[Foreign language] Thank you very much for waiting. Time has come, so we will now begin the financial results briefing of Hitachi, Ltd. for the third quarter, ended December 31st, 2023. Thank you very much for taking time out of your busy schedule to join us today. First of all, today's presentation materials are available on Hitachi, Ltd. IR website and the news release site, so please check them as you need. Let me now introduce the three speakers: Yoshihiko Kawamura, Executive Vice President and Executive Officer, CFO of Hitachi, Ltd.; Tomomi Kato, Vice President and Executive Officer, Deputy CFO; Masao Yoshikawa, Executive General Manager, Investor Relations Division. Kawamura will now give an outline of the financial results. Please wait for a moment while we switch screens. Mr. Kawamura, please. [Foreign language] Thank you very much for gathering for this meeting today. Now, we would like to start the explanation of the results of the third quarter for Hitachi, Ltd. Now, please look at page 1. There are 4 points I'd like to emphasize today. First is the key points of the third quarter. Second, the results of the third quarter. Three, the fiscal year 2023 forecast, and also number 4 is the appendix. These are the points I would like to cover. Now, please refer to page 3. Here, I would like to give you the key messages for the results. There are 3 points that are covered here. In terms of the results, 3 sectors are included. Hitachi Astemo for automotive parts have been reorganized. They are no longer consolidated, therefore, it is only for three sectors that we are showing performance for Hitachi Limited. That is the reason why we're referring to this as three sectors. The third quarter results will be presented. Revenues came in at JPY 2.1289 trillion. 11% increase year-on-year. Adjusted EBITDA JPY 221.8 billion YOY, JPY 34.1 billion increase. So we have revenues and profits. For the accumulated from Q1 to Q3, revenues was JPY 6.0537 trillion YOY, increased by 12%. Adjusted EBITDA, JPY 581.5 billion YOY, a plus JPY 83.4 billion increase in revenues as well as profit. Now, based on the third quarter, three quarters, I'd like to talk about the forecast. Revenues, JPY 8.2656 trillion. This is a 4% increase from the previous forecast. Adjusted EBITDA, JPY 829.3 billion, increase of JPY 11.3 billion from the previous forecast. Therefore, we have revised upward in terms of revenues as well as profits. Now, in terms of consolidated total forecast, net income, JPY 530 billion, that is a JPY 10 billion increase from the previous forecast. Core free cash flow, JPY 440 billion, increased by JPY 100 billion from the previous forecast. I would like to talk about major transactions for DSS, Digital Systems and Services, as well as we have had a very strong orders, inclusive of that for Hitachi Energy. For DSS, epoch-making deals have been won, as mentioned here. The next generation nationwide load dispatching system has been won. This is not on a region basis, but rather nationwide, the load dispatching system has been won. Now, Hitachi Energy has also been very strong. And as mentioned here, from TenneT, we have won a business of JPY 40 billion under the framework agreement for Hitachi Energy and Petrofac. Hitachi Energy will supply its HVDC converter stations. This is a framework agreement for this deal or arrangement. With this, pre-advanced payment can be provided. This will also have a positive impact on our cash flow. Furthermore, for Trenitalia, we have won a deal of JPY 140 billion deal for high-speed trains in Italy. Digital Services & Systems for the three quarters orders has exceeded JPY 2 trillion year-on-year, up 9%, backlog of JPY 1.5 trillion. Hitachi Energy orders for the three quarters came to JPY 2.6209 trillion, up 51% year-on-year, backlog of JPY 4.3 trillion. So we have businesses around JPY 2 trillion, and therefore, we have the backlog of about two years. These are the major highlights of the third quarter. Now, I would like to refer to specific details. Please refer to page 5. These are the highlights of the results for the third quarter only. Please look at the text above. For the three sectors, we grew revenues 11% YOY basis, and increased Adjusted EBITDA by 18% organically. And please look at the table. Referring to the three sectors to the right, in terms of revenues, JPY 2.1289 trillion, up 11%. This is the growth of 11%. 8% is the year-on-year changes, excluding the impact of foreign exchange rate fluctuations, at 8%. Adjusted EBITDA, JPY 221.8 billion, a YOY increase by JPY 34.1 billion. And here, a YOY increase of 18% has been achieved. Adjusted EBITDA margin has also improved, at 10.4% for the three sectors. Net income has increased significantly as well, JPY 244.1 billion. Core free cash flows is also mentioned. This is an important KPI for our midterm management plan, and it has increased significantly to JPY 147.4 billion, increased by JPY 97.1 billion. In terms of foreign exchange, yen is becoming weaker, and therefore, we are assuming JPY 148. The sensitivity will be explained further later. Now, please look at page six. Page six and seven are the results of the business segments. Page six, Digital Systems and Services, as well as the Green Energy Mobility. Page seven is for the Connective Industries. Please look at page six. For Digital Systems and Services, on the very top, YOY basis, increased by 9%. Adjusted EBITDA increased by JPY 16.1 billion, therefore, increasing revenues as well as profit for the sector. Looking at the dynamics on the right-hand side, front business increased revenues, and Learning Society Services increased also revenues as well as profit. Service and platforms revenues was flat. However, the cost reduction has led to increase in profit, as shown on the below. GlobalLogic continues to grow strongly, increase in revenues as well as profits. Adjusted EBITDA is JPY 87 billion, is the highest ever record for a digital system service. Next, moving to Green Energy & M obility. Please look at the top line. YOY basis, increased by 21%, 1% for revenues, and almost flat, around JPY 100 million for Adjusted EBITDA. Hitachi Energy, R ail has increased revenues, but Power G rid related costs has increased somewhat, and that is the reason why Adjusted EBITDA is almost flat. Now, nuclear energy, Hitachi Power Solutions is also mentioned here. YOY increased by 32% or plus JPY 0.6 billion. Hitachi Energy here, there has been a significant contribution to revenues increased by 25% in terms of revenues and adjusted EBITDA JPY 9.2 billion. The market environment, as well as the framework agreement, has had a positive impact, therefore making significant contributions to the profitability. Related cost is also shown here. Railway