Panasonic Holdings Corporation (6752.T) Earnings Call Transcript & Summary

Hello, everyone. This is Yuki Kusumi. Thank you very much for attending Panasonic group IR day despite your busy schedule. Today, I'd like to explain the Solutions Area, which we announced last February as a focus area. But before that, I'd like to say a few words about the Housing Solutions business, which we announced recently on November 17, amid a decline in new housing starts in Japan. We believe this will benefit not only PHS, but also YKK AP as it would allow us to accelerate our nonresidential and overseas expansion and become a one-stop comprehensive building materials manufacturer with a wider range of products for our customers. So we proposed this to YKK and YKK AP in November of last year. There's so much work to be done before the closing, but we can now share the details with you all. As we mentioned in our earnings briefing, we are also taking nonsequential actions, involving discussions with other partners. And as with this case, we will make announcements when signing agreements are made. Today, I have to explain that the Solutions Area, we have businesses with solid strengths and the potential to increase our earnings power. I presented a similar chart in February. And I believe the essence of business in this area is to continuously contribute to the profits of our customers' businesses and continue to receive compensation for that. Therefore, our competitiveness is contributing to the profits of our customers' businesses and our competitiveness in the operational efficiency that enables this. And this is directly linked to our earnings power. We have many strong businesses that can compete globally, including businesses in which we had top market shares. Many of our businesses are still based on the sale of hardware, and there is significant room for improvement in terms of continuously contributing to our customers' profits. I believe that as you listen to our briefings today, you will understand that we are on the verge of achieving this. The first of these 3 businesses is energy storage systems for data centers by ensuring safety and evolving technology to absorb the increasingly volatile power consumption of AI servers. Due to GPU advancements, we guarantee maximum power consumption below peak power per rack reducing the contracted power consumption of the entire data center, contributing to the improvement of profitability. This is a mission-critical area and by adding functions to solve new power challenges arising from AI advances, we are ensuring continuous stable operation. The second is the Electrical Construction Materials business aimed to layer on solutions that enhance the value created while the building is in use. That is the lifetime value. Currently, as we are leveraging connectivity, including centralized control rooms within buildings, we will develop solutions that optimize energy consumption while improving the well-being of users. The third is SCM software that autonomously solves customer issues in the ever-changing supply chain. We will explain Blue Yonder's current and dramatically enhanced cognitive solutions, including examples of collaborations with other businesses within the group. This is today's agenda, and the speakers have already been introduced by the moderator. I hope this will help you deepen your understanding of the strength and growth potential of each of our solutions businesses, so as to feel excited about the group's growth. I look forward to hearing your frank feedback during the Q&A session. Your valuable feedback shall be incorporated in our management to enhance the corporate value of the entire group. That is all from me.

This is Kazuo Tadanobu. Now regarding the strategy for our data center energy storage system, I would like to start my presentation. First, regarding the market environment surrounding data centers. As you are aware, the AI server market is expected to expand rapidly due to demand for generative AI, projected to grow from $52 billion in 2023 to $224 billion in 2028, with an annual growth rate of 34%, it's also anticipated to see significant demand growth. Meanwhile, market and customer needs are becoming more sophisticated, driven by the large-scale computations are required for AI. Demand for power solutions are becoming increasingly sophisticated. As GPUs evolve, server racks are becoming higher powered and power supply requirements now include beyond backup to include peak power suppression and smoothing of sudden voltage fluctuations. Big power suppression helps data center operators reduce contracted electricity costs and voltage fluctuations then contributes to stable server operation by preventing momentary power shortages caused by increased GPU power assumption. The power supply systems, therefore, provide advanced management capabilities, including high output and fluctuation absorption. However, we believe a distributed system located near servers within the rack is considered advantageous. Demand for power solutions is rising. We maximize our contribution through evolution of unique strength and providing solution proposals and ability to supply. We aim at becoming power solution provider for the data center with a safe battery centered in the power system. As our value proposition, we proactively propose solutions for increasingly complex customer challenges and flexibly supplying capabilities to meet surges and fluctuations in demand. We will continue to uphold industry initiatives and maintain our industry leadership. We believe our company possesses 3 key strengths that significantly contribute to realizing these value propositions. The first is our strong customer base with industry leaders and delivery experience, we have built strong relationships of trust with hyperscaler customers. We worked alongside customers to develop solutions, even before distributed power source became widespread and our pioneering solutions have earned high recognition. We believe we hold approximately 80% of market share in this field as of this year. The second is our design proposal capability to solve customer challenges. By anticipating increasingly complex customer power supply issues and continuously proposed systems that translate required functions into specifications ahead of competitors and continuously propose systems that lead the industry. Furthermore, our deep understanding of the systems allow us to independently determine specifications for cells, power units and other components and integrate them optimally. The third is the ability to materialize [indiscernible] products. We achieved performance, safety and reliability through sophisticated manufacturing capabilities, in particular, to meet the higher safety standards required for server rooms, we combine the quality and safety of individual cells backed by our long history in the battery business with patented safety mechanisms at the module level. Our integrated development and production system covering everything from sales to modules enable us to supply products at the timing and volume requested by our customers. Next, we will explain our midterm outlook and enhancement measures to achieve our vision. First, we aim to achieve sales of approximately JPY 800 billion by FY '29. To achieve this, we will not only respond to the rapidly growing demand for existing products but we will also introduce next-generation products to the market, such as CBUs using capacitors, and BBUs for dedicated power supply racks, which are our next generation products to drive growth. Furthermore, including next-generation products, over 80% of sales through FY March '29 are secured through awards. And we already possess the foundation to achieve the JPY 800 billion scale. To solidify this foundation, we will advance 2 key enhancement measures. The first is supply system enhancement. We will rapidly expand production capacity in Japan and North America as global supply hubs and build a system capable of flexibly responding to rapidly increasing demand. Second is strengthening proposal and development capabilities for the next generation, leveraging both internal and external resources and technologies across systems and devices to provide more advanced solutions in a timely manner. Through these metrics, we will flexibly respond to increasingly sophisticated customer needs and market changes and enhance our competitiveness. Starting next page, we will explain details. First, regarding measures to strengthen our supply system, we will utilize and expand our existing bases in Japan and North America. We will make efficient investment and acquire scalable supply capabilities that meet customer demand. Regarding our approach to production basis to efficiently increase capacity in response to certain demand, we will make effective use of existing sites, including automotive. We will also establish supply chains and BCPs in the U.S., the region with the highest customer demand and to shorten supply lead times, we will expand our production base in North America. As a specific implementation plan, we will address the immediate surge in demand within Japan while advancing our North American expansion in the medium to long term. First, in Japan, we will triple our cell production capacity by fiscal year in FY '29 compared to FY '26. In addition, expanding lines at existing sites, we are also modifying lines for automotive applications with production scheduled to begin in the first quarter of FY '27. In North America, to prepare for future demand growth and supply chain development, we are looking into partial utilization of our automotive site in Kansas. For modules, we plan to expand existing lines at our Mexico plant and establishing a new second area to further increase production capacity. By efficiently establishing the global supply system, we will respond flexibly and promptly to rapidly increasing demand. Next, I will explain our efforts to strengthen proposal and development capabilities for the next generation. To achieve further value enhancement at an early stage, we are strengthening our foundation and the thorough utilization of external resources and technologies. First, as an evolution of our value proposition, we anticipate increasingly complex power supply demands and provide the systems our customers' desire. Specifically, we will evolve our systems from BBUs to shelf and rack configuration and simultaneously evolve the devices. For example, to absorb power load fluctuations, we are developing a device called super capacitor and plan to offer it as a CBU system compatible with current shelves. For improving power efficiency within data centers, we envision a new form factor, a dedicated power rack supporting high voltage and plan to offer systems incorporating corresponding ultra-high-power devices. To strengthen these proposals and development capabilities, we are implementing a significant shift in human resources and increasing the number of power supply and system engineers through collaboration with the Panasonic group. Regarding technology acquisition, we are working to create new value through collaboration with industry. And the CBU mentioned earlier, combines our proprietary capacitor integrated unit with the industry, which possesses capacitor technology and mass production is scheduled to begin in FY '27. We are also strengthening collaboration with external partners, such as power supply manufacturers. Through these initiatives, we are proactively addressing the advanced power requirements demanded by data center and enhance our solution capabilities. Finally, we will explain our management targets. For FY '29, we aim to achieve sales of JPY 800 billion and ROIC of 20% or higher. Customer demand is exceptionally strong, and we expect sales for current fiscal year to reach the upper JPY 200 billion range. In FY '29, we will achieve high growth expanding to approximately 3x in scale. Regarding ROIC, we will achieve 20% or higher by establishing the supply system through highly efficient investments while maintaining and improving our current high profitability. This concludes our explanation of the data center energy storage system. Thank you for your attention.

