Mitsui & Co., Ltd. (PNK:MITSY) Q3 2025 Earnings Call Transcript

Mitsui & Co., Ltd. (PNK:MITSY) Q3 2025 Earnings Call Transcript February 8, 2025

Operator: We would like to start the briefing on the financial results for the Third Quarter of March 2025 of Mitsui & Co. Thank you for joining us today. Allow me to introduce you to the speakers. CFO, Representative Director, and Senior Executive Managing Officer, Tetsuya Shigeta; General Manager of Global Controller Division, Masao Kurihara. I’ll be facilitating. My name is Konishi from IR. CFO and, the GM will give you a presentation of about 15 minutes followed by a Q&A session. The copyright of today’s video and audio belongs to the company and the management company. Please refrain from reproducing or diverting all or part of it without permission for any purpose. This meeting will be recorded and will be available on demand on our website on a later date. Now we’d like to start, starting with CFO, Shigeta.

Tetsuya Shigeta: Good afternoon. I’m Tetsuya Shigeta, CFO. Thank you for joining us today. I will begin with an overview of operating results for the first nine months and full year forecast. I will then hand over to Masao Kurihara, General Manager of the Global Controller Division, who will speak on the results in more detail. Although, the global economy recovered gradually during Q3, many uncertainties in the operating environment remain, partially due to the direction of the new U.S. administration’s future policies. Even in this environment, Mitsui is strengthening its current earnings base by improving our business portfolio through investments for growth, asset recycling and our middle game initiatives, while at the same time laying the groundwork for future growth.

I will provide a summary of operating results for the first nine months. During the first nine months, we were able to take advantage of earnings opportunities through our business portfolio, which globally spans a wide range of industries. As a result, core operating cash flow or COCF was JPY793.5 billion, and profit was JPY652.2 billion, which progressed in line with our expectations. Based on this progress, there is no change to the COCF forecast of JPY1 trillion or the profit forecast of JPY920 billion for the year. In addition, the current share repurchase, which is scheduled to be completed by the end of February is progressing steadily. I will now move on to the forecast for COCF. In addition to the lower prices for certain commodities, there has been continued uncertainty in the macro environment.

Despite this, Mineral & Metal Resources, Energy, Machinery & Infrastructure and Chemicals segments made progress exceeding 80% against their previous forecast. And as a whole, we expect to reach JPY1 trillion. Regarding profit, against the backdrop of good performance in the Mineral & Metal Resources, Machinery & Infrastructure segments, progress was steady overall. There is no change to the previous forecast of JPY920 billion as we expect gains on asset sales in the Chemicals and Lifestyle segments in Q4 as well as profit in Energy due to seasonal factors. In this section, I will discuss cash flow allocation for the first nine months. Cash inflows for the period was JPY1,260 billion, comprising COCF of JPY794 billion and asset recycling of JPY466 billion, which includes several large scale deals.

Cash inflows from asset recycling in FY March 2025 is expected to be similar in scale to that of FY March 2024 in the region of JPY500 billion. Cash outflows was JPY1.011 billion, comprising investments and loans of JPY537 billion and shareholder returns of JPY474 billion. In line with the key strategic initiatives set forth in the medium term management plan, we are making steady progress in enhancing base profit through new projects as we continue to carefully select investments, balancing between near term earnings contribution and building our long term earnings base. Since the Q2 financial results announcement to date, investments have been executed in MTC, a metal recycling business in India; HAVI, a food service logistics business in Japan, which we have recently renamed Mitsui & Company Supply Chain Solutions; and Sneha, a broiler business in India.

Q&A Session

We expect these to contribute to earnings starting in either the current or next fiscal year. Also, investments are underway in the Block B gas field in Vietnam, the Tangguh LNG expansion and development project in Indonesia and vertically integrated renewable energy business in the U.S. These investments have a longer time frame, and we expect them to begin contributing to earnings in FY March 2027 onwards. In addition, we’re continuously working on scarce, large scale investment opportunities for growth by leveraging our many years of experience and expertise. I will now speak on our shareholder returns policy. There is no change to the shareholder returns policy announced in Q2 of FY March 2025. We’ll continue to consider enhancing shareholder returns being mindful of the balance with investments for growth.

