IHI Corporation (7013) Earnings Call Transcript & Summary

I am Seo from IHI. I am a Managing Executive Officer and General Manager of Human Resources division. Once again, I would like to thank all of you for spending time to attend our business area briefing. Thank you very much, indeed. I, today, would like to talk about IHI Group ESG management. I will be explaining about our ESG management, but, for example, there is disclosure of nonfinancial information, and we are to carry out various activities towards this end. But rather than explaining each and every one of these items, I would like to talk about how the IHI Group sees ESG and how this is reflected in our management policies, how it is positioned within our policies and how it contributes to enhancing our corporate value. These are the things that we would like to explain and explain about our assumptions in our policies. So in regards to this, we would like to welcome you, your comments and we would like to engage in dialogue with all our stakeholders. Thank you. Thank you very much. Next page, please. And what's written here? And also what we're going to present here. It does not describe anything special. And please try to instead -- try to understand the background, why we came to hold these positions. Well, this sheet talks about management philosophy and also our vision as IHI Group, this remains unchanged, both the management philosophy and the group's vision. As President Ide has already explained this when he explained about project change. Now my question, why this is so? When we were putting together the ESG management in thinking about our group's vision, we came to understand that we need to seek for business opportunities in trying to resolve social issues. We were able to reaffirm this during this discussion. And this year, we're commemorating our 170th anniversary and companies like us. Ever since our inception we have tried to -- with our technology contributed to bring about solutions to societal issues. This has been our history, and today, when we discuss ESG, again, we want to try to focus on coming up with solutions to social issues and try to seek for business opportunities in doing so. This remains unchanged. But these social issues is not just a pure pursuit of economic rationality. This is what ESG or ESG is telling us today in this world. Therefore, President Ide has come up with this vision, a society in which nature and technology are in harmony. We try to seek business opportunities coming up to -- with solutions to society, and we want to try to seek for harmony between technology and nature. And that is behind this group vision. Now trying to seek business opportunities in trying to resolve social issues. We believe that this also contributes to enhance corporate value. And we have discussed how this can be done in trying to enhance our corporate competitiveness. And this was what we discussed in our management policy 2023. I think you have seen this before, this talks about our group management policy 2023. And in this material, what is circled here, well, we have ESG at the center of management and what corresponds are written here. What is circled? It says life cycle and value chain. And we are focusing on these 2. And we believe that as an IHI Group, this is a group-wide competition policy that we have. In other words, we want, in doing our business try to come up with solutions to social issues. We have to take on a life cycle and value chain perspective. Both perspectives are needed in our business. And through that, we want to differentiate ourselves from others. Well, as for the specifics, I will explain about them in the later slides. But if I may add, as IHI Group our strategy, well, I regret to say that amongst the reason for being called a conglomerate discount, we were not able to clearly spell this out. That is my understanding. And therefore, each of the business, we call them SBUs, each have respective business strategies. But we -- on a corporate strategy basis, the direction that we want to head towards through our corporate strategy was not set out clearly in the past. And therefore, when it comes to portfolio management and others, we were not able to set out a clear direction towards the future. But because we have life cycle and value chain, these 2 perspectives and thinking about the growth of our business, we were able to clearly spell this out. Based on this, in our business policy, we have, in not only the growth business and development-focused business policy, we have a core business, and we try to seek whether we can seek for business through both the value chain as well as the life cycle perspective. And also -- moving on to the next topic. What I've just explained was the strategic positioning. Next slide, please. And on the next slide, here. It talks about within the ESG management, the material issues, the priority issues, ESG, and they are listed here. And so we have the major initiatives listed but the meaning of this is something I would like to elaborate on. Our corporate group, IHI. We are seeking for business opportunities and coming up with solutions to social issues. And in doing so, currently, we believe that one of the major social issues and also the area where there is need for various solutions are tackling climate change. I think we can safely say climate change is such an issue. We need to come up with measures to address climate change. And to what extent we can come up with solutions is going to