systems for the third quarter has had increase in revenues, but a decline in profit. This will be explained in further details in later pages. If you look at the on a year-to-date basis, it is increased by revenues as well as earnings, but therefore this situation is special to the third quarter. Next, looking at the connective industries, looking at the very top, in terms of the revenues flat, EBITDA has increased by JPY 400 million. Down below, the building system is shown here, declined by 1% in terms of revenues, increase in adjusted EBITDA by 1.9. This is linked to the Chinese real estate market correction that's taking place. In our case, there have been significant impact, but even with less revenues, profit is increasing. This is because the from hardware we are now shifting away to focus on services, which is shown in this result. Smart life and eco-friendly systems, which is home appliances, -7%, -0.7 in terms of Adjusted EBITDA. We believe that this will be the bottom this year. Next year, we are poised for recovery. The reason why I say this is that because of the pandemic, over the three years, home appliances had a significant increase. So we are now in a reactionary decline, and this correction will be reaching a bottom this year, and next year, we are poised for recovery. Next, measurement and analysis of Hitachi High-Tech, YOY basis, -7%. Adjusted EBITDA decreased by JPY 6.5 billion, decreasing revenues as well as profit. The measurement and analysis system for medical is growing very well, but the semiconductor manufacturing equipment, this time last year, we thought that semiconductor cycle will recover, but there's been delay of one year, and therefore, this year will be the bottom. Therefore, that is a reason why we have a decrease in revenues as well as profit, at which we're at the bottom. Industrial D igital, Water & E nvironment, and the Industrial Products, the industrial areas are all posting increasing revenues as well as earnings, remaining very strong. Here, we are looking at the subsidiaries. At the very top, we have Hitachi Astemo, but in October, it has converted to equity method affiliate, therefore, on a YOY basis, the second half will be less, and therefore, it is negative. Hitachi Construction Machinery, we only have 25%, so it is not in the scope. Hitachi Metals is also being deconsolidated, and therefore, there'll be no impact in the fiscal year. Page 9. Based on what I've explained, looking at revenues on top and Adjusted EBITDA on the bottom, this is the waterfall chart showing the movement. As for revenues at the top, at the left-hand side is the third quarter result for last fiscal year. Right-hand side is for this year. The movement is shown in the middle. First of all, there have been the divestiture of the Hitachi Metals, minus JPY 279 billion, divestiture of Hitachi Astemo, minus JPY 383.6 billion. The foreign exchange was impacted positively, JPY 5 billion. There have been sales effort made, and increase altogether by others, JPY 163.6 billion. We end up at JPY 2.258 trillion. So it is a decline in revenues. For Adjusted EBITDA, we start with JPY 231.1 billion. The items are the same, divestiture of Hitachi Metals, Astemo, and the foreign exchange, and other efforts made. We end up at JPY 231.2 billion. As I have mentioned earlier, in terms of revenues are declining, but for Adjusted EBITDA, you can see that it remains flat. Revenues are declining, but profit is being secured in these results. Page 10, please. Here, at the end of third quarter, the balance situation is explained here, cash flow situation is explained here. The gray area is as of December 31st, 2023, end of the third quarter. Now, we are at JPY 12.073.2 trillion. Looking at the difference with last year, in terms of asset minus JPY 428.2 billion because of Hitachi Astemo and below. Looking at the 51.5 days and in terms of cash conversion cycle, it is improving by 6.6 days. This is because of the cash flow improvement for Hitachi Energy. You can see that the cash conversion cycle is improving significantly. D ratio is also improving to 0.32 x. In fact, on a full year basis, it will be even better than this. In terms of cash flow, on the other hand, there is operating activities, investing activities, and free cash flow is around JPY 70.8 billion, increased by JPY 136 billio n. Core Free Cash Flow, which is most important, KPI, one of the most important, is increasing by JPY 193.6 billion to JPY 268.5 billion. Page 11, please. Now, let me update you on Lumada situation. So there are three tables. First, upper left, far left, and second one, this is the third quarter of FY 2022 and 2023. At the top, you can see the revenue. Third quarter, fiscal 2022 was JPY 476 billion up to JPY 568 billion, so that's 19% YOY, 19% up. And you can see the legend, the revenue from the four quadrants. And the two on the right, bar graph, this is the full year of FY 2022 and FY 2023 forecast. FY 2022, this was JPY 1.960 trillion up to JPY 2.330 trillion, so that's another 19% increase YOY, and then adjusted EBITDA. It's 1% up from 14% to 15%. Next, the bar graph on the right. This is Lumada business ratio of overall. Left is revenues and the proportion of Lumada, and the right side is adjusted EBITDA. Revenues, FY 2021, 2022 and 2023 forecast. This year, JPY 8.2856 trillion, and of which JPY 2.33 trillion is Lumada, so that is 28% of total. Adjusted EBITDA, likewise. Lumada proportion on adjusted EBITDA base is now up to 41%. Close to half is Lumada. Now you can see the horizontal bar graph. This is what I mentioned at the outset. FY 2023 revenue, the left side, JPY 2.33 trillion. Breakdown here, digital systems and services, JPY 1.04 trillion, YOY 21%. Green energy and mobility, JPY 390 billion, YOY 23% plus. Connective industries, JPY 900 billion, YOY +15%. You can see the topics at the bottom of the page. One is the load dispatching system. This is the largest. This is completely Lumada and Hitachi Energy, for overseas package will be brought in, so it will be the international specification. This is big. In GlobalLogic, on a smaller scale, we acquired digital engineering companies in Australia and the U.S. Suntory Beverage & Food Limited, and we have a collaboration. So this is a traceability system for raw material receipt to manufacturing, logistics, and warehousing. And lastly, generative AI. We are now trying to utilize generative AI internally and externally. We're seeing new movements. So that was up to the third quarter. Now from page 13, we will have the full year forecast. Page 13, please. So in all profit items, we have revised upward in all items. The three sectors, YOY, 8% up and Adjusted EBITDA, plus JPY 104.4 billion, 14% up. The revenues, three