Mitsubishi Motors Corp

2020. Due to the impact of the spread of COVID-19, the global demand for automobiles was sluggish, resulting in net sales of 574.9 billion yen and an operating loss of 82.6 billion yen. The ordinary profit was negative 87 billion yen, and the net income was negative 209.9 billion yen, mainly due to impairment losses recorded in the first quarter. Sales volume was 351,000 units globally, down 41% from the previous year. In the second quarter, July to September period, the net sales were 345.4 billion yen. Operating loss was 29.3 billion yen. Ordinary loss was 28.3 billion yen. Net income was was negative 33.7 billion yen, and unit sales volume was 212,000 units. Although we observed a recovery trend in earnings from the first quarter to the second quarter, the situation remained challenging. Please turn to page four. The factors behind the year-on-year changes in operating profit are as shown in this slide. In terms of the volume and mix, as I mentioned earlier, the impact of stagnant global economic activity led to a decline in all regions, with the impact amounting to a negative 93.7 billion yen. The sales expenses improved by 7.1 billion yen due to a reduction of sales expenses associated with a decrease in unit sales. Cost reductions were affected by planned production adjustments at domestic and overseas plants. Thus, cost reduction did not make progress. FX deteriorated by 1.1 billion yen year-on-year as a result of the overall trend of yen appreciation, although an upturn in the Thai baht was confirmed, which is the cost currency. R&D expenses improved by 14.2 billion yen-on-yen, as a result of efforts in reducing them. However, although other expenses deteriorated by 3.6 billion yen due to deterioration after sales business of 9.2 billion, which is in line with a decline in the number of units sold. And please turn to page five. Regarding global demand for automobiles, some developed countries are beginning to show signs of recovery, but our sales volume in the first half declined 41% year-on-year to 351,000 units, mainly due to delayed demand recovery in ASEAN. In the ASEAN region, which is our core market, the situation varies from country to country. Vietnam and Thailand are showing signs of recovery, but in Indonesia and the Philippines, restrictions on activities continue. However, overall conditions are severe, and as a result, sales in the ASEAN region fell 53% year-on-year to 71,000 units. In Australia and New Zealand, The lockdown is being lifted in stages, but the recovery in total automobile demand was moderate, and our sales also fell 33% to 30,000 units. In Japan, although the impact of the spread of COVID-19 on the economy subdued, demand in our main state segment did not recover in the first half. Our sales fell 48% to 27,000 units. The situation of sales in other regions were also severe, and the year-on-year decline was more than 30%. Please turn to page 6. Next, we would like to explain about the full year forecast for FY2020. Please turn to page 7. As I mentioned earlier, economic activity in each country has resumed one after another. With the end of infections not being anticipated, all of these activities have only been resumed in stages, and the path towards normalization is uncertain. In such an environment, as we announced at the first half result meeting, we have formulated our business outlook for FY 2020 based on the assumption that the automobile demand will gradually recover towards the second half of the fiscal year after bottoming out in the first quarter And by the end of fiscal 2020, we'll return to the level at the end of fiscal 2019. In the first half, particularly in the ASEAN region, which is our core market, the recovery was relatively slow and sales and associated profit were weak due to the impact of these factors. However, we are able to proceed almost as planned with the cost structure reforms and inventory reductions that were planned at the beginning of the fiscal year. Although the outlook is uncertain due to factors such as the second or the third wave of COVID-19, we have made steady progress in reforming our cost structure, so we maintain our full-year forecast at this time. Please turn to page 8. Although we do not change our full-year forecast for FY 2020, but we have revised some of the variance factors. In terms of volume and mix, We anticipate that the sluggish economy caused by COVID-19 will prolong since ASEAN countries are revising downward their forecast for the total demand. On the other hand, developed countries in Europe and also North America are recovering faster than expected. We gave careful thought to these changing circumstances and concluded that these should not have a serious impact on operating profit variance factors. And also for the forex exchange, we have updated currency exchange rate as shown in this slide to reflect the current market level. As a result, we now expect a forex impact of negative 2 billion yen year-on-year operating profit. Katosan, please.

