Panasonic Holdings Corporation

I'll present the consolidated financial results for the third quarter of fiscal 2026 and December 31st, 2025. The summary, sales and operating profit decreased year on year. Sales decreased overall due to lower sales in lifestyle and the deconsolidation of automotive despite higher sales in Kinect Industry Energy. By business, sales of generative AI-related businesses in industry energy increased. In addition to higher sales of process automation and connect, sales decreased in in-vehicle and energy consumer electronics and air conditioners in lifestyle and various other businesses. Adjusted operating profit increased overall due to increased profit in lifestyle, connect, and industry despite deconsolidation of automotive. Operating profit and net profit decreased due to recording of restructuring expenses for ongoing group management reform. Operating cash flows for the nine months decreased year-on-year due to the absence of monetization of IRA tax credit through transferable method in FY March 25 and restructuring expenses. As for the full year forecast, overall sales in adjusted OP remain unchanged by segment. Adjusted OP is revised downward in lifestyle and upward in connect and industry. Overall, adjusted OP forecast for energy remains unchanged, while adjusted OP for in-vehicle is revised downward, and that for industrial consumer is revised upward. The downward revision of the forecast for OP is due to increased restructuring expenses. Sales decreased year-on-year by 4% to 2,063.3 billion yen. However, sales excluding automotive increased by 5% year-on-year. Adjusted OP increased to 159.1 billion yen. Due to the recording of restructuring expenses, operating profit decreased to a loss of 7.2 billion. Net profit also decreased to a loss of 17.1 billion. Results by segment based on the current reportable segments. Following the launch of the new organizational structure in January 2026, we have begun disclosing our financial results based on new reportable segments effective after the three third quarter announcements. Please refer to the reference materials for the results based on new reportable segments. First, sales by segment. Lifestyles of overall sales decreased due to lower sales in such businesses as consumer electronics and HVAC, both affected by weaker overseas demand, despite higher sales of electrical construction materials supported by favorable sales, mainly in Japan. Connect saw sales increase due to higher sales of process automation, capturing demand for ICT, including generative AI servers, avionics with continuous drum orders, and blue yonder. In industry, sales increased driven by continued demand growth for information and communication applications such as generative AI servers. In energy, sales of in-vehicle decreased due mainly to lower sales as North America factory with deteriorated EV market conditions. Sales of industrial consumer largely increased due to continued favorable sales of energy storage systems for data sensors. Within other elimination and adjustment, sales in entertainment and communication decreased due to deteriorated market, while sales in housing increased. As for adjusted OP by segment, increase in lifestyle connection industry and energy adjusted op of in-vehicle decrease due mainly to lower sales in north america and the impact of u.s tariffs while adjusted op of industrial consumer increased due mainly to higher sales as for as a result overall adjusted op increased despite the deconsolidation of automotive As for the results of lifestyle segment by divisional company and living appliances and solutions company, sales in adjusted OP decreased due mainly to sluggish overseas sales. Heating and ventilation AC company saw adjusted OP remained at the same level a year. In cold chain solutions, sales in adjusted OP decreased due mainly to temporary lower sales caused by manufacturing issues in North America. Electronic works company saw OP increase on higher sales of electrical construction materials in Japan. Year-on-year operating profit variance analysis from left increased sales in real terms had a positive impact of ¥10 billion. Increase in fixed costs had a negative effect of ¥8.4 billion. Please note that positive factor of 5 billion was recorded due to restructuring. The net impact of raw materials and logistics prices was negative 4.3 billion. Net impact of price revisions, rationalization, and other factors was positive 27. Blue yonder, negative 4.8 billion yen. EXCLUDING FOREIGN EXCHANGE EFFECTIVE EXCHANGE RATE WAS POSITIVE 1.9 BILLION MAINLY IN INDUSTRY AND ENERGY DECONSOLIDATION OF AUTOMOTIVE WAS NEGATIVE 8.2 BILLION IMPACT OF USE AS TERRORISTS WAS NEGATIVE 4.3 ADJUSTED OP INCREASE BY 8.9 BILLION YEAR ON YEAR OPERATING PROFIT WAS DOWN 139.5 BILLION ON THE LEFT OPERATING CASH FLOW decrease of 412.4 billion year-on-year due to non-recurrence of IRA tax credit. On the right, net cash was negative 945 billion. As for the consolidated full-year forecast for sales and adjusted OP remains unchanged from forecast announced in October. The forecast for OP and profit before income tax is revised downward by 30 billion due to deterioration and other income loss of 30 billion. Full year forecast by segment. Please note that the figures are presented based on the current reportable segments. The forecast is revised upward for Connect and Industry, downward for Lifestyle.

