Hitachi Ltd Ord

scheduled time has come so we will now begin Hitachi limited web conference on q1 fy 2025 earnings thank you very much for taking time out of your busy schedule to attend today's briefing the presentation materials are available on Hitachi limited IR website and news release website so please take a look Let me now introduce the three speakers. Tomomi Kato, Senior Vice President and Executive Officer, CFO. Hiroaki Ohno, Deputy General Manager of Finance Division. Shinichiro Tamai, Executive General Manager of Investor Relations Division. Mr. Kato will first explain the overview of the financial results. Please wait for a moment while we switch screens. Mr. Kato, please. First I will explain the structure of this document. I will start with the key points of this earning announcement followed by the results of the first quarter of the fiscal year 2025 and the outlook for fiscal year 2025 and segment results. I will now explain the key points. First, the results of the first quarter of fiscal year 2025. Despite the impact of exchange rate fluctuations in U.S. tariffs, the energy power plants business and the mobility railways assistance business performed well, driven by the continued expansion of GX demand. Expanse's consolidated results showed both increased revenues and increased profits. Justin Evita achieved a record high. Additionally, a core free cash flow increased significantly air-on-air due to the concentration of advance payments for large-scale projects. However, even excluding large advance payments, there was an increase air-on-air. Here I will explain the five key performance indicators. First, revenues excluding foreign exchange defense grew by 5% year-on-year. Adjusted EBITDA increased year-on-year, and the adjusted EBITDA margin also improved by 0.4 percentage points year-on-year to 10.5%. net income attributable to parent company shareholders exceeded ¥190 billion, an increase from the previous year. Additionally, core free cash flow increased significantly from the previous year to approximately ¥350 billion. Compared to internal plans, revenues and adjusted EBITDA exceeded plans for static consolidated results. Next, the outlook for the 2025 fiscal year. While there are short-term risks, such as the impact of US tariffs, we expect the momentum of demand expansion for DX remain unchanged in the medium to long term. Even after factoring in increased strategic investments and risks related to tariffs, we anticipate revenue growth and profit increases for Hikachi as a whole, driven by the growth of energy DSS and mobility sectors. Specifically, revenues are expected to increase by 6% excluding currency effects adjusted EBITDA and net income are projected to increase year-on-year. Core free cash flow is expected to decrease due to the reactionary decline to the increase in advance payments received in the previous fiscal year. Despite an increase in on-air in the first quarter, we have decided to maintain our forecast for the full year due to uncertainty of the business environment going forward. ROIC is expected to remain at previous year's level, taking into account the possibility of M&A investments. However, by leveraging debt, work is expected to decrease, resulting in an increase in the ROIC spread compared to the previous year. These forecasts have not changed from the previous. Next segment highlights in the energy sector. The coal grid business is performing well due to continued strong demand in transmission grids and renewable energy related projects. Revenues and profit increased in the first quarter and profit margins also improved. As a result exceeded the internal price, we have therefore revised our fiscal year forecast upward. Mobility also saw a growth in its signaling business, including the effects of acquisitions, resulting in an increase in revenues and profits in the first quarter. With improved profit margins, internal plans were seated before we revised the fiscal year outlook output. In VSS, order intake grew steadily, led by domestic DX and modernization, increasing 5% year-on-year. On the other hand, in terms of revenues and adjusted EBITDA, while domestic operations grew steadily, overseas operations saw a decline in revenue and profit due to factors such as customers' investment restrained caused by the indirect impact of US tariffs and intensified competition in the storage business. Currently, in the overseas business, we are promoting measures to improve earnings, including expanding sales of new products, expanding service operations and reducing costs. In preparations in the second half of the fiscal year, taking into account the additional improvement effects, we have maintained our forecast for the fiscal year. CI saw steady growth in order intake, primarily driven by semiconductor manufacturing equipment, resulting in a 4% increase compared to the previous year. On the other hand, revenues in Justin Ibinga declined due to reduced revenues and profit in the elevator and escalator business in China, despite the steady performance in other businesses such as semiconductor manufacturing equipment. As a result, overall, SIGAI declined compared to the previous year. However, results were mainly in line with the plan. The forecast remains. Finally, regarding the corporate items and illumination, downward