This is Kiyoshi OtakI from Electrics Works company. Thank you very much for your continued support to our company. Thank you very much indeed. Today, I will discuss our company's strategy titled Growth and Reform of the Electrical Construction Materials Business. I will focus on these 4 points you see on the slide. First, the business overview. Electric Works Company has 4 factories in Japan, 76 sales offices and 34 affiliates. At overseas, we operate in 101 countries and regions through 16 affiliates. Last fiscal year, we recorded sales of JPY 1.715 trillion and adjusted operating profit of JPY 76.7 billion. In particular, our overseas electrical construction materials business accounted for 24% of the total sales of JPY 261.9 billion and our Indian business reached JPY 100 billion positioned as important pillar for our future growth. Our business areas are concentrated in lighting and electrical consumption materials. We hold a top market share in both areas in Japan. We also have second largest market share globally for wiring devices. We also both leading domestic product lines related to systems and energy. Our strength lies in building ecosystem with stakeholders and delivering a wide variety of products on time with the quality our customers expect. By strengthening our competitiveness, domestic sales have grown steadily at an average annual rate of 4.9% over the 3 years from FY '23 to FY '25. India, the driving force behind our growth, grew at an average annual rate of 10.6% over the same 3-year period, exceeding the real GDP growth. We believe our strategy is bearing fruit. Next, our perspective on business environment. While the number of new construction stores in Japan is declining, we expect a slight increase of 0.7% favor driven by the 30% expansion of high-value markets related to energy management and well-being. In today's human capital management, improving employee engagement and reducing turnover have become important corporate priorities and investment in office environments aimed at improving employee comfort and productivity has become prominent. Meanwhile, overseas, particularly in the Indian market, population growth and expanding domestic demand are driving continued GDP growth, forecasting a remarkable growth of JPY 3.6 trillion or JPY 2.15 trillion by FY '31, a CAGR of 9.1%. Based on this environmental recognition, we aim to improve profitability in Japan and grow sales overseas. As shown in the profit pool for domestic electrical construction materials, we will increase the solution sales ratio to 50% and strengthen profitability by changing our business structure. Solution sales refer to package sales based on proposals for clients and designers that address well-being energy management and other needs as well as sales of engineering, maintenance and service capabilities. For overseas electrical construction materials, we will pursue sales growth, securing market position, particularly in the Indian market. We aim to increase the overseas sales ratio to 35% with sales in India reaching JPY 200 billion, doubling the current levels. Next, let me give you the specifics of our strategy. First, regarding our Indian business, which is the core of our overseas growth strategy, we aim to increase sales to JPY 200 billion by FY '31 and establish a strong market position. The growth engines for this are: first, strengthening our aftermarket electrical construction business. We will further increase our wiring device market share, expand cross-selling and develop lighting into our next pillar. We also believe that we can further increase our market share by strengthening our sales structure in the southern region where competing national manufacturers are strong. To strengthen proposal capabilities number two, we will broaden the range of products for upstream designers and strengthen our collaboration with our major regional developers to comprise our customer base to capture the market. To accelerate these strategies, we will actively consider mergers and acquisitions and minority investments. Some examples of case studies. Building projects range from apartment complexes to hospitals and offices. Many of our products, including wire and devices, distribution boards and system components have been adopted in projects by well-known developers as shown on the left. Furthermore, as shown on the right, our advanced technologies, such as LED floodlights are being utilized in stadium projects, including cricket grounds. We will strengthen our marketing efforts by expanding our presence through these studies and leverage our robust sales channels. Next, domestic solutions strategy. In the domestic market, we will contribute to improving building LTV or the lifetime value in response to increasingly sophisticated needs. Building LTV refers to the total value of building generates throughout its lifetime. The value we provide is to enhance the value buildings by continuing to connect with customers and providing optimal solutions such as economic rationality, asset value optimization and well-being for each stage of the building process. Before the construction completion, we will strengthen package sales with high-value proposals centered on well-being and energy management. After the construction, we will strengthen our engineering and maintenance and service capabilities and promote optimization through data utilization. This is supported by product and activity. We propose products that connect our products to network and enable real-time information exchange and control, by visualizing and utilizing equipment status, power consumption thermal [ comfort ] of the office environment, CO2 concentration and other data, we can achieve labor savings and increased asset value as shown here. And we see a double-digit or a higher profitability in other areas, and we can enhance the overall profit in this area by concentrating on this area. Here are some specific examples. In the office sector, as shown on the left, our automated lighting control system introduced to improve energy efficiency and employee comfort. And the proposal to Mitsubishi Real Estate, we do have advanced networking for the common networking and systems. In the sports and entertainment sector, LED floodlights and our live video production platform, Kairos, were adopted at Toyota Arena Tokyo, which opened in October. This enables us to achieve both powerful visual effects and energy saving and has been recognized for improving the excitement and experience value of each visitor. These examples demonstrate our strength in providing solutions that continue to connect with our customers even after the product delivery. Finally but not the least, I'd like to talk about the business effect. We will achieve our fiscal year 2030 -- 2025 forecast of adjusted operating profit of JPY 83 billion and an operating profit margin of 7.6% and aim for further growth toward FY 2031. Regarding KPIs, we aim to increase the overseas sales ratio to 35% by FY '31. We will double sales in India, our growth engine to $200 billion. We will increase the domestic solutions sales ratio to 50% by FY '31 and promote a shift toward higher value. We will achieve sustainable growth in corporate value through both overseas sales growth and strengthened profitability in Japan. That concludes my presentation. Thank you for your attention.