sector is JPY 8.2856 trillion. This is +8%. So this is the 8% that I mentioned earlier. And left side, this is the excluding foreign exchange factor, Adjusted EBITDA, JPY 829.3 billion, YOY, JPY 104.4 billion, and this is 14% up. Adjusted EBITDA, 10%. And net income attributable to Hitachi, Ltd. stockholders, JPY 546.8 billion. So all profit items increased. We're revising all items up. And EPS, JPY 588. On the left side, core free cash flow, up from JPY 340 billion to JPY 440 billion, up by JPY 100 billion. ROIC is up from 8% to 8.2%. Now, the small table on the right side is the FX sensitivity. No change from the past. JPY 140 to $1. So if one yen depreciates by JPY 1, how much impact on revenues and adjusted EBITDA is shown? So with JPY 1 depreciation, JPY 3 billion plus on revenue and JPY 200 million plus on adjusted EBITDA. Page 14. So, the earlier had two pages, now a summary on one page. Digital systems and services. So if you could look at the entire sector, revenues, JPY 2.55 trillion, and adjusted EBITDA, JPY 321 billion, 12.6%. This is the highest profit, and YOY 7%, JPY 27.2 billion, and this is up 3%, 11% up from the previous forecast on dynamics. Revenues and profits are up. In GlobalLogic, both revenue and profit are up. Next, Green Energy & M obility. The top sector part, revenues, JPY 2.97 trillion. Adjusted EBITDA, JPY 190 billion, and YOY +20%, JPY 26.4 billion, and +7%, plus JPY 4 billion against previous forecast. Dynamics. So first of all, against the previous forecast, revised up by JPY 190 billion in revenue and JPY 4 billion in adjusted EBITDA. Hitachi Energy, revenues and profits are up. Railway, as I said earlier, on a full year basis, revenue and profit are now up. Third quarter alone is not, but full year, revenue and profits are up. Connective Industries, top row. Revenues, JPY 3 trillion, and adjusted EBITDA, JPY 330 billion, +1%, JPY 17.8 billion. Against previous forecast, it is flat. Building Systems, +3%, plus JPY 4.5 billion, so both revenue and profit are up. Measurement & Analysis System, Hitachi High-Tech. Because of the reasons I mentioned earlier, revenue is flat, but the is slightly down. Astemo is now equity method. It will convert to an equity method affiliate. Next, page 15, please. Full year revenue and adjusted EBITDA, comparing last year and this year. So, JPY 10.881 trillion in FY 2022 both Hitachi Construction Machinery, Hitachi Metals will be divested, and Hitachi Astemo foreign exchange will be positive, and others positive. And so it's JPY 9.450 trillion. Adjusted EBITDA, FY 2022 is JPY 884.6 billion, and same increase and decrease items. Right side, JPY 880 billion. Revenues is down, but adjusted EBITDA is flat. Slight decrease, but flat. The listed companies, will be excluded, and that impact is absorbed and achieving this level. So that was the full year results. From 2017 onward, this is a cumulative first, second, and third quarter. The big trend remains unchanged. Three sector grew revenue YOY 12% and increased adjusted EBITDA YOY, JPY 83.4 billion, 17%. Revenues JPY 6.0537 trillion, +12%. So that is the 12% you see on the first row, and 9% is excluding FX. Adjusted EBITDA JPY 581.5 billion, and plus JPY 83.4 billion is reflected here, so that is YOY +17%. Adjusted EBITDA margin 9.6%, and net income JPY 461.9 billion. Core free cash flow JPY 268.5 billion. This is cumulative third quarter, three-quarter cumulative. Next, page 18. This is quarter one through three. Big change, no change in trend. Digital Systems and Services, YOY, so both revenue and profit are up. GlobalLogic, both revenue and profit are up. Green Energy and Mobility, both revenue and profit are up. Hitachi Energy, a big jump. Rail Systems, well, is also up in sales and profit. Connective Industries, revenue is up by 2%, but adjusted EBITDA, because of Hitachi High-Tech, the semiconductor-related, minus JPY 2.9 billion in business. No increase in revenue, but the business composition changes, so profit is up, and Hitachi High-Tech number is shown here, and Astemo. So total here. Page 19, consolidated statement, profit and loss. You can see small numbers, but FY 2023, the gray part, the numbers I already mentioned are listed. Revenues, JPY 9.45 trillion, and adjusted operating income, JPY 740 billion. And you can see the ups and downs. Adjusted EBITDA, JPY 880 billion, and EBIT, JPY 979 billion. And third from the bottom, 24.4% effective income tax rate. This is bigger than last year's 14.2%. But last year, because of the, deferred tax asset and the deemed dividend, those were the factors, and 24.4% is a normal rate. Bottom right, net income, JPY 530 billion. Page 20, please. This is up to third quarter cumulative by region, by market. You can see in black box, three sector total, revenues and the composition ratio. Japan is 39% of the JPY 2.354 trillion, and China, down by 1% to 13%. Digital Systems and Services, 27% down. So in China, you can see that's a big factor. And on the right side, back to the black box, ASEAN, India, 9%, that's up by 6%. And North America, 15%. This is +19% on a YOY basis. GlobalLogic contributed significantly. In Europe, 17% YOY. This is Hitachi Energy, accounting for a big portion in other areas. On the far right, you can see third quarter cumulative overseas revenue of 61%. So over 60% is overseas. Page 21, by segment, order results. Digital Systems and Services, and then Green Energy & Mobility, and right side, Connective Industries. Digital Systems and Services, front business and, YOY, they're all strong. Order is growing from last year. Green Energy and Mobility. Fiscal 2023, third quarter YOY. Nuclear energy, 32% down, and railway system 53% down. I will answer in the Q&A session. Both in FY 2022 had large contract, and so it's a reactionary fall from that. Connective Industries on the right side. There's some triangles, where building -7%, and Smart Life and Eco-Friendly Systems, and 6% in High-Tech. This reflects the current circumstances, but the three industry BUs are up. I went rather quickly, but that was the outline of the material we delivered today. Thank you very much. Thank you very much. Thank you very much. We would now like to proceed to the Q&A session. Those of you who have questions, 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. Furthermore, if you no longer have to ask the question, please release the raise hand button. We will not be showing the video of the person asking the question today. W e will take questions first on the Japanese channel, and then the English channel. This time around, we will take questions from the media, institutional investors, as well as financial analysts altogether. So we will now take questions on the Japanese channel. Please use the raise