be a key to enhancing our corporate value. As for IHI, we believe that mitigating climate change was to reduce the emission of GHG. Mitigation alone is not enough. We think we also have to think about adaptation. We try to adapt physically to the actual climate change occurring. For example, disaster prevention or reduction. We believe that such things are possible. And we think that this is one of the big strengths of IHI. Well, of course, our business, we have models that are emitting GHG. We want to reduce the emission. And we recommend to our Scope 3, not just reducing Scope 1, 2, but 3. And we believe that this is the activity that needs to be carried out. But meanwhile, at the same time, looking at what is happening in the world today, physically, climate change needs to be adapted to because society will not be viable going forward. And this is already happening today. Therefore, to try to address these issues and coming out with solutions will be a major challenge for our company. At the same time, trying to address E, environment means that the people are living there. And the people who are related will be protected or the business development that we do will have less impact. That is what is wanted. And that is -- leads us to S and human rights. Well, our business in various ways is related to human rights and also the biological species rights. And we don't want to have a solution which has rigs about trade-offs. We are trying to come up with solutions to E, meaning that in relation to that, those people or living beings that are dependent on the environment will also have to be addressed. Therefore, we believe that the characteristics of our business is that we do face. In other words, we have to address both E&S. And another characteristic under S is that our activities, well, naturally, we are not working as a standalone company. In those countries, which are trying to develop, there are different projects being carried out, be it disaster mitigation and others. There are a variety of people who are engaged with such projects. And we need to engage with such diverse people. And this is fundamental to our business, meaning that we ourselves try to think about the interest of these diverse people. Because if not, we will not be able to come up with the appropriate solutions. Therefore, we are also focused on building diverse and inclusive workforce. So that within -- not only within our company, but also with people outside, we want to build an ecosystem or a partnership. And want to -- we want to work with such people and let them think freely serves together, we can come up with solutions. But this at the same time, as I said at the beginning, means that people with different interests will be engaged and unless we engage with such people with different interests, we will not be able to come up with the appropriate solutions. And not -- we'll not be able to understand what is a competitive edge. And it's a stakeholder here, but we need to engage with different stakeholders and secure not only their trust, but also obtain information from them and integrate such information. That will also be very important. In other words, as a second perspective, what I'm saying about ESG is that for IHI Group, this is, on the one hand, strategic behavior and at the same time, we have to directly work to enhance our corporate value. This is something I would like to emphasize. Next sheet, please. So having said that, I believe that, that was the main topic of this briefing. In other words, in midterm management policy, we have this policy that we'll be heading towards strategically, and we will have to implement a human resources strategy in this process. and the other is what we call ESG. And the nonfinancial disclosure. And we need to understand that this is our core strategy. So having said that, I would like to move on to some specific examples to add to what I've already mentioned. As I said earlier, as a future strategy, we will focus on value chain and life cycle. Next sheet, please. And here, we talk about the aviation, transportation segment, civil aero engines. This is a life cycle area that we have been focusing on. And this will remain unchanged. And the business structure will remain unchanged. But going forward, as it says, we want to pursue the innovative engines and revolutionary aircraft and think about the life cycle requirements. And these systems -- transportation systems of biofuel included, we have to think about the overall value chain. And think about what will be necessary for us to contribute to this value chain and think about our own capability. I would like to talk about this more specifically when I talk about human resources strategy later on. And this is about ammonia. Well, in various places, we are carrying out different activities. And one major point is that looking at the whole value chain, we want not only to produce and supply equipment, but instead, this ammonia, we need to create a market for ammonia. And therefore, as it says, so we have this fuel manufacturing project in mind, so that ammonia can be distributed and the market be created for ammonia. Next, and this is our core business and how you want to embed and evolve our life cycle business. On various ways, we, for our core business have been taking up a life cycle business. But I said as the value chain on the whole we have to look at what we need to do. It's not just IHI's value chain, but the customers value chains. We want to take on that