Resonac Holdings Corporation (4004) Earnings Call Transcript & Summary

Thank you very much for your time today. I am Hidehito Takahashi. I took office as CEO of Showa Denko in January. Today, I'd like to talk about our policy toward realization of co-creative chemical company. This is to announce the new direction under the new management system. And you can consider this as an update of the long-term vision announced in December 2020. Let me now explain what we mean by co-creative chemical company. We have a wide-ranging and cutting-edge functional materials technology from mid- to downstream sector. We would like to become the chemical manufacturer who takes an initiative to resolve social challenges. To realize that, we need to think beyond the conventional boundaries of our individual business activities. As a top player in the global chemical industry with capacity to decide and act with agility and flexibility to create a better society with internal and external stakeholders of the chemical industry and like-minded parties and communities. This is our vision of a chemical company with co-creation at its core. As I mentioned at the outset, this is an update of the long-term vision announced in December 2020. Under the new management system and with the new corporate philosophy. Under the new system, we have 2 legal entities right now. But there is only one management committee, where all the decisions are made, just as one company. Let me explain the purpose of Showa Denko. I think chemistry has lights and shadows, meaning 2 sides. So when you look back at the history, chemistry brought many convenient things to the society. I don't think you can imagine a life without plastics. Although there probably were no issues back then. Now looking back, we can say probably the chemistry may have placed the burden on the earth. If you look at it objectively, I think that the chemical industry is the closest to resolve this negative side of the chemistry. Through the co-creation with the stakeholders, creating the better society so that the human can coexist with the earth. That is the thinking that we have included the purpose, change society through the power of chemistry. This purpose is based on awareness of the responsibility of a chemical manufacturer, and it is firmly anchored to the concept of sustainability. And the purpose also reflects our strong will to sincerely work with the integrity of chemistry. We will try to be the leader in terms of the quality and also in terms of scale, we want to make the newly-integrated company as a global top-level functional chemical manufacturer from Japan. Ideal state is, first of all, to become a company that can compete on the world stage and the company that contribute to the sustainable global society. Those 2 are already included in the long-term vision, announced in December 2020. After the announcement of the CEO, we have been thinking a lot about the talent development. We want to become a company that develop talents that represent Japan's manufacturing industry. In other words, other companies thinking that the employees of SDK are very impressive and they don't have the human talent like that. So we want to make sure that we have such human talent. I would spend as much time as possible focusing on the talent development. Through the roundtable meetings with the employees, I have already communicated my thinking and I am fully committed to the human development. Let me now explain the relationship between the strategy of the newly integrated company and the sustainability in the newly integrated company the sustainability is at its core of the corporate strategy. As mentioned in the long term vision, to become the company competing on the world stage and contributing to the sustainable global society and to develop the talent, we have set the 3 materialities for sustainability. In order to achieve this, we would secure global level profitability that gives us the entry ticket to compete on the world stage. And there is no end to the portfolio management. So we would allocate management resources strategically and replace the portfolio from the shareholders' perspective so that we can eliminate the conglomerate discount as much as possible. We would also focus on continuous innovation as a chemical manufacturer. And as a platform to realize those strategy, we have new corporate philosophy and new personnel system focusing on the human resource development and the new management team to execute all these. Sustainability is a the core of our strategies. In order to enhance our sustainability management, we would set up the specific KPIs for the sustainability -- materiality for the sustainability and enhance the safe core engagement and for certain employee sustainability in mind. And as a chemical company with the petrochemical and chemical business, we will sincerely pursue carbon neutrality. Through the co-creation with the like-minded partners, we will supply the leading-edge materials and provide and develop as recycling technology to contribute to realize the sustainable society. Now let me talk about the different factors behind those strategies. First, about scale and profitability. In order to compete on the world stage, we have to have both high-quality and sufficient scale. In terms of quality, we have to become a good company to be able to contribute to the society in the area of sustainability. When I say scale, that means that we are becoming the profitable company so that we can maximize corporate values. Those are the 2 sides of 1 coin. In order to contribute to the society and resolve the sustainability challenges. We have to have money. So unprofitable company cannot become a good company. So in that sense, we aim to maintain net sales of JPY 1 trillion, and achieve EBITDA margin of 20% or higher. So the blue area shown on this slide is the area that we want to move toward. There is no end or final state of the portfolio management. We will continue to revise and replace the business portfolio so that we can improve the portfolio management. As a portfolio management policy, there are 3 criteria for judgments. First is fitness for strategy. This includes the perspective for sustainability; second, is best owner; and the third is whether we are clearing the hurdle rates. From now on, we would focus on the ROIC as a management indicator so that we can maximize the corporate value. Utilizing the proceeds from the last year's public offering, we will concentrate our management resources to the semiconductor and mobility. By growing the core growth business, the percentage