Kawasaki Heavy Indu New

Thank you for your participation today. My name is Hashimoto. First and foremost, we sincerely apologize for the repeated compliance issues that came to light in fiscal year 2024, and for causing concern and inconvenience to you. The investigation by the Special Investigation Committee is still ongoing, and we will announce the results separately. Regarding the full year results for fiscal year 2024, business profit was revised upward sharply compared with the 130 billion yen forecast announced in February. We achieved record business profit of 143.1 billion yen. Turning to the full-year forecast for fiscal year 2025, we plan to exceed the fiscal year 2024 results and achieve a new record for business profit of 145 billion yen, despite setting a stronger yen exchange rate. The impact of US tariffs is expected to be felt mostly in the powersports and engine segment. however while taking into account the softening market trend this forecast does not reflect the impact of increased costs due to tariffs themselves because of the high level of uncertainty in future policy trends and economic conditions we will reflect these conditions in our financial highlights from the next announcement onwards as forecasts become clearer your understanding is greatly appreciated let's now move on to a more detailed explanation Allow me to hand you over to Mr. Yamamoto. My name is Yamamoto. Thank you for your participation. Allow me to present the financial highlights. As Mr. Hashimoto mentioned, our company's final results for fiscal year 2024 significantly outperformed the forecast announced in February, and we achieved record orders received, revenue and business profits. Regarding the full-year forecast for fiscal year 2025, in order-based businesses, increased revenue is forecast in both the aerospace systems business, for which a strong performance was recorded in both fiscal years 2023 and 2024, and the energy solutions and marine engineering business. In mass production-based businesses, an increase in revenue is forecast in the powersports and engine business as a result of the full-scale launch of operations at our new plant in Mexico. In terms of profits, despite a downward effect on profits from the exchange rate setting of 140 yen to the dollar, we plan to continue achieving record business profit as a result of increased revenue leading to higher business profits, and from price pass-through and cost reduction measures. The impact of US tariff policy has not been included because this is currently difficult to forecast, but we will implement a variety of measures to minimize potential impacts. This concludes the summary. I will provide more details beginning on page 5. Orders received in fiscal year 2024 amounted to 2,630.7 billion yen, revenue amounted to 2,129.3 billion yen, exceeding 2 trillion yen for the first time, business profit was 143.1 billion yen. Profit before tax was 107.5 billion yen, and profit attributable to owners of parent was 88.0 billion yen. As you can see, the weighted average exchange rate was approximately 8 yen weaker than in the previous period, and US dollar-based transactions amounted to approximately 1.94 billion dollars. Please see page 6. This chart provides a breakdown of orders received, revenue, and business profit for each segment. As you can see in 1, there was a significant recovery in the aerospace systems business from the losses in PW1100G engine business recorded in the previous year. There was also a sharp improvement in the profitability of the aero-engine business. These developments led to a large jump in business profit. An increase in business profits can also be seen in two, for reasons such as increased revenue in the energy solutions and marine engineering business, as well as improved profitability of the shipbuilding business at the joint venture in China. Page 7 shows the statement of profit and loss. 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. Please see page 8. On page 8 of the income statement, as shown in 4, we recorded a foreign exchange loss of 16 billion yen. This was primarily due to the end-of-year revaluation of foreign currency denominated debt payable. Consequently, profit attributable to owners of parent increased by 62.6 billion yen year on year to 88.0 billion yen. This is page 9. Next, I will explain the factors behind changes in business profit. Compared with last year, business profit increased by 58 billion yen as a result of the recovery from losses recorded in relation to the PW1100G engines. The depreciation of the yen against the US dollar compared to last year was a factor contributing to an improvement of 22.8 billion yen in exchange rate fluctuations. Additionally, changes in product mix, including strong performance in the aeroengine business and the absorption of inflation-related cost increases through appropriate price pass-through, contributed to an improvement of 2.8 billion yen. However, SG&A expenses increased by 26.4 billion yen, primarily in the aerospace systems business and powersports and engine business, resulting in business profit increasing by 96.9 billion yen year-on-year to 143.1 billion yen. Please refer to page 10 for a detailed breakdown by segment. Page 11 shows the statement of financial position. Please