hand button if you have any questions. Ezawa-san, please, please unmute and, ask your question. [Foreign language] Question. I have two questions. First of all, by regions, you talked about, North America. Please elaborate further on this matter. Second is regarding railway, business. In terms of, North America, increase in revenues, and you can see that the ratio is increasing. On the part of, Commerce and GlobalLogic, increase has been mentioned. But, by business segment, seems that, green, is, growing rather than digital, I take it. Is it a correct understanding? Please confirm. And in the green, I think it's Hitachi Energy, basically, in North America, the growth that you are seeing, what I am interested in, what kind of deals are growing in North America for green? You talked about forecast. You said that North America is going to be the driver of the growth going forward. Please elaborate further in the context of Hitachi Energy. The second question is regarding railways. Now, in the last result, I think, there was some adjustment made. In the third quarter, it seems that there has been a upward revision, although small. Is that a correct understanding? Please elaborate. But why is it going up and down, down and up? Control and forecast seems not clear. Do we have to be concerned about this o r is there a different reason why this is the case? [Foreign language] Answer: Regarding numbers, Kato-san will provide further details. Regarding North America, I mentioned GlobalLogic is very strong. This is a company that is growing significantly. But, as you have rightly mentioned, I would say that power grid, Hitachi Energy has been very strong. We don't have plant in North America, but because of the infrastructure related legislation, this is having a significant positive impact. Our railway business has been run in North America as well. In the green energy, there is significant contribution made by North America. Regarding railway systems, numbers are sometimes not fixed. I mean, Thales inclusion will have to be adjusted in terms of numbers. Thales will be next year o r rather, for fiscal year 2024. So, now, the situation is clear. That is the reason why we are presenting these numbers at the third quarter level. But, at any rate, for the railway systems, we have run major deals, not only in North America, but also in Europe, but we believe that this business will continue to make contribution. I'd like to ask Kato-san to elaborate on the numbers. [Foreign language] Regarding North America, as, Kawamura-san has just explained, Hitachi Energy is showing a significant increase and growing overall. Grid integration, as well as transformers, are growing significantly. And today, we talked about the orders backlog. We have a significant backlog, and therefore, we can expect a further growth going forward. Thank you. [Foreign language] Thank you very much. Thank you very much. Next, Okawa-san, please ask a question. [Foreign language] Question. I have two questions. First is on Digital Systems & Services front, profitability. I think you mentioned this, the profitability is improving quite significantly, so the background, if you could elaborate on the reasons and the future outlook, please. Thank you very much. That's my first question. [Foreign language] Thank you for the question. Answer: This front business, first, the project management, the Phase Gate Management is now done very stringently so that we will not, to avoid losses, and this contributed a lot. So cost side contribution was large. And the other factor was large system update, renewal continued, finance, public, and Energy sector. These large system renewal upgrade was done, and we captured that contract without fail, so that was a big contributor. If you need more numbers, Kato-san will explain in more detail, but that is a macro perspective. Thank you very much. Question. My second question is on Lumada. Digital engineering and this by segment breakdown, I think you changed from the second quarter, so if you could explain on the changes. The amount is still small, but what is the change in your forecast by product or by segment, please? [Foreign language] Answer. Oka-san, s orry, the data at hand does not have by product, the increase. I don't have the accurate number, but just roughly, ballpark, Kato-san will explain. [Foreign language] Fiscal 2023 forecast is up, revised upward by JPY 20 billion. System integration related and managed services, these segments we think we can go higher, so we revised upward. So third quarter is 19% growth year-on-year, and full year, 19%. So this forecast, we think we can achieve this level. So this is some macro rough numbers, but three sectors, year-on-year level, revenue, digital engineering, around 30% up, and system integration, 20% up, and connective, connected products, hardware, less than 30% up. So the four quadrant segments were all up by 20%-30%, so they all pushed up the results. Thank you. I hope this answers your question. Thank you. [Foreign language] T hank you very much. Next, Hiroi-san, please, please unmute and ask your question. [Foreign language] Question. I hope you can hear me. [Foreign language] Yes, we can. [Foreign language] I have two questions. At the beginning of January, your market cap exceeded JPY 10 trillion. What is your take on that, and how to enhance the enterprise value of Hitachi going forward? What are your views on this? Second question is regarding the press release, Kawamura-san. It seems that this is going to be the last earnings call for Kawamura-san, because of the changes that are taking place. Were you able to achieve everything that you hoped to achieve in Hitachi, after joining Hitachi? And please share with us your message to Hitachi people going forward. [Foreign language] Answer. Regarding market cap exceeding JPY 10 trillion, my thoughts is that this is only a midway point. Blue chip companies in the world, and the companies that we benchmark with, compared to them, we believe that JPY 10 trillion, in terms of Japan, we could be within the top 10. But we are a global company. That is our aspiration. Therefore, JPY 10 trillion is only a midpoint in our journey, and we want to aim further, higher levels. This is what I'm discussing with the president as well. How can we achieve this? We have to allocate more resources to the growth areas. This will be first and foremost. It's easier said than done, but there is customers and technology, and we have products, and follow-up will be required. We can't do this all at once. However, in the midterm management plan, product, customer, regions-wise, we have to focus our management resources as well as the effective utilization of assets that will be required. This is