of the core growth business will become higher. And we will try to increase the corporate-wide EBITDA margin as a weighted average of each EBITDA. And without looking for uniform growth of all businesses, we would let the core growth business drive the corporate-wide growth. From this fiscal year, we would make changes to the segments for disclosure to clearly show the effective strategic allocation of management resources and continuous revision and replacement of business portfolio. Electronics, hard disks and SiC, which are related to the data economy are included in Semiconductor and Electronic Materials segment. Mobility business is under Mobility segment. Ceramics, functional chemicals, aluminum, specialty components and coating materials, which are the base of the technology are included in Innovation Enabling Materials segment. Petrochemicals, carbon, industrial gases and basic chemicals, that is the group of the basic chemical business are included in the Chemical segment. And Life Science and others are in the Other segment. For each segment, we will set the EBITDA margin targets and try to achieve the corporate-wide EBITDA margin as a weighted average. With this change, I believe we will be able to communicate with market smoothly about the growth of the businesses that we want to focus upon. Next, let me talk about specific growth strategy of our growth businesses, starting with Semiconductor Materials. As reported in the Page 1 of the Nikkei Business Daily, the front-end mutualization and the effort to lower the costs are reaching their limits. So now it is indispensable to try to combine the high performance and low cost with back-end packaging technology. And with this, the importance of the packaging-related material would increase and highly value-added semiconductor materials affect back-end packaging technology. Under those trends of the technology, we have wide-ranging semiconductor materials for the back-end packaging. On this page, we are showing the products for which we are #1 in the world or #2 in the world. We have a leading edge technology and also high competitiveness. Some clinical manufacturers say that they have an electronic material business. But when you look closer, some of their products are quite close to the commodities. And the companies would say they have semiconductor materials. In many cases, they have 1 or 2 products. We are the only one have wide-ranging semiconductor materials. And each one of them has a technological edge and high market share. We are proud to say that we are superior to others. As the data economy develops quickly from now on. From the macroeconomic perspective, our semiconductor and electronic materials, including semiconductor materials, disks and SiC epitaxial wafer, we'll have a growth opportunities. Next, I will explain the growth scenario of semiconductor materials. First, let's factorize the growth of semiconductor materials. The semiconductor market is expected to grow by 5% to 8% per year. In addition to that, the use of materials for increase as next-generation packaging evolves. This is the driver for growth. For example, the use of copper-clad laminates is expected to increase by about 16% compared now because package substrates become larger and thicker. In addition, as the number of layers in 3D NAND increases, the amount of material used for C4F6 etching gas and CMP slurry is expected to increase by about 15% and 5%, respectively. Multiplied together, the growth rate of the Semiconductor Materials business is expected to exceed the growth rate of the semiconductor market. As a result, our sales in the semiconductor Electronic Materials segment are expected to grow from JPY 360 billion in 2021 to over JPY 850 billion in 2030, an annual growth rate of more than 10%. In line with the adoption of the new segment classification, the scope of the sales forecast for growth businesses has been changed from the previously announced long-term vision to Semiconductor and Electronic Materials segment. We believe that we are now able to visualize the progress of our future initiatives in an easy-to-understand manner. Please turn to the next page. I would like to explain about our other core growth business, the Mobility business. In the Mobility business, we will achieve growth by capturing market growth with the key drivers being the various needs associated with the advancement of case. Therefore, among mobility businesses, we will position case-related businesses as a core growth business. Historically, the Mobility business has been a mixture of case related and non-case related businesses. But we will focus on case-related businesses in the future. We already have products that contribute to weight reduction, such as rear door modules and plastic gears. As for products that contribute to electrification, we have LIB anode materials, Advanced Battery Materials, VGCF conductive additives. For heat control, we have water jackets and aluminum radiators. We will focus on case and increase the percentage of sales from the current 50% to 65% by 2025 in order to achieve growth in Mobility. Next page, please. Here, I will explain our unique approach strategy for building competitive advantage. The new integrated company's business is characterized by a wide range of functional chemical materials, ingredients and technologies from midstream to downstream. By having downstream operations, we were able to see the faces of our customers and understand the needs of the market. We believe that we can provide unique value by matching this with our material technologies. Furthermore, we believe that the wider the scope of coordination and the more difficult it is to coordinate across the value chain, the more meaningful it is to internalize it and in a sense, becomes a product that allows us to win more. And this stocking is just one example, but the R&D and marketing teams are currently taking inventory of elemental technologies to identify the sources of competitiveness that will be the key to matching technologies and are working to link them to business strategies. Next page, please. I would like to explain the JOINT2 initiative as one way of battling to build competitive advantage. JOINT2, an open innovation initiative, is the successor to the original JOINT. 