refer to the provided materials for details on the factors contributing to changes in assets at the end of fiscal year 2024. Please see page 12. Regarding changes in liabilities and net assets, as shown in 4, despite increased advance payments received in the aerospace business and other businesses and an increase in interest-bearing debt, the net debt-to-equity ratio was 78.4% as a result of increased net income, which was within our target net debt-to-equity ratio of 70-80%. Page 13 shows the cash flow statement. As shown in 1, operating cash flow improved significantly year on year, for reasons such as achieving record high profit before tax and increases in contract liabilities and trade payable in the aerospace systems business. Consequently, the final figure for free cash flow was positive at 37.7 billion yen. Please see page 14. We have provided a chart showing the cash flow trends over the past 10 years. As the reference materials show, there has been a large increase in working capital over the past 3 years, and it is likely that the resultant cash contribution is becoming gradually apparent. Let's move on to page 16. This shows the forecasts for fiscal year 2025. Although a decrease is forecast for orders received compared with the high level of orders received in the last fiscal year, revenue is forecast to increase by 8% from the previous period to 2,310 billion yen. Turning to business profit, setting the weighted average exchange rates at 140 yen to the dollar, which is approximately 10 yen stronger against the dollar than in the previous period, is expected to result in a decrease in business profit of 34.1 billion yen from the previous period, and this has been incorporated into the forecast. Despite this, we are forecast to achieve a new record high for business profit of 145 billion yen for reasons such as increased business profit resulting from growth in revenue. Please see page 17. The breakdown by segment of the forecast is shown in this chart. Detailed explanations will be provided on the individual segment pages. This is page 18. Regarding the impact of US tariff policy on the company's results in the current period, in the businesses other than the powersports and engine business, the impact is expected to be minor for the most part because in many cases contractual responsibility for paying tariffs is borne by customers in these businesses, and changes in tax rates are considered billable as additional costs. However, in the powersports and engine business, the company's U.S. subsidiary is expected to bear the cost of tariffs on motorcycles, components for four-wheelers and other products shipped to the U.S., and a market is likely to slow down due to tariffs. The level of impact has been calculated by taking into account price pass-through, as well as the effects of introducing attractive products. We will make ongoing efforts to minimize the impact. Page 21 is about aerospace systems. The slide shows the results for fiscal year 2024. Business profit finished up significantly compared with the forecast announced in February for reasons such as savings and various period expenses. Regarding the forecast for fiscal year 2025, revenue is expected to increase as a result of increased sales of aero engines for both Boeing and commercial aircraft, but business profit is forecast to decrease because of the stronger yen exchange rate setting assumption compared with the previous period. This is page 22. For your reference, page 22 provides the results of orders received and revenue in the aerospace and aero engine businesses, including the number of aircraft component parts sold to Boeing, and the number of jet engine component parts sold. This is page 23. This page shows the quarterly trends in revenue and business profit. Also provided for your reference, it gives an overview of past trends. This is page 24. 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. There have been no changes from the previous announcements. Page 25 is about rolling stock. The slide shows the result for fiscal year 2024. Regarding the forecast for fiscal year 2025, an increase in orders received is forecast in Japan and Asia, but orders received in North America are expected to decrease in response to the R211 Option 2 contract for the New York City Transit Authority in the previous period. No major changes have been made either in revenue or in business profits. This is page 26. This page 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 we have focused on as a profitable business undertaking, and the progress of the R211 project for the New York City Transit Authority in the U.S. For your reference, page 27 shows quarterly trends in revenue and business profit. This is page 28. Regarding the business environment and order trends, we have noted the resumption of investment in rolling stock in the domestic and overseas markets. Other than this item, there are no changes from the previous announcement. Page 29 is about Energy Solution and Marine Engineering. The slide shows the results for fiscal year 2024. Turning to business profit, there was a major improvement compared with the figures announced in February, for reasons such as improved profitability in individual projects. Regarding the forecast for fiscal year 2025, a decrease