Mitsubishi Chemical Group Corporation (4188) Earnings Call Transcript & Summary

The scheduled time has arrived so we will now begin the Mitsubishi Chemical Group management policy briefing session. My name is Chihara. I will be serving as the moderator in today's event. Let me introduce today's speakers first. Mr. Chikumoto, Mitsubishi Chemical Group President and CEO; Executive Officer, CFO, Kida; Executive Officer, Chief Strategy Officer, Yabe. Today, other officers in-charge of each business are present today. Let me introduce them. Basic Materials & Polymers, Shimodaira; MMA & Derivatives, Kurokawa; Pharma business, Tsujimura; Advanced Films & Polymers, Egawa; Advanced Solutions, Wakabayashi; Advanced Composites & Shapes, Franck Ruel; Portfolio Transformation Promotion, Araki. Now Mr. Chikumoto will start his presentation. The Q&A session will take place after the presentation. The presentation and a Q&A session by the present will be conducted in Japanese. And Franck Ruel's comments during Q&A session will be in English so please use the simultaneous interpretation equipment if you need. [Operator Instructions] The video and audio including Q&A session will be posted on our website at a later date. Now let's get started. Chikumoto-san, please.

Thank you. I'm President Chikumoto. Thank you very much for this opportunity. I would like to take off my jacket. It's going to be a long session so please feel relaxed, and if you want, please take off your jacket and tie as well. Thank you. Because of the facility setup, I have to stand here giving my presentation. Sorry for that. We lead with innovative solutions for achieving KAITEKI, the well-being of people and the planet. This is the purpose of our company. Today, first, I will cover KAITEKI Vision 35, what we want to do in 10 years, and next, I will cover a new Medium-Term Management Plan 2029. In the new Midterm (sic) [ Medium-Term ] Management Plan, we will describe what we are going to do in the next 5 years. So towards 2050, 2030 is 10 years in the future and this is our image of the milestones in 2035. So the vision is for 2035 which I will discuss later. The world is becoming more complex. The pace of change is relentless. Our customers are expecting and demanding more. Our way forward is clear. As a green specialty company, we are committed to solving social problems and to delivering impressive results to customers with the power of materials. This is our vision. Why the 2035 vision was formulated newly at this time? Actually, 6 years ago, we came up with KAITEKI Vision 30, that is for 2030. And the team, which was formulating this was management planning, where I belonged of Mitsubishi Chemical Holdings at that time. And later on, there was more speed and change in the world and the dynamic change in our environment after that. Another reason is that one of the things we explained was a selective focus on key businesses. But to be honest, we couldn't do that. And over the last few years, because of the confusion of the management, there is a gap today between the management team and the employees. That's why we reestablished a vision and reformulate the 5-year plan and showed this to you so that the management and employees can reunite themselves and do a good job in the next 5 years. For 2035, after KV 30, the world has changed, especially in those 5 areas, we have identified those 5 social issues. They are unchanged from KV 30, energy use and decarbonization, sustainable resource management, digital technology advancement, food and water resource optimization, and extension of healthy life expectancy. For those social issues, as a business, what we should be doing, we have set some areas, green chemical, effective energy use and decarbonization, sustainable resource management, digital technology advancement, food and water resource optimization and extension of healthy life expectancy. And this chart shows you the values that we can provide in each of these areas. First, as the foundation, we are leading the green transformation of the chemical industry globally. So this is a stable supply platform for green chemicals. This is what we want to realize. When we talk about these things, people ask how can we make money out of green chemicals. But already, that's happening with the PET bottle. It used to be cost JPY 130 but it was -- went to JPY 140, JPY 150 today, and the price includes that. PET bottles was crystal clear in the past. It was transparent but this bottle and the bottles recently are more opaque. And if you look at the lead part and look at the lead part of PET bottles, it's brownish already. It is because recycled materials are used today in the PET bottles. Actually, already, you are paying for the cost of green transformation and circular economy, so consumers are already paying for that. So globally, more than we think, carbon-neutral and circular economy, the access has already expanded more than we thought. And consumers are already beginning to pay for those. So based on that green chemical mobility, eco-conscious mobility we have, and we are enabling advanced data processing and telecommunication and we are supporting the society by food quality preservation and technology and equipment for new therapeutics. So without green chemical, probably in these areas, those products would not be able to be supplied in the future. So stable supply platform, green chemicals. As you know, this is driven by the regulatory responses to global climate change and the chemical industry is facing a turning point. Therefore, carbon circular, and we are promoting and commercializing carbon and material cycles and establishing reliability and traceability for environmental-related disclosure data. As you know, Masdar company in Abu Dhabi and with INPEX and we are conducting a feasibility study in Abu Dhabi. This is for e-methanol, the lowest-cost solar power-based fuel, e-fuel and water and hydrogen. Hydrogen will be created by decomposing water with -- from the CO2 and O2 and propylene and methanol, we can produce them. And when we operate this facility, how much cost is the running cost? We are investigating those things in the feasibility study. And for methanol, generating propylene, we have come up with this technology, already depreciated the joint technology with Nikkei or JGC and also chemical cycle. The new recycling, we are now realizing this in the Kashima plant. And just a few days ago, we have completed the construction, and therefore, we are going to have a trial stage. So as I have mentioned, well, because we need to generate revenue. Without that, we are not going to pursue this business. And of course, we have received support from the government. However, because -- so we are determined that we are able to generate profit out of this business. So bio-naphtha and also SAF for the project, we would like to implement new projects going forward. And also eco-conscious mobility. So therefore, the positioning of mobility will change and will have a diverse usage not only being used on the surface. So there will be a greater demand for the diverse material. For automated driving, there will be less accidents. And therefore, there will be a greater demand for the resiliency and also enhancement. And therefore, according to the requirements of the clients, we are going to accommodate to their new demands. And therefore, for the eco-friendly, we are going to have a recycle and also more carbon neutrality in order to have those products in the market. So that will be our value. So in the semiconductor industry, well, because we are envisioning an increase of data and therefore, because thinking about the water recycle and also the data management so we are going to have a high precision. And therefore, for the semiconductor material, we are going to provide that. And for the main, because we are going to have a recycling of the water and therefore, we are going to provide that to the semiconductor manufacturing, for example. So cleaning the equipment for the semiconductor industry, we are going to work and create an ecosystem for the semiconductor markets as well. For the food quality preservation, due to the climate change and also the population increase, the food loss issue is becoming more peculiar. And therefore, because we are going to provide support for the processing and also for the collecting, we are going to provide more easy-to-use recycling system. And therefore, we are going to provide and propose this value to the market. So for the new therapeutics, for the technology and equipment because we are going to have a longer longevity and there will be more pharma that will be related to bio. And also, for example, there will be more high-functionality material being required and also contributing to the sustainability recycling the material. And therefore, we would like to create that cycle in order to provide a market value. So therefore, by taking those steps, so by 2035, we would like to achieve JPY 900 billion. So for the FY '24, so -- we are going to have a forecast of JPY 290 billion so there will be a huge increase for the Chemical business and looking at the group business, for the group business, we only have JPY 55 billion. However, it's going to increase to JPY 550 billion. For the group business, it's going to increase to JPY 350 billion. For the chemical business, the ratio in the COI will increase drastically. For the Pharma business, I'm going to explain in detail later. So we are going to search for the best partner. And for the industrial gases, we are going to expand our business arena. So our keyword is connect. So as I have mentioned, in order to generate this kind of huge profit, why it's achievable? So this is a very simplified model. So there is a demand and also there is a solution. And therefore, we are going to connect them with agility in order to provide higher value. So with the salespeople, technology, R&D, manufacturing and also, we are going to invite an external business partner and by connecting them, that will be the key. And therefore, we are going to provide our human talent, market cultivator, technology integrator manufacturing enabler. So we are going to nurture and also we are going to invite external human talent. And therefore, we are going to change our human talent management as well. And already in the manufacturing so we do have a diverse manufacturing capability so we do have a high-skill employees. And also, we do have a process and designing and also the commercialization capability. So therefore, if those areas will be connected, we are