Mitsui Fudosan Co., Ltd. (8801) Earnings Call Transcript & Summary

Thank you for participating in Mitsui Fudosan's Investor and Analyst Briefing today. I will explain the results for the first half of the fiscal year ending March 2025. I will start with an overview of the consolidated profit and loss statement. In first half fiscal 2024, while Mitsui Fudosan's operating revenues fell JPY 2.8 billion year-on-year, operating income declined JPY 10.2 billion and ordinary income dropped JPY 17 billion in absolute terms, all were at levels second only to the new record highs for first half results set in the previous fiscal year. First half profits attributable to owners of parent dropped JPY 40.9 billion year-on-year, reflecting the absence of last fiscal year's gains generated on the sale of investment securities, the vast majority of which was posted in the first half of the previous fiscal year. The progress rate versus the full year forecast was 38%, but we expect to report extraordinary profits in second half from gains on sale of property in the Property Sales to Investors business and sales of tangible assets. As such, progress toward the full year forecast is in line with plan. We are making steady progress toward achieving our new record high full year forecast, including business income, the new profit metric set out in the group long-term vision, & Innovation 2030. Next, I will discuss business income by segment. First, the Leasing segment reported a JPY 3.2 billion year-on-year decline on the back of the impact of increased property taxes for 50 Hudson Yards and the absence of the impact of domestic and overseas property sales in the previous fiscal year. However, rent revenues from existing offices and GMV for the domestic retail facilities increased. Versus the full year target, the progress rate was 50%, tracking in line with plan. Mitsui Fudosan's metropolitan area office vacancy rate was 2.4% as of the end of September, improving 0.1 percentage point from the 2.5% as of the end of June. Next, the Property Sales segment. In property sales to domestic individuals, progress on handovers at properties such as Park Tower Kachidoki South drove year-on-year improvements in the number of units reported and profit margin with profit up JPY 8.5 billion. In contrast, Property Sales to Investors and overseas individuals reported a profit decline of JPY 25.5 billion in the absence of the property sales reported in the first half of the previous fiscal year. As a result, profit for the Property Sales segment, as a whole, fell JPY 17 billion year-on-year. The progress rate relative to the full year forecast was 37%. We note that handovers for Property Sales to Investors in the current fiscal year are concentrated in fourth quarter. Next is the Management segment. Property Management reported a slight decline in profits, while Repark occupancy rates improved. There was an increase in expenses for systems upgrades. Brokerage and Asset Management profits grew JPY 4.3 billion year-on-year on a higher number of transactions and higher unit prices at the rehouse business. Overall, the Management segment posted a JPY 4.3 billion increase in profits with a progress rate relative to the full year forecast of 57%. Finally, the overall Facility Operations segment posted a year-on-year increase in profits of JPY 6.8 billion on significant improvements in ADRs in the Hotel and Resorts business and increases in operational days and spectator numbers at Tokyo Dome in the Sports and Entertainment business. The progress rate relative to the full year forecast was 65%. Next, I will discuss net interest burden within nonoperating gains and losses. Progress on domestic and overseas investments, which pushed up the outstanding borrowings led to a negative impact of JPY 38.8 billion on net interest burden, a widening of JPY 5 billion year-on-year. We are tracking in line relative to our full year estimate of JPY 79 billion. Extraordinary profits as of the end of first half were JPY 10.6 billion, but as explained earlier, the drop of JPY 43.3 billion year-on-year reflects the absence of gains posted on the sale of investment securities in the previous fiscal year, which was mainly concentrated in first half. This fiscal year, we are guiding for JPY 85 billion in extraordinary profits on a full year basis, including gains on the sale of tangible assets. Next is the balance sheet. Total assets increased JPY 473.8 billion from the end of the previous fiscal year to JPY 9.9 trillion. Of this increase, JPY 336.4 billion is the result of ForEx impact on the back of the weak yen. On liabilities, progress on domestic and overseas investment led to an increase of JPY 471 billion in interest-bearing debt. JPY 71.9 billion of the increase is due to ForEx impact. By accelerating asset recycling into the fiscal year-end, we plan to repay more than JPY 400 billion in debt. While it will be subject to the then current ForEx rate, we are assuming a fiscal year-end level of JPY 4.4 trillion for interest-bearing debt. Net assets increased JPY 37.7 billion from the previous fiscal year-end to JPY 3.2 trillion. Finally, I will explain our full year forecast. The progress rate for business income as of first half for the leasing business is 50%, in line with plan. Within the Property Sales segment, the progress rate for property sales to domestic individuals was 47%, but conditions are very strong with the contract rate for new condominiums as of the end of first half relative to the full year forecast for units at already 97%. The first half progress rate for Property Sales to Investors and Overseas individuals was 25%, but this is because the vast majority of handovers for