Now, I would like to explain about our sales by region. Please turn to page 10. In the first quarter of FY 2020, global automobile sales declined sharply due to the impact of stagnant economic activity caused by the spread of COVID-19. Subsequently, in the second quarter, the lockdowns in each country were gradually relaxed, and a recovery in demand emerged, mainly in developed countries and some emerging countries. On the other hand, the second wave of the pandemic is ramping up, particularly in Europe, and uncertainty over the future is again becoming stronger. Despite such a challenging environment, we have prioritized measures to steadily expand sales in the future, such as improving quality of sales by strengthening our dealer network, as well as enhancing digital marketing and reducing inventories. These measures have progressed almost as planned. Our sales conditions in the first half of the fiscal year were harsh in some regions, but sales in some regions exceeded expectations. As a result, overall sales were generally in line with the plan. Regarding our four-year sales, we lowered our forecast for unit sales in line with the total demand forecast in ASEAN and other regions where the market is slow to recover, resulting in a global volume of 824,000 units, which is down from the initial forecast of 845,000 units at the beginning of the fiscal year. Please turn to page 11. Next, I would like to explain the progress of structural reforms. Please turn to page 12. As indicated, all structural reforms have progressed faster than planned or as planned. We also expect most of reform costs to be recognized during the current fiscal year. Regarding the reduction of fixed costs, the new midterm plan Small But Beautiful sets a target of a 20% reduction from the fiscal year 2019 by the end of fiscal year 2021. Despite the extraordinary factor caused by the COVID-19, we achieved a 20% reduction from the previous fiscal year in the first half due to the acceleration of various measures. In terms of specific implementation status, We are making progress on schedule with respect to indirect labor costs through headcount rationalization, including reallocation, restraint on new hiring, and voluntary retirement plan, as well as the revision of the compensation system. And we expect to achieve the plan. With regard to marketing costs, In line with the basic concept of selection and concentration, we controlled costs in non-core regions and concentrated a portion of them in core regions, thereby improving cost effectiveness and at the same time reducing the overall budget. As announced in the first quarter, depreciation cost is expected to be reduced by 12% compared to the previous fiscal year through impairment losses on fixed assets. Similarly, we reduced development costs for non-core regions and concentrated a portion of these spending on core regions, thereby establishing a system that enables us to develop products in line with our strategy. As a result, we expect a 13% reduction compared to the previous fiscal year. Regarding the restructuring of the production system, as announced in July, we expect to increase the overall utilization rate and reduce depreciation costs by suspending production at PMC. As for general and administrative expenses, reductions progressed more than we anticipated in all items, including reductions in expenses, mainly travel expenses and outsourcing expenses, and consolidation of subsidiaries and other facilities into the head office building. Please turn to page 13. As I mentioned in July, during the current midterm plan period, we are committed to providing customers with reliable and attractive products through the promotion of environmental technologies in which we excel, and the evolution of our genetic 4WD technologies and off-road performance. In addition, in the new environmental package announced recently, the promotion of electrification focused on PHEV is stated. In line with these plans, we plan to launch our new Eclipse Cross including PHEV model in the second half in the global market. In addition, in order to prepare for increasingly stricter environmental regulations in ASEAN, we will gradually expand sales of outlander PHEV in ASEAN countries. In addition, we will begin producing outlander PHEV in Thailand in December. We continue to develop technologies and expand our lineup of environmentally friendly models in accordance with our plan. Please turn to page 14. Global automobile demand has been gradually recovering, particularly in developed countries, and it looks like the global market has taken a step toward normalization. However, in recent days, the second or third wave of COVID-19 is spreading mainly in Europe. And in some countries, restrictions on activities have resumed. In addition, it is still difficult to say that the uncertainties of the future, such as the impact of the US presidential election result, have been dispelled. In addition, The pace of recovery in ASEAN, which is of paramount importance to us, is relatively slow, and I think you are very worried about it. However, in order to manage this uncertain situation, we believe that our highest priority is to steadily implement structural reforms based on selection and concentration, and to firmly establish a foundation for recovery in business performance. Based on this recognition, we focused on implementing measures in the first half of the current fiscal year. As a result, reforms have progressed more than originally planned, and we are now seeing a path toward improved profitability. First, we will work together to ensure that the plan for the current fiscal year is achieved. Needless to say, While taking into account the uncertainty about the future and the financial stability that forms the foundation of our business, we intend to weather this difficult situation and meet the expectations of all our stakeholders. I would like to ask all of our stakeholders for their continued support. Thank you.

