Kawasaki Heavy Industrial Ltd

Thank you for your participation today. My name is Hashimoto, President. Firstly, please allow me to offer my sincere apologies once again for the concern caused to our stakeholders as a result of the misconduct incidents uncovered in the previous fiscal year during the process of addressing past underlying issues. In December last year, we received the final report of the Special Investigative Committee. The impact of these incidents on our results was reflected in the results for fiscal year 2025, and we believe that some of the financial impact of these incidents on results from the current fiscal year onwards have been limited. Our company will remain fully focused on regaining the trust of our stakeholders. Regarding our full year results for fiscal year 2025, revenue was 2.3112 trillion yen, business profit was 145.1 billion yen, and profit attributable to owners of parent was 108.1 billion yen. In all cases, we recorded record results for a second consecutive fiscal year. Turning to the full year forecast for fiscal year 2026, we have set the exchange rate at 150 yen to the dollar. For business profit, which attracts significant attention, we anticipate recording 170.0 billion yen. This would exceed our previous record for business profit by a large margin. We expect revenue to increase compared with fiscal year 2025 and we anticipate an increase of profit to 110.0 billion yen. Accordingly, we are making steady progress towards our fiscal year 2030 target of a business profit margin exceeding 10% in all business segments. Regarding the external environment, we expect difficulties with procuring materials and production delays as a result of the Middle East situation, and we have incorporated a certain amount of risk in the forecast. Turning to US tariff policy, our assumptions are based on the systems and tariff rates that have already been applied or are expected to be applied at this stage. However, we have not incorporated impacts from any refunds of reciprocal tariffs paid in the previous fiscal year. Looking ahead, in the next and later announcements of our financial highlights we will reflect the latest situation in our results forecasts as necessary. Let's now move on to a more detailed explanation. Allow me to hand you over to Mr. Yamamoto. My name is Yamamoto, Chief Financial Officer. Thank you for your participation.

Allow me to present the financial highlights. This is page 5.

In our financial highlights for fiscal year 2025, as you can see, revenue and profit both increased year on year, and our company recorded record highs for orders received, revenue, and profit. Pre-tax income was 145.5 billion yen, an increase of 23.5 billion yen compared with the February forecast, and net income was 108.1 billion yen, an increase of 18.1 billion yen on the forecast. The weighted average exchange rate was approximately 1.7 yen stronger than in the previous fiscal year, and U.S. dollar-based transactions amounted to approximately $2.2 billion. Please see page 6. This chart provides a breakdown of orders received, revenue, and business profit for each segment. As point 1 shows, in the energy solution and marine engineering segment, the energy business and the ship and offshore structure business continued to perform strongly, and revenue and profit both increased. In contrast, As point 2 shows, in the power sports and engine segment, despite an increase in revenue, profit decreased due to factors such as increased tariff costs and decreased profitability against a backdrop of intensifying competition in the U.S. power sports market. Page 7 shows the statement of profit and loss. Please see the chart for details. As point 1 shows, selling, general and administrative expenses increased due to revenue growth, but the selling, general and administrative expenses ratio decreased as a result of our efforts to control fixed costs. Please see page 8. As point 2 shows, foreign exchange gains of 18.9 billion yen were recorded due to translation gains arose on foreign currency denominated receivables resulting from depreciation in the value of the yen at the end of the fiscal year. Consequently, profit attributable to owners of parent increased by 20.1 billion yen, year on year to 108.1 billion yen. This is page 9. Next, I will explain the factors affecting changes in business profit. Regarding change in revenue, the power sports and engine segment contributed significantly to revenue due to increased sales. In contrast, looking at change in product mix and other factors, despite a noteworthy improvement in profitability in the energy solution and marine engineering segment, profitability dropped sharply in the power sports and engine segment. As a result, business profit increased by 1.9 billion yen year on year to 145.1 billion yen. Business profit decreased by 18.7 billion yen due to cost increase due to U.S. tariff policies, mainly in the power sports and engines segment.