this fiscal year are slated for fourth quarter. While the progress rate relative to the full year forecast is only 25%, the contract rate for property sales to investors, including properties where we have generally reached an agreement, is very solid at currently more than 70%. We expect to hit a 100% contract rate by the end of the calendar year. We note that we are expecting to incur JPY 15 billion in losses on the overseas business on a full year basis, taking into account losses on sales of U.S. rental residential properties where prospects for upside to future cash flow are limited for property-specific reasons and selling conditions for residential properties in China. However, we are expecting a significant overshoot in second half from property sales to domestic investors. As such, we expect to achieve our overall initial full year forecast for the Property Sales segment. The Management and Facility Operations segments reported progress rates of 57% and 65%, respectively, on strong performances. If near-term conditions remain favorable, there is a possibility that we may overshoot our initial forecast for these segments. For net income, we expect to achieve our full year forecast of JPY 235 billion on the back of extraordinary gains in second half, including gains on the sale of tangible assets. Given all of the above, we maintain our initial full year forecast and have set the interim dividend per share at JPY 15 per share. We would like to reassure you that we are strongly confident as we move toward achieving our full year forecast. This completes my summary of the first half fiscal 2024 results. Thank you.

Thank you for finding the time in your busy schedules to participate in our results briefing. I am CEO, Ueda of Mitsui Fudosan. I would like to begin by expressing my gratitude to all of you. I think many of you here today as well as those of you participating online may already know that Mitsui Fudosan was recognized for the first time by the Securities Analyst Association of Japan in its 2024 Awards for Excellence in Corporate Disclosure by Industry in the construction, housing and real estate category. This is the plaque we received. Thank you. We have always focused on maintaining an open stance in engaging with investors. I view and Innovation 2030 as a plan we developed together with all of you. I am very pleased as I believe the award is a reflection of your high regard for the plan and our other disclosures. We are extremely grateful to have been honored in this way. Going forward, we will continue to seek out your frank input as we work together in our aim to further enhance management. We humbly request your continued guidance and support. Moving on, I have consistently said that my most important mission as CEO is to raise the share price by enhancing corporate value. This underpins the long-term vision we formulated in the spring of this year. It has been 6 months since it was announced. We are currently making solid progress on many of the strategies laid out in the plan, and I am confident in our ability to achieve this fiscal year's forecast for business income and net income in what is the first year of the plan. I aim to further boost the share price by continuing to exceed your expectations in building a solid track record. In the long-term vision, I highlighted 3 initiatives under the first business strategy path: one, to decouple from the market; two, to strengthen development profitability; and three, to further develop and evolve the overseas business. For us, decoupling from the market means achieving high profitability regardless of the external environment through differentiation, driven by providing high added value. As Japan breaks free of deflation, we are on the verge of a historical inflection point away from the so-called lost 30 years. The arrival of an era in which added value is properly recognized will create unique opportunities for us, the Mitsui Fudosan Group, given our outstanding ability to create value. I am confident that our raison d'etre will be enhanced. Today, I would like to talk about how our firm grasp of a dynamically changing environment is allowing us to create value. In addition, I will also elaborate on how this added value will lead to the creation of economic value in the form of top-line growth, taking into account the first half fiscal 2024 results. First, I will start with the office business, which is of great interest to investors. Following the pandemic, the positioning of this business has changed significantly. Recently, we have seen the emergence of a wide range of demands on offices, such as the need to accelerate innovation or to provide a competitive advantage in securing human resources or mitigate employee turnover. Tenants have also expressed the need to provide working environments and services that accommodate diverse working styles without limiting individuals to a single fixed location or to create offices that nurture, support and enhance corporate culture. What is the common element at the root of all these different needs being expressed by customers? We at Mitsui Fudosan believe what tenant companies, our customers, are seeking is to strengthen their ability to create added value in their core businesses. The strength of our office business is to go beyond simply providing the physical office space that our customers want to provide a broad range of services and solutions that will support tenants in enhancing the added value they create in their core businesses. To be more specific, at a high level, the added value provided by our office business consists of 3 layers. Of course, we provide superior locations, high specifications and a