12 semiconductor material and equipment manufacturers have formed a consortium to develop solutions to tackle next-generation semiconductor technology challenges. JOINT2 is based at the Packaging Solutions Center in Kawasaki. This site is equipped with an integrated line for prototyping and evaluation of advanced packaging and can reproduce the semiconductor back-end manufacturing process. Using this facility, we are able to match the equipment and materials of participating companies and provide our customers, the semiconductor manufacturers, with one-stop solutions that they cannot provide on their own. This is truly one way of embodying a co-creative chemical company. Please turn to next page. In order to promote our unique approach, we will utilize digital technology in each functional layer of development, manufacturing and sales, in particular we will focus on AI computational science in order to provide our customers with high value-added products more quickly and aim to achieve a level that allows us to compete globally. For instance, we will use quantum computing to speedily optimize the combination of composite materials formulations. As an example of materials informatics, we are building our own MI platform to enhance our material proposals. In these 2 fields, we possess advanced technologies. And on February 10, we released a joint press release about our collaboration with Fujitsu on the use of quantum computing. Next page, please. Here, I would like to explain about our challenge to become carbon neutral. Because we handle petrochemicals and chemicals, we firmly believe that we must take carbon neutrality seriously. Our measures for 2030 and 2050 are focused on Oita and Kawasaki. Our efforts until 2030 will be an extension of existing technologies. We will achieve a 30% reduction in greenhouse gas emissions in 2030 compared to 2013 through energy conservation, energy transfer, carbon credits and shifting thermal power plants to low carbon fuels. Innovation is a must to achieve net zero in 2050. We are currently strengthening our R&D efforts. Please turn to the next page. We will also focus on activating human resources and fostering a culture. We will break away from Japan's traditional labor system centered HR operations and focus on instilling purpose valued, talent management and the development of next-generation leaders. First of all, we announced our values as a new integrated company in December last year. This was a strong message that we want all employees in the new integrated company to embrace. These values will also be used for personnel evaluation. Employee performance will be evaluated based on 2 axis, performance results and values. Currently, the entire management team is working together to spread these values. Next, we will conduct talent management based on value-based human resource evaluation. In Japan, human resource management has tended to be led by the HR department, along with a small number of management members behind closed doors. However, in the new integrated company, we will visualize the pool of human resources and especially for the high-caliber employees share information with all the executives to agree on their education plan and develop the next generation of leaders. Next page, please. I would now like to introduce our new management team. You won't find any non-Japanese faces, which seems to be a trend in other companies. So I apologize for the somewhat plain appearance. But we did go completely casual at the head office this year, including denim and jeans. So we took a picture of everyone in casual wear for a pictorial effect. 7 are from Showa Denko and 5 from Showa Denko Materials. 5 of the 7 people from Showa Denko have joined Showa Denko after I joined 6 years ago, and 1 female member has climbed the ranks within Showa Denko. I believe that we have been able to assemble a team with diversity in terms of experience and functional expertise. Though it may be difficult to increase the ratio of female executives immediately, I would like to manage the ratio of female managers as much as possible as a KPI. I believe that 3 things are necessary for investors to trust us and invest in us: the first is whether the cabinet can be trusted; second is whether the say/do ratio is high. The say/do ratio means whether the company does what it says it will do; and the third is to keep a track record of numbers. I believe that we have formed a cabinet that is worthy of your trust, so we will do our best to show you the say/do ratio and the numerical track record. Please turn to the next page. These will be our long-term numerical targets. One change from the long-term vision announced in December 2020 is that we have adopted ROIC as a KPI. Initially, we used ROE, but we decided to use ROIC because it is more directly related to corporate value. For 2021, it was 4.3%, and we will aim to achieve 10% in the mid- to long-term. We will strive to maximize our corporate value by properly achieving our KPIs. Next page, please. I call this page, the page of repentance. The Showa Denko group had not been able to break away from the old Japanese company mold in terms of management policy, organizational culture and personnel system. The divisions were highly vertical, decision-making tended to respect the divisional optimum and decision-making standards tended to be based on discussions of how much sales would increase or how much operating income would rise. We have been bound by rules and regulations and a prioritized risk avoidance. People were conforming to a single career path created by the HR department and transfers between divisions were limited. In the future, if it is only optimal for one division but not for the entire company, it will not be addressed. We will focus our decision-making criteria on whether the action will contribute to improving ROIC and increasing corporate value. Based on purpose value, we will foster culture where people make the decisions, not the rules and where challenges and failures are celebrated. We will support individual career development and create a personnel system where there are as many careers as there are people, and we will utilize job rotation and posting. It has been my experience that if you don't change what you do or how you do it or who does it, no matter how much you want tomorrow to be better than today, not once have things improved when you wake up the next day. The merger of the 2 companies is opportunity to change all of this. Please consider this page, which can be assumed is for internal use as a declaration to you of my own commitment to change. Next page, please. This will be the last page. We, the new cabinet, will work as one to transform the new integrated company into a company that can compete on the world stage, and I am committed to leading that transformation. So I ask for your continued support. Thank you very much for your kind attention today.