in orders received is forecast in comparison with the orders received for LPG and ammonia carriers and submarines in the previous period. However, increased revenue and increased business profit are forecast because of improvements in revenue and profitability from ongoing ship construction, notably that of LPG and ammonia carriers in Japan. This is page 30. Page 30 provides a breakdown of orders received and revenue for the energy system and plant engineering business, and the ship and offshore structure business. This is page 31. This page shows quarterly trends in revenue and business profit for your reference. This is page 32. Looking at specific efforts, the key role in this segment is played by products and services that contribute to realizing a low-carbon or decarbonized society. We have shown an order that was received for a municipal waste incineration plant from the Awaji Area Integrated Administration of a large region office association. The facility will use waste heat energy from waste incineration to supply electricity to 3,400 households, contributing to CO2 reductions. Looking at measures for providing decarbonization solutions, please refer to our introduction of the construction of a demonstration facility for a compressor used for hydrogen liquefaction plants. Page 33 is about precision machinery and robot. This slide shows the results for fiscal year 2024, which were almost in line with the forecast announced in February for both revenue and profit. Regarding the forecast for fiscal year 2025, increased revenue and increased profit are forecast. This reflects the gradual recovery in demand in the construction machinery market in China and other regions, the recovery in the semiconductor manufacturing equipment market, and growth in sales in the general industrial machinery field, as well as the achievement of profitable operations at Medicaroid Corporation, an equity method subsidiary that operates a robotic-assisted surgery system, Henatory. This is page 34. This page shows orders received and revenue for both the precision machinery business and the robot business. Revenue from hydraulic machinery to the Chinese market and a breakdown of robot related revenue by field are also provided for your reference. This is page 35. This page shows quarterly trends in revenue and business profit for your reference. This is page 36. In terms of the business environment, as I explained earlier, businesses in both hydraulic machinery and robots are expected to recover moderately, so please refer to it. Page 37 is about Powersports and Engine. This slide shows the results for fiscal year 2024. There was a decrease in revenue compared with the forecast announced in February, but business profit was almost in line with the announced figures. Regarding the forecast for fiscal year 2025, despite ongoing uncertainty about market conditions for reasons such as U.S. tariff policy, we plan to increase revenue, incorporating improvements in the production of four-wheelers and sales improvement after the recall issue is resolved at our production plant in Mexico, where full-scale production was launched in the second half of fiscal year 2024. Meanwhile, looking at business profit, despite increased revenue, business profit is forecast to be on par with the previous period, taking into account the stronger yen exchange rate setting and the impact of tougher competition on profitability. This is page 38. Page 38 shows revenue from motorcycles for developed countries, motorcycles for emerging markets, four-wheelers and PwC, and general-purpose engines. We have also included regional sales volumes for motorcycles and sales figures for four-wheelers and PwC. Please refer to the planned vehicle sales for fiscal year 2025. Sales of 250,000 motorcycles for developed countries are forecast, which is an increase of 16,000 vehicles from the previous period. Sales of 255,000 motorcycles for emerging markets are forecast, up 9,000 vehicles, and sales of 100,000 four-wheelers and PWC are forecast, up 30,000 vehicles, from the previous period. This is page 39. This page shows quarterly trends in revenue and business profit for your reference. This is page 40. Page 40 describes the business environment and the specific efforts in the powersports and engine business. Please refer to this page as it features our first electric four-wheeler. This is page 42. Regarding shareholder return, planned annual dividends for fiscal year 2024 of 150 yen are forecast. This is a 10 yen increase from the previous announcement, taking into account the large improvement in net income since the announcement in February. The current plan for dividend in fiscal year 2025 is 150 yen, which is the same as the last fiscal year. This is page 43. Here, we would like to report on two project topics. We will start by introducing the concept models of futuristic mobility showcased by Kawasaki Heavy Industries at the Future City Pavilion of Expo 2025, Osaka, Kansai. Having decided to take part in Expo 2025, we selected the theme Impulse to Move based on the research regarding people are genetically predisposed to derive happiness from the act of moving. We have showcased life-sized concept models of futuristic mobility. Let's move on to page 44. Allow us to start by introducing