Now we would like to move on to the Q&A session. So our apologies, but English lines only for listening only. So if you have any questions, please press the start key first and then press 1. And we will call your name. So when your name is called, please tell your organization your name. But if you would like to cancel your question, then you can press 2 after pressing the start key. And we would like to limit the number of questions to 2 per person. Thank you for your understanding. Thank you very much for waiting. So Mr. Yoshida from Citi, please. Thank you very much. So two questions. The first question is about the volume. So the volume of shipment and also the profit. I'm looking at the balance between the two. So for example, last time you had about 30 billion yen profit for the 200k shipment and for the first the second half is say 500 so 500k and then about 60 billion or say per quarter about 30 billion yen worth of profit i'm assuming so from i'd say second quarter to third quarter of the first to the second quarter so there's a How can we, should we interpret for the reason why you're not getting the recovery that you planned? Maybe we shouldn't just look at the small perspective of just looking at the quota to quota, but say you have $140 billion, and do you have a lot of margin for this? And then also the question is that... I think between the first half, the second half, there's a difference in the R&D cost and also depreciation amount. But in terms of development, I think your forecast is trying to bring down the cost to about $100 billion. And for the second half as well, whether we are going to utilize fully the $140 billion or not, or are you going to – is there room for front-loading the cost reduction activities? Because I'm also looking at the figures coming from Nikkei. That's the first question. And the second question is about 50% of the EV by 2030. So the majority of the EV countries are developed countries. So I think this target is quite aggressive. So per region and per type, whether PHV, EV, or VEV, and hybrid, if you can give us a breakdown information of allocation of the EV target. So the first question, let me confirm your first question first, qualify. So 200K, and then the profit is, say, you said $30 billion, that first half you said, and the second half is, say, 500K unit, but it was about $60 billion. So compared to the number of volume, like you're saying, that we're not going to have enough profit. So I think you're talking about the, say, 200K or, say, 30 billion. I think you're talking about these numbers after looking at the second quarter result. But first, I want you to look at the broad-eye picture. So for the first half, we reduced a lot of fixed costs. And among the fixed cost reductions, some of them are coming from the structural reform and some of them are coming from measures for COVID, or we front-loaded some of the initiatives. But in the second half, as the impact of COVID were brought under control, then, of course, the vehicle mix will change as well because of the new vehicles. So those are some of the contributions. And in terms of the volume, This time in our presentation, so we reduced the retail by about 20K, and then we increased by 5K for the four tiles, and also there are some changes in the vehicle mixes as well. And also for the first half, for the fixed cost reduction, 20% reduction compared to the previous year, and we have some impact in the second half as well. But overall, for the full year target for the fixed cost reduction, we believe that the contribution will be bigger than what we expected or planned. So we, for the ASEAN, we decided to drop the volume in China. It's well in line with the trend or the outlook for the market. But at the same time, we will make sure to have a good balance by reducing the fixed cost and then Overall, we have about, say, 150K drop. So that's our forecast. This is Yukata speaking. So compared to the Q1 and Q2, so I think your question is, are there any specific reasons, or are we having any conservative perspective in our forecast? So we basically have both perspectives included. So we're now presenting the how to achieve numbers. And also in the first half, we were affected by the COVID, but we already planned and then decided to reduce the cost, anticipating that the market would shrink in the first half. And because of that, compared to the second half, for the first half, We had more cost reduction, but at the same time in the second half, we have the assumption that the situation will be normalized more. So we are presenting the numbers that we confidently declare that we can achieve. And then about the R&D expenses and electrification. So this is Nagaoka speaking. So about the R&D expenses, like you pointed out, for the first half, compared to the plan, we reduced by 14.2 billion yen. But in the first half, because of COVID, several activities were put on hold. So because some of the activities were shifted to the second half, so whether we can achieve the same amount again in the second half, that is not the case. But at the same time, there is a pure reduction took place in the first half as well. So for the second half and also the full year achievement for the cost reduction, we believe that we have a good room to achieve in the end. We're not going to double the amount of reduction that we achieved in the first half, but at the same time, fully we believe that we should be able to achieve our target for the cost reduction by certain margin. And about the electrification, let me share with you the background first. So as you pointed out, under the new environmental package, compared to 2010, the emission from the new vehicles will be reduced by 40% by 2030. So as a part of the enablers to achieve that electrification is being considered. And our core market, ASEAN market, as you know. So CAFE, there are no regulations decided, but looking at the plans for the ASEAN countries, by 2030, the restriction may reach to somewhere similar, slightly below the restriction level of Europe. and also China and U.S. and Japan as well. For those countries, it is expected that they will introduce very challenging restrictions for the emission. So we need to – we have to consider to what extent we need to bring in the electrification by 2030. So battery EV plug-in hybrid and also so-called general hybrid, those models, Some of them, so that includes mild HEV, which the emission reduction is not as big as other EV. But how to combine different types of hybrid or EV models and come up with the strategies for each market or each country will be the key. But each country has a different demand level. So we have four technologies, and we will ensure to utilize those four technologies through our alliance. So, for example, in case of China, then the battery EV plug-in hybrid, those percentages probably will be higher in the mix. But then in the ASEAN market, not to that level, but instead have an other EV cars need to be introduced. Otherwise, we may have a higher percentage of plug-in hybrid or battery EV. So we need to make a decision based on the situation of the market. So we are at the moment considering the allocation and the volume. So at the moment we do not have firm numbers that we can disclose, but per region we will come up with the plan that can cater to the demand of each country and of course through the discussion with our alliance partners. And that is all. Thank you.

