Kawasaki Heavy Indu New

My name is Yamamoto. Thank you for your participation. Now I would like to present financial highlights. The consolidated results for the third quarter of fiscal year 2024 were positive overall, and we recorded the highest ever orders and revenue for a third quarter. Regarding the full-year forecast for fiscal year 2024, the previously announced figures for pre-tax income and net income were revised upwards to 100 billion yen and 78 billion yen, respectively, both up 5 billion yen. This took into account recent conditions and the replacement of assumed exchange rate to 150 yen per dollar. Business profit and dividends remain unchanged at the previously announced figures. This concludes the summary. I will provide more details beginning on page 3. In the third quarter of fiscal year 2024, orders received were 1,821.9 billion yen, revenue was 1,407.3 billion yen, business profit was 79.0 billion yen, and quarterly profit before tax was 64.4 billion yen. Quarterly profit attributable to owners of parent was 44.1 billion yen. Our performance has varied somewhat from business to business, but overall we are progressing in accordance with previously announced assumptions. As you can see, the weighted average exchange rate was approximately 9 yen weaker than in the previous year, and US dollar-based transactions amounted to approximately $1.53 billion. This chart provides a breakdown of orders received, revenue, and business profit for each segment. As you can see in one, there was a significant recovery in the aerospace systems business from the losses in PW1100G engine business in the same quarter last year. There was also a sharp improvement in the profitability of the aero engine business. These developments led to a large jump in income. Meanwhile, as you can see in 2, there was also a sharp increase in sales and profits from the previous quarter during the 3-month period of the third quarter in the powersports and engine business, which helped to reduce the year-on-year decrease in profit from this business. Please see the chart for details. As shown in 2, SG&A expenses increased as a result of business expansion, further inflation, and a weaker yen. Meanwhile, as shown in 3, equity method investment income was up significantly, largely thanks to better results at the joint venture in China in ship and offshore structure. On page 6 of the income statement, as shown in 4, we recorded a foreign exchange loss of 2.1 billion yen despite a sustained weakening in the yen. This was primarily due to the revaluation of foreign currency denominated loans payable. Consequently, quarterly profit attributable to owners of parent increased by 57.6 billion yen year on year to 44.1 billion yen. Next, I will explain the factors behind changes in business profit. Compared with the same period last year, business profit increased by 58 billion yen as a result of the recovery from losses recorded in relation to the PW1100G engines. Regarding the exchange rate, the depreciation of the yen was a factor contributing to an improvement of 13.9 billion yen. In terms of change in revenue, aerospace systems business and energy solutions and marine engineering business contributed to an improvement of ¥12.8 billion. Changes in product mix and other factors, including a strong performance in aeroengine business and appropriate price pass-through, contributed to an improvement of ¥11.6 billion. However, SG&A expenses increased by 25.4 billion yen, primarily in the powersports and engine business, resulting in business profit increasing by 78.2 billion yen year-on-year to 79.0 billion yen. Please refer to page 8 for a detailed breakdown by segment. Please refer to the provided materials for details on the factors contributing to changes in assets at the end of this quarter. Regarding changes in liabilities and net assets, as shown in 3, while interest-bearing debt has increased, the net debt-to-equity ratio was 115.1%, which was a similar level to the same period last year. We will continue to strive for improved asset efficiency to achieve our target net debt-to-equity ratio of 70-80% by the end of the fiscal year. As shown in one, operating cash flow improved by ¥19.7 billion compared to the same period last year, resulting in a cash outflow of ¥78.1 billion. This was due to increased income despite increased inventories in the power sports and engine business and aerospace business. For reference, we have provided a chart showing the cash flow trends over the past 10 years. Turning to the business forecast for fiscal year 2024, orders received were revised upwards by 130 billion yen to 2.56 trillion yen as a result of reaching an informal agreement on a subway car project in North America and an increase in Ministry of Defense related to orders. Revenue and business profit were revised downward compared with the forecast in the previous announcement. This reflected the long-term impact of the Boeing strike and incorporated the impact of a revaluation of foreign currency-denominated refund liabilities in PW1100G engines and aerospace systems business as a result of the revision of assumed exchange rate to reflect a weaker yen, as well as recent conditions and risk factors in powersports and engine business. In energy solutions and marine engineering business, there was an upward revision on the previously announced forecast thanks to firmer profit improvements in multiple projects. Consequently, business profit remains unchanged from the previous announcement, and profit before tax and profit attributable to owners of parent were both revised upwards by 5 billion yen, respectively. as a result of the revision of the assumed exchange rate to ¥150 per dollar, as explained earlier. The breakdown by segment is shown in this chart. Detailed explanations will be provided on the