This is Higuchi from Panasonic Connect. I will explain our Blue Yonder business in the supply chain management domain. We are to focus on the solution areas. That means to make a shift from hardware business, we ought to shift the portfolio. This means that the revenue will shift from one-off to recurring and customer churn costs and barriers to exit will be higher. And this makes it difficult to get caught up in pure price competition. With this context, supply chain management is increasingly becoming a strategic core element of our customers' business operations. Consequently, in this area of uncertainty, the need to properly manage the entire supply chain is growing. Here, too, software plays a crucial role. Software handles the entire process of understanding, monitoring and controlling the supply chain status. Software also connects the front and back of the chain. This software plays a vital role in supply chain optimization, which is management agenda. This is further enhanced by the addition of AI and multilayer networking with suppliers, carriers and others, increasing the value added. Panasonic Connect focuses on innovating our customers' field processes and supply chain management always sits at the top level of these field processes. Unfortunately, developing globally scalable standard software organically from Japan is generally very difficult. So we have added them to our portfolio through M&A. This is public data for the supply chain market and supply chain management standard packaged software market, which is projected to grow at a CAGR of approximately 15%. Furthermore, considering that custom products exist outside this market and that standard products are migrating from on-premises to private clouds and public clouds, there is a large untapped potential market. On the other hand, the market is fragmented. In this space, as a pure SaaS player, achieving scale and securing market presence can realize high business value. Here, we are showing sales force for customer management system and Workday for human capital management. We are aiming for a position similar to top players in each category, such as ServiceNow, Office 365 and SnowLake, which have achieved high corporate value. Blue Yonder positioning and potential is already the largest pure-play supply chain management software provider in terms of revenue and customer count. Furthermore, it is the only company that can provide a true end-to-end solutions offering demand planning, supply planning, warehouse management, transportation management and return management plus supply chain network functionality that connects suppliers, customers and carriers. The dots in the table indicate middle class capabilities. Blue Yonder serves approximately 3,000 customers across retail, manufacturing, consumer goods, and logistics sectors with deep penetration into top-tier companies as shown on the right. Therefore, the company is uniquely positioned to provide globally optimized solution. Even if competitors possess supply chain network capabilities, they cannot immediately achieve true end-to-end integration. While Manhattan is primarily a point solution focused on warehouse management, Blue Yonder solution is end-to-end, offers a broad product range and has a solid customer base. However, the biggest issue, frankly, was that due to repeated acquisitions and being under private equity ownership, where long-term investment was suppressed, software investment was not made and the architecture was outdated. Therefore, we thought that the winning strategy would be hiring an excellent industry-proven team, including Duncan, who succeeded in starting up [ Infor ] to elevate -- evaluate the situation. As the market matures, we would fundamentally rebuild the architecture, acquire missing pieces through M&A, integrate one network and build a solution that fully and natively incorporates Gen AI. The integration of acquired company solutions and the incorporation of AI capabilities due to the emergence of generative AI extended the investment period slightly beyond the initial plans and increase the investment amount from $200 million to $300 million. However, this allows us to aim for a higher level. First, regarding cognitive-enabled solutions. Cognitive refers to AI that understands trends with human-like intuition akin to human cognitive abilities. This means interpreting the meaning of information and data understanding patterns rather than merely making fixed judgments based on past data or future predictions to detect anomalies. However, generative AI alone is not sufficient. Blue Yonder, enriches its full potential by natively embedding AI with its existing machine learning and individual optimization engines along with end-to-end supply chain data. Currently, Blue Yonder performs 25 billion predictions daily by fully leveraging AI in each and every one of these predictions, we achieved greater flexibility, effectiveness and accuracy. To maximize this cognitive capability, we have invested in building a robust integrated platform that serves as the enabler. This is where we have been investing. This platform delivers an integrated data foundation, microservices, multi-tenancy, cloud native architecture, event-driven capabilities and interoperability between solutions. No other SCM vendor is building a platform that fundamentally delivers this level of scalability, end-to-end capability and cognitive AI. We believe this is difficult to achieve immediately at this point. In summary, with this vision, Blue Yonder aims to become a top SaaS player in the SCM software domain, the necessary requirements to achieve this are as follows. First, we are aiming to become a true end-to-end solution provider, incorporating not just point solutions but also enhanced SCM network functionalities, return solutions and CO2 emissions visualization capabilities acquired through the $1.1 billion acquisition of 5 companies. Second, we are to maximize SaaS capabilities by establishing a highly responsive interoperable integrated platform that enables scale expansion with minimum incremental cost. Third, to boost customer value by embedding generative AI into Blue Yonder's existing SC execution resources, machine learning, optimization engines, workflows rather than adding them as add-ons, thereby achieving cognitive AI approaching human cognitive level. This is the vision, and this is truly unique. This slide illustrates the components that make up the vision, the foundational platform and supply chain network have already been developed. The supply chain network is already connected to over 150,000 suppliers, significant benefits such as inventory reduction and decreased out of stocks can be achieved Developments of planning systems, execution systems, order management, return management, UX and AI agents are also nearly complete, including the remaining development, full completion is scheduled within fiscal year '28, the FY '26. The blue part indicates the respective functions to be realized, but the key emphasis remains to the end-to-end integration of execution and planning systems throughout the platform. We have announced 5 engines, and we are also looking ahead to implementing conversation and collaboration between autonomous agents known as agent-to-agent communication, which will be a major strength. So far was on the product development investments. Other activities, including hiring a Chief Transformation Officer, fully leveraging AI, optimizing functional staffing and achieving $150 million in annual fixed cost reductions. Looking ahead, we plan to further optimize personnel in the technology development field through AI utilization. Furthermore, along with the completion of strategic developments, we will reduce development resources targeting annual cost savings of $65 million to $80 million. Regarding investments, while past focus was on the product themselves and tuck-in M&As, the emphasis will now shift to go-to-market activities. Since new products inevitably face initial customer hesitation, we will promote programs to facilitate early adoption of new products by customers. We will drive initiatives to accelerate migration from on-premise private cloud and traditional SaaS through cognitive solutions. Through these initiatives, we aim to increase adoption of our highly acclaimed cognitive AI products, enhanced communication of Blue Yonder visions and goals, deepen customer understanding, boost top line revenue and profitability and simultaneously improve product margins by scaling through our integrated data and cloud platform. Executives who have already experienced and successfully executed this process at SaaS vendors have joined Blue Yonder. They are resonating with its potential and are actively contributing. Here is the lineup of the powerful leadership team these leadership team and members will promote the measures to increase the revenue. And this graph shows the forecast fundamentally due to pre-transaction solicitation regulations. It is difficult to present future forecasts. However, within these limitations, we wish to convey the best possible picture we can at this time, which is why we are presenting this graph. Development investment will peak around '25 with the remaining developments scheduled for completion within '26, year '26 will be a period where we will not sell all products, but must launch new ones. This period will involve investing in initiatives to promote customer adoption of the new products. Following this, we will enter the period where we begin to realize the profit-generating effects mentioned earlier. Regarding strategic investments in product development, while this is still conceptual, we plan to reduce them after peaking in '25 and began generating profits. Rather than suppressing investment to boost EBITDA and artificially inflate enterprise value without making the right investments to scale as a SaaS vendor, the Duncan and his team is rigorously executing the fundamentals of cloud business, making the right investments and building the business. As mentioned, customers resonate with Blue Yonder vision. Consequently, we are seeing a growing trend where customers entrust Blue Yonder with the end-to-end operations. They aim to achieve a highly accurate and efficient and autonomous supply chain using cognitive AI while also networking with suppliers and carriers to pursue total optimization. As a result, deal sizes are increasing with the number of large deals exceeding $1 million, growing to 2.8x last year. This is Honda's example. Honda U.S. has comprehensively adopted Blue Yonder solution. This aims to improve sales production and supply chain efficiency through enhanced forecasting accuracy, scenario planning and comprehensive visibility. This addresses challenges such as increasing production complexity across multiple vehicle models and ensuring better alignment with consumer demand. Simultaneously, it drives the shift toward cross functional automated collaboration. Additionally, one of the world's largest automakers as well as other clients, including Heineken and Morrison have similarly decided to use Blue Yonder comprehensively. Panasonic Group is also implementing this internally. While here, we are introducing 4 locations. Both planning and execution solutions have begun live operations. And at 4 additional locations, we are currently considering additional implementation. We are beginning to see the management benefits shown here. And frankly, we are surprised by the significant impact, especially at the first 2 sites. Synergy with Connect is also being promoted. On the left, the yard management solution is expanding its use across industries such as retail, logistics and automotive. It enables automated trailer gate checks and continuous tracking within the yard and integrates with Blue Yonder warehouse management system. Additionally, there are 4 joint solution projects currently underway. On the right is Robo Sync announced in October. Developed by Connect, this new technology enables intuitive control of robots in factories and warehouses across multiple vendors. It allows control of robot arms, hands, cameras and sensors from various manufacturers through a single control platform. Its ability to connect seamlessly with Blue Yonder and Raputa robotics has been very well received, and we are already collaborating with 26 SI partners. We will continue to accelerate the collaboration with -- between Connect and Blue Yonder. Thank you for your attention.