management operational framework, which provides security and peace of mind, but that is not all. In addition, we offer a wide range of intangible services. For instance, we provide a range of consulting services to transform corporate offices and comprehensively support the creation of spaces that make it easy to work, aiding our tenants to achieve diverse working spaces and optimal working styles under &BIZ. Work styling is designed to accommodate a diverse range of working styles. &WELL is a service designed to improve worker productivity and health management, an area of interest for many tenants. Furthermore, we engage deeply with our tenants, which allows us solid insight into their concerns and issues. This gives us the ability to, not only propose collaborations with our tenants, but with 3,000 corporate tenants in multiple industries, we are able to propose multifaceted solutions to support our customers' core businesses. We are able to propose collaborations with other tenant corporations or provide the connections for business matchmaking. To give you a sense for the usage levels of the intangible services, which provide ideal working conditions and support diverse work styles and events, the number of &BIZ members is now roughly triple the pre-pandemic level at more than 150,000. Revenues from the use of meeting rooms doubled over the 1-year period between fiscal 2022 to fiscal 2023. We have seen a significant pickup in the use of the service. &WELL membership is now around 50,000 and the number of companies participating in large-scale walking events increased 1.7x from last year to more than 130 companies. There are numerous examples of many tenants using the intangible services provided by Mitsui Fudosan effectively. With regard to work styling, which enables diverse working styles, our ability to provide products and services like share or solo for multi-location satellite offices makes it possible for us to propose a wide range of solutions to management issues, such as the need to accommodate diverse working styles or provide forums that can spark innovation. The ability to propose such products in combination with fixed location offices is also enhancing our leasing capabilities. In response to the need for short-term project space or offices for start-ups, FLEX, a service office product offering flexibility in terms of scale or time frame, has generated synergies. There have been some instances where the FLEX business has been the lead-in to tenants expanding or moving fixed location office space. Against this backdrop, we are expecting work styling business revenue for this fiscal year to rise 10% year-on-year, backed by a recent large-scale contract win for 20,000 users. Membership numbers as of the end of October are now 21x what it was in April 2018 when we started this business at 310,000. Measures to raise prices for various services and a high occupancy rate have also contributed to the strong sales growth. Furthermore, as examples of our proprietary solutions or solutions we propose to our 3,000 tenant companies in the form of combinations of services to support our customers' core businesses, we hold events promoting the creation of new businesses for tenants in the same building, such as networking events at properties like Midtown Yaesu. These events connect the individuals responsible for developing new businesses or open innovation from different organizations. In this way, we are proposing solutions to a wide range of issues. By providing offices that people want to go to in neighborhoods they want to go to, tenants can enjoy a fulfilling work life. Moreover, we believe that being a landlord who involves ourselves deeply with our tenants, by supporting their efforts to strengthen the ability to create added value in their core businesses and enhance corporate value is the key driving force behind why customers choose Mitsui Fudosan offices and why they want to remain in our offices on an ongoing basis. Our evolution into what we call a developer of industry, aligning ourselves with our tenants' businesses is a key strength of our office business. As a result of these strengths, Mitsui Fudosan has been able to achieve and maintain a vacancy rate that is significantly lower than the market to this point. At the end of the current fiscal year, we now expect our office vacancy rate to improve to the mid-1% level, down from our initial guidance of around 2%. We expect to be able to achieve a historically low vacancy rate, even in comparison to pre-COVID levels. We have seen some of our peers complete large-scale properties with vacancies. We are making solid progress on leasing for Mitsui Fudosan's Nihonbashi 1-Chome Central District Project with top rent levels for the area. Tenant leasing for this property has been largely completed. I believe the strength of our office business is epitomized by our ability to achieve strong progress on leasing for large-scale properties like this well ahead of completion and our low vacancy rates in an environment that is increasingly polarized. Furthermore, while I can't discuss specific rent revisions for individual tenants, at a high level in current rent negotiations of the metropolitan area leases expiring this fiscal year where tenants have agreed to changes in rent levels, more than 80% have agreed to higher rents. Given tenant negotiations, I won't talk about specific rent reversion rates, but there are instances where tenants have agreed to rent increases of more than 10% or 15%. For negotiations to be completed going forward, our policy will be to seek rent increases for all leases in principle, and we aim to achieve high rates of increase. Next is the retail