That completes my part of the presentation today. I will now hand over to the General Manager of the Global Controller Division, Masao Kurihara, for details of our financials.

Masao Kurihara: I am Masao Kurihara, General Manager of the Global Controller Division. I will now provide details of our operating results for the first nine months. First, I will explain the main changes in COCF by segment compared to the previous period. COCF for the first nine months was JPY793.5 billion, a year-on-year increase of JPY24.4 billion. In Mineral & Metal Resources, COCF decreased by JPY26.5 billion to JPY284.8 billion, mainly due to lower iron ore and metallurgical coal prices. In Energy, COCF increased by JPY109.7 billion to JPY277.8 billion, mainly due to LNG related business. In Machinery & Infrastructure, COCF decreased by JPY31.6 billion to JPY115.5 billion, mainly due to a consolidated subsidiary becoming an equity method investee, and an increase in taxes and lower dividend income due to asset sales.

In Chemicals, COCF increased by JPY24.3 billion to JPY70.2 billion, mainly due to good performance in production and trading. In Iron & Steel Products, COCF increased by JPY0.6 billion to JPY4.4 billion. In Lifestyle, COCF decreased by JPY20.8 billion to JPY28.8 billion, mainly due to lower dividends from equity method investees. In Innovation and Corporate Development, COCF decreased by JPY6.6 billion to JPY18.6 billion, mainly due to an increase in taxes related to asset sales. In others, COCF decreased by JPY24.7 billion to minus JPY6.6 billion, mainly due to an increase on tax burden. I will now explain the main changes in profit by segment compared to the previous period. Profit for the first nine months decreased by JPY74.2 billion to JPY652.2 billion.

In Mineral & Metal Resources, profit decreased by JPY12.9 billion to JPY229.2 billion, mainly due to lower iron ore and metallurgical coal prices. In Energy, profit increased by JPY28.1 billion to JPY123.9 billion, mainly due to LNG-related business. In Machinery & Infrastructure, profit decreased by JPY24.2 billion to JPY186 billion, mainly due to a decrease in profits in the automotives and lower profit from asset sales. In Chemicals, profit increased by JPY3.2 billion to JPY40.3 billion, mainly due to the good performance in production and trading despite the absence of gains on asset sales in the previous period. In Iron & Steel Products, profits increased by JPY1.4 billion to JPY8.9 billion. In Lifestyle, profit decreased by JPY53.2 billion to JPY32.3 billion, mainly due to the absence of valuation gain on AIM Services recorded in the previous period and the decrease in profit in coffee trading.

In the Innovation and Corporate Development segment, profit increased by JPY30.1 billion to JPY76.1 billion, mainly due to the sale of rental property in Japan. In others, profits decreased by JPY46.7 billion to a loss of JPY35.5 billion, mainly due to an amendment to the retirement benefit system. This page shows the main factors influencing year-on-year changes in profit. For base profit, despite higher profit from LNG-related business and chemicals as well as earnings contribution from new businesses, there was an absence of an additional dividend from Vale, and lower profit in Penske Truck Leasing and coffee trading, leading to an overall decrease of JPY14 billion. In resources cost volume, while increased volumes of iron ore, crude oil and gas contributed to higher profits, there was a net profit decrease of JPY3 billion, mainly due to higher costs.

In asset recycling, there was an increase of JPY1 billion, mainly due to gains from the sale of Paiton and rental property. In commodity prices and ForEx, due to lower commodity prices, profit fell in total by JPY39 billion, consisting of JPY30 billion for iron ore and JPY30 billion for metallurgical coal. For ForEx, profit increased by JPY38 billion, mainly due to the weaker yen. In valuation gains, losses, onetime factors, there was a decrease of JPY57 billion, mainly due to an amendment to the retirement benefit system and the impairment of mainstream. Here, we have a comparison of full year forecast against the previous forecast with a summary of the factors involved. Although base profit is expected to decrease in coffee trading and iron and steel products, LNG-related businesses and other areas are expected to increase, leading to a forecasted decrease of JPY2 billion, which is essentially flat.