able to provide innovative manufacturing technology and commercialize that. And also with AI, we are able to have an evolution of manufacturing. So however, currently, we are not being connected, so those areas are not being connected. However, by connecting those areas, so on the right-hand side, we are going to achieve those targets. So that is the vision we have. And therefore, by implementing this connect, I think we are able to achieve that. For the human talent, we are going to allocate responsibility and clarify the responsibility and also their tasks. And therefore, in order to create those tasks, they need to create a team. And therefore, by team building, we are able to have the connectivity, for example, subordinates and also the R&D development and manufacturing by connecting them. We are going to have innovative manufacturing technology as well as the manufacturing processes. For example, we do have this kind of supervisor meeting, so we are going to have a national supervisor meeting. And also, we are going to have a global manufacturing meeting, and we are going to create a new business department accordingly, if necessary. So those are the technologies. So this is only 1 example of our technology, for example, in the manufacturing and also the analysis and simulation technology and scale-up technology, we do have that. And therefore, we are the largest in Japan. So thinking about those technologies, there will be the basic technology supporting them and also because we are not able to include all of those technologies in 1 list. However, the issue is that we are not able to connect those technology, and without that, we are not able to implement innovation, and we cannot provide solution to the customers. So on the other hand -- so for example, talking about the lunar rover, YAOKI. So because in producing this YAOKI, we had provided material design technology and, let's say , simulation technology and scale-up technology. By connecting those technologies, we are able to be selected as a partner for developing lunar rover. So for the lightweight battery pack, we are able to connect 4 business areas in order to materialize and produce the product. So in order to connect with the society, so as I have said, so [indiscernible] and also the impacts and ourselves. So we are able to provide e-methanol propylene green and also the polyolefin. And also with Nikkei, we are able to have a joint development of the technology, and therefore, we are able to provide a low-carbon derivatives in those areas. So by connecting them, we are going to use the human talent. And therefore, the market cultivator have already -- the system has already started. And of course, the leader is the United States. However, in all the regions, we are going to allocate the market cultivator. And therefore, they are going to connect with all the products. And for example, for the eco-friendly mobility, they are able to work horizontally. And this kind of organization will be allocated within our business management department. For the regional and global strategies, we are going to implement according to the regions. Americas is having -- driving growth. However, so within 5, 6 years, we are going to create a manufacturing plant. It takes 5 to 6 years, and therefore, we are going to have a decision-making process. In China, at the moment, people say the risks are too high, but the money we make in China will be invested in China because in China, demand is still growing. So we are not giving up on China. For talent, we want to be selected and we want to select good talent. The types of talent we want is -- has the distinct strength and sense of ownership and the technology and able to learn the technology and collaborate with other companies. These are the people we want, and human resources system will be started to evaluate them. And the company can provide the environment to those employees to work in a very liberal manner and connect with others. So that's how we would like to select good talent and be selected by them. And that's how we would like to achieve the vision. In terms of sustainability, towards carbon neutrality 2050, this is a must. And for 2030, we have a target of GHG reduction for 29% from 2019. In 2035, this is just a milestone towards 2050 so we will set our target based on the government's target for 2035. So far, I talked about 10 years plan and the vision for 2035. Probably in your mind, you may be wondering whether we can achieve this, and maybe it is too much talk for the content. But we would like to explain to you what we are going to do in the next 10 years or next 5 years, and so that we can convince you that we can do this. But let's see if I can convince you. Now for the next 5 years, how are we going to spend our time? First, I'd have to review the past 3 years. Sales did not grow and profits did not grow. In Chemicals, this is briefly very poor situation. Why did we fall into such a poor situation? When I became President more than 6 months ago, I have been considering what happened. Well, I came out with a conclusion and that is the lack of discipline. There was a discipline but the people could not follow. People could not follow the process. Based on the principle and rules, we couldn't make decision. That's why we set these things. This is why these are the 3 criteria for business selection. First is consistency with the vision and purpose. Second is competitive advantage. Third is potential for growth. So growth potential means whether we can make money or not, whether customers like our value and based on the value, whether they are willing to pay or not. And the growth potential going forward, is the business sustainable? And is the market growing? Is -- can we take more share in the market, whether there is such a viability or not. So those are the 3 criteria. So based on those 3 criteria, if any business cannot satisfy them, they will be put under close monitoring. And then almost automatically, they will be divested or exited. So those 3 criteria, we want to make a decision based on those 3 in a very rigorous manner. In terms of the disciplined approaches in business operation, 1 is price policy, whether we are setting price for the value that the customer recognized. Are we setting the price right way or in the product mix for high value-added products, are we moving up into the high-value products in the portfolio? And for commodity in order to avoid volatility, do we have a clear formula, formula-based pricing? For investment decision, we will have a rigorous selection process. Number one, whether we can make money or not, that's the most important. Also whether we have the commitment from customers in terms of the volume and the price acceptance, we will see this, first and foremost. And the process management and review means that once we approve something, we are not leaving it to the business. The Steering Committee will check the progress every month, how much money each business is spending and whether they are delivering on the promise or not. If they are not delivering what they have promised, and then we are not going to give any money to that business anymore because those are the people who are bad at spending money. So we are not letting them spend any more money. So we will have such a rigorous process. Having said that, well, we don't mean to be too stringent. We want to grow top line and profit at the same time. So when there is an opportunity, we will take a bold decision and make an investment. Asset optimization, we are rationalizing excess capacity. This is something we are already doing. We are also already optimizing business tasks and personnel. And this is a company as a result of merger of different companies, but we are working on this. In terms of the scale and action, we cannot give you the plan yet but we will optimize more. And also corporate functions, we have to rationalize this. Clearly, we need to do this. But for many years, we have left it behind without solving the problem. So according to global standards, our expenses, we will benchmark and see whether we are spending too much or not, and that's how we are making decision. And in terms of collaboration with other companies, this is something we are already doing. The biggest one is Asahi Kasei and Mitsui Chemical collaboration. But other than that, we have several different projects going on. And the next is revaluation of IPs. And this is something that we found invaluable because we may have some tangible assets which we didn't realize that they have the value, but we want to review their values and utilize them. And the management targets to JPY 190 billion. We want to increase this to JPY 270 billion. That's core OP and OP margin is 12% and the ROIC is 8%. That's the target. And how can we do that is maybe your natural question but let me take you through the details. So major growth driver is Specialty Materials, which is this year, JPY 34 billion in profit this year. And in 5 years, it will increase to JPY 144 billion. And Polymer and Carbon and Petrochemical, minus JPY 21 billion, but we want to make it profitable to JPY 44 billion. It's not such a big profit. But for basic Chemical business, that's so-so. So towards 2035, first and foremost, we want to turn around the business and make up JPY 44 billion. This is the commitment we can make so far. Shimodaira-san say this is a commitment. This is something we want to deliver. And the main drivers, rationalization and optimization of assets and growth investments. With those, we think we can really achieve this. Business portfolio management. There are 3 criteria, as I explained. And based on that, already from '21 to '23, we have 10 projects and JPY 200 billion, and going forward, JPY 400 billion and 30 projects. That's what we want to do from '24 to '29. I cannot disclose the list but we already have a list of items to do this. So it's dynamically reviewed and changing, and these numbers may change in the future based on our progress. This is from FY '21 to first half this year, the rationalization we have already taken on. In '24, actually, some of the core businesses are listed up as candidates. So we have no sacred area, no sanctuary in doing this, rationalizing the business. So next, those are the 3 principles for business operations. With these 3 principles, approximately JPY 140 billion profit increase is what we want to achieve. For barrier films and resin. For barrier film, the market is already on the growth trajectory, and we have already made a decision on a major investment there. So