For Forex, profit increased by approximately JPY28 billion mainly due to the weaker. Finally, for valuation gain/loss and special factors, although there was the impact of impairments in the copper business in Chile and the renewable energy business, there were also valuation gains through new growth investments leading to an increase of approximately JPY1 billion. Here we have a comparison of the newly announced full-year forecast against the business plan announced in May, with a summary of the factors involved. Base profit is expected to increase by JPY12 billion. Although we expect lower dividends from the LNG business, good performance in the automotive business as well as contribution from LNG trading and the ship related business should lead to higher profits.
For resources costs/volume, although we anticipate cost improvements in exploration and other areas in the upstream energy business, inflation in Australia and Chile is continuing and there has been lower production volume in the Australian iron ore business. Mainly due to the above factors, we expect a JPY4 billion decrease. For asset recycling, we expect an increase of approximately JPY39 billion mainly due to an increase in gains from the sale of MRCE, a European electric locomotive leasing business, as well as a timely sale of Thorne HealthTech, among others. Commodity prices/forex is expected to generate a profit increase of approximately JPY67 billion. In forex, an increase in profit of approximately JPY64 billion is expected, mainly due to the weaker yen.
Finally, for valuation gain/loss and special factors, mainly owing to impairments in the first half, we expect a decrease of approximately JPY54 billion. Now let’s take a look at the balance sheet as of the end of the first half of the current fiscal year. Compared to the end of March 2023, net interest-bearing debt increased by approximately JPY200 billion to JPY3.4 trillion. Meanwhile, shareholder equity increased by approximately JPY700 billion to JPY7.1 trillion. As a result, net DER is 0.48x. That concludes my presentation.
Q – :
A – Unidentified Company Representative: Now, we’d like to open the floor for questions. I have two questions. First is on Slide 10. Base profit earnings power expansion. As President Hori said, on the right, the new projects contribution to profit JPY60 billion, and you said that half of them has already been accounted for, but it is somewhat difficult. Looking from outside to see the green portion on the left, how you would make this look? Of course, efficiency improvement and turnaround, JPY110 billion. To what extent you are making progress? I do understand that it’s difficult to quantify the progress. But if it is difficult, then you may have mentioned specific examples like coffee business, but with how much certainty you can have a dialogue with the share market?
I think that would be reflected in your real earnings power and also dividend in the future. So at this moment, including specific examples, how much progress have you made at this moment on the green portion? If you can share that with us that would be appreciated. And the second question is just for clarification, the philosophy behind shareholder returns. At the outset, as President said, the dividend increase has been based on the cash flow and also share buyback has been also considered. But you have made this decision, by looking at the past, but what about forward-looking prospects? Well, for example, base profit, earnings profit power is increasing because of new projects. You are also taking that into account to make decision on dividend increase.
For example, if you are in trouble in the future. If you can confirm that you can also earn profits in the projects, we can expect a dividend increase to remain valid. For example, the share buyback. If the python is going well as planned, then the share buyback is also one of the options. So the additional share buyback and also forward-looking shareholder return. If you can, also share that with us, that would be appreciated.