perspective and think about what we need to do. Next sheet, please. And one example is this. In energy, we have looked at all the value chain and looked at not just the power generation equipment, but value chain on the whole, the carbon neutral value chain, so chemical and other things will have to be looked into. We want to shift to such things and change our portfolio. And this is what is described on this page. Now for your reference, I'm showing this. Other than business activities that I have explained in the group and within the facilities, there are emissions and we need to reduce emissions. Here, as products and services, we are providing services and products, including these GHG emission reduction and we will be introducing new things to realize the carbon neutrality. Can you skip some pages? Page 15. Earlier in the management policy, I talked about life cycle and value chain and change these strategies. Such transformation will be done, I explained in each business. The key point I'd like to touch upon -- I have touched upon them briefly. So for human resources, human capital strategy, the keys are here. First, organizationally, the area where we do not have sufficient knowledge, we have to acquire such knowledge and it will be internalized, for example, ammonia value chain or fuel project. We have to obtain knowledge from our side and internalize and run as a business. These activities at IHI, we have been focusing upon doing this in-house, but with a big change, we have to have the exchange of human resources with outside world. And we are focusing upon that. Fortunately, at the beginning, we thought that this was going to be a big challenge. But fortunately IHI, as we face social challenges, and that's the content of social challenges. The points that I have explained need to be explained to the external world and then there are many applicants. We received more applicants than before, and we are feeling that it is working well. Furthermore, in the energy business area, I have explained as well, but resource shift needs to be done. In other words, the -- we should be taking the deed for the business transformation and the big change and shift of the human resources needed. And currently, for this, management policy and human resources policy is to be understood, and we are conducting workshop on an organization basis for 11,000 people. As of the 26th of September, we have completed these workshops, including overseas operations, 30,000 employees, we are providing such opportunities of workshop. Lastly, this should not be temporary work. So as written under #3, we -- the evaluation of human resources and shifting people, new management and the managerial people needs to be developed to do that and also vis-a-vis the change of the company. The relationship between the company and employees should be good. So engagement and well-being, we'll be focusing upon this. These are the 3 major priority measures. Going back to Page 12. Now in this background, about the human rights, as I explained earlier, not only the employees, but partners who are engaged in the activities as well, we are respecting human rights, and we'll be responding as shown on this graph. Lastly, I'm skipping some pages because of paucity of time. For this part, as I explained in this way, we explained our activities so that people have good understanding and based upon the understanding, we received comments from the stakeholders. For us, this will result in increased business opportunities. And based upon that, we are conducting these activities. Of course, governance is important, and we are fully aware of that. And for this, the dialogue with the stakeholders, we are focusing upon that. Next sheet please. What is shown here? Our engagement with stakeholders under #3, insights from the stakeholders will be incorporated into the management, which will lead to the expansion of the business opportunities and strengthening of governance. Page 18, please. This is just by way of example. The response to climate change, UNDP, with them, we are having dialogue and engagement how we can reduce and prevent disasters not only in Japan, but in other countries, how we can look at this as a business opportunity as business and conduct the activities to reduce and prevent disasters. We are actively having engagement and dialogue with such organizations as the United Nations Organization. And then supply chain and human rights. Rare Metals, and we are -- minerals, we are respecting human rights as well. So about ESG, I have explained and I did not explain that more detailed numbers, but ESG for IHI is an important part of our business strategy. And based upon that strategy is very clear with the management strategy 2023. Human resources who create value and we are conducting activities along that line. And these will be the 2 sides of the coin and result in increased enterprise value and increased value of the human resources. That is our philosophy for conducting the ESG management activities. This concludes my presentation. I thank you very much for your attention.