Resources cost volume is expected to result in an increase of JPY4 billion, mainly due to cost improvements in the upstream energy business. Asset recycling is expected to increase by JPY15 billion due to plans for sale of some assets in Q4. Commodity prices and ForEx are expected to result in an increase of JPY18 billion, mainly due to impact of weaker Australian dollar against the U.S. dollar. Valuation gains, losses and onetime factors are expected to result in a decrease of JPY35 billion, mainly due to the impairment of mainstream and other energy-related factors. Looking at the balance sheet compared to the end of March 2024, net interest-bearing debt increased by JPY0.1 trillion to JPY3.5 trillion. Meanwhile, shareholder equity increased by JPY0.1 trillion to JPY7.6 trillion.

As a result, net D/E ratio is 0.46 times. That concludes my presentation.

A – Unidentified Company Representative: [Operator Instructions] The first question, please. Thank you very much.

Unidentified Participant: Thank you for the presentation. There are two questions. I’d like to ask two questions at a time. The first one, in the presentation, the Slide 19 was not mentioned, but, in the first half, this slide was mentioned already, but I’d like to ask this question about the slide. So for the full year forecast amendment, the coffee trading, there will be recovery in the second half that was assumed, but there is some negative factor, in here. So I understand that, but, after three months after the first half, the existing, business and efficiency and turnaround, the new businesses or projects, considering the progress made, what one is, within your assumption? Perhaps coffee trading is below your expectation probably.

But, I think this will, also leading to the next fiscal year. So if you can enlighten me on that. And, this is not mentioned, but in the mainstream, the third quarter JPY15.9 billion impairment loss is recorded. Excluding one-time factor, I think, there’s still a deficit of, JPY1 billion in the third quarter. So I think this will be positioned as a turnaround continuously in the fourth quarter onwards. So can you also, give me your thoughts on the mainstream focus? That’s the first question. And second question, I think this is deviating from the financial results, but the balance sheet, leeway, JPY1.2 trillion, portion that you mentioned. So in the first half, as for leveraging this portion, I think, your focus is more heightened compared to the first half, but external environment has changed and Trump tariff is uncertain.

So I think business environment is beginning to become more uncertain. So based on this, current environment, this balance sheet leeway that you had, how are you going to go about leveraging this? Are you going to just position this as an uncertain factor? So how are you going to plan to leveraging this portion of leeway in balance sheet at this moment?

Tetsuya Shigeta: Well, as for the first question, the base profit expansion progress, well, we have not updated this, and we have reposted the slide from the second quarter earnings results. But, overall so as a passing moment, the JPY120 billion for March 2025, the second from the left, and JPY170 billion in March ’27. The probability to achieve these has not been changed. And, once we know the earnings results of March 2025, we’ll do more analysis and give you the fresh explanation. And it’s not the accumulation of results, but, existing business enhancement and efficiency improvement and turnaround. At this moment, those that are struggling, those that are performing well, of course, there are good ones and bad ones, but in overall, there’s no change to the forecast.

The coffee trading that you mentioned and also steel products, there are some businesses that are struggling, but mobility businesses and chemicals, especially methanol business had an increase in profit. So base profit expansion is expected for some businesses. And for those businesses, in terms of achieving the targets, there’s no major concern on our part. As for new businesses, as I said, so in this — after the second quarter earnings results, several businesses have been now disclosed in this time. So, as for the target of JPY60 billion for the next fiscal year, we are making progress steadily. So as a mainstream, as you said, well the impairment loss has been posted this time as well. And so we have to make sure the turnaround will go successfully, and we will focus on that.