adjustment of ¥10 billion was made to reflect the release of upside potential mainly in energy and mobility. On the other hand, considering the uncertainty of the business environment going forward, we have included a downward adjustment of approximately 20 billion yen to reflect the incorporation of business deterioration risks. As a result, the Obama-Hikachi consulting forecast for the fiscal year remains unchanged. Let me talk about the U.S. tariffs. In the first quarter, the direct and indirect impacts amounted to the deterioration of 2.5 billion yen in adjusted EBITDA. While we have managed to mitigate the direct impact on performance compared to the previous forecast, primarily through progress in price pass-through at Hikachi Energy, indirect impacts include investment restraint by some overseas customers in the DSS segment. Regarding the full-air outlook, while direct impacts are decreasing, indirect impacts are gradually increasing. We have incorporated a total deterioration risk of ¥30 billion in the adjusted EBITDA, the same as the previous forecast. While there are still uncertainties regarding short-term indirect impacts, we believe that the momentum for demand expansion in the part of its core business in North America will remain unchanged in the medium to long term. Next, the results of the first quarter of fiscal year 2025 are explained in the highlights. In addition to adjusted EBITDA, core free cash flow also reached a record high. Now I will explain the year-on-year change breakdown for the first quarter. First, regarding revenues, increases in energy mobility offset the negative impact of foreign exchange rates, resulting in a year-on-year increase in consolidated revenues. Adjusted EBITDA followed the same trend as revenues. Despite the foreign exchange and the US tariff impacts, profits increased in one year and profit margins also improved. Core free cash flow exceeded the previous level, significantly driven by the increase in adjusted EBITDA and improved working capital due to the receipt of large advance payments despite an increase in capex. Next, financial position. Total assets as of the end of first quarter fiscal year 2025 was approximately 13.49 trillion yen remaining at the same level as the previous fiscal year end. Cash conversion cycle was shortened due to an increase in core free cash flow. This will explain the revenues by vision in the first quarter. First, the European business expanded by 17% year-on-year. The energy sector grew by 33% due to the power goods business, while mobility railway systems grew by 17% due to the acquisition of signaling business. On the other hand, China business declined by 16% due to a decline in new demand for elevators and escalators. In ASEAN, India and other regions grew by 10% due to an increase in railway signaling projects for mobility. and the silicon factor manufacturing equipment for CI. Next, I will explain the segment orders results for the first quarter. DSSO, steady expansion in domestic business with growth in front business and IT service. However, service and platform Revenue declined due to customers' investment restraints and intensifying competition overseas. Energy soared and Iran air decreased in both power grid and nuclear power due to reactionary decline to the non-scale orders from the previous fiscal year. However, base orders for power grid remained robust with an increase of approximately 10% plus. Mobility increased due to the acquisition effect of the signaling business as well as the increase in signaling and rolling stock projects. CI recorded declines in building systems for elevators and escalators in China and in industrial and digital reactions declining due to large-scale projects during the previous year. However, the semiconductor manufacturing equipment and industrial machinery may improve as resulting in overall increase for CI. I will now explain the highlights of our FY2025 outlooks. The main contents are as explained in the topic slide at the beginning. We are keeping the assumed FX rate at 145 yen to the US dollar and 155 yen to the euro. Now, this is the breakdown of year-on-year changes. First, regarding revenues on the upper half, we expect Hitachi consolidated revenue to increase year-on-year, despite the negative FX impact from the increase in DSS, energy, and mobility. Adjusted EBITDA is also expected to grow year-on-year, thanks to revenue increase in the three sectors, despite incorporating in strategic investments, FX impacts, U.S. tariff effects, and the current risks. Net income is expected to increase year on year, thanks to an increase in operating income and the impact of the sale of air conditioning joint venture, despite the impact of FX and U.S. tariffs. We decided to keep the forecast unchanged, taking into account future structural reforms and other factors, in addition to the adjusted EBITDA forecast mentioned earlier. Although adjusted EBITDA is expected to increase, Core freight cash flow is forecasted to decrease year-on-year due to an increase in working capital, a repercussion from an increase in advance received in FY 2024, and an increase in capex to expand Hikachi Energy's production capacity. Despite the year-on-year increase in Q1, the forecast will remain unchanged this time, considering the uncertainty of the business environment