As reported on September 12, a subsidiary of our company has been subjected to an on-site investigation by the Japan Fair Trade Commission for suspected valuation of the anti-monopoly law in connection with parking system business. We take the matter seriously and are fully cooperating with the investigation. We would like to first of all apologize for all the concern and inconvenience caused. And in regards to this issue, it is still under investigation, so allow me to refrain from making any comments on this issue. Next, please. And these are the points I would like to cover today. There are 3. First process for achieving FY 2025 performance targets; two, the measures to maximize cash from vehicular turbochargers, our biggest business; and three, the growth strategies in priority core businesses. Next. This is a summary of what I will be covering. Well, IHI Group's direction that is resolving social issues is at our center. And we would like to address decarbonization and reduction of environmental impact as well as automation and labor saving, which are the major social issues facing industries. And we would like to base this and build our business from here. And as for the vehicle turbochargers, we want to maximize cash. And as for the industrial machine, rotating machinery, thermal and surface treatment, these positioned on the 2 growth pillars. And we would like to promote, embed and evolve life cycle businesses so as to boost our profitability. Next. This talks about our business area overall. And revenue FY 2022 was JPY 436.5 billion. Our business based on this characteristic is classified as a gas and including vehicular turbochargers, rotating machinery and materials and processes, thermal and surface treatment and logistics. So these are the 3 major domains that we are carrying out a business on. Next. This is the business environment, the outside environment. On the left, as I said, there are growing needs, industrial needs for such a societal environmental changes as well as the decline in workforce. We take this as a business opportunity. And on the right-hand side, we believe that this will lead to growth initiatives, decarbonization, automation and LCB expansion. Next, this is the growth story of business area earnings. And so it talks about the 2 Industrial Systems overall and vehicular turbochargers. I would like to explain the measures that will be taken for each, and we have the pages listed here. In FY '25, we want to achieve a revenue of JPY 500 billion we want to try to achieve that through various measures. And this is FY '25, the operating profit and how we can try to improve our profitability. This figure illustrates improvement in profitability, Industrial Systems and life cycle business, vehicle -- vehicular turbochargers, Industrial Systems and Product business. In FY '22, especially when it comes to the improvement in profitability, on the negative side, there was a significant effect that impacted us. The first is a slow automobile production recovery and soaring materials and equipment, energy and labor costs. These 2 are the major impacts and the last is electrical components and other supply shortages. This has an impact on automobile production and also industrial systems were also hard hit by these factors. In order to improve profitability, we have listed here various things. And please focus on the red area above. In 2021, we see that it was more or less a breakeven. But in '22, there is a major decline in Industrial Systems and Products business. And this was because of the cost soaring and not being able to put -- reflect this in our prices. The biggest measure is to try to have our customers recognize the value of our products and to reflect costs in prices so as to return to profitability. Next is the life cycle embedded and also evolution, which is described in blue and this is the area that we want to grow. And third, it will come up later but the automobile production is expected to improve moderately. And therefore, we want to be able to improve the profitability of our turbocharges, including our sales price. And the major developments, first, about the turbocharge business, vehicular turbochargers, and this shows the overall situation. North America, China, Thailand, Europe, we have this global network and based -- doing our business based on this. And last year, cumulative total was 100 million units. And our share is as described here, global share is 20% plus. Next, and this talks about the market trends of vehicular turbochargers, the transition in the passenger car production on the left, and for each of the engine systems, we have the breakdown on the right. There was a dive due to pandemic and then due to shortage of semiconductors, the recovery was slow. There are 3 lines described, but it shows that recovery is slow. Meanwhile, looking at the current situation included, we are seeing a moderate recovery and currently, we are thinking that it will be like the solid line that appears on the left. Meanwhile, on the right-hand side, looking at the powertrain -- by powertrain battery vehicles is the orange part. And this is heading towards 2030 and beyond, it will increase significantly. We don't think this trend will change. But it's not illustrated here, but by region, we think that there will be various differences and we think that this situation will become more significant going forward. And the hybrid, and this part here, this is the review of the internal combustion engine, and we believe that this is increasing in Europe and turbocharger will continue to be installed on some of these. And therefore, this will determine the trend. Next, well, I showed you the overview of the market trends and the orders received, we added all these together. And from '23 to '25, we see that there will be a moderate recovery. We're expecting a moderate recovery. FY 2025, it will be about a 7 million