Well, for the next few years, the business development and development stage will continue. So there’s some period for struggling, but turnaround will be done together with the partner. And we have to strictly select the regions of geographies. But, in terms of geography, the areas where the strong demand is expected, for example, South Africa, Australia, and Southeast Asia, such as Philippines will be the focal regions. And we would build up our track records so that we can enhance the value for the mid to long-term. So we would like to demonstrate the turnaround through these efforts. As for the second question, in the previous medium term management plan, the financial base position had been strengthened already. So more than ever, we — it is not necessary to increase the leverage more than ever.

So even if the environment becomes more uncertain, the investment for growth and the shareholder return, there should be a balance between these two, and that policy can be maintained. And there are a lot of different options for both purposes, and we have enough financial position to allow us to do that. So based on that position and financial position and base that we have currently, the U.S. and other business environment uncertainties, face being — faced with these, we don’t need to change our directions significantly. Well, thank you, for the first question.

Unidentified Participant: Follow-up, coffee trading or mainstream, it will take more time to start contributing to profit, that’s what you said. But, at what timing can you expect the improvement in terms of financial numbers? Can you give us some time frame?

Tetsuya Shigeta: Well, as for mainstream, additional impairment loss has to be avoided first and foremost. And on the other hand, construction and development will take time. So, in terms of, profit contribution, we have to wait a little bit longer, that’s all.

Unidentified Participant: What about coffee trading?

Tetsuya Shigeta: Well, as for the coffee, — Well, it’s been, sluggish, so let me explain the situation. First of all, as you may know, coffee prices in futures trading in New York, there’s Arabica type of coffee beans listed and record high was listed for the first0time in 47 years. So it’s been maintained at the higher prices, but working capital for the business has been increased and interest cost has increased accordingly. And furthermore, in terms of positions, the contract and the trade and the inventory, these are long positions and also there are hedge positions and short positions. So if you net these, well, we are avoiding the ForEx change, and head start. That’s the structure that we have. But because of the changes in the prices, there is some temporary price control in some markets.

So there are some advantages, ones for our contracts, but the contracts was signed before the soaring the prices and the contract enforcement has or implementation has been delayed, and it’s been taking time. So, as for the buy trade and positions, evaluation has been, be done, and there’s some impairment loss. Of course, we — if we can resume the shipment on the contracted goods, then, we can make improvements. But, implementation of contracts is taking time, that is the background. So it’s not just a business units it belongs to food business unit, but corporate and overseas based locations and, forming the task force to address this. So it depends on the market prices, and market prices has to settle down, that will be one of the factors that is required, but we are hoping that we can solve this problem without taking too much time.

But, I can’t be so sure about several months or one year, but we’d like to get this done as soon as possible. Thank you.

Unidentified Company Representative: Next question, please.

Unidentified Participant: I’d like to ask two questions. My first question, actually, both related to your profit capability. First, regarding energy. In the third quarter you had a one-time losses, which was substantial, and full year profit forecast has been maintained. Of course, trading energy, you have had upward impact, but with dividend included are they sustainable continuous? Because volatility is increasing. And towards next, fiscal year, what is going to happen in dividend if energy trading, they are going upward, what are the factors leading to that upward impact? And if there are any changes, please let us know. And my second question about machinery, I believe that was quite strong. Of course, there was impairment with the mainstream, but excluding that, it was it came to about JPY50 billion in profit.

And in the fourth quarter, I think it’s a JPY54 billion in a profit that is foreseen. Of course, in U.S. automotive was a little weaker. However, it is not going down. In other words, a profit making is continuing this area. So do you think, you are hitting bottom? And towards the future, do you have an outlook that you can share with us? So it is a JPY50 billion profit. Is this something that can be secured? Thank you.

Tetsuya Shigeta: Yes. Thank you very much for your questions. As for energy, of course, during this MTMP period, including this fiscal year, as a gross driver, LNG related business is very strong. And when we give a plan, outlook, of course, we think about optimization, the market, and, logistic factors, so that the trading gains are seen in a conservative way. So I cannot deny that, our forecast is conservative. So we do see a downside. But, LNG and also natural gas is a necessary energy source. And in five to 10 years, I think that situation will continue. So I believe this is something that we will continue to see. And when it comes to new investments, the profit contribution will be a little later, but the entire block B, the gas and the LNG businesses, we will see accumulation of these projects, and they will be replacing other projects.