Hello, everyone. I am Hideki Somemiya. I took office as CFO in January this year. Thank you very much for your interest in our company performance. Now let me present the financial results of fiscal 2021. Please turn to Page 2. Today, I'd like to mainly talk about 3 points: first, in fiscal 2021, both sales and operating income grew significantly. Also based on the ongoing business that is adding the SDMC or Showa Denko Materials January to June results before consolidation and subtracting businesses transferred in 2021, both sales and profit grew; secondly, compared to the fiscal 2021 results, including the business transfer, sales and profit in the 2022 forecast are lower. I believe that the market responded to this news. But excluding the business transfer impact based on the ongoing business, both overall sales and profits are expected to increase; third point is that we are making faster-than-expected progress in financial measures of long-term vision announced in December 2020. From Q1 this year, we introduced new segments for information disclosure. This was already explained by our CEO, Takahashi. Now please turn to Page 4. Now let me explain the financial results for fiscal '21. This page shows a summary of consolidated financial results compared to fiscal 2020. Net sales were JPY 1,419.6 billion, up JPY 445.9 billion or 46% year-on-year. Operating income was JPY 87.2 billion, up JPY 106.6 billion. Ordinary income was JPY 86.9 billion, up JPY 130.8 billion. As a background, as SDMC was consolidated from July 2020, the fiscal 2020 results included its 6-month results. I would explain the new operating income and expenses and extraordinary profit and loss on Page 10. Net loss attributable to owners of the parent was JPY 12.1 billion, JPY 64.2 billion improvement year-on-year. On the right-hand side, we are showing the numbers based on ongoing business. This is excluding the business transfers and including the SDMC's results in the first half of 2020. Based on this, out of the year-on-year sales increase of JPY 202.7 billion, about 2/3 are mainly from the SDK business, that is mainly petrochemicals and the remaining is the SDMC business, up JPY 70 billion. This is mainly semiconductor-related material. Operating income ongoing business was JPY 73.7 billion, up JPY 107.5 billion. EBITDA was JPY 182.9 billion, up JPY 112.9 billion year-on-year. EBITDA margin improved by 7.9 points to 14.5%. As our CEO said, we introduce the ROIC as a corporate management KPI. Unlike the year before, in fiscal '21, we booked operating income. As a result, ROIC improved to 4.3%, up 5.2 points. Page 5 shows sales and operating income by segment. Aluminum sales declined as rolled aluminum products and aluminum can businesses were sold. Sales and profit of others decreased as Shoko Co. Ltd. was deconsolidated. Sales of other segments showed a major increase on higher volume, reflecting demand recovery and others. Profit grew with effects of various measures and others. Details by segment are shown on Pages 6 through 8. Those are for your references. Just one point on Page 8. SDMC segment. In August, we announced the forecast. And from that, the actual operating income of SDMC segment was lower. This was the main factor. Major reason was the semiconductor supply shortage, which led to the deceleration of the car production. In the second half, the profit of the mobility components were lower. As for the profit of information and communications, mainly semiconductor materials, the profit increased as expected. Please turn to Page 9. This graph shows the operating income breakdown by factor. 2020 operating loss was JPY 19.4 billion. 2021 operating income improved significantly by JPY 106.6 billion to JPY 87.2 billion. More than 1/3 or JPY 37 billion was devaluation of inventory of graphite electrodes. In accordance with the lower of cost or market accounting method. In Q2 2020, as the graphite electrode market price declined, we devalue the inventory. As inventory of half-finished goods and materials were consumed, the profit grew. As for the volume factor, positive JPY 27.1 billion. This reflects the higher volume of graphite electrode, aluminum specialty components and hard disk media. Petrochemicals factor related to naphtha was up JPY 15 billion. This is related to the feed cost -- feedstock cost adjustment as naphtha price rose. Newly consolidated SDMC's operating income, JPY 24.3 billion was added. Now please turn to Page 