Next. from Morgan Stanley Securities. Hello? Do you hear me? from Morgan Stanley Securities. I have two questions. The first question is, slide 12, about the progress of structural reform. You said that 20% reduction of fixed costs in the first half, and then given the market situation, so maybe there are some costs which you need to immediately reduce. So whether you have achieved sustainable reduction of costs? So from that viewpoint, I would like to understand what's the progress of your cost reduction as a part of structural reforms. One of the things there is the cost slide, cost of structural reforms. So looking at the report, okay. Yeah, the cost of structural reforms, the cost does not seem too big, but when we look at the net loss of this year, maybe this should continue for some time. So I would like to understand that point. And second question. About inventory status. Full year wholesale amount is slightly positive and then the retail volume amount is slightly down. And I think the COVID like the recovery from COVID situation should vary from region to region, but I would like to understand the status of inventory by region. That's all. OK. But. the 20% reduction of fixed costs as a part of the structural reforms. We said that, so there are some special factors. And then how much realistic, like a real cost reduction was achieved. I think that's the point of your first question. And specifically, it's hard to give you specific numbers, but when you think of special factors, like overseas business travel, like we reduced expenses in that area, and also the cost related to event, we reduced that. So they can be called special factors. But even without that, like we have been able to achieve a good level of cost reduction. We can confirm that. So for the general and administrative costs, We believe that we can significantly and overachieve our target. In coming over to advertisement cost, we are making trials and errors. And then we successfully achieved a lot of reduction. But maybe we controlled this a little too much. So maybe we need to consider spending a little more. But anyway, so this fiscal year, Against our original target of 10%, 20%, we have been able to overachieve that. It's hard to talk with concrete numbers, but a 10%, like an initial assumption was 10% cost reduction, but I think we have come to about 15% so far, and we can keep building up the results in terms of the cost reduction. and about the cost about special loss. So we announced that as our full year announcement, and I think we can be within the range. So all the special costs related to structural reform will be posted during this fiscal year. And to your second question about inventory, may I continue or? About inventory. I'd like to give you an overview. And Yatabe is going to talk about regions. And at the end of last year, about 13,000 units. So we had an increase of inventory. And then we are aiming to reduce by 181,000 units this year. And then we made some changes in the wholesale number. And currently, we say that it will be like we are still aiming at reducing by 150,000. And then in the first half, we reduced by 95,000. And in the second half, we aim to reduce another 50,000 units. So end of the year. So we would like to compress significantly the distribution stock and inventory. And then I think we are making good progress. This is Yatabe. As it was said, at the end of March in 2019, as of September this year, the local total inventory is about 320,000 globally. That was last year, and then now it's about 230,000. That's the level of reduction we achieved. And all in all, the inventory level has reduced. Europe, which has slightly higher level of inventory, and also the U.S., the inventories in those regions have successfully reduced. In Europe, we are in the process of structural reform. Currently, the level of stock over there is about 60,000, and we could half the level of inventory in the U.S. And in Indonesia, we had relatively high level of inventory, but it has been reduced. So globally, all in all, like in general, the level of inventory has decreased, but South America – excuse me – the Middle East and Central America, these regions have quite high level of inventory, so they have higher level of inventory compared to other regions. To my first question, Mr. Kato said that like a 15% cost reduction, that was the level. So you're saying that out of 20, you assume for the year, and you have achieved 15% so far, and then you will keep building up the result of cost reduction. Is that what you said? In FY19, we said that, yeah, we said that we would reduce cost by 20% by fiscal year, end of fiscal year 2021. So, That was 20% was by the end of 2021. And then we had a limited number of measures that we can do in one year. So as of 2020, like we said that it would be 10%. So we already overachieved that. It includes some special factors, but So for this year, we assumed to make a 10% reduction from 2019, but so far, we have been able to achieve about 15%, which has already exceeded our initial assumption.