From Goldman Sach, Harada-san, please.

Harada from Goldman Sachs Securities. I have 2 questions. First, on energy. Data center was focused in your presentation, which is good news, of course. But for -- in vehicle battery production line, it's to be used you said, especially for Kansas, which should ramp up in a large scale going forward. While in vehicle battery is sluggish over a medium to long term, for data center applications. To what extent do you expect the capacity in Kansas to be filled by this data center demand. That's my first question. My second question. You focused on 3 businesses today. I understand that they are the priority areas. And today, I suppose it will be retained within Panasonic Holdings asset businesses. Still, I can't really get the feel of the synergy amongst different businesses, so to reduce the conglomerate discount for the holdings itself. How do you plan on doing that? I understand that for Blue Yonder, there isn't much that you can talk about because it is prepared from the listing. So can you again explain the reason why you decided to focus on those 3 companies -- 3 businesses today?

Thank you for your 2 questions. First is with regards to energy, the data center, the Kansas plant to what extent that the capability at Kansas plant will be used for data center applications over medium to long term. Your second question was a rather nuanced question as to what will be retained and what will not be retained going forward? So first, I'll give the floor to Tadanobu-san for the first question on energy.

Thank you for your question. First, so production is rapidly expanding. And we would ramp up in accordance with the speeds required by the customers. And of course, we will enhance the capability of the existing lines in Japan as well as to use part of the in-vehicle battery production lines. But you asked about Kansas, for the cylindrical batteries, it's not separated between e-vehicle and data center. Of course, it could be used for both purposes with minimum investment for modification of the production lines. As you are aware, for in vehicle, towards the next growth, this proprietary phase is continuing a bit longer than we had expected. So it's not a question of in-vehicle versus data center, we will just be looking at the demand in North America. To be more specific, currently, for sales that are currently in production, more than you think the gigawatt is smaller, maybe a 5 or less gigawatt or so. And with that, we are thinking of using the capability of Kansas to a certain extent.