going forward. Next is performance by business segments, starting with DSS, and the breakdown is shown here. First is front business. Domestic demand for DX and modernizations remained unchanged in Q1, but revenues were flat year-on-year due to an impact of ATM project for renewal of Japanese banknotes and revenues from large project in FY24. However, thanks to the expansion of Lumada business, we expect revenues and profits to increase year-on-year on a four-year basis. In services and platforms, overseas business declined in Q1, mainly due to factors such as investment restraints from customers, competitive situation, and delays in certain projects in the storage business. On the other hand, Globalogic, the digital engineering company, continued to grow mainly through increased synergies with other sectors, despite the impact of investment restraints among customers, and achieved a mid-single-digit revenue growth on U.S. dollar basis. For the full year, we are promoting additional improvements, such as further sales expansion, service enhancement, and cost reductions in the overseas storage business, and maintain our forecast for revenues and profits increase. In particular, Globalogic's revenue expects mid-teen growth rate on a U.S. dollar basis, thanks to future increases in orders and internal use. Next is energy. Stachi Energy, which operates the power grid business, saw a 20% revenue increase in Q1 on a U.S. dollar basis. Profits increased thanks to revenue growth, improved profitability of backlogs, operational excellence, and lower management platform renewal cost, and profit margin also improved by 3.5 percentage points. We revised our full-year forecast upward with profit margin expected to reach 13%. Nuclear energy's revenues decreased in Q1 and also for FY 2025 due to the impact of large projects recorded in FY 24. In mobility, revenues and profits increased year-on-year thanks to the impact of the acquisition of TELUS railway signaling-related business and the robust progress in signaling system projects. We revised our four-year forecast upward this time. Next is CI. For CI as a whole, Building systems saw a decline in Q1 due to a decline in elevator escalator business in China. New installations decreased, but service business, including renovations, increased in China. Meanwhile, most businesses other than buildings performed well. In particular, revenues of measurement and analysis systems increased 12% thanks to sales increase in semiconductor manufacturing equipment. Regarding the four-year outlook of CI sector, revenues will remain flat year-on-year, excluding the FX impact, but will maintain operating income at FY24 level and improve profit margin with growth of Lumada business. Finally, Lumada business revenues for Q1 of FY2025 increased by 54% year-on-year, and revenue ratio on Higachi consolidated basis reached 41%. we revised the classification of Lumada business to two simple categories, starting from FY25. As a result of examining the target businesses, we identified businesses that should have been included in the Lumada business, such as managed services and software businesses included in digital services, and SI business using products and AI included in digitalized assets, therefore decided to include those in Lumada business from FY2025. Slightly over half of the year-on-year increase in Q1 was due to this target business review, but nearly half comes from the increase in the existing Lumada business, which contributed to the expansion of revenues and profits. I will explain the factors behind the year-on-year increase in Q1 by segment. DSS saw an increase in FI projects and IT services utilizing generative AI. In addition, the installed base for data center storage is expanding. Energy Sector won a large project for a control and protection system for HVDC and increased the business on asset management systems, such as enterprise asset management. Mobility sector increased its digitalized railway signaling system projects. CI sector enjoyed an expansion in the installed base of digitalized assets, expanded through renewal projects of building systems, aiming at generating future service businesses, including Hikachi Hitex semiconductor manufacturing equipment, and also the digital services business for the manufacturing industry. That concludes my explanation on Q1 FY2025 earnings and the outlook for FY25. Thank you very much, Mr. Kato. Next, we would like to proceed to Q&A. Those with questions, please utilize the raise hand button on the Zoom screen. We will designate your name. When your name is called, please name your name and affiliation and ask your question. If you no longer require the question to be asked, please release the raise hand button. Today we will not be showing the video of the person asking the question. Questions will be accepted in the order of Japanese channel and then the English channel. Please note that we will accept questions from the media, institutional investors and analysts at the same time. Now we will take questions from the Japanese channel. Hirakawa-san, please. Please unmute and ask your question. Regarding DSS and energy, I have one question each. For DSS, service and platform is what I would like to ask about. There is an indirect impact of tariff and therefore there is a minus 14% year-on-year. How