My name is Takaoka. It is my pleasure to walk you through our first quarter financial results. Overall, the group experienced an increase in revenues, but a decrease in income. Yet, on the whole, we consider this to be a solid performance. Operating revenues grew for the sixth consecutive period and reached an all-time high for our first quarter. Driven by this revenue growth, operating income rose by JPY 10.7 billion year-on-year to JPY 125.5 billion, and ordinary income also increased. On the other hand, quarterly profit attributable to owners of parent decreased to JPY 68 billion, mainly due to a decrease in gains on sales of investment securities compared to the previous year. By segment, while all segments achieved revenue growth, the real estate and hotel business recorded increased revenues but decreased income. All other segments grew in both revenues and income. At this point, we have made no change in our full-year financial forecast. As for dividends, we are maintaining our plan for an annual dividend of JPY 84 per share with a payout ratio of 37.2%. Next, I'd like to explain the changes in consolidated operating income. As a result of a JPY 57.3 billion increase in revenue and a JPY 46.6 billion increase in expenses, operating income increased by JPY 10.7 billion. JR East transportation revenues increased by about JPY 38 billion. In addition, revenues grew by around JPY 15 billion in retail and services, as well as real estate and hotels, excluding real estate sales, and by around JPY 9 billion in other business segments. In real estate sales, while revenue decreased by JPY 4.5 billion, the cost of goods sold also fell by JPY 500 million, resulting in an income decrease of JPY 4 billion. Personnel expenses increased by approximately JPY 16 billion, mainly due to revisions to JR East personnel and wage system. JR maintenance expenses increased by around JPY 7.5 billion, driven by maintenance work aimed at overcoming the lingering effects of the COVID-19 pandemic. Other expenses increased by approximately JPY 18.5 billion, mainly due to higher depreciation expenses and taxes and dues following the completion of Takanawa Gateway City and OIMACHI TRACKS. As a result, operating income grew by JPY 10.7 billion. Next, consolidated statements of income. I'll explain the segment by segment details later. Non-operating expenses increased by JPY 2.2 billion year-on-year, primarily due to higher interest on bonds. The JPY 19.7 billion year-on-year decrease in extraordinary gains was mainly due to lower gains on sales of investment securities. Although we sold a portion of our holdings in the first quarter as well, the gains were down compared to the same period last year. Next, performance by segment. The transportation business achieved increases in both revenues and income. For the Shinkansen, revenue increased due to higher passenger volume and the effect of the fare revision. For conventional lines, revenue grew thanks to increased use of non-commuter passes and commuter passes in the Tokyo metropolitan area, along with our fare revision. Bus operations and rail car manufacturing also achieved revenue growth. The table at the bottom shows the plan versus result of railway business passenger revenues. Thanks to increased railway usage, actual results exceeded the plan across all categories. Next, traffic volume and passenger revenues. The strong trend in railway usage since the fiscal year ending March 2026 continues. Although two typhoons in June and the earthquake off the coast of Iwate Prefecture reduced revenue by approximately JPY 3 billion, an increase in railway transportation, including inbound tourism, boosted Shinkansen non-commuter passes revenue by roughly JPY 8 billion and conventional lines non-commuter passes revenue, including the Kanto area network by about JPY 8.5 billion. Commuter passes also grew, generating a revenue increase of around JPY 4.5 billion. The effect of the fare revision for the first quarter was estimated at approximately JPY 20 billion total, which was roughly in line with our plan. By breakdown, the fare revision contributed to revenue increases of roughly JPY 2.5 billion for non-commuter Shinkansen, about JPY 12 billion for non-commuter conventional lines, and around JPY 5.5 billion for commuter passes. We will closely analyze the impact of passenger shift to parallel private railway lines due to the fare revision, taking into account the use of commuter passes from the summer onward and into the second half of the fiscal year. Currently, while a certain level of passenger shift is occurring in parallel corridors such as Shinagawa, Yokohama, and Shinjuku, Hachioji, we believe that overall usage growth has more than offset it. Here are the relevant indicators for the transportation business. Regarding Shinkansen passenger volume, while the Tohoku Shinkansen was at 99% year-on-year in June, since this line was most affected by the typhoons and the earthquake off the coast of Iwate Prefecture, all other categories were generally strong. Weekday figures are also performing well, so we believe