Thank you very much. And next, from the Securities, Hakomori-san, please. This is Hakomori speaking. Can you hear me? Yes, we can hear you. Good evening. Good evening. The first question is, about the sales situation in the ASEAN market, like your product competitiveness and the strategy, if you can supplement to your question. So at the moment, the recovery in ASEAN countries is slower than you expected, and I think that is true. But on the other hand, for example, if you look at countries like Thailand, and then the top two OEM sales are pretty good, and also Indonesia and also the Philippines as well. So it looks like individual company has different situation. So Thai, Indonesia, and the Philippines, and also in those regions, I would like to know your perception on the sales activities. So that's first question. And the second question is more simple. So I think at the end of the first quarter, so the net cash excluding the finance, I think, Iker-san, you said the net cash will be $120 billion level at the EINs. So I would like to know whether that target changed after applying some revision. So first of all, about the ASEAN. So this is Etobe speaking. So as you know, the main five countries in ASEAN, depending on the country, the recovery from the COVID varies, especially in Indonesia and the Philippines, their recoveries are slow. And because of that, our sales forecast as well impacted from the recovery slowdown. But for the first half, Vietnam and Malaysia, for the countries that are faster in recovery, for those countries, we are picking up market share. But Indonesia, so the recovery is very slow. So other OEMs, In order to sell out the inventory, they are implementing various sales measures. But for us, expand our mainstay, for that price, we would like to maintain that price as much as possible so that we can generate profit. So under that, we competed in the first half. And because of the sell-through price compared to the other OEMs, Our sell-through price looks relatively on the high side compared to competitors' prices. And also for the Thailand, among the three, Xpander and Pajero Sports, we are maintaining a similar share level as previously, but for the pickup, So because of the new release from competitors, our market share is struggling. But for Thailand, because this is an ASEAN market, it's a core market to us. So like Ikea mentioned, so the allocation of the fixed cost and also advertisement cost, we are allocating more resource in those areas for the ASEAN market in the second half of the year. And for your information about the pickup vehicle in Thailand, the situation was, as I mentioned, but for other regions, for the pickup, compared to the initial plan, the sales situation is actually good. For example, Australia, New Zealand, and also Central and Latin America, and South America, and Europe as well. The sales is... on the upward trend. And actually, we haven't been able to produce the volume catering to those demands, and we are preparing to expand or increase the production for those models. And also, another question that we had about net cash. So what is the status of the net cash after the first quarter? So for the year-end net cash, I believe that we probably will have a better number than the number that you mentioned. But let me give you additional information about the short-term free cash flow situation first. So for the first quarter free cash flow, So it was negative $21.5 billion, and it was partially due to $211 billion. This is due to COVID. But then for the second quarter, it was a positive $8.5 billion. And that was because the sales recovered and also the inventory adjustment worked in our favor as well. And also for the outflow of the cash, basically it stopped. And then because of that, at the moment we discussed that it is $203 billion for the first half. But for the second half, we have several measures in place. So it probably will end in negative. But for the operational level, it probably will end in positive. So for the full year, we believe that it will be the positive of about $10 billion. But for Q2, the cash-out will take place in Q2 for the structural reform measures. So overall, it will look negative, but in the operational activities, we'll recover because of those measures in Q2. And we believe that it will work in our favor in the future. So you can take that into consideration as you assume what's going to happen for the net cash at the end of the year. Thank you.