is it going to change in the second quarter and onward for global logic? There was three double digits for the year. So what is the current situation? And do you think there is a possibility of tariff having a ruined impact, especially in the area of storage? What are your thoughts about the current situation as well as the second quarter and onwards? Can I ask the second question as well? Yes, please. The second question is regarding energy. In terms of the profit margin, there was a 1% point improvement in the first quarter and second quarter. And for the fiscal year, there was an increase in 1% point. What is the background of increasing this? What about the orders received for this fiscal year for the full term? It has been prevailing at a very high level, so we don't think that it is going to continue at this high level. What is your current outlook? Answer to your first question regarding DSS. Regarding SAP, as I explained earlier, we are struggling in terms of storage. In terms of the global logic, in the U.S., kind of indirect impact is leading to investment restraint. This is having an impact. However, on the other hand, There is further utilization taking place for us as well as for other customers as well. That is the reason why we are seeing growth. But in terms of storage business, The indirect impact of tariff is there, but there is intensified competition as well. There are some areas where we are losing to competitors. In the second quarter in November for Hitachigan tariff, last year, new products, inclusive of the mid-range, have been introduced. Therefore, we will continue to make efforts to increase sales. In terms of maintenance service contracts, we would like to increase as well. And the cost optimization is also very important for us. Improvement impact should be brought to them in the second quarter onwards. For global logic, there is a customer restraint in terms of investment, but we are also seeing opportunities to acquire new customers. And utilization expansion is what we want to promote and we believe that we can achieve the growth rate for the full year. In terms of storage, second quarter improvement. We will try to do what we can. However, having said that, the indirect impact of U.S. tariff, if it is leading to investment restraint, there is a possibility that timing will be delayed. As I mentioned, the outset $20 billion is incorporated in this regard. That is all for TSS. Next for energy, in terms of power grid for Hitachi Energy, the profit margin has improved significantly, which is a good trend for us. Now, we have made an upward revision. In April, when we showed the full air guidance, we had to consider the impact of the tariff, which was uncertain. Looking back, we may have been too conservative in incorporating this, taking into consideration the current orders as well as the situation of the first quarter. We felt that the revision is required. Now in terms of the 3.5% increase, this is something that we feel confident about. Revenues are increasing and productivity is also improving as well. In terms of mix, it is more favorable. High voltage products are increasing. Up until last year, we have been making improvements in terms of our information platform, which has run as close as having an impact of 1 percentage point. We believe these efforts have been effective. In terms of voters received, For the whole year, we have not presented numbers for the first quarter compared to the previous year. Major projects have been delayed. Therefore, it looks smaller compared to the previous year. But these orders for high voltage switchgear and also transformers trend remains intact. Therefore, the base order for the first quarter is likely to continue with major projects. We believe we can increase the orders received going forward. Question, I have a follow-up regarding base orders. What is the percentage out of the total orders? Is it one-half? Is it three-quarters? Answer. For the first quarter, this order is accounting for more than one half. Compared to other quarters, there was absence of major projects, but this will change if there is a major project, but that was the case for first quarter. But depending on the quarters, the ratio will differ. Thank you. Thank you. Next, Takizawa-san, please. Thank you for this opportunity. Question. First question. The full year forecast is maintained now by segment. Has the hurdle changed, especially DSS, 8% growth or service platform, 1% growth against this target? Some deals, projects are pushed backward, but how much gap can you fill? Have your hurdle changed? Answer. DSS. As I said earlier, the DX demand in Japan is very strong. There are some projects last year... There were large deals in the front business last year. So this is what it looks like in Q1. But the order itself is strong. And so the front business and IT service will grow on a four-year basis. And overseas, global logic is also strong. Just one point is, as I alluded to earlier, the tariff impact, the customer's investment restraint may push back our storage, our improvement measures and efforts in storage. That is one concern. But at this point, we have made significant improvement, so we will see how we progress and reflect this into our forecast. Thank you. Question. Now, follow-up question. So DSS, the Overseas