, it isn't as if the forecast for the year will change, for the The forecast for the fiscal year is still achievable according to our view. Second question, regarding GlobalLogic. 22% increase for the full year, and 19% for three months. So it seems that you're slightly behind. Is this impacted by the global recession? What is your take? Please elaborate. I'd like to ask Kato-san to explain this. Regarding the first quarter, there has been no significant change. About 20% of growth is being achieved. In the first quarter, on the part of the customers, investment is being restrained. This is not only for our company, but for the industry overall. This is having a slight impact. Basically, this is a business that is poised for growth in the medium to long term. It is on a growing trajectory. We believe that these numbers are achievable for the full year. Question, my last question. Regarding DSS service platform profit, is what I'd like to ask a question about. Storage is declining, and growth investment is expanding. Specifically, what kind of investment, at what scale are you contemplating? Answer: There are two points to be made here. Research and development, continuous investment will take place, and there is also M&A. One time, a significant amount may be invested as well, mainly around Lumada and generative AI areas. There is an investment being made in research and development on increasing mode. It isn't as if we are contemplating investment for large acquisition. It's a generative AI around Lumada, where we are continuing to make investment. For example, for cloud, especially for hybrid cloud, we want to grow this business going forward. The full solutions will be enhanced, as well as sales effort will be stepped up. That is where we are making investment for growth. Regarding the first point, building orders. Last first quarter, in terms of units, the business was very strong, compared to the quarters before and after. The last year's first quarter was 110% in terms of orders. The subsequent quarter, it was below 100% because of the slowdown in China. If we make a year-on-year comparison, between the first quarters, last year was very strong. -14% is a numerical impact that is manifest. Regarding the growth rate of the GlobalLogic business, two pure competitors exist in the United States. Organic and inorganic are mixed in the performance. On the surface, our numbers are larger, but the impact of M&A must be considered as well. There is also synergies that have been brought to bear with other businesses. In exclude If we exclude that, compared to our competitors, we are in line with in the industry. On the other hand, we have other sectors, and we can bring to bear and enjoy synergies. That is the advantage of GlobalLogic belonging to the Hitachi group. In this way, that is how the trajectory of growth for GlobalLogic should be evaluated. Thank you very much. Thank you. There seems to be quite a number of hands being raised, but we're approaching the time to close. The next one will be the last question, and we would like to follow up on other questions later individually. Lastly, Ishino-san. Ishino-san, please unmute and start your questions. Thank you very much. Can you hear me? Yes, we can hear you. Thank you. Question, what Kawamura-san talked at the beginning. Japan accounts for 35% of revenue, and overseas, 65%. It's in the flash performance report as well. For Hitachi Group, in terms of a profitability in Japan, in terms of profitability, what is the percentage that Japan accounts for? How are you trying to control global profitability in that context? Well, Asia, North America, Europe, there are other regions, so how are you controlling profits, Japan versus overseas? Well, thank you for the question. Well, the number for Japan alone, we're not tracking that any longer. Each sector, each business unit has a global business, including Japan. We're looking at overall numbers only, so we're not carving out numbers just for Japan. We're not able to give you an immediate answer, so please take your question. Please let us take your question back as homework. Well, when monetary policies are changed substantially, I think that's going to be a very relevant question, so I look forward to your answer at a later timing. Another question: GlobalLogic generative AI-related business orders, what is the% of such orders? Well, another very difficult question. We do not have relevant data at hand, let us look into that and get back to you with an answer later. Well, thank you. Lastly, about High-Tech, Hitachi High-Tech, orders There was mention about WFE's upward forecast revision. The extent of improvement is limited. It's -30 to -25. Hitachi High-Tech's order growth, are orders going to slow down given the situation of the industry? Does that mean that it's going to have a tough time next year? Well, thank you for the question. I think I talked about this in earlier discussions, but Hitachi High-Tech not only does semiconductor manufacturing equipment, but medical analysis and measurement instruments, data processing as well, they're balanced out. Manufacturers who are dedicated to semiconductor manufacturing equipment, they're in very difficult position, but Hitachi High-Tech is not. Medical business is doing very well. It can be balanced out and offset. Semiconductor manufacturing equipment decline will be bottoming out, we believe that there will be a recovery in that market into the next year. In the second half of FY 2023, next fiscal year, we're not being pessimistic about our semiconductor manufacturing equipment business. Thank you. The time has come, to bring, the Hitachi, Ltd. web conference, so on, first quarter of fiscal year 2023 earnings, to a close. Thank you very much for your attendance despite your busy schedules.