unit global production. That is our current estimate. Next, now having given you the market trend, this is measures to be taken because of the material cost increase, we need to pass on the cost to our prices. And as it is Japanese OEMs in North America and plug-in hybrid, hybrid installation, these are the areas that we want to work on. And in terms of after-sales service, we're doing this globally, but mainly in Southeast Asia, we want to expand our service network. And lastly, optimize resources, we want to try to develop fuel cell electric turbochargers for the future. So we want to make various shifts. And depending on the regional trends, we want to review the scale of resources at each site. As we look into the future, we make the electric turbochargers, commercialization launch. From 2030 there will be a significant increase in fuel cell electric vehicles. And indispensable for that, the electric turbocharger is needed. Already in 2018 in Europe, we have supplied this to be mounted, and we are going to increase product -- the sales and the menu of products are to be increased. And with AVL, the largest player, we entered into agreement and we are conducting development and this will lead to the future, and we are going to make sure that this will happen. Next page, please. From now on, the priority core businesses and for each of the business, I'd like to explain the business and the direction. Rotatory machinery business, compressors is the main business. General-purpose compressors, process gas compressors and separators are the major ones. Last year, the revenue was JPY 60 billion. And in the future, we are going to increase this to more than JPY 100 billion. Next page, please. Compressors, we have a general purpose compressors, left bottom, mainly compressing air and is to be used in various industries. And the other one is process gas compressors for various industry use, processed gas is to be handled. CAGR is written here, especially the top one, process gas compressors, we will realize higher growth, especially energy industry as the material is shifting from solid to liquid and also CO2 is to be utilized. So energy industry is to handle gas. Such engineering is needed going forward. And therefore, this is indispensable key device. Up until 2030, CAGR, 5.8%. From FY '30, double-digit growth is expected and we will be capturing the business opportunity as this market grows. Next page, please. This is the ammonia value chain and compressors will be -- become the key device in the ammonia value chain. Here, from various perspectives, as a group, we look at the value chain, and we are going to enter into various parts of the value chain and the strength of the key device is to be enjoyed by the group as a whole. Next page, please. Another business is a heat treatment and surface engineering business. For various materials, the heat treatment and the surface engineering is conducted to add values and strengthen functions. You do not see the product itself, but on various parts, this technology is used on a global scale. This will lead to the value of the business. For example, heat treatment you see the gears. In the past, it was hardening the material to enhance the performance of gear and to extend the life of the gears. But as written on the right-hand side, surface engineering, the application scope is expanding significantly. For example, decoration and special aberration resistance is needed and others. There are a number of examples written here, aviation and other areas. So the technology here will determine the overall performance of the product. This is a key technology, and we take this as a business opportunity for us. Next page, please. The business of heat treatment and surface engineering, there are mainly 2 businesses. As a machine industry, we are doing equipment sales. Equipment is to be sold to the customers for their use and the companies that we have acquired with the global network using that, we are conducting processing services as well. That is a unique characteristic of our hours. Last fiscal year, the revenue was slightly shy of JPY 50 billion. for this business, globally, this will grow to a level which is close to JPY 100 billion, and we are going to take measures to reach that. Next page, please. A number of industrial sectors, segments, this is used. The focus area segment is written here. Medical Care. This is related to our application as well, aviation space and the other one is decorative area. In this segment, we are going to realize growth. Equipment and progress -- processing services, we have quadrants, the surface engineering will grow most, and we are going to focus upon that. As written on the left-hand side, the growth business and development focused business and the key -- one of the key technologies, we are going to utilize this internally. Next page, please. This is one example. For fuel cell vehicles from OEMs, we have received many inquiries and plural orders have been already placed. This is a separator, which is placed inside the fuel cell and the -- to prevent the corrosion and surface treatment. We have the global only one technology and using this as a core and for the fuel cell, we are going to grow significantly using this as a technology. Next pillar which is supporting our segment, which is the embedding and evolving life cycle businesses for the embedding, not only our products, but we'll be expanding the scope of our activities. So capturing our other companies products