individual segment pages. This slide shows the results for the third quarter of fiscal year 2024. In addition to a recovery from losses related to the PW1100G engine recorded last year, Ministry of Defence related orders and aero engine business have both performed well, with orders received and revenue both significantly up year on year. Regarding the full-year forecast, this was revised upwards by 40 billion yuan compared with the previous announcement due to a strong performance in orders received from the Ministry of Defense, which placed a single order for 17 large CH-47 helicopters, thereby compensating for a decrease in sales to Boeing. Regarding business profit, in the aero engine business there have been impacts from the revaluation of foreign currency denominated refund liabilities in PW1100G engines as a result of the change in the assumed exchange rate, as well as from the protracted impact of the Boeing strike, which has led to a review of our production rate for Boeing. Accordingly, business profit was revised downward by 6 billion yen compared with the previous forecast. However, both of these causes are regarded as temporary for the current quarter. This year Boeing was affected by the strike, but it has announced expectations for improved aircraft production next year compared with this year. Moreover, a further increase in revenue is expected in Ministry of Defense-related business, along with an improvement in the profit ratio. Accordingly, we expect strong growth to continue. For your reference, page 16 provides the results of orders received and revenue in each business, the number of aircraft component parts sold to Boeing, and the number of jet engine component parts sold in the aerospace and aero engine businesses, respectively. This page shows the quarterly trends in revenue and business profit. Also provided for your reference, it gives an overview of past trends. This page outlines the current state of the business environment and order trends in the segment. It also presents the specific efforts we are taking to achieve the forecasts. Other than Boeing-related remarks, there were no major changes from the previous announcements. As the slide shows, the results for the third quarter of fiscal year 2024 indicate that business profit increased ¥1.5 billion to ¥4.1 billion year-on-year, mainly as a result of increased revenue from R211 cars from New York City subway in the U.S. Regarding the full-year forecast, the forecast for orders received has increased by 60 billion yen compared with the previously announced forecast as a result of receiving an order at the end of last month for an option 2 contract in the R211 project for the New York City subway. This is despite a reduction in forecast orders due to a high-speed rail project for India, which was included in the previously announced figures, being delayed beyond the current fiscal year. Regarding revenue, sales were increased by 10 billion yen and profit by 1 billion yen as a result of a weaker yen in the exchange rate trend. Page 20 shows orders received and revenue in the Japanese, Asian, and North American markets. For your reference, it also shows revenue in after-sales service, which has been a profitable business undertaking, and the progress of the R211 project for the New York City subway in the U.S. For your reference, this page shows quarterly trends in revenue and business profits. Regarding the business environment and order trends, we have noted the resumption of investment in railway cars in the domestic market. Other than this item, there are no changes from the previous announcements. This slide shows the results for the third quarter of fiscal year 2024. Regarding orders received, in the third quarter there was a large increase year on year, helped by orders received from the Ministry of Defense for a submarine, as well as LPG and ammonia carriers. In terms of profit, in addition to higher profits from larger revenues, equity method earnings were also strong, which led to a large increase in profits. Regarding the full-year forecast, orders received were revised upwards by 50 billion yen for reasons such as an increase in municipal waste incineration plants business and Ministry of Defense-related business. Turning to revenue, there was no significant change, and revenue remains unchanged. However, business profit increased by 8 billion yen as a result of improved profitability in various projects. Page 24 provides a breakdown of orders received and revenue for the energy system and plant engineering business, and the ship and offshore structure business. This page shows quarterly trends in revenue and business profit for your reference. Looking at specific efforts, the development of a recycling system for used automotive lithium-ion batteries was one measure aimed at promoting the realization of a recycling society. The project promotes the collection of critical minerals, for which there is a shortage, and we will work to develop this system in cooperation with our partners. The key role in this segment is played by products and services that contribute to a low-carbon or decarbonized society. We are making promising efforts to convert gas engine fuel to hydrogen, and steady progress is being made in this area. This slide shows the results for the third quarter of fiscal year 2024. Orders received, revenue, and profit all improved sharply year on year due to a gradual improvement in the market environment. Regarding the full year forecast. Revenue was revised downwards by 10 billion yen, and business profit was revised downwards by 1 billion yen as a result of lower-than-expected performance for hydraulic equipment for construction machinery markets in developed countries, as well as for general-purpose robots. Page 28 shows orders received and revenue for both the