Customers Investment Restraint in storage and global logic, as much as possible, what kind of customers, what kind of projects do you see those impacts? And will you see a possible impact in the second half? Maybe a direct impact may spread up to $30 billion. Do you have a clear direction or visibility there? Answer. I cannot say too much on this, but recently in the automotive sector, the OEMs, are starting to have some financial difficulties. I will not say which one, but those companies, OEMs, and some government investment is pushed back. A government of countries' policy may change. So those are the general slowdowns that we see. But there are some industries where we see an increase. So Of course, we will see a growth in the medium to long term for sure, so our forecast remains unchanged. Thank you. Question. My last question is on mobility and HMAX, the contribution to profit. I think there are long-dated projects, but is this an upside to your full-year forecast? Is it likely to push up your forecast? Answer, HMAX. The mobilities, railway business, overall digital service, it accounts for a part. So it's difficult to single out the number there. But in terms of projects, there are positives. In Q1, in Scotland, the rolling stock maintenance contract up to 2032, they're thinking of utilizing HMACs. So customers have very positive response here. Thank you very much. That's all. Thank you very much. Toshi-sama, please. Toshi-sama, please. Please ask your question. Question. Question. Thank you very much for your explanation. I have two questions. First question is regarding the impact of Trump tariffs. You said that on a full air basis, the impact is $30 billion in terms of adjusted EBITDA, and the net income was $35 billion. Has there been any change from the beginning of the fiscal year for these numbers? Please confirm. Now, in July, the negotiation of tariff is becoming clearer. But what is the reason why you have not changed these numbers? It doesn't have to be qualitative. You can give a qualitative answer instead of quantitative. Numbers have remained. But do you think that it has become more alleviated from the beginning of the fiscal year? Is it becoming more challenging? Question 2 is regarding the fiscal year forecast, which has remained unchanged. Mobility energy has been made upward in revision, but not for the full year. A 20 billion business deterioration risk is being incorporated. What kind of risks have you incorporated? Please elaborate further on these risks. Thank you for your question. Regarding the US tariff impact, we have shown that on page 5. And left-hand bottom, please refer to the diagram. It is rather vague, but let me explain. At the time of April, we only understood the direct impact, not the indirect, and therefore adjusted EBITDA basis, $30 billion was incorporated. But as mentioned here, gradually, The deals are being concluded with various countries and therefore there is more clarity in terms of the tariff ratio. So the direct impact is lower than April. For example, between the US and Japan as well as EU and US deals are reflected. However, on the other hand, in the area of IT, there is indirect impact that we have to consider. There is customers' investment restrained, which we consider to be indirect impact, which is now coming to the fore. It hasn't been decided yet, but overall... Taking all these factors into consideration, we have maintained the 30 billion. On the left-hand side, you can see that there is a further increase in the indirect impact. Now, for the fiscal year 2025, we have maintained these numbers, and you have also asked about the potential. Energy mobility at the current 30 billion, the operating vision has been made, and the risk and stretch have been reflected, therefore there is no change. But regarding 20 billion, risk buffer has been incorporated, but it is not so certain that we can allocate to sectors. Therefore, it is considered to be a risk buffer. But what we have in mind... It's also related to the indirect impact of a tariff. IT-related investment could be restrained by the customers. This will mean a risk will come to the fore. That is the reason why we have incorporated these numbers. However, depending on the progress made, there is a possibility that we will change the outlook. In the second quarter, we will evaluate the situation more carefully. Thank you. Next, Miroshi-san, please ask your question. Question. Thank you very much. So on tariff impact, where you explained the impact, it's such an energy and the price pass through has already been taken. so more specifically in which service to what degree have you taken these actions as much as you can explain please answer statue energy the contract with the existing customers is that when the tariff changes the content of the contract changes accordingly but for the past contracts, we will consult with customers. So we consult with them on a case-by-case basis. And comparing April and now, the customers are agreeing to the price pass-through. They're starting to see this as reasonable. So compared to April, this portion is decreasing. Thank you very much. Question. So from Q2 onward, you will continue taking these measures? answer. Yes, exactly. Thank you. Thank you very much. Yasui-san, please. A question. I have two questions. First