and using -- focusing on our overall operation as well. In terms of evolution, the decarbonization and shows the saving labor, not only our equipment for the customers, we are to provide solutions and create new values as written at the bottom, digital -- digitally connected with the customers so that this will become a pillar of growth going forward. Next page, please. Along with that, the 3 examples are shown from 3 businesses and implementation examples, the logistics and industrial systems. The issue of 2024 problem and employees for logistics are short and very unique AGV. On the right-hand side, you can see the running the cartridge go up the shelf and pick up things. This is unique, and this is to be controlled. The second one, transportation machine, crane operating crane -- the operator of the cranes and automation can be done -- significant automation can be done for the operation of crane. And the parking at the bottom, parking business itself is to be turned into operations and management business and lifetime earnings is to be maximized together with the owner. So, through these initiatives, next slide, as written here, our vision we will be realizing the vision and we will be realizing the earnings target for the future. This concludes my presentation. Thank you for your attention.

I am Takeda, Managing Executive Officer and President of Resources, Energy and Environment Business Area. These are the points I'll be covering today. First, I'll talk about our business area outline. And then I'll talk about the business environment. And lastly, I will talk about the initiatives we are taking. On this page is the energy domain area positioned in the policy for 2023 and create a carbon-neutral future is our main vision. We want to provide new solutions to society and effectively use our existing assets so as to promote decarbonization with our customers. And in our midterm management plan, the core businesses are positioned as Carbon Solutions, Power Systems, Nuclear Energy. The ones that are listed on the left, that is the power plants, thermal power plants, process plants amongst -- and meanwhile, the development-focused business areas are ammonia utilization devices equipment, carbon recycling, methanation and power system, ammonia fired engines. On the right-hand side, we talked about the four segments and the sales competition by each product. And the overall revenue is JPY 371.3 billion. About 40% is Carbon Solutions. And at outer wing, blue part represents Carbon Solutions, remain 60% occupied by the other 3 key components. So they are equally divided max. The Power System, Nuclear Energy, Asia EPC are about 20% each. And for each businesses, the new build or a main equipment and life cycle ratio are given for each of them in the inner circle. The new is blue. The life cycle is blue. And the strength of our business, I'm sorry, and this is a very small print, but robust engineering capability for large structures. And also for the power systems learned, we have ample experience. And also, we have experience in commercializing ammonia utilization, methanation and other carbon-neutral technologies. We were the risk especially the coal fire power, this thermal power generation business will shrink and there will be competition intensifying in emerging economies and the nuclear power position is rising. And so -- and also, there is the environmental regulations for ships that will be deployed early on. So this can -- the risk can be also interpreted as opportunities, opportunities for us to expand our business. This page talks about the business environment. IEA for each area, it talks about the decarbonization, CO2 reduction scenario, zero emission scenario. And the earliest scenario is what is shown here. In the middle, the graph here, the blue part is electrical and heat, yellow is industry and orange is transport. And at the top, the green is buildings. For each from 2020, it shows the CO2 emissions and how it will trend moving towards 2050. The reduction is shown here. And underneath, we have boxes, it is a very busy table, but the boxes show for each timing what measures will be taken to realize CO2 emission reduction. It's both global and Japan. I will not read out each one of them, but looking at 2030 electric power and transportation. These are the leading areas, which will realize decarbonization. And in the boxes, it talks about EV, new cars, EV cars will account for 60% of new car sales. And then looking at 2040, this will be the industry. This will expand the industry in 2050 for all segments, decarbonization will be realized. This is what IEA is speaking. And we at IHI have to think about what we need to do to comply with this trend. This page here, it talks about the group management policy 2023 and what we are wanting to do in the energy sector. What's important is what showed at the bottom Carbon Solutions, Power Systems, Asia EPC and Nuclear Energy, there are these 4 business units. And for each heading towards carbon neutral in the transition period by 2030, what they are going to do. We believe that this is very important and that is shown in the gray hatched box. First, at the top, is LCB. So with embedded and evolution, we want to try to secure the funding for investment. And do feel ammonia ready is what we want to realize. And along with that, resources will be reviewed. And that is the type of activities that will take place during the transition period. So that at the age of transformation, in 2035 