precision machinery business and the robot business. Revenue from hydraulic components to the Chinese market and a breakdown of robot-related revenue by field are also provided for your reference. This page shows quarterly trends in revenue and business profit for your reference. There are no changes from the previous announcement in terms of the business environment. Regarding specific efforts, please refer to our introduction of the autonomous excavation system for excavators development as one measure for addressing the decrease in working population, as well as our sales launch for programming support software, which makes it easier to introduce industrial robots. As the slide shows, the results for the third quarter of fiscal year 2024 indicate an increase in revenue of 12.8 billion yen compared with the same period last year. This is the result of a strong performance in motorcycles and effects from a weaker yen, despite a temporary decrease resulting from a recall on four-wheelers in North America and production launch delays. In contrast, business profit decreased due to increased fixed costs from investment for higher production. Regarding the full-year forecast, there is a good possibility of achieving the previously announced figures as a result of steady improvements in both production and sales and increased profitability since the third quarter, as well as a positive market reaction to the two-row ridge model announced in late January as reported by some media. However, reflecting the factors including the risks of tighter logistics in the U.S., as well as market trends for four-wheelers, the revenue forecast was reduced by 20 billion yen, and accordingly business profit was also revised downward by 3 billion yen to 48 billion yen. Page 32 shows revenue for motorcycles for developed countries, motorcycles for emerging markets, four-wheelers and PWCs, and general-purpose engines. We have also included regional sales volumes for motorcycles and sales figures for four-wheelers and PWCs in the third quarter. Regarding planned vehicle sales for the full year, motorcycles for developed countries were revised downwards from the previous announcement by 15,000 vehicles to 260,000 vehicles, and motorcycles for emerging markets were revised downwards by 20,000 vehicles to 275,000 vehicles. Four-wheelers and PWCs were revised downwards by 10,000 vehicles to 80,000 vehicles. This page shows the quarterly trends in revenue and business profit. As explained earlier, the profit ratio improved rapidly in the third quarter of the current fiscal year to 8.4%. The fourth quarter profit ratio assumption used for this forecast is 8.7%, as explained on the previous page. This page provides a market overview and describes the specific efforts in the powersports and engine business. No major changes have been made from the previous announcement. Regarding shareholder returns, the planned annual dividends for this fiscal year remain unchanged at ¥140 per share, as previously announced. Here, I would like to report on three project topics. I will start by introducing our entry into civil aircraft engine maintenance business in aerospace systems, which is one of our company's core businesses. Civil aircraft engines are expected to see strong growth levels in the future as a result of increasing passenger demand. Until now, our company has focused on development and manufacturing of components. With the aim of increasing the added value supplied by our company, we have decided to enter into MRO business, including maintenance and overhaul of PW1100G engines. We will use our company's unique ability to bring together all Kawasaki engineers, including the use of robot technology, and we look forward to making progress towards our aim of 20 billion yen in revenue in 2031. Page 37 introduces the latest conditions in the hydrogen business, which will be a core business in the future for the company. As introduced on the slide, we are making steady progress in preparation for the arrival of a hydrogen society. This includes the development of world-first 100% hydrogen combustion technology in a large gas engine, and a successful operational test of a small hydrogen engine in the aircraft domain, as well as the conclusion of a memorandum of understanding with Airbus and Kansai Airport to prepare for the operation of hydrogen aircraft in the hydrogen usage domain. Lastly, I will introduce Kawaroba, a social innovation hub opened by our company in November at Haneda Innovation City, located next to Haneda Airport. Today, society is faced with numerous challenges, including energy, decarbonization, a falling birthrate, an aging society, and disaster prevention, but these challenges cannot be resolved by a single company working on its own. For this reason, our company has opened Kawaruba with the aim of cooperating with a diverse range of determined people to build innovation across organizational boundaries, and to achieve the social implementation of solutions to the challenges we face. We have started out by designating hydrogen energy and social robots as specific fields. We have already started collaborating with several startups, local governments and government agencies, and started to work hard to overcome challenges. Page 39 shows the factors contributing to changes in the full-year business forecast concerning business profit from the beginning of this period. As shown in this slide, despite a decrease in revenue in the powersports and engine and precision machinery and robot businesses since the previous announcement in November, the forecast of 130 billion yen in business profit remains unchanged due to impact of exchange rate fluctuations and equity method earnings. the following pages contain supplementary information this concludes the presentation thank you for your attention