what I would like to ask the next generation to take on. Now, I entered Hitachi nine years ago, and whether I've done what everything that I have aspired to achieve is difficult to answer, but engaging in dialogue with you has been very useful for me. You've taught me a lot. I'm very happy and grateful that we've had a meaningful dialogue over the years. My as piration was not so difficult, but r egarding the dealing with assets as well as and to define our relationship with the capital markets, as well as the disclosure and control, these are areas that I hope to improve, and I believe that I have been able to make a small contribution. So there is a sense of satisfaction on my part. From the next earnings call, Mr. Kato, I will be answering your questions. Thank you very much for your support over the years. [Foreign language] Th ank you very much. Next, Umegaki-san, please unmute yourself. [Foreign language] Thank you for your hard work, Kawamura-san. So I have a question on next year. So the economy slowdown may be expected, and the FX is unforeseeable. On the other hand, DSS and GEM and the market situation and your order backlog is strong, and so I think your general trend is, revenue and profit increase. Are there any risk factors or things you need to be careful of? That's my first question. [Foreign language] Answer. Thank you for the question. Fiscal 2024, in February and March, we have budget meeting to develop the FY 2024 budget. So we do not have a concrete plan yet, but this will be the final year of the 2024 midterm management plan, so we have three plans. So this medium-term plan, 2024, we have measures, but if the current situation continues, like the geopolitics and the financial market, and the technology advancement, if this remains constant, constantly progress, then FY 2024 will be a significant increase in revenue and profit, as you just mentioned. But there are many difficult things in reality. I don't want to talk much about politics, but there are many elections this year. On the internet, we see news like, if Trump wins, the trade relations will change and the security situation will change. So it's not that business environment or the interest rate or the FX or the trade relations sudden change is a big risk that we have to be aware of. In March, the primary, Super Tuesday will be held in the U.S., so we will watch closely and see how U.S. will handle this. Of course, the relations with China and Taiwan comes into play, so the security is a big factor. On business side, BOJ, last week and this year, is starting to send out signals, this week, and so, interest rate is a big factor. We are controlling debt, so there should not be a big problem impact, but the bond market will be impacted. So the feedback from the bond market may come, if the interest rate moves, and the FX may move accordingly, so the investment mindset may change accordingly. So FY 2024, in terms of environment, cannot be optimistic, so we have to factor in all these elements. My successor will come up with a good 2024 plan, I think. [Foreign language] Thank you. Question: Page 20, by region, revenue. You said China, mainly on DSS, the proportion is declining. GlobalLogic does not have much exposure in China, if my memory is correct, and so you, I think you said that the challenge is to grow in China, but maybe it's not going that well from the numbers. So what is your plan, if you have any plan you could share with us? [Foreign language] Answer: GlobalLogic is a U.S. company, so what to do with China business is a difficult situation, difficult thing, but we have not given up. If there are business demands, we will go in and move forward, so basic stance remains unchanged. So I will read out the numbers. China, DSS. As mentioned earlier, GlobalLogic is down. It's not that GlobalLogic is down, Hitachi Vantara storage business. China's government's policy focuses on China products, and therefore, sales is down. [Foreign language] Understood. Thank you. [Foreign language] Thank you very much. Next, Harada-san, please. Please unmute and ask your question. [Foreign language] My question a nd thank you very much, Kawamura-san, everybody else. I have three questions. The first question is somewhat covered by the other questions. The margin is high for the front business, so please talk about the continuity of this business. The front business is receiving many orders, and IT resources are incurring a higher cost. There could be wage increases that is forthcoming. Is this going to have an impact on the margin? Would it put downward pressure on margins? [Foreign language] As you have rightly mentioned, system integration is a main part of the business, therefore, the personnel cost is very important. And many major projects regarding generative AI, system engineer work will be replaced somewhat by such technology. So we have a large-scale project that is ongoing so that the speed can be enhanced and absorb the HR cost. Numbers will be presented by Kato-san later. And for financial and public sector, as well as energy, in these areas, we believe that we have a significant backlog. We are assuming that orders will continue. Therefore, we don't think there will be a significant decline in the front business. It will continue to be a viable business for us with good profitability. Now, regarding the backlog, as I mentioned, in late on page 21, from business, the backlog is increasing by 10%. Therefore, it remains very strong. The IT service is also similar. Therefore, as Kawamura-san has already explained, even with the cost increase, measures are being implemented accordingly. Therefore, more than ever, we believe that even higher profitability can be pursued. [Foreign language] Question: So if anything, there is possibly an upside? [Foreign language] Answer: We believe that this business will continue to grow. [Foreign language] Question. Regarding the second question, is regarding Hitachi High-Tech, the semiconductor production equipment. You mentioned that the recovery, it will come from next fiscal year. Is it going to be the second half or later part of the second half? What timing, next year will we see a recovery? [Foreign language] According to industry consensus, I think it is going to be next year's second half. The semiconductor industry correction has run its course, but there is going to be somewhat of a time lag. Therefore, for our business, I think it will see recovery in the second half of next year. [Foreign language] Now, third point is regarding shareholder return. In the three years, JPY 800 billion-JPY 900 billion communication has been made last year, to the tune of JPY 800 billion-JPY 900 billion. What about the share buyback? [Foreign language] Core free