Thank you, Tadanobu for the response. And Harada-san, your question, your nuanced question about what will remain, what will not remain. You used a rather sensational expression. We are working on the group management reform, trying to optimize our resources. We're in the midst of that effort. So as we have been saying for the inorganic actions, we are partly looking into these possibilities, and we will give you the details once we are ready to make such announcements. Basically, of these 3 businesses, you said there isn't much synergy. True in our presentations today, there was no emphasis on synergy. But as Otaki san explained the Toyota arena case. And [ Mike ] business, also talked about the [ Askanfield ] in [indiscernible]. So these are the cases in which EW and Connect had synergy. And in terms of energy, energy storage and energy management systems and devices for that purpose, Otaki san company and Tadanobu-san company do have synergy, although we didn't talk about that this afternoon. And by addressing deals within solution area, we have to make sure that there will be synergy. I'm not sure if synergy is the right word, but [indiscernible] proposal capability is what we would like to really exercise going forward. And Otaki-san, if you have anything to add, I'll ask you to do so later. Regarding the listing of Blue Yonder, that policy remains unchanged for it to be listed. But as Higuchi-san said earlier, the Blue Yonder business is part of the integrated solutions. So over the long term, this is going to be a continued effort. And we would like to think of the listing within the framework. But the realm that Blue Yonder is doing business in, we have seen continuous mergers and acquisitions, including rather high priced ones. Should this continue then depending on the status of our capital allocation, we might try to get external financing as well, including what we will get in relation to listing. So when time comes, we will look into these possibilities more solidly. Otaki-san, Higuchi-san, anything to add

Thank you. Otaki, from Electric Works. As Kusumi-san said -- well, in addition to what Kusumi-san has already mentioned. Within group, the energy storage systems of Tadanobu san company. And for the improvement of the power generation capability of housing and also regarding the hydrogen fuel battery, we do have the first in kind of system being developed that will combine the energy distribution, energy supply as well for the first time next year. And we are promoting the establishment of customer data infrastructure within EW company. And we do have the data -- customer data totaling over hundreds of thousands, so as to make the lifetime value by customer being visualized. And we will be leveraging those capabilities for the continued growth of the group.

This is Higuchi. Additional comments. As I briefly mentioned earlier, it's really hard to see software vendors out of Japan. -- originating in Japan. We tend to customize and we're still in the Galapagos state. And from Blue Yonder, we are learning a lot in terms of the software development and others as Pansasonic Group have added value on cloud or the regional services based on the same infrastructure will increase going forward. So the state-of-the-art Blue Yonder thinking and platform could be leveraged in that sense.

We will take a question from the next person, Okazaki san of Nomura Securities.

I'm Okazaki of Nomura Securities. My question is on energy this time, as a next generational product, CBU and BBU for the rac was introduced and supercapacitor, put what's also mentioned, what kind of technological advancement is incorporated in this area? If you could explain more on capacitors in your industry capacity, you have been working on that. But the super capacity seems to be different. Can you build that in-house? In some cases, it may be better to procure from outside for ultra high output, the cell level -- at cell level existing product, what kind of evolution are you planning to introduce. You have additional questions. My second question is on Blue Yonder. This time investment recovery road map was presented. At 2026, you are to still improve the revenue. And I think it is delayed. And what do you -- how do you see the risk of further delaying the generation of the profit.

Thank you for your questions. For Energy super capacitor, there are so many things I would like to talk about, but I will let Tadanobu answer that question and investment recovery of Blue Yonder, Higuchi san, please.

Thank you for the question. 2 technologies were introduced today. One is using capacitor, building new racks and also towards the future, we are to implement in new racks. So your question was technical question. On capacitor, we are developing sales together with industry. For material technology, it is done by industry and the finished product is covered by the energy that is the roles and responsibilities. You talked about procuring from outside. But actually, we use capacitors principle, the evolution of the material technology and having uniqueness of the data center for data center, usual capacity cannot cover. In that part, we are to develop original product and finishing into the product. So originally, on in-house, we are developing and then to complete the product development under energy. Another point to install in racks. One aim is for the 2 generation into the future, there will be power racks and 800-volt will be our assumption -- assumed standard for the future power rack. High voltage management is necessary and such PDU will be developed and further value add will be incorporated together with the customers. On sales, are there any evolutions? The GPUs requirement in a given generation for the data center, new cell recipe development is already completed, and that will also be implemented in the high-voltage area. So in both sides, the devices will be evolved. Okazaki-san between capacitor and cell, capacitor is way large in terms of the size of the energy for the current takeout instantaneously. And with such a large capacitor, then we can leverage on the technology built through the battery development.

Higuchi san, please reply on the Blue Yonder investment recovery question.

Well, let me talk about Duncan's personal story. From the university days, he has been learning the supply chain software. And after becoming CEO of Blue Yonder, it's his dream to create a world's top supply chain software company. So he's going to rewrite all the softwares and he is determined to do this, rewriting software. This is a very difficult task. And on top of that, there's generative AI. So that is to be incorporated and 5 acquisitions, they are to be integrated. So that is the development underway. In 2025, majority of development investments are already made and we have actual products. They are visible. In 2026, we will focus our funding on go-to-market. Future investments in other areas, we are not considering at the moment, the probability of emerging risks in other areas is very low. What about the pipeline? Are you feeling the success in the cognitive area? Yes, as much as I can share. if you -- well, we cannot have -- we cannot show the data. But in terms of the pipeline, we are feeling good reaction. At the end of '24, there was a security incident, and there were some customers who canceled due to such factor concerns are being raised. But this is a temporary matter. In the future, the pipeline will lead to revenue. That would be the reality. Duncan joined and he said he -- the software need to be rewritten entirely. At the time of the acquisition, we could not recognize. From your perspective, the -- it looks that -- looks like the investment recovery is being delayed compared to the initial assumption or.

Okazaki san, did this answer your question?

Yes.

We'll move to the next person from JPMorgan, Ayada san from JPMorgan.

Ayada from JPMorgan, I have 2 questions. First, on energy, JPY 800 billion sales is the target that you presented. To achieve this, how much investment increase is projected or how much increase in fixed cost is projected if you can share anything? You did talk about the expansion of the production facilities and development as well as human resources. So on the expenses side, I think the big items, what are the big items. If there are any numerical information, you can share with us. And when JPY 800 billion sales is achieved, would the profit margin improve compared to what it is today. That's my ultimate question. A second question, again, related to profit. Blue Yonder, you disclosed today? The margin before adjusted, I think, about 5%. And after adjustment with R&D, maybe 19% or less. Manhattan, I think, is close to 30% and Blue Yonder at the time of acquisition. Compared to that time frame, I think now it's lower. I'm looking at Slide 11. For FY '28 onward or calendar year '27 onwards, do you expect the margin to improve. I don't think that would be achieved just by making R&D expenses. So what are the other factors that are needed for profit increase? Would it simply be an increase in top line? Or are there any other factors that are needed for the margin improvement?