Curlio, an off-road personal mobility vehicle by four robotic legs. This is a novel four-legged off-road personal mobility solution by four robotic legs that integrates robot and motorcycle technologies, offering drivability, stability, and fun-to-ride experiences. The feature of Curlio is the use of a hydrogen engine as its power source, providing an effective solution to help realize a decarbonized society. Within just one week of announcing Curlio, we had easily surpassed 100 million page views on social networking services, attracting huge attention globally. Next, we will introduce the ALICE system, which only Kawasaki Heavy Industries Group can offer as we possess mobility technologies in land, sea and air. ALICE is a future transportation system that allows you to get into a cabin that comes to pick you up at home and automatically switch between trains, ships and aircraft to travel to your destination. This allows people around the world to travel freely with comfort and enjoyment. You will be warmly welcome to visit our Showcase of Futuristic Mobility at Expo 2025. This is page 45. Next, we would like to introduce our hydrogen business, which we are building as a core next-generation business. Turning to the recent business environment, the appetite to invest in green hydrogen has decreased as a result of relatively higher costs for reasons such as inflation and a return to LNG, and there has been a global slowdown in green hydrogen manufacturing projects. However, we believe there is a growing possibility of progress being made in hydrogen introduction as a result of green hydrogen becoming more popular with the support of blue hydrogen, which is highly compatible with LNG. Our company possesses transition products such as gas turbines and gas engines that can be used with not only LNG but also hydrogen as the fuel source, and our orders received in sales have been trending strongly. Our company possesses the CCS technologies needed to separate, recover and store CO2, which is essential for blue hydrogen. For these reasons, we believe we will have numerous business opportunities during the energy transition periods. Please see page 46. Given that this presentation concerns our year-end results, we would like to take a look at ESG-related topics. As the slide shows, in December last year Kawasaki Heavy Industries was selected for the first time as a component of DJSI World, a global stock index. This represents an upgrade from the DJSI Asia-Pacific Index, which we are already included in. We understand that this upgrade resulted from a high evaluation of our efforts to revise our director's compensation system. Please also feel free to read about the progress we have made, including the acquisition of SBT accreditation. supplementary information is provided from page 47 onward starting with this presentation revenue by region is also provided by segments on page 51 please refer to it as well this concludes the presentation thank you for your attention Thank you for listening. Next, President Hashimoto will explain our future business growth image. I will now explain the outlook for achieving a business profit margin of 10%, as described in our Group Vision 2030. As explained before, in our consolidated results for fiscal year 2024, we achieved new records for orders received, revenue, and business profit, significantly above the previous records. Looked at by business, large contributions to our profits were made by order-based businesses including not only the aerospace systems business but also the energy solutions and marine engineering business. This was the result of strong performance in shipbuilding business at the joint ventures in China, as well as the result of ongoing construction of LPG and ammonia carriers in Japan. For rolling stock, profits have stabilized due to the shift to full-scale mass production of the R211 project for the New York City Transit Authority. Meanwhile, in mass production-based business, the precision machinery and robot business contributed to profitability through the price pass-through and cost reduction measures, despite effects from a deterioration in market conditions. The power sports and engine business also contributed significantly to profitability during the second half of the fiscal year as a result of an improved operation rate at our new plant in Mexico. In light of these circumstances, we expect, as the outlook for our companies results in fiscal year 2025 presented today, to surpass fiscal year 2024 in both revenue and business profit, despite a stronger yen exchange rate setting. Looking ahead, impacts can be expected from changes in the external environment, such as changes in exchange rates and tariffs by the U.S. government. However, we will work hard to expand revenue by minimizing these impacts through price pass-through and cost reduction measures, and also by steadily supplying markets with competitive products. We will continue to promote our business with the aim of realizing Group Vision 2030, and we look forward to achieving a business profit margin of 8% in fiscal year 2027, and a business profit margin of at least 10% across all business areas by 2030. We hope you will provide us with even greater guidance and encouragement in the future. Thank you for listening.