therefore, for the barrier films, we are going to increase the production in U.K. So for the rest of the films, the concern is that because the LCD panel because the -- pricing went down. However, the size is increasing. However, we are not able to improve the profitability. And therefore, we are going to change to high value-added business. For example, the modality and semiconductors are our target. And also, we have already implemented a shift to those business areas. For the display, for the OLED polyester film occupies around 90% of the market share especially, so for the vending and the flexibility and also the reflection for the high efficiency, we are able to utilize our technology in order to provide a high value-added product. With the semiconductor materials and solutions, you may not know. So the major products, so we do occupy #1 or #2 position in the market. For example, synthetic silica and also the GaN wafer and Lithomax and also the polymer products. So this is a polymer and also the CMP post-cleaning agent and also the epoxy resin. So we are #1 or #2 position. So for the semiconductor manufacturing, the cleaning solutions in Asia, in Japan and also in Europe, we are #1. And also for the wastewater recycling, we are making it as a business, and currently, we are #3. However, we would like to achieve #1 or #2 position. For the semiconductor, we do have the main and also the other areas. And therefore, we are going to support from both sides and that will be our value. For the food business, we are going to enhance the product mix and provide more localization in order to propose our product. And currently, so our product mix is not able to achieve the branding power for us. And therefore, having a strategic investment, we are going to increase our product mix and provide more solution to the customer. For example, if you would like to extend 3 days so providing a certain film and certain additive. And also, if you would like to extend by 10 days, you are able to combine a different product. And therefore, we would like to provide such kind of solution to the customer demands. So carbon fibers and composites. So the issue is clear. As you can see from the carbon fibers and composites and also the composite first. So we are not able to have a diversification. And therefore, as [indiscernible] utilizing CPC invested JPY 100 billion in Italy, and we have made an investment of JPY 100 billion. And therefore, they are producing automobile and also at the engine. And also, we are the only company within the carbon fiber industry that is able to complete automobile by ourselves. However, asset optimization and also we are not able to have the optimization of the product. And therefore, we were not able to achieve the pricing that we wanted to get. And therefore, sometimes our products have been used in the lower stream, and therefore, we are not able to generate that profit. And therefore, we are going to focus more investment in this area in order to generate more profit. And for the recycling, we already have that capability for the mobility. For example, from the completed automobile so until the recycling, we are the only company which is able to provide such kind of capability. High-performance engineering plastics. So globally, we do have 25 manufacturing sites. And why is that? Well, because they have a stock shape and also after MMA, we have those new sites. It seems that we have too much manufacturing size, and therefore, we are not able to concentrate. And therefore, we are going to provide rationalization as well as the consolidation in order to have an optimal producing process. For the MMA, so within 5 years, we didn't include the investment in the United States. However, because we are the only company which have these kind of producing policies and also, we do have less CO2 emission and therefore, the market share is the global #1. And therefore, in 6 months, we are able to generate this much profit, and this is the only company which is able to generate this profit. And therefore, the existing MMA equipment had been antiquated, and therefore, we are waiting for the EOL, end-of-life of those equipment. Basic Materials and Polymers. So as I have mentioned, so with Asahi Kasei and also Mitsui Chemical, we are going to jointly work together. And then therefore, using this basic raw material joint platform, we are going to invest in this platform. And therefore, we are able to have -- and therefore, in Kashima, so there is a chemical recycling plant. And within 6 months, we are able to start the commercialization and therefore, collaborating with big brand, we are going to have more profitability. And therefore, because without this, so if we are not able to provide the basic raw material, then in the chemical industry, they are not able to continue the chemical business. And therefore, we are going to face squarely in order to cope with this issue. For the Pharma, so those are the major 3 products. So therefore, with the FDA, we have concluded the discussion with FDA. And therefore, we are going to have the approval of ND06122 and for the [indiscernible] and also for the anti-obesity drug, the market will increase. And also, we are going to implement rationalization. And therefore, we are going to get a full result or the full fruit out of this process. And therefore, within the pipeline, within the R&D, we are able to implement thoroughly. And therefore -- so for the CNS disease and rare diseases and also for the immunology, for the inflammation and cancer, we do have the strength. And also against the cancer, we do have a very competitive edge and there is no concern for us. On the other hand, we are going to enhance our pipeline so that is inevitable. For example, the patent for the Radicava, we are able to have the patent measure against that. However, we are going to enhance our pipeline going forward. And therefore, we are going to search for our best partner. So therefore, thinking about the future of our Pharma business, we need to have a good partner who is going to invest in this area more. For the rationalization. So therefore, we are going to have improvement of the business operation as well as FTE. We are consolidating ERP, and therefore, we are going to allocate JPY 335 billion so we are a joint company. And therefore, for example, we do have different systems and it requires more cost and also data management is not easy. And therefore, we are going to implement ERP. And for the supply chain, we are going to have the rationalization. And therefore, FY '29, we would like to allocate rationalization merit of JPY 50 billion by FY '29. So for the sustainability so we are going to reduce by GHG emission by FY ' 30, negative 29% reduction of waste, minus 50% water resources so negative 310 tons. So for the human talent, so as a measure, we are going to promote diversity and also, we are going to nurture those kind of global manners. And also, we have invited 30 top talents and also next top talents, 30% each. And therefore, we are going to nurture those human talent. Also, as I talked about earlier, the keyword connecting, the people who can connect will be highly evaluated, and we will reward them by the new HR system we are going to implement. That is based on the merit and merit-based HR system. For employee engagement, 69% is the score today and we want to increase it to 80%. And for diversity, we want to increase the score from 29% to 40%. For capital allocation, about JPY 3 trillion cash income we have. Out of that, 20% will be allocated to shareholder and debt repayment. And dividend payout is benchmark is 35%. D/E ratio, 0.8x or less. On the other hand, for Chemicals business, strategic investment, growth investment and maintenance CapEx, these are the ratios. For growth investment, already, based on the growth strategy of 5-year plan, this is already part of it. Specific projects are listed up. I can't show you but we have a list. For strategic investment, it's like assortment enhancement in foods and investment in semiconductors and stock and shape business. Major investment, those are included in the strategic investment category. So enhancement of shareholder value, growth, ROIC and shareholder return. Those are the 3 main drivers. Top line growth is important. But more than that, we have to focus on specific areas, growth investment and strategic investment will be made there so that we can increase profits. And also ROIC should go up from 5% to 8%. Shareholder return, as I said, 35% is the benchmark and we will pay out dividends based on that. Lastly, commitment from management. So we will instill management policies and maximize contribution of all employees, and we will build the best management team based on experience, proven track record and ability to execute with mutual trust. Right now, there are several team members there. When I became President, other than my position, we replaced 8 positions. At the moment, after 6 months or more, I really feel that it was a good decision. I put all the specialists in each of the positions. Each one of them is a unique talent. In each area, they are professional people and I have experience of management. So the strong management team is what we have today. However, this year, the race, we want to win the race today, today -- this year. If we need, for example, someone like Araki-san, if we can find from outside, we would like to positively recruit those types of talent. And next year, we want to go to major league and we need talent and organization, which is living up to the major league. And the year after that, in the major league, we want to win the championship. And we want to have the strong enough team to win. So even during the team, we may replace members and the team members. And if there are good talent out there, we don't hesitate to recruit from outside. So we have shown you the 5-year midterm plan. As I just said, in the first year, we will seed and we will grow the seed in the second year and the harvest in the third year. So when we harvest in the third year, are we going to sow the seed or are we going to eat the seed? That's the question. But in our mind, we want to plant the seed so that we can harvest continuously. But after 3 years, I will come back to you once again so that you can evaluate what the management team has done. We will secure the trust of shareholders with results, link shareholder value with management team compensation. Our purpose is listed up once again here. With this, I would like to conclude my presentation. Thank you for your attention.