question is regarding the reasons for the fact that Europe is strong and France for America. If that is the case, I would imagine that for America to increase, why has Europe been strong? What is the orders received for US? Please give the perfect explanation for generative AI. I understand that there is high expectations for U.S. What is the environment for all this? Second question is regarding the front business and IT service domestically. It seems that the increase in profit is smaller compared to increase in revenues. Is there any special factors driving this? Answer. Regarding power grid by region, this is on page 10. We have shown the breakdown by regions. This depends on the projects and businesses. And it isn't as if the Q1 trend will continue in this way. But for Q1, high voltage as well as transformers, high voltage products demand is very strong. That has been reflected in the web news. HVDC projects was also included. This will be recorded by percentage of completion. Now, for North America, the growth rate for last year was very high. That is how it looks for the full year. But in terms of scale, sometimes it does not change. Therefore, it isn't as if North America is prevailing at low levels. That is not the case. AI and data centers are... This is an area where we are receiving orders for transformers, but the core is accounted for by the replacement of old facilities, as well as the grid stabilization with connectivity to renewable energies, which are driving business. Now, for the domestic area, I would say that in terms of profit margin, this will change from project to project, and this will change from quarter to quarter as well. But on our part, manpower cost is increasing. This is pressure exerted on us. And in turn, we have to enhance our value to make proposals in the customers in order to increase the price. But having said that, cost is increasing, which is pressure, and this is having an impact on these numbers. But on the other hand, generative AI, related SI, as well as IT services are being proposed to our customers in the form of the Lumada business. We are seeing steadfast growth in this area. This is a result of Q1, but going forward, we believe that there is possibility of improving the margins. Thank you. Thank you. So we will switch to English Channel for now. Any questions from English Channel? Please raise your hand if you do. Please use the raise hand button if you have questions on the English Channel. We do not see any questions, so we'll come back to the Japanese channel. So next is Suzuki-san, please. Question. Thank you. I have two questions. First is on the overseas storage business in DSS. I have some questions there. So the competition is intensifying, you said. How is the storage market now? Large crowd vendors' storage is difficult, or the low-priced storage, the vendors offering low-cost storage is becoming more influential, intensifying competition? What is happening here, if you could elaborate, please? Answer. Thank you for the question. So in Tier 1, in storage products, there are high-end and mid-range. In high-end, the customers are restraining their investments, so the projects are pushed back. It's not that we're seeing a decline in the market as a whole. There are some different circumstances from customer to customer. In mid-range, the competition is intensifying. It's not that the market is shrinking, but for Q1 alone, we could not sell as much as our competitors. But we are taking steady steps to make a recovery. We had new products last year, so towards the second half, we want to stage a recovery. Thank you. Question. My other question is not directly related to your financial results, but... AI, the impact of AI on your talent recruitment hiring strategy. So the IT personnel has been in shortage for a long time, but recently in the U.S. and other countries with the penetration of AI, the so-called AI layoff is accelerating rapidly. Will you continue hiring as planned, or will you suppress your recruitment? Is there a revisiting of your hiring strategy? Thank you. Answer. So this will be a rather general view, and it will include my personal view as well. In Japan, as I mentioned today, modernization... Our customers request our modernization, and DX is extremely strong. So we use Gen AI for coding and SI. We are trying to use this in general, and it will improve efficiency, but... To meet all the requests, we are using this as a solution to meet the huge request. And so regarding the IT talents, we are always feeling shortage. And therefore, we are starting to use our overseas resource. There is this tightness in the resource, shortage in resource, which we think will continue for the time being. Thank you. Thank you very much. Next, Hanada-san, please. Please ask your question. I have two questions. The first question is regarding power grid business. The Korean manufacturers are also increasing exports. ASV is also increasing exports. according to statistics in your case you said that many of your projects are long term so it is not in direct competition but are you seeing any changes in asb are you seeing improvements or not blended asb is also another way of thinking about this depending on the products I would like to confirm whether it is increasing for the products that you provide. Second, when you