facilities business. In August, the Senken Shimbun, a specialist fashion industry daily, announced its shopping center GMV rankings. In a repeat of last fiscal year, Mitsui Fudosan, as a company, had the largest number of facilities ranked into the top 10, claiming 4 spots. I believe our ability to consistently generate high GMV is the result of ongoing initiatives over time. In addition to the highly convenient locations, it reflects our ability to create attractive facilities that offer visitors enjoyable experiences, our continuous efforts to enhance store lineups with large-scale renewals every few years and efforts to attract traffic through a wide variety of sales promotion initiatives working in a win-win manner with our tenants. Also, using our retail facilities, which have high potential as a base, we aim to maximize the value of the customer experience through synergies that leverage the content of our sports and entertainment business. This includes the new arena asset and Tokyo Dome. We are promoting initiatives that are unique to Mitsui Fudosan that cannot be replicated by our peers. We were able to achieve year-on-year GMV growth of 6% in first half fiscal 2024. These initiatives are starting to solidly bear fruit. In particular, in the Funabashi area, where we opened the LaLa arena TOKYO-BAY in July of this year, we have already seen the impact of increased traffic flow to facilities in the surrounding area since the opening of the arena. Utilization levels for the arena have significantly exceeded our initial assumptions. We have event bookings for almost all weekends when expected customer footfall is high. There have been instances where Lalaport visitor numbers have increased 30%, depending upon the event. We expect to see strong contributions to apparel and dining GMV going forward. We are also hosting tie-up events for artists performing at Tokyo Dome or the arena at our facilities. In particular, there have been a number of pop-up stores for well-known artists at Miyashita Park in Shibuya. The GMV from the pop-up stores on a per tsubo basis has, on occasion, exceeded Miyashita Park's average per tsubo GMV by more than 10x, contributing greatly to facility GMV as a result of higher traffic and enhanced recognition. Going forward, we aim to grow the top line through measures that maximize the synergies with sports and entertainment content in a wide variety of scenes. We hope you will hold high expectations for these initiatives. Next is the logistics facilities business. The neighborhood creation type logistics facilities we develop are also highly rated by our corporate tenants for superior locations, high specifications, direct sales relationships with end users and 3PLs and the use of ICT equipment, which enables solutions-based marketing where we solve our customers' issues. Backed by this strength, we have been able to achieve rent levels 1.3x higher than surrounding market levels at MFLP LOGIFRONT Tokyo Itabashi, which opened in September and other neighborhood creation type facilities. In addition, there have been instances at Mitsui Fudosan's neighborhood creation type logistics facilities where we have been able to achieve rent increases of 10% to 15% at the time of lease renewal. We will continue to leverage such strengths to grow rent revenue for our logistics facilities. Next is the domestic residential sales business. This fiscal year, we expect to achieve an average unit price for our condominiums of more than JPY 100 million and an operating profit margin of 22.9%, a new record high. This average unit price exceeds the overall average unit price for condominiums in the metropolitan area by more than 20%, which gives you a sense for how high the price band is for our product. As a side note, our market share of high-end condominiums selling for more than JPY 200 million was more than 50% in fiscal 2023. The proportion of the customers buying such high-end properties that do not take out loans tends to be high. A key feature of this segment of the market is that it is less likely to be impacted by trends in mortgage rates going forward. The contract progress rate relative to the condominium units we expect to report this fiscal year, consisting mainly of high-end properties was already 97% at the end of September. Given this, the probability of achieving our full year business income target of JPY 96 billion for the property sales to domestic individual subsegment is very high. In terms of recent selling conditions, including high-end properties such as Park City Takadanobaba, Park City Nakano, the Tower, Park Tower Osaka Dojimahama and the Toyomi Tower, we are already building sales for properties to be handed over in the next fiscal year and beyond. We have seen no impact from the BOJ rate increases at this stage and sales continue to be very strong. We recognize that there is a need to monitor increases in construction costs going forward, but we believe that we can leverage economies of scale to dynamically design product to generate high added value and continued top-line growth in our area of strength, which is central urban large-scale redevelopment projects. In comparison to our peers, we are able to improve efficiency through design and other changes and believe that our properties have a superior ability to absorb higher costs than those of our peers. Our ability to develop many high value-added central urban large-scale redevelopment properties in an inflationary environment is a major strength. Mitsui Fudosan aims to maintain and enhance its business performance going forward, backed by a robust development pipeline and the creation of added value that outweighs the impact of construction