Now we would like to start the Q&A session.

Morgan Stanley, Watabe is my name. Congratulations on the disclosure of the midterm plan. I want to ask you about the major championship winner plan you talked about at the last part. You are aiming at top largest market cap globally in chemical industry. JPY 570 billion is not enough. But when you say major league championship winner, what do you mean by that quantitatively?

Well, we were not jumping to there at once. In 3 years, we would like to be successful enough to aim at that. That's the kind of profit we would like to achieve in 3 years.

So given that JPY 570 billion to go towards that level, your vision is understandable. But for example, for Pharma in '29, Radicava IP is expiring. And specialty, this is the kind of profit you need so probably you can do this. On the other hand, for Basic, well, this is never achieved with derivative and MMA or MMA is now gone. So what do you do to achieve this? With MMA, with the flat level, are you still doing business in the U.S.? The U.S. investment -- many people are worried about the investment level in the United States. What is your image? Is it going to be your stand-alone investment or JV? So towards JPY 570 billion, please give us more -- probably more explanation.

We have managers in-charge of each business, so I would like to let them explain. Shimodaira-san first, please.

This is Shimodaira. Thank you. First of all, in our area, 2029 target is JPY 44 billion. That's the commitment number. This year, we are running losses, most of it or almost all from carbon fiber. Petrochemical is profitable but carbon fiber is negative. Last year, in autumn, on a continuous basis, the raw material prices declined. And there was an inventory loss we had to record because for the coking coal, transportation distance is very long. so we have to always have a stock of certain inventory. So there was an inventory loss because of that, we had to record. Because of that, that's the situation. So we are reducing our production capacity at the moment because we can -- that way, we can reduce the exposure by the market fluctuation. That's how we are controlling the risk. And also the fact that we have to sell or if we try to sell more than we need, we will undermine the pricing. Therefore, we want to resist the risk of the market and we will have a pricing strategy to hedge the market fluctuation. That's why -- that's how we are reducing the losses in carbon fiber. So reducing the nonprofitable business, this is going to be the most important thing in improving profitability. We just talked about the carbon fiber, but for the petrochemical domestic demand, we want to commensurate with the domestic demand. We want to have a new commodity model, the multi-general purpose product. That includes downsizing of facilities and assets. Also, for the growth areas, we have mobility and what we have is compounds there and general purpose polyolefin, it's not -- no longer general purpose. We want to do the high-performance polyolefin and there are some already, and we want to grow them and also come up with the new products in this category. On top of that, we want to promote rationalization. There is a company-wide movement. But in our basic material, there are specific rationalization as well. So in the next few years or next 5 years, that's how we would like to achieve the commitment number for the next 5 years. That's all.