Thank you. The first question goes to Tadanobu-san,, Second question to Higuchi san.

Thank you for your question. Fixed cost investments was your question. First, I think it was asked in the earlier question as well, the cell. The initial investment amount is large. By FY '29, we're not expecting large investments. We'll be using existing facilities and we would be optimizing the assets. So we are not thinking of any major investments for now. So it is going to be investment light. And in terms of amounts already sized in terms of gigawatt is not that large. It's hard to really give you maybe the double-digit billion at most. To achieve the JPY 800 million sales that is 2.5 to threefold increase, the investment is not going to be that large. As for fixed cost, for the labor-intensive part, that will be the assembly for the Mexican plant, it's not going to be that large. Automation is progressing. I can't give you the figures. But in terms of operating profit, what we do disclose for energy. The profit margin that we have today would be secure, and we're hoping for higher than that. So even with the increased sales, we plan to at least maintain the current profit margin.

For Blue Younder, our CFO, Higuchi san would respond.

For fiscal or rather calendar '27 beyond margin improvement, there are 3 factors. First, as you said, Ayada san, development costs will no longer be incurred. That's a big factor. Another is an improvement in the marginal profit. With the increase in the size of SaaS sales that will be the beauty of software business. The marginal profit or the marginal cost is very small. So the marginal profit will increase. And as for the new platform, we can move -- expect the customers to move from the existing platform to a newer platform with better marginal profit. And as for the fixed costs, the ratio would go down because of the economy of scale. So the fixed cost factor will go down. So these 3 factors will drive the margin improvement. If I could add from conventional SaaS to native SaaS, the margin, which improved quite a bit just by that factor. And that is part of the story. And with the completion of the cognitive solution on a per customer basis, the number of modules adopted will increase. And when one is adopted, that could lead to more modules being adopted. At least we'll have more opportunities for that. What do you think? Yes, exactly. Still Manhattan is a point solution. So it's on a unit-by-unit basis. So they can sell rather in a speedy manner, whereas Blue Yonder still has issue with the speed. So that's where the energy is now concentrated on.

We will take a question from next person, Ms. [indiscernible].

I'm [indiscernible] from Nikkei. My first question is on Blue Yonder. My question is to Higuchi san of Connect. On the profit improvement. The image is presented, but I'm interested to know more recent numbers. Blue Yonder consolidated adjusted operating profit. When will that turn to Black Inc.

Well, I tend to speak too much. I checked with my CFO sitting next to me, and he said that we cannot provide answer to -- it is complex with the regulation. So we would like to refrain from making such a comment. Your thoughts, the outlook that as well, difficult to answer. Internally, of course, we set our own forecast, but we would like to refrain from giving a clear answer. Ms. [indiscernible]. There's a vehicle or regulatory constraint before listing. So that is why we cannot comment.

My second question is to Kusumi-san. Structural reform progress. I would like to understand further details the businesses that are growing were covered today. In the previous round of earnings call, you already presented on the businesses with -- which are not successful or others that are being restructured. What is your thoughts on that? And this is not related to today's main topic. But if I were to make a comment.

Well, Mr. [indiscernible] san, there's no additional comment on top of what we announced previously. For TV, we are to go higher than the hurdle so that we can maintain the business, and we are in the process of achieving major reform in the operation and refrigerator kitchen, we are to broadly proceed with China shift, and we are to surpass the hurdle rate. Within 2 businesses under industry, there are partial challenges, and we are looking at nonlinear measures as well. And once we conclude the contract, we will be ready to disclose.

I'll move to the next question from [indiscernible] Toyo Keizai.

Maki from Toyo Keizai. I have 2 questions for Kusumi-san. First, continuing from the earlier question. Please correct me if I'm wrong. In February, you talked about FY '26. There are 7 businesses on which the direction is to be decided. And at the end of October, you talked about 4 of them. And then there was a PHS announcement in November. So meaning 5. So remaining is HVAC and 1 more. You have yet to talk about this. I think this will be your last presentation or briefing Kusumi-san for this fiscal year. And you said that you will talk about the direction by the end of this fiscal year. So does that still hold? And Panasonic Go and B2C AI service Umi that you talked about at the beginning of the year, especially for Umi, the service was to start during this fiscal year FY '26. We're in November -- or we were in December now, and you have yet to make any announcements. Is there any delay? Or has there been any change in the policy itself.

Thank you. Your first question about consumer electronics overall as well as HVAC. For consumer electronics for our TVs and kitchen appliances, other than those, the hurdle rates have really gone up, and they have been exceeded. So while that is to be resolved and when the group -- as a group that could be optimized, then they are no longer the businesses with issues. As for HVAC, air to water did not grow as much as we expected and the commercial user or the operational use, air conditioning systems didn't do well. For air to water, market is beginning to recover and as for professional use HVAC, which was suffering, in Japan, but there is an early pickup, and we are seeing signs of recovery towards profitability. And Katayama-san, we actually have to give him a credit for that and still HVAC can satisfy the hurdle rate. Regarding the Panasonic Go, it's not just Umi, no, but we are talking about AI used to change the business as well as their operations. This will be implemented steadily for sure. For the consumer electronics, we are strong in Japan, even here, we will use AI. In that sense, regarding Omi, I do see the need to really show the direction. So I'm going to ask CSO, Sumitaka-san to comment.

Thank you for your question. Kusumi-san has already covered most of it. As for itself, we have already made announcements regarding the use of AI for group overall, not just the consumer electronics, but to change the existing businesses as well as operation. On this movement, we are continuing to see acceleration. For Umi, particular application for consumers, how we can provide businesses using AI. That's something that we continue to look into follow-up regarding Panasonic Go.

Do you have any specific actions taken or initiatives? That's what I wanted to hear about. And as for Umi, it's not likely to start by the end of this fiscal year. I correct?

Thank you for your questions. Well, internally, -- this is internal, and that's why we haven't really made any announcements. But for Panasonic Go, we already do have the organization established to cover the entire group and initiatives are being implemented, and we have also started to look at the possibility of turning this into business and we will make announcements when things become more clear. As for Umi product development, that's not going to be completed by the end of this fiscal year.