and after the industry, transport and electric power, we will be able to head towards carbon neutrality. Next, this page talks about the overall portfolio of Resources, Energy and Environment business area. On the left-hand side, we show leading up to 2030, what business balance will be, the business portfolio. As I said, coal thermal, it will be shrinking and therefore, they main facilities and new builds that will be declining. What's important is what is above the LCB and whether or not we can earn a profit with LCB and ammonia and hydrogen and carbon neutrality projects. We -- about JPY 50 billion scale want to try to expand our business to that level by 2030. That is the challenge that we have faced with and what's important here is the LCB. On the right-hand side here, we show you the graph where we give you the details. In the next 3 years, for each SBU, LCB life cycle business will show a revenue of about JPY 200 billion. That is our plan. If we could earn JPY 200 billion then the profit can be invested for future carbon neutral businesses. And furthermore, we have numbered them 1, 2, 3 in circles. They are ranked as such. And it shows how difficult it will be to achieve these goals. And based on that, the action plan has been put together. And this shows the LCB classification based on how difficult it will be to achieve. On the left-hand side, upper side, we have existing life cycle businesses. And as in the past, we want to fully implement this. But regretfully, the carbon thermal asset investment will be declining. And therefore, life cycle business needs to be embedded and we want to further realize embedding of our life cycle business and put in place the necessary schemes and not just our own products, but other companies' products or the equipment before and after equipment. These to see life cycle business expand. And that's the pink bar. And on the right-hand side, #3, this is the evolution bar. And this unlike the past, we want to try to approach and create customer value through new technologies and approaches. These are the 3 steps we want to take. And for each, we have action plans in place. Next, so given the business environment, how are each of these businesses working? I'd like to talk about the activities. First is Carbon Solutions business, where we're seeing the largest amount of changes take place. On left-hand bottom, and we have this graph again. And this business, we believe, because it was dependent on coal-fired power generation, we see that the new builds are declining significantly. LCB because of embedding and evolution, we want to try to hold out and to use that money for the ammonia and carbon-neutral new business. We need to think about significant transformation in this business unit. And what we're doing right now is shown on the right-hand side blue box, engineering organization transformation and also transforming the production sites. For each, we have a working team and doing the activities. And this -- this is a related company in Singapore, Jurong Engineering Limited, JEL as abbreviated. And this group is responsible for Asia EPC business. And looking at the global map on the right, in Southeast Asia, this is a main area market and this EPC or construction business is the focus. And last year, we received a lot of orders and we believe that the revenue will increase. And India, in the middle, we have the Indian market, ammonia. And we are studying in collaboration with Adani Project. And in the middle, that's Middle East, in Kuwait we are replacing boiler in company -- in other company. So we are engaged in such initiatives. And Africa on the left, Northern Africa and Mozambique, a gas turbine and coal-fired power generation plants, we have those existing plants where we're doing maintenance, expanding our maintenance work. So especially on the right-hand side, the gas-fired EPC in Asia is growing such skills and experience. We want to leverage those skills and if we have ammonia only in Japan, we want to be able to transition this smoothly to the Asian market. Now the third business is Power Systems business. As you can see in the waterfall chart at the bottom, FY '22, this business was in red ink. About minus JPY 2 billion, but with the business structure transformation is underway and transfer -- passing through both the material cost and reducing SG&A expenses and we are now able to generate JPY 5 billion of operating profit, and we are undergoing transformation. As you can see in the box on the right-hand side, as we move towards carbon neutrality reciprocal engine is an important content. With the reciprocal engine, ammonia can be used as fuel, and we have already started that initiative. This page shows the Nuclear Energy business. Nuclear Energy business, the restart of the light water reactor and in Rokkasho-Mura, Rokkasho, for restart of the Rokkasho, in 2022, lots of construction work underway and the sales and profit wise, considerable sales and profit was generated and as you can see on the graph on the left-hand side, peaked in 2022 and especially FY '24 and FY '25, it is sort of the gap in terms of increase of sales and profit. And we have to conduct activities so that we can fill the gap. From FY '25 onwards, as we move towards FY '30, once again, the restart of light water reactor and also decontamination and decommission work continues. Therefore, the sales will start to go up. In terms of revenue, this is a stable business. But as you can see at the bottom partnership, we