So this is Kurokawa. So I'd like to explain about MMA. So therefore, under this MTMP, we would like to have the accuracy with the figure. Therefore, the U.S. project is not included. However, from 2030 to 2035, we have included the figure, and therefore, [ will be case ] as initial target. So we would like to have a stable and also utilizing the natural gas from the U.S. and have a most carbon-neutral MMA and therefore, as a result, so with the Chinese players. So therefore, there are too much overcapacity in China. However, we'd like to provide the -- and look into the areas where we're able to generate stable profitability. And therefore, the European and also the old equipment will be suspended in the near future for the ACH. And therefore, we are going -- and when there will be changes for the carbon tax, we think we are able to have additional profit. And talking about Asia, so this is the most demanding area. And therefore, looking at the current situation, there are oversupply. And therefore, we are not able have a very good business. However, within that, we need to maintain our presence because we do have a track record of 20 years. And therefore, price-wise, against major players, we are able to get a higher price. However, we are not able to achieve this future target. And therefore, we are going to have that downstream technology. And until now, so because we have provided and sold the products that have been sold in -- produced in our site. And however -- so therefore, utilizing our downstream technologies, we are going to supply to the customers especially with large companies and also with the companies we are able to generate a new market, new business. And utilizing our technology, we would like to create a new demand and therefore, to the supply. So we are going to introduce measures, which is to be able to compensate the supply and demand area. And therefore, for our technology, so not only providing a stable MMA product, we are going to have more technology value. And therefore, for the clients, they are able to understand the benefits being engaged with us and therefore, create more profit in order to achieve this target. So that's our idea. So for the investment amount, -- so of course, so it's increasing. And therefore, we are taking some measures in order to manage this investment amounts and therefore, investment amount is increasing. And therefore, because we are not able to collect our ROI with a certain pricing. And therefore, providing this value of low-carbon footprint. So therefore, because we are not able convince the stakeholders with a good pricing with our customers. And therefore, we are having a negotiation with our customers right now. And therefore, as a person in charge, we have already started negotiation with the customers. And therefore, so we would like to contribute and have a discussion within our company, and we hope -- I hope that I can provide a material as soon as possible for the discussion.

So this is Tsujimura. So talking about RADICAVA. And therefore, 2029 May, so this is the exclusive time line. So therefore, for the patent for the RADICAVA for the formulation and also there are some different patents that we hold. And therefore, we do have a long preview for those patents. And therefore, for the authority, it's been set as in May of 2029. However, for the generics, therefore, we are taking some countermeasures not to be taken over by generic products. And therefore, because this exclusive previews for the generic drugs. So we do have some measures and therefore, we are able to have exclusive preview for the RADICAVA until May of '29. And therefore, we are able to prolong this exclusivity for a longer period. And therefore, we are optimistic about this position.

So Mr. Miyamoto from SMBC. And therefore, because for the basic materials and polymer, so it's Page 56. Mr. Chikumoto have explained for the green value and you have mentioned about the PET bottles and recycled material and, for example, biomass naphtha. And therefore, so the competitors are not able to have a good sale of the petrochemical product. And therefore, this green value takes time for the market to accept that petrochemical-related product. How are you going to secure your profitability in this area? For example, for the national security because this is a public business and therefore, whether you are able to utilize a subsidy from the government or not? And also, there have been a collaboration with 3 companies and in order to enhance these kinds of collaboration, how are you going to implement? And therefore, you have mentioned in 2029, so this figure that I was not able to envision and therefore, whether the ROIC is going to surpass this level and therefore, for the basic materials and polymers. So please explain more about the profitability for this business?

So this is collaboration with 3 companies. So FY '29 midterm plan, this prerequisite is not included because -- so because green ethylene and propylene, so we're focusing in those areas. And therefore, the downstream should be green products as well. And therefore, so we believe it is important to pursue this position. However, for this business, so propylene and ethylene selling them as a product. So we are not able to sell that. So we are going to create derivatives and therefore, we are going to create a business. And therefore, having that figure, so this is collaboration and partnership with 3 companies, we are going to focus more on the green technology. However, this is an area where we can provide more additional green value. And how much will that be? Because FY '25, we are going to have the carbon neutrality around that time and therefore, we need to have a higher value in order to pursue with investment. For that, we need to have a support from the government. However, because without the value product, we are not able to continue with our investment. And therefore, we are going to prioritize our higher value products and therefore, we're looking at the carbon tax. And therefore, within that trend, I think that situation will change and evolve accordingly. And also talking about the petrochemical basic material and also the capital efficiency and for the ROIC. Because I don't have that figure, so Kida-san, do you have that?

We do appreciate your concern. But for FY '29, the capital cost for us is 3% to 4% in terms of CAPM. Of course, the spread with ROIC is what we are monitoring. By FY '29, in basic material, we can exceed that. Compared with other businesses, it is still lower, but we can have a 6% -- high 6% range or 7% -- low 7% range. We may have some aggressive aspiration. But with the measures we talked about with petrochemical, we are going to increase the ROIC. That is included in the plan. Talking about green area, if I could add another point. The customers who can recognize the value in green can be brand owner. Even today, for them, for their products, which is emitting emissions CO2. In terms of -- in our case, it's plastic. They are trying to recycle and reuse those products and the materials. And we are getting those inquiries in Kashima, 20,000-ton plant, which is completed in the plant, we think that it is profitable. And with the 2029 plan, well, in terms of the value, it is still small, but we are counting their contribution -- positive contribution from Kashima in that sense.

In terms of the economic security, this is very -- has a very public nature -- high public nature and at the moment, petrochemical business is less than hurdle rate. We think that the natural government fund should be injected, JPY 1.3 trillion budget of METI talked about the ethylene facilities as well. They mentioned it. Therefore, with this collaboration, could you talk about the possibility of having access to that fund?