We will take a question from the next person, Hirakawa san of BofA Securities, please

I'm Hirakawa of BofA Securities. Question is energy related. The sales up to FY '29, the awards have been acquired for next-generation product, how much visibility you have on the sales? And in FY '29, 1/5 is made up of next-generation product. The current 80% market share in the next generation, what is your assumption of the share in making this calculation?

Thank you for the question. In FY '29, we will shift to next GPUs from the currently produced items. And we are acquiring awards and how much those will penetrate and what will be the probability. That was the gist of the question. Capacitor units we showed today and high-voltage BBU development, we have acquired award with Priority. And last process is to finish the technology with the customers and 80% is the weight of those products. The 20% are the areas where we have not finalized the specification with customers and the rack design is yet be done. We are yet to acquire awards, and we are discussing on the new solutions from FY '28 to '29. And we are hoping that we can contribute in those areas as well. The projected share in the future it is uncertain how the competitive landscape will be. But the share weight of this industry, the general perception is 7 to 2 to 1. First, vendor takes 70% and then 20% and 10%. Of course, we assume that we make full contribution, but we are the first vendor. That is the assumption in that simulation.

we'll Now go to the next person, Yasui san from UBS Securities.

My first question is on energy. Basically, just 1 big question about market share. If you look into detail cell module and eventually CBU and BBU as an integrated solution. So cell, where are the areas where you can maintain the large market share? You talked about 70%, 20%, 10% or 7, 2, 1. So where are the areas where you can't avoid losing a certain market share. And regarding the margin with the market share going down, how would your operating margin go down? My second question is on Blue Yonder. The multiple of the industry overall is high. But when it comes to service with -- it becomes more commoditized. So maybe CRM and other applications will be replaced by generative ones. So the [indiscernible] application or the applications that are closer to Gemba may not be competitive anymore. So would AI be good news or bad news. And I think industry multiple is high today. But can we expect that AI is not going to be a negative factor. In other words, not going to replace.

First to Tadanobu san, second to Higuchi-san.

Components market share, our business itself is not selling cells stand-alone or software stand-alone products. Now we provide the most efficient backup units modules with the power supplies for the customers. So there would not be any change in terms of what the market share is going to be per these components. Yes, there are some factors that will distinguish ourselves from others. But in all areas, we do have proprietary technologies. So I believe that we do have strong capability to sustain our market share. So we have the vertical integration from materials to sell to a battery to capacitor. We are the only one in the world, so we are to be the provider that will continue to provide value to our customers as a package. The trusting relationship that we have built with our customers is very strong. So there are future challenges, future aspirations. We are well aware of what customers want. So we will continue to try to satisfy those as we plan our future. The more recent trend is the operational cost of our customers to make a contribution in that respect. So it's not a question of whether the market share is going to go up or down slightly. Whether what is most reasonable for the customers in terms of the total cost, I think, would be an important one. And I think we do have a capability to maintain the balance in terms of profitability. And so that's what we retained even under JPY 800 billion.

If I could add, Tadanobu san, for capacitors, what kind of AI accelerators customers use. What will be the GPU road map of Nvidia. These plans if the customers are there. And if we are to satisfy this, we need capacitors. And for that, we need these capacitors. So that is the thinking process of our development.

So why provider? Well, the customers with the evolution of semiconductors, their challenges, issues are becoming more complex. And so we want to be proactive in addressing these questions. Instead of being reactive, we want to be proactive in making solutions, providing solutions to customers, emerging challenges, including the control capability. And that cannot be supported by conventional capacitors. We felt the need to develop a new principle for capacitors. And so we use our internal resources, expertise for the early development. It's not just synergy.

Well, Tadanobu san were in the capacitor business yourself.

Right.

And Higuchi san, the second question.

If you can look at Slide 7, Slide 7, the orange portion on -- there are 3 parts on the left-hand side is the engine for the supply chain execution. Machine learning, Blue Yonder to be optimized to workflow for execution. And this is the world word where the fixed formula is due to the calculation. But the threshold is exceeded, what do you do is what we are talking about here. So it's a preset. So this is really about numbers. And as for generative AI on the right-hand side, we are talking about the sensitivities that are close to human thinking when things go up, that you really need to watch out. So you really don't need threshold. So this is more non-engineering. And when there's 2 are combined, that will result in a very strong AI. People talk about physical AI. On the left-hand side, we are showing many things that are executed physically. And so this is going to be placing logistics and robotics and others. And this is not add on AI but native to connect the 2 sides. So that is the beauty of Blue Yonder solution. So in many ways, AI is going to be functioning very strongly. For example, if you feel that demand is going to go up, looking at the [indiscernible] messages, changed the planning or the state of the traffic or airport or road, and change the distribution plans or on the supply side, they are all connected. So you can see where inventories are. Or if you do have the temperature control, the temperature and the allocation could be combined to make a very high precision decisions. So generative AI is not going to be disruptive, whether it will be supporting your decisions. That's where we expect enhanced value.

I have a question. Follow-up question on Tadanobu san. CBU and BBU integrated solution. I think controlling that is a possibility as well, meaning the added value might go up. Would it be Panasonic that will do the control? Would it be hyperscale or others that will take care of that?

Thank you for your question. It's not yet 100% clear, but maybe turnkey with more efficient solutions. So these possibilities would be taken into consideration. And we will be deciding what to do in not so distant future.

We will take the next question. [Operator Instructions] question to just 1 Ono-san from [indiscernible].

I'm Ono from [indiscernible] My question is related structural reforms. And I would like to ask about the qualitative area for our solution area you have presented today in progressing as planned. Now what is the meaning of completing the structural reform and the purpose of the structural reform.

The group management reform is progressing and the personnel optimization, this is actually improvement of the profitability. As I have said in the beginning, in case of our company, during the past several years, COGS rate has risen. So we first need to suppress and make the organization lean. Another aim is to change the work style to improve the efficiency. Also, we discontinue work that does not generate value and also accelerate the utilization of generative AI, the solution areas that we presented today, what to do with each of these areas, that is a separate axis. Did this answer your question?

Understood

next person. Nishimura san from Okasan Securities.

One question about Electric Works, EW improvement in profitability going forward. You mentioned various factors. Solution, higher added value and increased sales of overseas ratio, what are the factors that you are currently focusing on, especially regarding the solution, expanding the sales and marketing resources. And I think you were talking about these initiatives already. So what are the challenges that you see.

Otaki san, please?