cash flow outlook has been increased, and Renesas shares have been sold recently. Therefore, I believe that there are also asset sales made as well. [Foreign language] So is there a possibility that you can increase this further o r is it you're remaining with JPY 800 billion-JPY 900 billion for the Midterm Management Plan period? Please elaborate further. [Foreign language] Answer. Regarding the shareholder return, we have not started discussions yet. This is something that will be discussed going forward. In terms of the Midterm Management Plan story, half of the Core Free Cash Flow will go to growth, and half will be returned to the shareholder. That is a basic principle that we will be following. However, there are different areas of possible growth. We may accelerate investment for growth. So we have to look at the overall picture in considering the return to the shareholder. But basically, for the Core Free Cash Flow, half of that is what we are considering. This basic policy remains unchanged. And based on this premise, please look forward to further announcements. Now, in terms of dividend, as well as whether we are going to do buyback or not, has not been discussed yet. Nothing has been decided yet on this topic. [Foreign language] Thank you very much for the answer. That's all for me. [Foreign language] Thank you very much. Next, Inajima-san, please unmute yourself and ask your question. [Foreign language] Question. You mentioned this earlier, but I have two questions on China. The Japanese companies that are in China, about 50% are planning to reduce their business. So what is your current status of China business? And in the short and medium to long- term, what is your thinking on China investment? And the other question is, Kawamura-san, earlier you said China, Taiwan, geopolitical risk, the supply chain base will be shifted to studied to be shifted to Japan or the allied countries. Is any update, progress in that initiative? [Foreign language] Answer. Thank you for the question. What we think of investment in China. We have big business blocks in China. One is elevator, escalator, elevator business, and as Kato-san said earlier, IT-related, storage-related business, and Astemo. Japan's, with Japan OEM, we have parts, and so these are big businesses in China. So reducing China investment suddenly is not something we do, or, disinvest in China. No, we will not withdraw our investment. A fresh capital may not be invested in from Tokyo, but we already have capital accumulated on site, and so we will reinvest, and if necessary, we will use that. And the trade with Japan and trade with the U.S., we still have minimum level, a necessary minimum level, but, it's not like before, where, mass-produced China, products in China will come to Japan or the U.S. We're not doing that. So the business completes in China, in trading and manufacturing and investment. So that is our current policy. As I said earlier, elevator business, initially, there was the Evergrande problem, and so Evergrande problem, and so we were worried. But now, in case of new installation, we get upfront payment. And in maintenance, we are now shifting to maintenance. So we have quite good profit in China. Going forward, fresh money injection from Tokyo will be restrictive, and for trade, we will continue the current level. And the Taiwan issue, at the beginning of January, there was an election, and the Democratic Party, they won, and they are close to the U.S. How Beijing exerts its impact or influence will be watched, so it's difficult. Regarding supply chain, Shanghai region's home appliance-related parts, we're partially manufacturing in China still, but we are returning to Japan, too. Initially, we thought of somewhere in Southeast Asia, but now we are basically bringing this back to Japan. I cannot go into details and share with you the numbers, but we are on schedule. The supply chain risk is now diversified, and we will bear this in Tokyo. The biggest problem is the semiconductor problem. For Taiwan, we have various semiconductor-related business, the production equipment to Taiwan, so the geopolitical and security judgment need to be made. Our current judgment is that China will not use the armed forces to Taiwan. We think that is unlikely. But in any case, it will be a Hong Kong-style entry. So relating to semiconductor, we're not thinking of taking any particular action at this point in time. Thank you. I hope that's answered your question. [Foreign language] Thank you. [Foreign language] Akizawa-san, next, please. Please unmute and, ask your question. [Foreign language] Thank you. Question, I have two questions. First of all, regarding GlobalLogic, what is the organic trend? In the first half, there was impact of acquisitions, 6% or 7% growth was mentioned. But from the third quarter, is it going toward the recovery, or is it still headwind? [Foreign language] Kato-san will answer that question. [Foreign language] Regarding GlobalLogic, as you rightly mentioned, on the part of the customers, IT investments are slowing down. It is continuing to grow, but the speed of growth there is slowing down, and that is continuing from the first quarter to the third quarter, so organic growth is around 4% year-on-year. Therefore, it is declining somewhat, but compared to the previous quarter, it is increasing. [Foreign language] Now, question, DSS, y ou said that there is an epoch-making deal that has been achieved, in terms of, s o the capabilities have been brought to bear, in the acquisition of the deal regarding the load dispatching system, with the involvement of DSS as well. So how can you capturing deals that transcend the different sectors? Please elaborate further. [Foreign language] You have explained this well. Now, regarding Tokyo, one business of a load dispatching system, it is on one Hitachi basis, through collaboration with amongst our different sectors. Hitachi Energy is providing the system, HVDC converter system, so we are transcending geographical areas as well as business sectors, working in collaboration. And GlobalLogic knowledge is also brought to bear, so U.S. is also involved. And this is epoch-making in that regard. In the power sector of Japan, it is epoch-making, but for Hitachi, it was epoch-making as well. Tokyo and Switzerland, the grid, and U.S. IT have worked in collaboration to achieve this deal. So for Hitachi, internally, this has been epoch-making, and I think this will become more prevalent going forward. This will be a very good opportunity for us to pursue such businesses as one Hitachi. We will continue to do so. [Foreign language] This is Yoshikawa speaking. Prime vendor is Hitachi, and Hitachi Energy is the secondary vendor to Hitachi. GlobalLogic