costs. Next is the Property Sales to Investors business, the other pillar of the Property Sales segment. Compared to other countries, interest rates in Japan are still low and monetary policy remains relatively easy. As a result, appetite to buy properties by domestic and non-Japanese institutional investors remains very strong. The market continues to see a stable flow of transactions for properties such as central urban rental residential properties and offices and logistics facilities, which generate stable cash flows. Transaction cap rates remain low. I believe this reflects the views of institutional investors who have recognized and knew that the real estate cash flows in Japan are stable and feel that the market is sound given an environment where inflation and interest rates are rising at a moderate pace. Given this, investors appear to be maintaining a proactive investment stance. In second quarter, Mitsui Fudosan completed the sale of an in-house developed data center, MFIP Tama, which was highly rated as an asset, including its tenants by a third-party investor. This is a reflection of the breadth of our relationships with potential buyers beyond our sponsored REIT. Every fiscal year, profit recognition for Property Sales to Investors typically skews to second half. The progress rate relative to the full year forecast as of the end of first half was 25%. If we take into account completed sales agreements and transactions where we have largely reached agreements with the buyer, the progress rate stands at 70%. We expect to be able to complete agreements for all planned transactions by the end of the calendar year. However, as mentioned earlier by our CFO, in contrast to the strong domestic property sales to investor business, we expect to incur losses in the overseas business, including losses on overseas property sales to investors. Losses on overseas property sales will be mainly in the U.S., and more specifically, the West Coast. As you know, the U.S. has started lowering policy rates, but long-term interest rates are rising. At this time, it is still unclear when interest rates will fall or when real estate transaction cap rates will improve. Given financial and real estate market conditions in the U.S., we felt that executing on asset recycling based on investment efficiency from a medium- to long-term perspective was very important to ensure we can accelerate the cycle of investment and cost recovery and build a superior asset portfolio. As a part of this, we made the decision to take stock of our overall overseas portfolio. With regard to properties where prospects for upside to future cash flow were limited for property-specific reasons, we felt it was better to make progress on balance sheet control from an investment efficiency perspective to sell now and recover our investment earlier rather than continuing to hold on to such property. The properties we decided to sell were mostly a subset of rental residential properties we have on the West Coast. Driven by changes in industry structure and changes in behavior as a result of the pandemic, these include holdings that had property-specific issues. For instance, it includes properties where development was conditional on incorporating production, distribution and repair or PDR space, the value of which has not been sufficiently rated. We note that for the sale of property at this time, we took the decision to lock in losses early in anticipation of a future recovery in the U.S. market. We would like to reassure you that we believe that the impact can be offset by factors such as an overshoot in the domestic Property Sales to Investors business. We are confident that we can achieve our initial full year forecast. With regard to leasing conditions at overseas properties, in the office business, we are now at 95% for 50 Hudson Yards, including pre-leasing. In recent lease signings, we continue to achieve rent levels that are double our initial assumption. We are maintaining our dominant position as a winner in an increasingly polarized market for offices in New York. On the West Coast, we have completed the leasing for lab and office property, Torrey View in San Diego with the signing of a lease with Pfizer. We are also seeing progress on leasing for the 1 remaining office block at Mission Rock in San Francisco. We note that more than 60% of Mitsui Fudosan's investments in the U.S. are for office properties, but the 3 properties of 50 Hudson Yards, 55 Hudson Yards and 1251 Avenue of the Americas, our flagship New York properties on the East Coast, account for the vast majority. Given lease contracts with tenants are over 16 years, these properties provide a solid foundation for our overseas leasing business. For rental residential properties, of the properties that are currently operational, occupancy levels are stable and high at over 90% on the East Coast and in the 80s for the West Coast. With regard to the completed properties in the Sun Belt area, as we transition to the leasing phase, we are off to a very good start. For the large-scale rental residential property in Dallas, which has more than 300 units, the rent level has been fixed at a level more than 15% higher than our initial assumption. Other Sun Belt properties are still at a very early stage in the leasing process, but we have gotten off to a firm start, in line with plan and response has been very strong. If we look at the overall market for supply of rental residential properties in the Sun Belt, while near-term supply is high, going forward, we expect supply volumes to gradually stabilize at lower levels as the impact of rising construction costs may prompt other developers to abandon their plans. The