Thank you for your question. For profit improvement going forward. the sales or the growth in Japan and growth overseas are to be combined, we are going to do both, especially for overseas, we will be focusing on India, especially. In 2007, we acquired the local company and payback period is now already behind us. And we are seeing increased growth in profit already in The order of several hundred kilometers, the language changes, culture changes. That's the market characteristics of India. So we'll have to think of the ways to win in that kind of market for the wiring equipment devices alone. We are currently producing worth JPY 600 million. And about 2 years ago, we made the digital investment quite a bit. So we are really covering the entire market company. And we are making sure that there are no areas that we are missing. So all this infrastructure is already being established. And so 10,000, 20,000, and 300,000 electric engineers and the total population is 300 million. That's how large that market is. So improving the efficiency of design and use of module design to reduce the cost to become even more competitive as what we'll be working on. And for nonresidential and project markets,, we are partnering with various players to make sure we are capturing the region specific local specific needs to make sure that we win. So we'll be spatial development and long-term reliability and lifetime cost reduction, all those factors that we have been talking about in Japan and other sectors that Japanese customers want are being well in Indian market as well. And so we are committed to the success in India. So we'll be proactively addressing M&As, and we will accelerate those efforts. And as for Japan, we are to increase the cases and businesses, examples of which I talked about today. The solutions ratio has now improved over the last 3 years, consulting as well as post market operation, their profitability is improving. So we would like to increase the ratio from 30% to 50%. So we are enhancing the human resources to enable this. Engineering capability, digital human resources over the last -- or last 3 years, we have been making necessary investments for future growth, especially for Energy Management. The question is whether we can monetize this at a low voltage BPP. And we are doing a demonstration with some partners, and it takes some time, but verifying the results and should we find that this is going to be feasible and successful, then that will be part of our next growth strategy. As an opportunity side from -- there is a movement towards LED from fluorescent light. So consumption, power consumption within the building needs to be addressed, and that is the tailwind. 5. In fiscal '28, the sales of fluorescent lights will be banned. And currently, there is still 600 million that remained in Japan. So we have been expanding the capacity to produce LED facilities 10 years ago. And we are getting many order inquiries of these lighting vectors together with air conditioning. So LED replacement and combined should contribute to improve profitability. And we are to realize energy consumption, not only in this, but customers want the well-being to be addressed concurrently as well. And we are getting relevant inquiries rather strongly now. So in the area of lighting, we are the global company. We do have the flat technology and beam-free technologies. And these technologies will be used for the lighting fixtures as well. I hope that answers your question.

Yes.

We will take the next question is Ezawa from Citigroup Securities.

I'm Ezawa of Citigroup Securities. I have 1 question on batteries. In FY '29, ROIC of 20% or higher is the target, can you break them down to explain what are included in this target? And what kind of forecast you are setting. Large CapEx will not take place. That is what you have been explaining. Energy Solutions, capital invested, the battery factories in Kansas for EV or domestic battery factories, the switching the purposes of factories. Those investments are not included. That is why ROIC is high or the profit margin is very high so that ROIC can go higher than 20%.

Tadanobu-san please answer this question.

I'm not going to cover the details of the numbers, but that both of the points, as Ezawa mentioned, would be true. This time, all of the changes reformed our products are included. And the conversion from automotive to data center are included. The sales growth is not just driven by the sales of the cell as a stand-alone product. So there are upsides and the gross margin will rise and along with the growth, we can -- we have good visibility that we can secure 20%.

I would like to ask for some additional explanation. Data center battery business is going to expand quite rapidly and other Panasonic Energy ROIC as the company. The rest of the business, the improvement will not -- is not expected. Just Energy Solution will grow. It's not going to be the picture. Probably not improving. It will not be true, but looking at the efficiency. Currently, the data center is large in scale when it comes to JPY 800 billion.

In scale, in FY '29 as a snapshot, we will grow larger. And right now, cancers is to be utilized fully, and that will contribute to the improvement. And in FY '29 all of the assets will be fully utilized, although the nature of the utilization may change. So overall, we expect growth.

We're getting close to the end time. So we will only take 2 more questions. From Nikkei Business, [indiscernible].

[indiscernible] from Nikkei Business. I have a question for Kusumi-san. Solution, I think, is defined differently from business to business and strategy differs from business to business. Conventionally, you talked about in-vehicle as the growth area and making focused investment. Do I understand correctly that going forward, it will not be that specific. In other words, you will not be focusing on particular area. Solutions sounds too broad. So I was wondering what kind of image you have as corporate balance.

Thank you, Wata san. Yes, solution could be conglomerate to a large extent. Integrating them all for synergy is not really a story here. If you look at specific pieces, there are various combinations that you can think of. And rather than separating them all, we want to focus more on what we can do as a group facing the customers. And including what was mentioned earlier, that's what we want to enhance.

Lastly, Katsura-san from SMBC Nikko Securities>

I'm Kato of SMBC Nikko Securities. I have 1 question on energy. And the concept is what I would like to know, 80% share. In this definition, the sales -- well capacity will triple and the revenue will be JPY 800 billion. How -- do you see this to be realized? Or in my view, you may be able to shoot for higher to the demand from the peak is high. So we may expect further revenue increase from that. And the pieces disclosed are not connected in my mind. So that is the reason for asking this question. For sale basis, if the output is high and then a particular player can get a larger share. And in the market, the current position may decline. There is such a major concern. So what is your rebuttal on such a concern? And what are the risk side.

Tadanobu san will talk about the details.

Big shaving -- peak shaving. I think that relates to capacitor. Firstly, our contribution include along with the evolution of GPU, there will be new concerns, so various concerns and platformers, when it becomes difficult to efficiently design comprehensively by themselves, then we can go in as the solution provider, the 80% share, well, well, the 70% that I mentioned, we will aim at that level. But if our -- if there is no solution identified, we will need to get in and provide our solution. Our recognition is that sophisticated, complicated systems are to be built and battery cells and BMS to manage them and system to manage the peak and also the units well sophisticated integrated suppression of the power will be needed. It's not that particular cell battery manufacturer is superior, but rather, we are positioning ourselves as the overall solution provider share is determined by the customers. It's not for us to answer. But our recognition is that the development we are answering to those challenges and we are positioned at the top. And we have acquired awards and customers recognize our service. And we would like to strengthen the relationship with customers and build further. I wouldn't say we will monetize, but rather, we will continue to aim at keeping that top position.

Thank you very much. That concludes our Q&A session. Thank you for your participation.

And with that, we have completed the entire program for the day. Once again, we thank you very much for joining us today despite your busy schedule.

And this concludes today's briefing. Thank you for your participation.