Of course, we are in discussion with the national government regarding carbon-neutral and secular economy. The level that is acceptable to consumers is -- there is a limit. In terms of recycling, bio-naphtha, it's not as costly as bio-naptha. That is the important point. Because as far as I know, bio-naphtha, there is 6-month waiting time. It's like a Ferrari of naphtha. It is very expensive. It's very difficult to get the stock. And then the cost may be too high. But in our case, with the brand owners, we are in discussion with them, and it's quite feasible as a business already. And some of this visibility include government subsidies. And that is something that we are doing while we are trying to secure the profitability. Unless we can secure profitability, Japan cannot promote circular economy or carbon neutral. So we would like to convince the government on those points, and we'd like to come up with a good mechanism in that sense.

So we'd like to invite next speaker from JPMorgan Securities, Nakada-san, please.

My name is Nakada. One question, and this might be rather ambiguous. So listening to your presentation, so therefore, providing solution to the society. So therefore, I fully agree with that vision. However, as a listed company in order -- so therefore, I'm being perplexed whether you are going to follow that. And therefore, with Asahi Kasei and Mitsui Chemicals, I think you're able to expand your business platform. However, it may -- well because you mentioned about no synergy. However, it seems you're going to pursue those projects as well. So therefore, from external view so in the previous midterm plan, for example, you're going to focus on the operational excellence like [ GX with ] chemical. So however, it seems more diverse for this in MTMP, like BASF. So are you going to that suit? Or do you think that your solution -- are you going to focus more like a 3M company? So therefore, could you clarify what kind of vision? So therefore, as Mitsubishi Chemicals, could you explain more clearly what will be your future view.

And however, it seems that with MMA, it seems -- so therefore, if that is Mitsubishi MMA company, if that is the case, we're going to invest more. And therefore, however, if it's incorporated into whole, it seems that -- it's much more improved our technology. So because we do have a diverse technology. And therefore, we do have the largest number of technologies. And therefore, the keyword is to connect. So therefore, recently, because I have been engaged with some major top management and their demands are very difficult. And what they are expecting to us is our comprehensive power because how much technologies you have. And therefore, maybe we individually don't think it's an excellent technology. However, the external business partners think that we have excellent technologies. And therefore, we need to directly connect to those customers. And therefore, having those kind of technologies -- until now, we have those kind of technologies, and we have paid so much cost in order to keep the patent. However, now with the complexity increasing, I think our values have been really accepted. And therefore, we need to have a volume in those technologies. And therefore, in the upstream, we are not able to consider it and consolidate. Until now, we do have these kind of green technology. Without green technology, we are not able to continue those 4 business areas because it is required to pursue carbon neutrality and circular economy. And therefore, in those areas, we are going to provide our green chemical. And therefore because we are not going to be dependent on others for the technologies, the reason why it's been divided into 4 areas. So I have focused on our expertise. And therefore, we are going to focus on those key areas. For example, the specialty area is something that we are going to allocate more as an investment. So at the beginning, industrial gas and also the pharma was your thinking for the interest in gas, for the food and semiconductor, we do have a synergy. And even now, so we are having a negotiation with our partners. And for the time being, I think the business style will not change. And for pharma, as I have explained. So thinking about the future of pharma, and I think it is very important to think about our future because at pharma, so talking about the patents, we do have a very strong patents. And also rather than you think we do have a high profitability in this area. And therefore, this kind of good business how we are able to grow this area. So thinking about that, so we need to look for our best match as a partner.

Now going to the next question. Mizuho Securities, Yamada-san.

Mizuho Securities, Yamada. May I ask 2 questions? My first question, this time, unlike past 3 years, the numbers match with each other. And if we can make profit and then I can anticipate the scenario. So you can make profit is important. In the last 20 years, I've been watching the company. There are several sources of profit, but because of the lack of investment or according to the management, the investment overrun happens. It's not like Tokyo Olympics from JPY 3.5 billion to JPY 44 billion. But we have to realize that investment anyways. So you are in the decision-making position, it's important to focus on the people. And the merit system is what you need, I think, in HR and also, once business fail and then you don't let them use the fund anymore. But if -- for the next 3 years, we have to make sure that these mistakes not happen. So what kind of HR system motivation and so that you don't have those failures anymore with the businesses?

As I said, discipline has to be in place. That's the principle we have to follow. In our case, even if we decide on the investment, we will not just let the business go on their own. Every month in the Steering Committee, we are watching the progress so that we can see there is no cost overrun and there is -- they're on the schedule. We will watch that. If there is any delay in our cost overrun, we will support the business with the rest of the organization. Well, today, that was difficult. So from other divisions, we injected people already and personnel change and organizational change are already happening. We are already making decisions on that. That's how speedy we are in responding to those problems. We didn't have such a capability in the past. We just led the things with the business or each segment or each business group. And after the results come out, they come to the management and say, sorry, and they cost -- they had a cost overrun. That was what happened in the past. At the end of the day, divisions who cannot make use of -- effective use of fund would not be able to get the investment money anymore. So that's how serious we are for the new investment decision we are making. In the past, so that discipline did not work. And on top of that, ideally, the divisions or businesses who had to spend more money for investment because of the lenient decision.

Gallium nitride thermal 4, I've been expecting something coming out of that for 10 years, but nothing. I think that there is an underinvestment situation there. How can you address such a problem?

Well, gallium nitride, together with JSW, we are jointly developing this. At the moment, facilities for the development, to be honest, are not enough, are not adequate. They only have 1 plant, maybe it takes 5 years. If they have 5 and they can develop in 1 year. And then you may need 5x the investment. But whether it's possible or not, 1-year development is much than 5-year development period because if they continue for 5 years, they keep spending money. So at this point in time, 5 years too long. That's why we would like to change the approach so that they can develop in 1 year. In that sense, we are investing in many things. Today, I cannot announce all of the things. But in the near future, we would like to disclose these details. So please wait.

Yes, I'm counting on it. I have another question regarding capital allocation, Page 62. In the group business, cash out is 34%. This is Nippon Sanso Holdings, maybe JPY 1 trillion, they will spend in 5 years on their own. So that's the most of it. That means pharma's pipeline purchase in order to accelerate growth. This doesn't seem to be included there. Is that the correct answer? And also shareholder return 20% and the shareholder return noncash depreciation loss. After this, if you think about profit before impairment probably out of all the cash inflow, maybe 40% to 50% is profit. Given that, you have to have a certain impairment. Otherwise, all of the shareholder return will be allocated to shareholder return, and this 20% will be allocated to shareholder return. Is that correct understanding? And also chemicals, disciplined growth investment is what we are expecting, as you just said. So please answer the 2 comments -- 2 questions I asked.