look at the overall picture, there is upside and downside. But for the full year, the focus remains unchanged. Hitachi Hitech seems to be improving in terms of orders received. But when you look at the overall picture, Can you elaborate further on what business is good, what business is not so good? Answer. Regarding Power Grid, the orders received and gross margins are always being watched very carefully. And for the time being... It has continued to increase, and this is continuing today. Therefore, we do not feel that the ASP is declining currently. For the overall picture, there is power grid and railway systems were revised up for power grid. we are at the limit in terms of production capacity so I don't think there is going to be a significant upside but in terms of efficiency we are improving and we have introduced ERP overall and therefore with better efficiency incremental upside could be gained. Regarding CI sector on the other hand For the Q1, in terms of revenues as well as profit, both declined. But this is according to our forecast for the full year. In terms of revenues, it will decline, but for profit, it is flat. Profit margin is something we can increase further. You talked about high-tech just now. And for CI... We are still conservative in our outlook. Therefore, through to and beyond, we have expectations for an upside. This is also a personal expectation that I have. Thank you. Thank you. We have one more person who is raising the hand, so this will be the last question. Ezawa-san, please. Question. So I came in halfway through, so I may be asking the same question, and so please say so if I am. First question is about the U.S. tariff-related, Hitachi's role in the circumstances. So 80 trillion yen investment from Japan to the U.S. So this investment to the U.S. What is the role Hitachi can play? What is your recent view on this? Just recently, you've been expanding your business investment, including M&A. You mentioned that in your capital allocation policy that you will increase your M&A. So maybe this is a tailwind for you. So, for example, $1 trillion level of M&A, will you have multiple cases of that size in the next three years in the U.S.? ? you may be contributing to the automotive sector. So are you feeling stronger about such possibility or answer? Thank you very much. So in terms of the investment in U.S., there are two ways. One is capital expenditure in power grid. Paragrid already have U.S. manufacturing base, and we are making quite a bit in the U.S. The demand is strong, so we have not covered all the demand, and it's importing from outside. So strategically, we will build the capacity in the U.S. So one is the increase in CapEx, and the other is the growth investment, M&A. Inspired to... Inspire 2027, we have a plan on growing utilizing digital. Ramada 3.0, Ramada-related or service-related M&A will probably take place in all sectors, of course, including energy, DSS, NCI. CI has not been large so far, but we've been doing quite a bit of midsize M&A in the U.S. We may do the M&A ourselves, but the other format is other companies may invest in the manufacturing sector in North America. For example, in automation, we will have more business. So I think we can expect in these two ways. Thank you very much. Question. My other question is DSS. The IT service, peer players, peer play in Japan, compared to those peer plays, they seem to be a bit weaker. You did not change your full year forecast. And maybe someone else asked this question already, but from Q2 onward, revenue need to increase to achieve your full year target. More specifically, what kind of change do you think you need from Q2 onwards to recover your revenue? And in front and in subcategories, if you could make any comments, I'd appreciate it. Answer. So first, I think you're talking about IT service. In Q1... Q1 was weak from an internal perspective. IT in Japan is strong. It's solid, but we have the overseas business there, URP-related business. Due to customers' investment restraint, we were impacted. So we are a bit weak now. But Japan is strong. So from Q2 onward, we can recover in this area, in the front business, in Q1, especially in finance-related business. Last year, there was Japan's new bank book project. And so as a reactionary fall, it seems like this Q1 this year is lower, but that's just for Q1. We can recover in Q2. And there are other variables, so we need to watch closely. Service and platform, you mentioned earlier. So you said the number seems to be a bit weak in Q1. Q1. One was the impact, the indirect impact from tariffs, customers' investment restraint, especially in storage. High-end projects were delayed. And including mid-range, the competition is fierce. And unfortunately, we could not sell as much as our competitors. So that was a Q1. Since last year, including mid-range, we've been launching new mid-range products. So we will promote our sales and also increase our maintenance service and optimize our costs to improve in the second half. but the indirect impact of tariffs may hit us, so we need to watch closely. Thank you very much. Thank you very much. With this, we would like to bring the Itachi Limited Web Conference on Q1 Fiscal Year 2025 earnings to a close. Thank you very much for your attendance, despite your busy schedules. Thank you.