So I think they will be able to maintain the mid to long-term corporate contribution coming from these projects and businesses. And when it comes to machinery and infrastructure, I gave you explanation about the impairment regarding mainstream earlier. So I’m afraid that I’m not persuasive enough, but mobility one and two projects involved in those divisions, they are quite resilient to downward pressure. And, I think the businesses are growing. So compare — the Penske business in the U.S. involving mobility is going well, and the track, the auctioning business, and these businesses expanding to the peripheral areas as well, and they accumulated as well. So Penske at the center in The Americas, and also in the Southeast Asia, we also have automotive business, which quite resilient to down pressure, and they have the quality to contribute to profit.

So we had sold Python. And when it comes to the base profit base, we have lost it, however, gas fired power generation in Thailand is growing. Therefore, we believe that, this is forming a very strong basis in our base profit. And, of course, shipping business, selling and buying and also maintaining of the shipping. There are some granularity to the business model of shipping business, however, and also in Energy, the shipping field, there is a replenishment going on, and that demand is also surfacing. So we would like to secure those opportunities of demand. So not in a short term, but we would like to make it, mid to long-term contributed to a profit. And we hope that during this MTMP, we would like to make it a stronger base going forward.

Unidentified Participant: So this best profit enhancement is being realized. So the sustainability of a profit is something that we can expect to happen going forward. I’d just like to confirm, the business in Canada, the distributor business in Canada, does it involve any tariffs, or is it something that a business that is completed in Canada only? Does not involve other countries?

Tetsuya Shigeta: Well, that business, basically that business is in Canada is within Canada. Manufacturing is in the US. No, manufacturing is also done in Canada as well.

Unidentified Participant: Yes. Understood. Thank you very much.

Hideaki Konishi: Thank you very much. That is sufficient. This is Konishi from IR. As for your question on Energy, I’d like to add a comment. So basically, what Shigeta has said is your answer. However, last year at the Investor Day, global energy, transition presentation was given by Matsui. And on the last page, we talked about the future outlook of global energy transition. So I hope you will refer to it later. But as he just mentioned, we talked about the natural gas LNG, and we talked about JPY160 billion for March ’25, and it will be JPY180 billion by March 2030. And as for other global energy transition projects, some may not be included in energy segment, but all energy related projects and businesses will increase going forward. That is the information we have disclosed. So I hope you will take that as reference. Thank you very much.

Unidentified Company Representative: Thank you very much. Next question, please.

Unidentified Participant: Can you hear me?

Unidentified Company Representative: Yes.

Unidentified Participant: Thank you very much. There are two questions. Firstly, in the overall picture, I’d like to ask by segment, Page 5, cash flow full year forecast has been revised. And top one, energy and mineral and metal resources are being upwardly revised. But from the iron and steel products downward, the, downward revision has been made. But originally, the iron and steel products and lifestyle and innovation and corporate development have been growing in your company. But by segment, how do you, evaluate the progress in the medium-term management plan goal? What is your concept that you had or image that you have? And second one, about the energy. Well, as Konishi-san said, in the midterm, how to increase the profit that is a different perspective.

If you look at the next fiscal year, what will be the factors for increase and decrease in the profits? ETF and also LNG spot prices are now increasing recently. So generally speaking, I think that would be the contributing factor for increased profit in the next fiscal year in your company. But what — is your thoughts on that? And what about the impact from, possible Trump tariff? Well, there are various factors in Trump, tariff involved, but, what I’d like to talk about is the Trump’s tariff on the increase in tariff for Canada and Mexico. What would be the impact on energy business in your company if that happens?

Tetsuya Shigeta: Thank you for the questions. Well, the Iron Steel products and lifestyle and innovation and corporate development. So in terms of, core operating cash flow, there was a downward revision and for — because this is close to base profit. So in the lifestyle, as mentioned and as explained, the coffee business in food is struggling. And the turnaround through — this turn turnaround of these businesses, we would like to hope to have a contribution that has been conventionally made and also wellness, hospital business, and other ones that will contribute to earning space. There is a steady progress made in those businesses, so we have to address turnaround properly. And as for Iron and Steel products, as you said, the trading is a focus and also investee’s business.