are expanding partnership as there are ups and downs in the operations by joining hands with other companies for the operators, engineers and we are going to fill the gap and also cater to the increased needs during the peak period. We are focusing also upon the following with new scale of the United States, we invest into new scale and SMR, small modular reactor projects we are engaged in that. And in the latter half of 2020, the operation, it will start in the United States. That's our aim. And we will start building the reactor. And furthermore, if I'm to add one more point, in October last year, with TEPCO in Fukushima, the engineering company of contamination. Decommission was started in Fukushima and 40 to 50 years of decommission work is needed, and we are going to squarely address the decommission work in Fukushima. Next page. This shows the sales and operating profit of this business in FY '22, as you can see the line graph, in terms of segment, JPY 26 billion of operating profit was generated FY '23 about the same level as '22. As we move towards 2025, we are formulating strategy for growth. And in FY '25, we are aiming for the operating profit exceeding JPY 30 billion. Sales, the gray one, JEL, Asia EPC, the orders were robust in FY '22. So this will increase. On the other hand, nuclear energy, as I mentioned, peaked in '22 and this is declining slightly. But as we move toward 2030, we can expect growth. And the Power Systems are flat and Carbon Solutions, the thermal power business will go down, but conversion fuel to ammonia and we will be able to see growth in sales. This one shows OP, operating profit, how we have to secure the operating profit, and this is a waterfall graph. As I said, FY '22, robust nuclear power business, JPY 26.2 billion of operating profit was generated. LCB, Life Cycle Business by expanding Life Cycle Business, about JPY 6 million can be added. On the other hand, Nuclear Power was good in FY '22, and this will go down by JPY 5 billion. And the Power System, which was in red ink, structural reform will be conducted. And with JEL, the business will be expanded, which will result in increased profit. So JPY 31 billion of operating profit can be achieved in FY '25. Next page, please. From this page onwards, we will look into the future and initiatives for the future. We know what we are going to do now. But what about the future? IHI's midterm business plan 2023, and this is except from that business plan. The clean energy area, especially in the ammonia value chain, we'll be focusing upon ammonia value chain. And storage, transportation and downstream of the value chain. Number of killer contents are there in the downstream. So we will be utilizing the killer content and increase the demand for ammonia. One example, our scope of business, as you can see in the drawing, the red line -- in the red line box, that is the scope of our business in our segment. And the products that we have, the killer contents are shown with the box in red dotted line utilization, especially boiler, ammonia, the firing -- 20% firing demonstration starting from this -- end of this year at Jarosite and Gas Turbine. 100 ammonia conversion is done. also jointly with GE, we are conducting joint research and development for commercialization in FY 2030. Next page, please. Ammonia, I would like to explain our strategy more in details. In that graph in the chart in the middle, going from bottom to the top, you can see from transition to transformation. We evolve from transition to transformation. As I said, end of 2030, 20% ammonia mixed firing will start. And if this goes well, then 20% will be commercialized and also more than 50% mix firing. From other electric power companies, there are inquiries, and we are going to start installation. And the ammonia needed for combustion will be transported and will have to be stored. So in the middle, you can see ammonia storage and infrastructure development is needed and by modifying the coal-fired plants, we are going to do that. Going forward, from 2040 onwards, in terms of building of new power plants not coal-fired, but the gas turbine ammonia the sole -- mono firing. So infrastructure of ammonia will be utilized and will be connected to gas turbines. And furthermore, as written at the left bottom, we use JEL and what we have done in Japan will be expanded to Southeast Asia. And also, gas turbine of ammonia will be incorporated from the very early stage. This page is methanation. Lots of things are written here. But already for methanation, small ones, mass production of the standard unit have already started in IO in Hyogo Prefecture and using these and also we are starting to see sales. The medium-size facilities with JFE, carbon recycle furnace is done in the carbon neutrality in the industry. And as a killer content, this is being utilized already. And on-site methanation, A lot of inquiries are received already. Large-sized facilities, gas companies in the gas field -- LNG gas field, methane production is done by them. And we have feasibility studies conducted in several years' time. This will be realized and this will be on stream. So first, the carbon recycling will become the top runner in methanation. And after that, in Singapore, we are supplying olefin and SAF. So this will be connected to olefin and SAF going forward. That concludes my presentation. Thank you for your attention. [Statements in English on this transcript were spoken by an interpreter present on the live call.]