properties being developed by Mitsui Fudosan are in central urban areas where growth is expected to be particularly strong even within the strong growth of the overall Sun Belt area. Many of these properties will commence leasing in 2026 or later when market supply is expected to be low. We hope you will hold high expectations for a favorable performance going forward. Next is the Management segment. We are also implementing measures to grow the top line in the Management segment. In property management, the Repark Car Park Leasing business is poised to successfully capture the wave of demand with more people going out by raising prices on a nationwide basis. In particular, we have raised the hourly rates for parking at more than 50% of the lots in the 23 wards of Tokyo. For the Brokerage and Asset Management business, the retail brokerage business has been able to win business in high-end Central Tokyo properties, boosting the average unit transaction value by slightly less than 10% year-on-year. In conjunction with this, we have seen solid increase in commission revenue. With the management business, we are not only aiming to stably grow profitability, but are also implementing measures to grow the top line, driven by the added value of properties and services. In the Hotel and Resorts business, first half average ADR for the lodging-focused hotels rose to JPY 25,000, hitting a new record high. This is a year-on-year increase of more than 20% and more than 50% higher than the level reported in the first half of the pre-pandemic year of fiscal 2019. There have been reports that as of October, foreign visitors to Japan in 2024 have already exceeded the annual total from last year. Mitsui Fudosan's properties have been able to fully capitalize on the demand. Foreign guests account for around 80% of our hotel guests in Tokyo. The Kansai area where the recovery had been a little slower is at around 70%. In addition to steady success in capturing inbound demand, we have also been able to capture demand for special occasion hotel stays and leisure travel by domestic travelers. This has allowed us to maintain high ADRs and occupancy rates. Going forward, while we will need to monitor ForEx rates and economic trends, near-term ADRs for reservations out to the end of the calendar year are running ahead of last fiscal year's levels. In the second half, we aim to exceed revenue and profit levels on a year-on-year basis. With regard to our investment strategy for the hotel and resorts business going forward, we are focused on quality rather than volume. We will proactively pursue opportunities in competitive, superior locations. In Japan's premier onsen resort, Hakone, which attracts both domestic and overseas visitors, we will open a new property in 2026 under our most prestigious luxury hotel brand, Hotel The Mitsui Hakone. The grounds for the property previously housed the Mitsui family's country home. This is a location with a significant historical connection to the Mitsui family. In this storied location, we will fuse Hakone's tradition and culture and tastefully combine beautiful Japanese aesthetics with a modern sensibility. Rather than pursuing temporary trends, our aim is to create new value that is not swayed by the times, a simple but sophisticated one-of-a-kind hotel. With this, we aim to further boost the top line for our hotel and resorts business. I have highlighted our efforts to create added value and grow the top line for our various businesses. The focus when discussing top-line growth at a real estate company tends to be narrowly concentrated on office rent reversions. However, Mitsui Fudosan operates a wide range of businesses covering leasing, property sales and management for not just office properties, but a full range of asset classes, including retail facilities, residential properties, logistics facilities and hotels. As you can see, by providing added value to our customers, we are able to achieve top-line growth in many different ways. As I stated at the outset, an inflationary environment is one in which added value is properly and appropriately recognized. During the era of deflation, the so-called lost 30 years, at the extreme, you could argue that it was a period when low prices swept everything else away. Even if you were able to diligently create added value, it went unrecognized as lower price points won out. It was an area which did not encourage innovation and people's spirits were stunted. We believe it is necessary to put Japan back on a growth trajectory and break free of the deflationary era, changing society's mindset to one where added value is properly recognized by promoting sound economic growth supported by inflation, backed by top-line growth in rents and selling prices. I believe the driver of top-line growth is not merely companies passing along higher costs, but the capability of companies to create added value and achieve prices that reflect the satisfaction of customers with the value they receive. Mitsui Fudosan will continue to target higher market share and top-line growth, driven by our pricing power and backed by a strong ability to create value by identifying diverse customer needs through sites and communities and prospects for market growth potential. This fiscal year, while there are puts and takes in terms of domestic and overseas profits, overall, we are making steady progress to achieving our forecast for new record high full year earnings. As we focus on attaining the & Innovation 2030 targets, we are firmly committed as a group to further enhancing growth, efficiency and shareholder returns. We humbly ask for your continued support. This completes my presentation. Thank you.