are not a contractual party, but they are providing a Hitachi Energy package solution development support to Hitachi Energy. Therefore, we have had a good collaboration amongst the different divisions of Hitachi. That's all. [Foreign language] Thank you very much. So we will switch to the English channel. Please use the raise hand button if you have any questions. Participants on the English channel, if you have any questions, please use the raise hand button. Okay, I do not see any hands, so we'll come back to the Japanese channel. Win-san, please unmute yourself and answer, ask your question. [Foreign language] Thank you. I have one question. First question. Question about wage increase. So what is your plan on the wage increase going forward, and the digital talents, IT engineers' wage increase? If you have any information you could share with us. Thank you very much. [Foreign language] Answer: Wage increase. In our case, we have the electric union, and the union is a big factor, so it is basically decided upon the negotiation with the union. Continuing from last year, we're planning on a big wage increase this year. We have confirmed that within the management, but the percentage increase is up to the negotiation. We have a basic principle, though. Added value and the productivity will determine the wage increase using a company logic, so it's not irrational. We will reflect the productivity improvement in the wage increase, and so this stance remains unchanged. At any rate, we will decide this with the union negotiation in March, and we're thinking of a significant wage increase and trying to budget it in the next year. The digital talents, this is a difficult problem. Japanese company, it's very scarce. The engineering department, university graduates, it's mostly machine engineering, and so the talent supply is small to begin with. So the supply-demand is very tight. So for Japan, we are, we have to take some unique measures. On the other hand, if we try to hire the talents in Japan, the macro labor market factor is in play, so we have to hire on the other overseas side. GlobalLogic had, have a big function of hiring people in North America. Labor market in North America is also tight, and so, we acquire a company in Eastern Europe to acquire talents, or Latin America, or Australia, and the U.S., like we acquired this time. We, we will acquire companies and acquire engineers there. So we're doing this in a two-pronged approach, Japan and overseas. Thank you. I hope this answers your question. [Foreign language] Question: Y ou announced the human personnel refreshment. Abe-san and Tokunaga-san, the position changed, so if you could explain the reasons. [Foreign language] I'm not the one with HR authority, so I cannot talk about the intention behind, but Tokunaga -san, in fiscal 2024, will be heading the DSS and the growth strategy, so he will discuss the backbone of the next medium-term plan, but his role has basically been unchanged. Abe-s an, Aoki -san will step down this time with this announcement, so Abe-s an will move after that. So Abe -san's assignment will be DSS, sub to Connective Industries. Abe-s an's change, the Connective Industries is the merge of the hardware and IT. This integration is crucial, and Abe-s an understands both sides, so I think he's the best fit. [Foreign language] Thank you. [Foreign language] Thank you very much. Next, Sagisaka -san, please unmute and ask your question. [Foreign language] My question. I have two questions, both related to Hitachi Energy. The first is regarding the backlog of Hitachi Energy. How is that converted to revenues in a steadfast manner? On page 14, the supply chain management as well as strengthening of production capabilities are mentioned. Specifically, how do you intend to tackle this initiative? Page 20, regarding the regional aspect, Green Energy & M obility, other areas is growing by 42% to other regions. Which regions, which products and solutions are growing in this category of other areas for Green Energy & M obility? [Foreign language] Answer: Regarding Hitachi Energy, as I mentioned at the outset, the order backlog is accumulating, and the third quarter, the backlog is exceeding JPY 4.3 trillion. How it is going to be posted in the P&L, out of JPY 4.3 trillion for 2023, 10% will be converted to profit in 2024, 40%, and the remaining 50% is 2025 and beyond. So it takes about three years for the backlog to be registered in the P&L. We need more capacity to enable this. Hitachi Energy will make a significant investment; JPY 80 billion-JPY 100 billion investment will be made so that our production level can be enhanced. There are many suppliers as well, so we will combine the resources of suppliers as well to increase capacity. Now, regarding your second question, Kato-san will respond to the question. [Foreign language] Now, other areas, specifically as Middle East. Hitachi Energy in Saudi Arabia has received an order for grid integration related, as well as, high voltage products. Business is growing in this area, so the other areas is Middle East, Middle East, for Hitachi Energy. Now, regarding CapEx increase, you know, for GEM sector overall, for this fiscal year, compared to one year below before, we are going to be increasing by JPY 30 billion. This is mostly for Hitachi Energy. So for this year as well, that is the the investment increase that is going to be made as an increment. [Foreign language] Thank you very much. [Foreign language] Next, Ayada-san, please. Please unmute yourself and ask your question. [Foreign language] Question. I have two questions. First is related to the earlier question. Hitachi Energy's third quarter margin, how do you summarize the margin? Year-on-year basis, the adjusted EBITDA, 8.7%, so that is 0.3 percentage point improvement. First and second quarter, year-on-year was 2 percentage point improvement. That was the pace. So the pace of improvement seems smaller. So how do you understand, how should we understand this margin? And for GEM as a whole, in the midterm management plan, 10% adjusted EBITDA margin is the target. So Hitachi Energy next year is expected to achieve over 10%. So third quarter summary and next year's margin improvement pace. That is my first question. [Foreign language] The way it numbers are shown this year, this time, revenue grew significantly and, the backlog goes to P&L, and the, that seems margin is declining because of that reason. But towards the second half in fiscal 2024, as I said earlier, order backlog margin is up higher than before, and that will be reflected. So we can see an improvement from the current numbers. Now, our view on FY 2024, we have not lowered the target. The strong backlog will be the foundation, and, with