So talking about the group business. So therefore, your understanding is right. So therefore, you have provided right answer. And therefore, for the CapEx for the pharma, we didn't have. So therefore, we are going to purchase from outside the pipeline. However, it's not included in our plan. So therefore, I fully agree with your comments. So talking about the impairment loss, because if I'm going to explain, it takes full 1 night in order to explain in detail. So therefore, basically, we are going to provide a dividend to the shareholders. And therefore, in the next 5 years, we think so. And therefore, 35% is not so low. And therefore, I personally think because our share price -- so therefore, it's been supported by the dividend yield right now. Currently, if we are going to maintain the current dividend payout ratio, and therefore, we are going to return to shareholders according to our profit. And talking about the CapEx so therefore, we are going to utilize the shareholder return, whether we are going to have our share buyback. So however, for that, I personally have a different notion. And therefore, we need to conduct that in a long range and also whether it's been accepted by the shareholders or not. And therefore, I personally believe that dividend -- keeping this dividend payout ratio of 35% is really important. And therefore, the cash out and therefore, you're going to pay -- repay the debt. And therefore, because according to your calculation, you are not able to allocate more. So whether if you are not going to conduct an impairment loss and therefore, because I'm sure that you're going to pay the dividend. So other than that, I think you are not able to allocate to other areas. So for example, the share buyback. So you are not able to achieve the share buyback of JPY 100 billion and JPY 200 billion. So therefore, we haven't included our share buyback in our plan. So we are going to pay a return to shareholders with our dividend. So therefore, in case, we might think about the share buyback going for future and therefore, you're going to allocate JPY 200 billion to shareholder return to debt repayment. And therefore, we have Mr. Wakabayashi and therefore, Yamada-san has mentioned that we didn't allocate to necessary areas. Wakabayashi, please.

Because we are going to go back to the previous question and because there are some semiconductor products. And therefore, this is the first time that we have provided this figure to outside. So therefore, by 2020, we have created a semiconductor headquarter. So until then, we have diverse business groups. However, we have consolidated into 1 area. And therefore, there is a keyword of connect and therefore by connecting that, the team members are able to understand what's our strength. And what kind of measures we need to take and therefore, from JPY 700 billion to JPY 100 billion and therefore, we are going to have that -- and therefore from JPY 70 billion to JPY 100 billion, we are able to create products based on our strength. And the semiconductor, we are not providing chips and therefore, in which area we can contribute. And therefore, we make analysis accordingly. And for example, for the synthetic codes and therefore, thinking about the [ internal ] codes and [indiscernible] because we are able to think about the upper stream. And we don't -- we are not able to circulate this chain. And therefore those equipment or the structure have been created internally and therefore, the #1 products have a better understanding. And therefore, because there is a comment about the [indiscernible] previously and therefore based on our long track record and careful thinking about the reducing energy and therefore, there is a gain on gas. So I think this is very important for that. And therefore, as President has mentioned, so we are going focus on our strength areas.

Okazaki-san from Nomura Securities, please.

Okazaki from Nomura. First question is about Page 44, selective focus on businesses. In your plan, for the next 5 years until '29, JPY 400 billion is identified. So Chikumoto-san, you emphasized speed. And because of 2029 number, it seems that it's too long to wait. So what do you think about this 2029 number? Because you have customers and employees, so it's difficult to make such a decision. But what is your thinking behind JPY 400 billion in 2029?

Well, in my case, I'm a type of person who deal with the things that we can do first, whether it's investment or selective focus on businesses, rationalization, we are starting with the things that we can do first. I don't think it will take until 2029. I will expedite. Well, you talked about the first 3 years importance earlier. In 1 or 2 years, we have to do everything. Well, that's what the investors can expect. It's not only the numbers, but we will do more rationalization, I think. As we discussed, we have to focus on the real strength of the company, that's important. And what are the advantages we have, that's the group of those technologies that we have I showed you earlier. And we want to realize those integrations as soon as possible.

So it says on top of current plan, we will consider additional cases based on regular business review process. So that's something that we can expect?

Yes, yes.

And on Page 39, discipline, 3 factors you showed us for discipline today, that's very important. But earlier, the past management people, we're seeing basically the same thing. At a glance, that's my impression. Please tell me if I'm wrong. On a monthly basis, you said you're going to do the project check. But before 3 years, in order to accelerate and expedite, what kind of discussions are you having today as far as you can share? You talked about the monthly check for investment. If you could give us some of -- a couple of more examples that will be helpful.

As I said earlier, for projects of certain sites, every month, we are reviewing for the projects which are already executed, and we are also reviewing and if necessary, we are making necessary modifications. And for pricing strategy, Kida-san is responsible for this. Well, in our case, first, we are trying to increase ROIC as we explained today. And also already in the company, we have started taking actions -- various actions to achieve this because ROIC will -- we should work on PL first in order to increase ROIC. From customers' perspective, maybe they appreciate this. But in our case, because of the nature of the product, we tend to maintain a stable and safe supply. Sometimes gross loss or sometimes we are selling a loss in many of the products because of the long-term contracts. And every month, when we do the business review every month, if you review item by item with specific customer name one by one, so we are looking at the SKU level by customer today. And then we are asking the salespeople, why are you continuing with this business. To each business leader, we are asking these direct questions as part of the pricing review. And then sometimes we say maybe we should stop this business all at once. So this is the process we are going through today. Well, in the -- on the service, we have been always talking about discipline in the past. But today, what we are doing is more proactive. And this is not something that we have done in the past with our previous management, but we are starting this process today. This is just one of the examples. So we have been changing a lot. That's the feeling of someone internal. Pricing optimization is very important, so please proceed.

From Daiwa Securities, please proceed Umebayashi.

From Daiwa Securities, it's Umebayashi. So Page 74, so because for the Advanced Film & Polymers and also the Advanced Composites & Shapes and therefore, the reason for increase of the profitability based on those 3 policies, you're going to implement that and therefore contribute to the increase. And therefore, actually speaking, what kind of measures are you going to take and therefore following those 3 policies, please explain in detail?