This shows the forecast of the lifestyle segment by individual divisional company. Sales and AOP forecast is revised downward in LAS and HVAC and core CCS, while the AOP profit forecast in electric works company is revised upward. It shows our analysis of the forecast by segment. The lifestyle overall sales and AOP forecast is revised downward by business. Living appliance and solution company and HVAC is revised downward due to a weaker overseas demand. CCS revised downward due to a temporary reduction in production in Q3. On the other hand, AOP forecast in electric works company is revised upward due to continued favorable sales in Japan. In CONNECT, the focus is revised upward with higher sales of avionics supported by continuous strong orders as well as higher sales of the process automation. In industry, the focus is revised upward with higher sales of products in electronic devices and materials and driven by the continued demand growth of Gen-AI servers in energy Overall, AOP forecast remains unchanged from the previous forecast. AOP in in-vehicle is revised downward due to the slowdown in EV market condition in North America while upward that for the industrial and the consumer with higher sales of energy storage systems. This shows our analysis of AOP forecast by factor in comparison to the previous forecast. The upper graph is the previous forecast. The lower one is the revised forecast. Middle row is the revised amount. As shown, the middle section operating profit forecast revised downward by 30 billion yen from 320 billion yen to 290 billion yen. an increase of the 30 billion yen in restructuring expenses currently underway, which is recorded in other income and loss, although the forecast of AOP remains unchanged. This shows the update on the structural reforms currently underway, including restructuring expenses and the expected effect. Restructuring expenses are now expected to increase by 30 billion yen to 180 billion yen. due to the expansion of restructuring. Accordingly, the group-wide effect of restructuring is expected to increase by 5 billion to 42 billion yen. The group-wide effect is now expected to increase to 145 billion yen. From this slide onward, I will discuss the outlook of each individual business. First is the in-vehicle in energy. On the left line graph shows the trend in sales volume of automotive batteries at the North American factories. The bar graph shows EV sales in units in US. Related to the termination of the IRA section 30D tax credit for EV purchases at the end of September 2025, there was a last-minute demand in Q2. As a result, greater than expected impact, the four-year forecast for battery sales volume is revised downward to 39 GWh from 40. In our outlook on the EV market, we expect the market to bottom out in Q3 and then overall four-year recovery is roughly to the same level as FY26. The uncertainty continues. However, we will continue to expand our business in line with the market trends and the customer demand. Next is our outlook. outlook for the energy storage system for the data centers in industrial and consumer. The graph on the left shows the sales outlook for the energy storage system for the data centers in pursuing our sales target of 800 billion yen in FY29. The possibility of securing nearly 500 billion yen over the current level has increased significantly. And we have also recently seen the rise in customer inquiries. In response to the surge in demand, we are moving quickly to make decisions on expanding capacity, including repurposing the existing automotive battery assets. For cell production, we have already begun converting the production lines at automotive battery factories in Japan. and plan to begin production for the data center applications sequentially from the Q1. Looking ahead, we will also consider further utilization capacity at our Kansas factory. For module production, we have decided to construct a new factory in Mexico and already launched this project. In addition to addressing increasing complex customer challenges and absorbing power load fluctuation, our energy and industrial businesses are collaborating To accelerate the development of the new solutions, we also plan to launch the capacitor backup units, which use our newly developed modularized supercapacitors in FY27. Leveraging our unique expertise from the capacitors to batteries within the company, we are delivering the solutions that only we can provide. By doing this, we maintain our leading market position to drive further. business growth. Next is outlook for the Gen AI related businesses. We set the target of the 100 billion yen in FY31 for existing two core products, conductive polymer capacitors and multi-layer circuit board materials with various new devices. As demand related to Gen AI continuing to expand at the pace far exceeding our initial expectations, we now see the possibility of reaching 100 billion yen With these two existing products alone, we plan to invest in several of our plants, including the construction of the new facility at Ayutthaya plant in Thailand for electronic materials. to ensure that we do not fall behind the rising demand. Furthermore, business opportunities are rapidly expanding in areas where our industry segments' expertise can be fully privileged, such as supercapacitors for CPU, high voltage devices for supply, and other peripheral applications. We also actively pursue growth by capturing those opportunities. This is the share transfer of the Panasonic housing solutions that we announced on the 17th of 11th. We are proceeding smoothly with the necessary procedures to close on March 31st, 26th. Portfolio management review is currently underway and this shows the segment changes, the lifestyle segment resulting from the transition to the new organizational structure starting in January this year. The current segments are shown on the left and the new ones are on the right. In addition, we are making some changes to the voluntary disclosed businesses. And from the next results briefing, we will be explaining based on the new reportable segments. And thank you very much for your understanding. That concludes my presentation.

Thank you. Misumi from Nikkei. I hope you can hear me. Yes, we can. I have two questions. First, I'm looking at slide 18, energy. The new plan to be constructed in Mexico. What is the size? When do you start construction? And specifically, where in Mexico and why Mexico? That's my first question. My second question about the new HR system. Solution revenue officer and chief revenue officer are newly established. Could you be more specific in what their respective roles are and what led to this change in the HR system? Thank you for your questions. First, for module plant to be constructed in Mexico, you asked about the location and the backdrop. First, in Mexico, we already have a plant. So we wanted to consolidate, expand in the vicinity. And that's why Mexico. We are to expand in two ways at the existing plant. We do have some idle space and capacity, so that will be the priority in our expansion. And in order to achieve the target that we have for FY29, we need further expansion. As for the timing, 800 billion yen in FY29, and we back cast from there for the construction plan. and for the second question our chro kinoshita would respond about the personnel change announcement especially solution revenue officer and chief ai officer about solution officer we have three business areas focusing on solutions as you're aware in the solutions area established the system for go to market and have the marketing strategy on btb b2b as a group so solution revenue officer was established to address that specific mission Suzuki-san of SAP is to join us, given his expertise, key account management expertise in particular. We will refer to his expertise so as to revisit our B2B strategy. And Chief AI Officer. In the AI area, Matsuoka-san has been leading this effort at Panasonic Well headquarters to promote the shift to AI in our core businesses so as to establish the platform as the solution company. This reform was in the innovation and incubation phase so far, and we are going to go into the next phase of AI transformation revolution, especially in solutions area, which is our focal business area. We are to leverage AI and to provide value added offering to our customers. And along this line of thought, so far, we had AI strategy development and research capabilities in different regions, different organizations, but we want to consolidate this to AI data platform. And so Panasonic Well Headquarters will be dissolved as of the end of March for further development. And Sakagibara-san, who is the CTO at Connect, will be assuming this new responsibility, so asked to provide solutions to the customers. And Sakagibara-san would be the CTO at Connect and also CAIO of the Panasonic Group so that we will have the maximum application of AI expertise under single leadership. I hope that answers your questions. Yes, thank you.