Trading is the focal focus and central part of the business. So in this fiscal year, the excessive production in China and exports outside of China has increased. And because of market price drop, the business has been becoming sluggish in our company. And so supply demand situation has to improve, that would be the requirement. So we are settling slightly in Iron and Steel products, honestly speaking. As for Innovation and Corporate Development, so we have done downward revision this time. However, next fiscal year in the next medium term management plan, there’s no major factors of concern, even though we have done with the revision. We are expecting solid progress. And the second question about Energy, in the next fiscal year, the quantitative numbers are being built going forward, so there’s no detailed numbers that’s in my head right now.

But for the next fiscal year, the performance that we have seen in the fiscal — this fiscal year can — is expected to be demonstrated and we are hoping that that can be done. And as you know, recently, business for Europe and Japan and Asia, Energy prices for those markets because the coldness is severe in winter. So spot prices are increasing because of that, but these are for spot demand. So, the winter until March this year, like, winter business until March has is now beginning to solidify its profits. And after April onward without taking excessive fluctuation risks we — how we can benefit from the sustained higher prices. So that is where our skills will come into play. So, throughout the year, better environment than this fiscal year, may not be true because depending on the months and market situations, it is too early to say that next fiscal year will be better.

As for tariff, Mexico and Canada tariffs have actually impacted the fluctuations in crude oil prices. But natural gas and energy is rather than tariff, deregulation trends is a tailwind for us probably. So we have to take measures to make sure that these will become a tailwind for us, actually, so that we can build up our profits. So that’s all. Thank you.

Unidentified Participant: Thank you. Well, as for natural gas, policy or deregulation, of course, from the midterm or well Trump is quite quick. So maybe there might be some profitability in this year, but for Canada and Mexico, if tariffs are imposed that natural gas and crude oil coming from Canada and gas — Canada and Mexico will be decreased. So for Marcellus and Eagle Ford, for your company, that will be a positive factor. Is that true?

Tetsuya Shigeta: Yes. Your understanding is correct. Thank you.

Unidentified Company Representative: Next question, please.

Unidentified Participant: Thank you very much for taking my question. I would like to ask two questions. My first question is about impairment of mainstream. Your initiatives on renewable energy, will it have a negative impact? When it comes to renewable energy, how you take risks? It will depend on the area where it is based and whether you will be able to get returns. So would the build and hold model work will be a question. So looking back, the weight on profit contribution or weight on asset, I’m sure you have been conscious of these two factors until now. But just looking at the scale of power generation, I don’t think that can be the only indicator that we rely on. So would there be any impact on your future renewable energy project?

That is my first question. And my second question, Page 19 of the presentation material, you mentioned that there are no revisions made. Enhancement of base profit, the initiatives I am focusing on. And at the start of the MTMP, of course, FX equals 130 into the dollar at the start. So about [indiscernible] million to reach JPY170 million. I think, we should see more growth to reach that number, but coffee trading, the turnaround is not going well in such a business. Therefore, whether there’s a target of JPY178 million, are there enough menus so that we’ll be able to reach that number next year? That is my question just for confirmation purposes.

Tetsuya Shigeta: Yes. As for your first question regarding mainstream, as I explained earlier, we’ll continue to work on turning around that business and stop bleeding so that we’ll be able to avoid any further losses. When it comes to renewable energy, of course, mainstream itself, we have made investments so that we can use it as a platform. And, of course, when it comes to wind and solar energy, the renewable energy projects we are working on at the same time. But currently, when it comes to renewable energy, President Trump’s perspective on renewable energy and the different countries and different regions, how they look at increases in construction cost and labor cost that leads to further increases in cost. These are the factors that make it difficult.