So this is Egawa. Thank you very much for the question. So I'm in charge of the Advanced Films & Polymers. And therefore, in short, because we are going to execute the right things with agility because we provide our specialty materials. So what is the definition of specialty, well, because as a conclusion, not only semiconductor because -- so therefore food package products, if whether it's non-specialty. However, they are -- so therefore, for us, the speciality material is that from the market and to the society, it's been regarded as a special material. And therefore, we think we call it a speciality material and therefore speciality materials, we do have our competitive edge and that is something we only can do. And therefore, we are going to focus on that area. However, talking about the speciality, so-called the speciality area, we think that some of materials are not specialty and therefore, we are going to focus on that and therefore segregate our business and whether we are going to structure divestiture or exit. So therefore, we need to have a streamlining. By doing that, I think we are able to improve our profitability and as a result, well because in certain business, we have put our costs and resources in human talent. And therefore, we are going to focus, and we'll have more focus on our expertise and therefore consolidating the strength area. For example, because there are some proposals for the M&A and everybody would explain about EBITDA and it's an excellent company. However, looking at those products, they don't have any speciality products. So therefore, because EBITDA 20% and therefore, if we are able to streamline the business and reduce the cost, it seems to having a set management. However, with that if we're able to streamline the business and reduce the cost, it seems to having a setpoint management. However, with that, if we are able to implement that policy, we are able to generate more profit and therefore, we are going to allocate the right areas where we can generate the profit.

[indiscernible] leading [ SASD ] domain. So basically covering these 3 disciplines, for instance, we already identified 23 projects that will be a launch over the next 5 years, 80% on the first 2 years. That's covering divestiture, closing, covering as well, consolidation, organic growth and as well M&A. So that's one of the key activities to expedite where we are not making profit on site, on facilities, on product line, on business. So this is ongoing, covering as well the carbon fiber chain, but as well the ESS activities.

So second question is about MMA. So therefore, talking about the strategy. So therefore, there are some antiquated equipment and therefore, you're going to wait for the EOL on those equipment and increase -- and you are going to wait for the increase of your profitability. However, in the plant, there are some production sites that you have closed, for example, in Hiroshima. However, for the time being, you're able to survive, however -- so talking about the new facility in the United States. So therefore, in some areas, whether other sites, do you have any plan for other sites in different regions? And listening to your presentation, you did have a share of 40%. And why you are not able to become a price leader? So therefore, according to each location, there are different positioning therefore that's what I thought listening to your presentation. So for example, do you have any regions where you can exercise your pricing power?

So talking about the facility, from my predecessor, the global asset management in order to conduct that, we are able to execute that. As a result, we have decided to close some facilities or some sites. So whether we are going to have the same cases in the future or because society will change. In the past -- so having a global process and therefore, having a global connectivity, that was our strength. However, because of the geopolitics, the regions are being separated, it's going to become our weakness going forward. Therefore having the regional locations and therefore, only connecting with our sites. So maybe if we are able to connect with other business partners in each regions and having that kind of connection, we are able to optimize the localized, optimized business in local areas. So as I have mentioned, well, because we do have a downstream technologies and utilizing that core technologies, we are going to connect with the downstream and therefore, we're going to increase our presence in that area. By doing that, for example, if there will be some efficient facility, and by -- if we are able to connect with those business partners, then if we have an old facility or if we don't have a good progress on the carbon footprint, that could be one idea to close our site in the local area. So therefore, we are going to monitor what will happen in the society, and that could happen in the future. That's one thing.

Well, the pricing power you asked about, like in the first half of this year, when there is a huge shortage of product, yes, we can have a certain pricing power. But otherwise, to a certain extent, balance has to be in place. And in our case, compared with other companies, quality, stability and supply stability is something that the customers really like and appreciate, and we have a mutual trust. So when there is a balance and then they will give us priority and select our products over others. And even if there is lack of balance, they try to -- customers try to buy our products so that they can stock up just in case. So that's the kind of mutual trust that we have established over the years. So compared with other companies, we can charge higher price. That is the fact. But as a total market, can we control the pricing in the market? Even though we have a high share for each region, the situation is different. So sometimes, we were affected by those situations in the past. But in the American project, we are hoping to break away with that because in trade terms, it's closed sort of. Therefore, in America, we want to have overwhelmingly good cost and carbon-neutral products. And then that way, we believe that we can attain a kind of price control you are asking about. We are very sorry, but we would like to entertain only one more question.

Nakahara-san, please, from Tokyo Intelligence Lab.

So my name is -- Tokyo Intelligence Laboratory, my name is Nakahara. And therefore, in order to encourage -- so therefore, you're going to pursue no more thing, and therefore, you're going to eliminate unprofitable business and secure more profit, and they're going -- you're going to focus on first 2 years. And after the rehabilitation, you're going to take a global measure. So that was the message that I have received. For the initial 2 years, in order to normalize your business, I think you're able to have an improvement of JPY 100 billion. And therefore, for this fiscal year, you're able to secure 50% and therefore COI of JPY 400 billion. That is a target that you're able -- you're going to achieve for the next year. Is my image okay?

So this JPY 400 billion, I cannot disclose that for you. However, I think -- so we do provide only the conservative figure and therefore, Mr. Kurokawa is very aggressive. And therefore, he doesn't provide any conservative figure. However, generally speaking, we do provide only a conservative figure. However, maybe you don't trust us. So therefore, we are becoming too conservative in a sense. And therefore, in this fiscal year, we're going to achieve our target. So therefore, following that trend, we would like to become more aggressive next year. And therefore, we are going to eliminate unprofitable business in comparison to this year. And therefore, we hope that we can improve our figure.

So second question, JPY 550 billion of cost reduction, what meaning do you have for that? And therefore, you're going to align and streamline 30 businesses? And are you going to focus on that or other than that, do you have any major target you envision? And for the rationalization and for the segmentation and maybe carbon is set. So other than carbon, petrochemical and functional business, and therefore, do you have these kind of segmentation for that?

Well, Yabe-san is the main person responsible for the rationalization.

Yes. This is Yabe speaking. You pointed out the impact of a divestiture. It's in the small letter, but this is excluded from this impact number. Organically, as Chikumoto-san said earlier, like the leftover job of PMI is something we are trying to do. This is JPY 50 billion per year as of 2029. That's the target, and this is against 2024. So compared with 2024, as of 2029, we want to have JPY 50 billion fixed cost reduction per year. So that's the organic cost reduction only that we are including here. So after cleanup, JPY 10 billion -- even after the cleanup of JPY 10 billion per year is realized. Well, it's not even. So the impact maybe heavier in a later year. But eventually, JPY 50 billion net impact is what we want to realize. When I saw the material, I thought that the carbon fiber is included, but it's not included here. Well, whether within carbon fiber, the organic reduction part is included, but the impact of divestiture in the exits are not included here.

With this, we would like to conclude Mitsubishi Chemical Group Management presentation meeting. Thank you very much for your participation today. [Statements in English on this transcript were spoken by an interpreter present on the live call.]