the high gross margin, we will achieve this target. Hitachi Energy Management, and we are coordinating, to make that happen. So 10% is our target that we are aiming for. Thank you. [Foreign language] Thank you. Question. My second question is Lumada. You mentioned earlier that GlobalLogic's organic growth, but for Lumada as a whole, organic growth, third quarter result, if you have that number at hand, please share that with us. And on a full year basis, JPY 20 billion upward revision in Lumada, but the FX assumption has changed slightly. So is this because of the foreign exchange or other factors? So that's my first question, numbers. And based on these numbers, page 11, Lumada business expansion is explained. Generative AI-related order is over JPY 10 billion, or more than 100 cases, projects. So you mentioned the augmented reality metaverse. Generative AI, Lumada business size, compared to normal business, is it larger or smaller? And the current business, what kind of clients, what kind of business accounts for the big portion of, I think it falls under digital engineering. If you could give us some more color on this business. Thank you very much. [Foreign language] Answer. First, the Lumada details, organic growth and others, we have only limited material, but Kato-san will explain. Third quarter revenue was 19% up year-on-year. Roughly speaking, excluding FX, it is still up by 15%, s o it's double-digit, mid-teens growth. Full-year basis, similar story, 16% up, excluding foreign exchange. So generative AI, Yoshikawa-san will explain. So this 100 projects, GlobalLogic and DS & DSS, mainly in Japan, these are the projects that we already acquired. In terms of the amount, the contribution to the total company is not large yet, but related they will lead to related systems in the future, so we are developing them meticulously. Regarding generative AI, we've been working on this since last year, and the inquiries is increasing. In terms of industry, finance and banking and the insurance and government. Thank you very much. [Foreign language] Thank you very much. Yasui-san, please unmute and ask your question. [Foreign language] And so I have two questions. First question is regarding the power grid market in the U.S. You talked about this issue. I think it was very difficult to gain approvals in the past, but with the introduction of renewable energies was not making headway. But the European market, is there a possibility that is rising for North America? Is the market environment changing today? Second question is related to the question that was raised earlier regarding Kato-san. He will be the new CFO. Now, it seems that executive changes seem to be rather significant compared to the past. So it seems that overall changes are being made. So what is your aspirations? Please talk about how you will deal with the opportunities and risks in the turbulent 3-5 years going forward. Please give us your outlook. [Foreign language] Now, regarding the U.S. infrastructure related and power grid, I would like to respond to that question. Under the Biden administration, infrastructure projects were emphasized not just for grids, but road, ports, and other infrastructure. U.S. grids are such that for the past 20 years it was not receiving investment because of regulations. It is becoming older in terms of infrastructure, and with the Biden administration, renewable energies are being emphasized. Therefore, when investments are made in this area, we believe that the window is now open, although we have been struggling in the past now. But, if the administration is going to change again, it would be reversed. So the grid business that is increasing could change in terms of the posture toward the environment by the possible new administration. So we have to watch this very carefully. In terms of the market growth numbers, I don't have the details with me today, so I would like to address that in the offline meeting. Now, I would like to ask Kato-san to talk about his aspirations, as he becomes a new CFO. [Foreign language] Now, regarding the executive changes, what I was most surprised is that there is going to be a significant globalization for our company. 60% of our business is global, and the same for human resources as well. But in terms of executives, it was not so reflected, but changes have been made, especially in the corporate area. Global talent has been increasingly allocated. As we pursue the growth strategy, new ideas and new experience and network and more diversity is called for. Therefore, we believe that we will have a strengthened executive team, and toward the next midterm management plan, we can be poised for further growth. What we have to be careful is that our corporate is not just in Tokyo. They are dispersed globally. So we have to have more of a virtual corporate management. Therefore, we have to have a very close communication more than ever going forward. And I'd like to ask for your continued support as well. [Foreign language] Question, I have a follow-up question. Regardless of digital numbers, would you sa y that the U.S. market is what you are going to pursue going forward? [Foreign language] It is not growing significantly yet. The situation is different in the U.S. compared to Europe. In Europe the Ukraine issue is having a significant impact. Prior to Ukraine, the European gas pipelines are dispersed throughout Europe. But now with the, the Ukraine issue, there is a limit to the gas supply. In Europe, the gas pipeline network is going to be replaced by the transmission lines, distribution lines, and that is the reason why that the energy is coming to the fore. But in the U.S., they have not reached that stage. They have their own natural gas, they have also oil, and the pipelines doesn't have to be replaced by the grid significantly. So that is the difference between Europe and the United States. But under the Biden administration, they are focused on the environmental issue. That is the reason why we have made a headway so far. For in 2021, in Texas, there was a major blackout. Therefore, the network is very old, and modernization is called for. A renewal demand is very significant in the U.S. In South Carolina, there was a terrorist attack, and the grid security needs is also coming to the fore. In Maui, there was a fire, and the grid is where the fire started. Therefore, the grid infrastructure in the U.S. is becoming obsolete, and therefore, we need more renewal. That is our take. Thank you. [Foreign language] Thank you very much. We had everyone raise their hand and asked all questions. So with that, we would like to close the financial results briefing for the third quarter and December 2023. Thank you for your attendance.