business travel demand continues to grow. In the Tokyo metropolitan area, weekday commuter passes use exceeded the previous year's level, supported in part by the trend of employees returning to the office. Moving on to the retail and services business. The figures presented here reflect the segment reclassification of our six overseas subsidiaries, three in Taiwan, one in Singapore, and two in the U.K. Ekinaka stores achieved higher sales thanks to an increase in the use of railways and together with increased revenue in transportation advertising sales. The segment recorded increases in both revenues and income. Although usage dipped slightly in June due to factors such as typhoons, leading to some weakness in a portion of the data, figures generally remained above the previous year's level throughout the first quarter. Real estate and hotel business, which achieved revenue growth but recorded a decline in income. Revenue increased mainly due to higher real estate leases associated with the grand opening of Takanawa Gateway City and OIMACHI TRACKS in March of the previous fiscal year. On the other hand, income declined primarily due to lower income from real estate sales, as well as higher depreciation expenses following the completion of Takanawa Gateway City and OIMACHI TRACKS. The key indicators. For station buildings and hotels as well, usage dipped slightly in June due to the impact of typhoons and other factors, but overall performance continues to track above the previous year's level. In July, all of these indicators have shown improvement. As for our office vacancy rate, the vacancy rate for properties in Tokyo operated by JR East Building currently stands at 3.5%. Looking ahead, leasing for the LINKPILLAR 2 at Takanawa Gateway City, which opened in March, is still underway, but it is progressing smoothly. We expect it to reach near full occupancy over time. Once that happens, we anticipate our vacancy rate will drop below the average for Tokyo's five central wards, which is currently below 2%. Finally, the other businesses recorded increases in both revenues and income. The Suica & Finance, Global, and Construction businesses achieved revenue growth. On the other hand, the Energy business recorded a decrease in revenue due to a decrease in construction-related sales in wind power generation. Starting from the fiscal year ending March 2027, we have changed our relevant indicator to transaction volume of our payment services. Through View Card, Transportation IC electronic money, and TePay, a QR code payment service scheduled to launch this autumn, we will closely monitor this trend and expand our customer touchpoints. Next, our inbound revenue results. In the Mobility business, revenue came in about JPY 800 million below plan. As you know, we believe this was affected by a drop in inbound visitors from China, with total arrivals to Japan also a little lower year-on-year. However, starting in July, our 36 regional headquarters will launch community-based initiatives to develop local tourism and boost transportation revenue. Through these measures, we aim to capture further inbound demand. In Lifestyle Solutions, we exceeded our plan by capturing demand at hotels and shopping centers, particularly in the Greater Tokyo area. Next, our consolidated balance sheets, as shown on the slide. Next, we have consolidated interest-bearing debt, capital expenditures, and key indicators. Net interest-bearing debt increased by JPY 281.1 billion from the end of the previous fiscal year. While the rate hiking environment continues, we will closely monitor market trends and secure funding in a flexible and agile manner. Regarding capital expenditures, Mobility CapEx is roughly unchanged year-on-year, though we expect a slight increase toward the second half due to projects such as the installation of automatic platform gates. In Lifestyle Solutions, with the openings of Takanawa Gateway City and Oimachi Tracks, the major investment phase has well done, resulting in a substantial year-on-year decrease in CapEx. The figures below reflect the end of the previous fiscal year. Next, I would like to share our non-consolidated performance for your reference. As for personnel and maintenance expenses, they are as I mentioned earlier. Please note that the increase in energy expenses is not due to the situation in the Middle East, but rather plant factors such as high maintenance expenses for power plants. We expect the impact of the Middle East situation to emerge from this summer onward. In our case, fluctuations in crude oil prices are reflected in our financial figures with a lag of about six months, so there's no significant impact as of the first quarter. Operating and other expenses increased due to factors such as higher labor unit costs at outsourcing partners. Depreciation expenses also increased following the new openings of Takanawa Gateway City and Oimachi Tracks. Please refer to the non-consolidated balance sheet and the following pages as reference materials. Thank you for your attention.
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