But decarbonization is what we are seeing, a transition period we are in. And the timeline compare to the original forecast, I think has been prolonged somewhat. But decarbonization is something that we need to realize. And with that, with the energy transition, these are some initiatives that we need to complete and realize. So within a larger portfolio, natural gas and LNG in those existing businesses, we hope that we’ll be able to support the energy transition in the mid to long-term in a sustained manner. And as for the enhancement of base profit, yes, regarding foreign exchange, yes, I agree with you. But market and interest rate, they are different factors that are changing all the time. So we need to make sure that we achieve JPY170 billion.

And this is what we are confirming with the different business functions so that we’ll be able to deliver this target. That will be our priority, and we hope that we’ll be able to see an upside to that target going forward. So we will continue to make efforts to that end and enhance the quality of our business. So in the three menus, when it comes to new businesses, the pipelines are very clear to see.

Unidentified Participant: So towards, this JPY68 billion, do you think that this number is achievable?

Tetsuya Shigeta: Yes. Your understanding is correct. Thank you very much.

Unidentified Company Representative: Thank you very much. Next question, please.

Unidentified Participant: Thank you very much. Can you hear me?

Unidentified Company Representative: Yes.

Unidentified Participant: Thank you for the presentation. There’s one question. If it’s regard to LNG, the profit increase seems to be large. In Slide 14, if you take a look at that, the cost and volume, cost declined, but volume seems to have increased. So can you explain more about this? At the December, after — maybe after Q3, the drain pipeline impact may have increased your handling. And energy price included in Q3 and there is a delay in the recording or time delay. Is that the reason why energy has been increased?

Unidentified Company Representative: Well, IR Head, Konishi will explain.

Hideaki Konishi: With regard to Energy volume, the first one is MEPAU. It has been performing as quite well. And [indiscernible] gas field, the on land — onshore gas field is being developed and is going to be launched, in June. But, no shelf liquefaction capacity is going to be utilized. But increasing production ratio has not been done, but we will procure gas in domestic market. And then, we are expecting this liquefied ones. And the recent, oil field is also performing well. So those are the main factors behind increasing volume. And as with regard to cost, generally speaking, the upstream business, E&P, business, partially development has been delayed. So exploration cost has been delayed in timing. And so exploration cost has been improving.

And also Abu Dhabi, Adgas (ph), LNG, maybe this was mentioned already, but capacity — CapEx plan had been made in originally, but it has been reconsidered and the CapEx has been declined. And so that would give us more funding for dividend. So that has been — those are the main factors behind this.

Unidentified Participant: Thank you very much. So this base profit or energy rated base profit, increased because of those factors that you just mentioned. Is that true?

Hideaki Konishi: Well, in terms of, volume, yes, that’s right. Basically, those are related to volume and cost. Yes. This has been classified, but there might be some base profit, other factors. But as for energy rated base profit, the main factor is trading, profit and dividends, the combination of those two. And as you can see the numbers, relatively big dividend is incorporated or posted in the third quarter. And in the full year forecast, in the fourth quarter with regard to trading a profit, there is expectation that there is going to be, as quite a number of profit from trading. Thank you.

Unidentified Participant: And that is, all the hands we see at the moment. Anybody else with a question? If you have a question, please click the raise hand button to let us know. Thank you very much for the question. Next question, please.

Unidentified Participant: Yes. I’d like to ask one question. This is a question regarding investment on Page 8. You said that, you will be making efforts — continuous efforts to realize projects with scarce, large scale investment opportunity for growth, so leveraging years of experience and expertise. So can you explain further what you mean by this?

Tetsuya Shigeta: Yes. As you can see on Page 8, there are no other hints that we can give you regarding these opportunities for growth, but I hope that, we will make more efforts going forward so that we’ll be able to give you more information on a short term. Thank you.

Hideaki Konishi: Any other questions? No more questions. And it seems that there are no further questions. I would like to conclude Q&A session even though we’re early a bit. But there’s announcement of IR event as you have received our email on March 14, Friday from 04:00 in the afternoon. Sustainability response to climate change and natural capital is going to be the topic of this IR event, and there will be online streaming. So I hope you can participate and thank you very much for joining us today.