Okay, next. From Nomura Securities. Thank you. Can you hear me? Yes. I have two questions. The first question is the US and Europe in business. I would like you to elaborate on that. First, the United States, auto data, incentive data. When I look at the data, the October incentive increased. I saw that number increased. And then your relationship with dealers and change in incentives and what are some changes in that market apart from the sales volume? Similarly, in Europe, so you announced that you will stop introducing new models, and I think you are in the process of negotiating compensation with the dealers. So sales incentives, is there any changes in the sales incentives in that region? So that is my first question about the U.S. and Europe. And then you sold like 550. $11,057.4 billion. And then I think in the second half you have some adjustment of inventory. I think you explained the inventory, consolidated inventory, but if you exclude that part, compared to – so what's the level of reduction in shipment excluding retail? So if you make the operating loss of over 50 billion yen in the second half, I would like to understand what kind of changes are expected in order for you to return to the block in the next fiscal year. OK, about the Western markets. First, the US, as you know. Our sales in U.S., like we do retail and fleet. There are two parts. And up to last year, like until last year, we had a policy of chasing for volume. So we sold big volume as fleet. But the fleet business is not really profitable. So we control the number of fleet sales and we focus on retail sales. And talking about incentives, Yeah, the incentive increased as a total market. And we also. We show some growth in incentives in line with the market growth of incentives, but it's still slightly low, lower than the industry or market average. And in next spring in the US. So we will have a new model coming up. And we are steadily Preparing for that new launch. Moving over to Europe. So new model. Introduction and development and those activities will be frozen. That's what we announced earlier and before. When that news went out. Yeah, we thought that if this kind of news would go out like we would have some negative. response but we did not really have that kind of a negative response from the market. So we have actually maintained the same level of market share as we had last year. And we are talking different things with the local dealers there. So this year for Europe, compared to the target at the beginning of the year. So we can, I think we can add about the 20,000 yen like addition to our original target this year. Talking about inventory. So the numbers that I mentioned, so this is, so the number I mentioned includes the GMMC and others. So I would like separately talk about more precise number. But the full year, so we say that we will reduce about 159 reduction. And then in the first half, we may achieve the 95,000 yen, and 33,000 will be the remaining. For Asia, for North Asia, it will be 33,000. And if possible, Yeah, and then I would like to understand just the image I got about the second half of a 510,000 unit and then 5.4 billion yen of profit. Yeah, from second half to next year, there are some points. One of them is in the second half. So we try to reduce number of year end inventory level. So in order to return to the black next year, about 70 percent comes from the marginal profit, and then the remaining 30 percent comes from fixed cost reduction. So in the second half, the same. About the year-end inventory is reduced by about 150,000 units, so it's a big decrease. So early next term, We believe that we can make a sustainable start, so that will be our focus. So we would like to ensure continuity from second half to next fiscal year. And as Kato said about our fixed cost, so we have come to about half of the plan, but the reduction in the indirect labor costs, take that will show full effect in the next fiscal year. So I think we have a very good prospect about returning to the black in the next fiscal year. Thank you very much.

Thank you very much. Then Okada Securities Nagasan, please. So this is Naruta speaking. Can you hear me? Yes, we can hear you. So I have one question about the future direction on the fine-tuning for your strategy. So you have a small but beautiful strategy. And my understanding, they're focusing on the ASEAN. And then for the Europe, are you planning to scale down the business? But at the moment, ASEAN, the situation's difficult. And then it's healthy picking up in Europe. So set aside the activities for reducing the fixed cost. What kind of activities are you planning for the ASEAN? And also, although you made several announcements for the future in Europe, how are you planning to fine tune from the plan that you announced? I would like to understand where you're heading. So first of all, about the situation in Europe. So we announced to freeze the introduction of the new models. And because of the plan, we expected to see a big drop in sales volume. But in terms of the degree of the drop, so it didn't reach to that level. And so it shows that there's still a demand for vehicles in Europe. The marginal profit of the vehicles, if you look at that, and so if we sell the volume, and how will that help our profit? From the perspective, the European market is not really a market that will generate profit for us. And because of that, for the future measures, we are not planning, we're not thinking to apply any changes to the plan that we have. and also for focusing our resources in Asia or ASEAN. At the moment, because of COVID, the volume is quite challenging. And I think that is why you are bringing up this question. But for the ASEAN market as well, the COVID situation, for example, the situation is quite dire in Indonesia. But still, there is a small sign of recovery that we are seeing. So in the future, we believe that the market will recover. Under that understanding, the ASEAN market, we believe that it continues to be a strong market, but there are a lot of things that we need to do in order to recover our sales. For instance, reinforcing our outlets, our stores, and also leveraging on digital marketing and expanding our sales activities. So those measures we do need to implement and also we need to verify or measure how effective those measures are. So at the moment we are in the process of that. At the moment TIV is not yet picking up. So the situation remains to be challenging to us. But while it is difficult, it is important to implement various improvements in our sales activities. And that is why we are still executing the measures to improve our sales activities. Thank you very much.

Is there another question? If you have a question, please press 1 after the star. Any other questions? As there is no other questions, I would like to close the Q&A session for today. Thank you very much for joining us.