10. This shows the year-on-year comparison of non-operating income and expenses and extraordinary profit and loss. In 2020, there was financing expenses to acquire former Hitachi Chemical shares. In 2021, interest expenses increased on higher interest-bearing debt. However, equity in earnings increased as SDMC contributed for a full year and foreign exchange gains and losses improved. Net non-operating number improved JPY 24.2 billion. Net extraordinary profit and loss was minus JPY 63.9 billion. Loss was up JPY 39.6 billion year-on-year. In Q1, JPY 9 billion environmental expenses were recorded. Business restructuring expenses related to the transfer of energy storage devices and systems business were at JPY 32.8 billion. Impairment loss was JPY 11.6 billion, for equipment for production of thermal insulation parts. Gain on sale of the businesses was about JPY 3 billion. That is with the transfer of aluminum-related business, wiring board and energy storage devices business. This is JPY 12.6 billion better than the full year forecast of extraordinary profit and loss announced in August, including JPY 5 billion improvement of sale of cross-held shares, which were accelerated and part of the SDMC-related restructuring expenses, which were carried forward to fiscal '22. Please turn to Page 11. This shows the consolidated balance sheet at the end of fiscal year. Total assets were JPY 2,142.4 billion, down JPY 61.2 billion year-on-year. Under assets, notes and account receivables and inventories increased on sales volume recovery and higher products and raw materials prices. Cash and deposits grew with proceeds from public offering. Tangible fixed assets and intangible fixed assets, including goodwill and others declined. Notes and accounts payable were up, interest-bearing debt was down. Total liabilities were JPY 1,323.9 billion, down JPY 161.6 billion year-on-year. Interest-bearing debt was JPY 850.6 billion, down JPY 209.5 billion year-on-year. This was a major decrease. With last year's public offering, the shareholders' equity and the retained earnings increase, foreign currency translation adjustment also increased. Total net assets were JPY 818.5 billion, up JPY 100.4 billion year-over-year. As shown on the bottom left, net D/E ratio was 1.15x, an improvement of 0.68 points. As shown on the bottom right, equity ratio improved 5.6 points to 24%. Page 13 shows the fiscal '22 forecast. Net sales, JPY 1,350 billion. Operating income, JPY 84 billion. Ordinary income, JPY 79 billion. Net income attributable to owners of the parent is expected to be JPY 27 billion. Without businesses sold in fiscal 2021, sales and profit expected to be lower. However, as I explained from now on, on the continuing ongoing business basis, both sales and profit are expected to grow. Please turn to Page 14. As you can note, excluding the impact of business transfer, net sales for the fiscal year ending December 2021 will be JPY 1,259.3 billion, a 7.2% increase forecast. By segment, Petrochemicals are expected to decrease due to opportunity losses from the shutdown maintenance that occurs every 4 years. Aluminum is also expected to see a decline, but sales in all other segments are expected to increase. Next, please refer to Page 15. Again, excluding the impact of the business transfer, operating income in 2021 will decrease by JPY 13.5 billion to JPY 73.7 billion. Operating income in 2022 based on continuing businesses is expected to increase by 14%. In the Petrochemical segment, there will be a JPY 5 billion impact from shutdown maintenance. There was approximately a JPY 9 billion difference in raw material naphtha receipts and payments. So chemicals will also see a slight decrease in profit. For other segments, mainly driven by SDMC and inorganics are expected to increase. Next, Page 16. As Takahashi has mentioned, from the fiscal ending December 2022, disclosure segments will be changed in line with the strategies of the long-term vision and new management structure. Page 17, please. This is the sales and operating income by the new segments. The forecast for the first and second half of the year for chemicals are a bit on balance. But all in all, the second half tends to be stronger. As for the results for 2021, we are unable to disclose them today due to the time required for the changeover to the new segments. We apologize for the inconvenience. Starting from our Q1 announcement in May, we will use only the new segments. And at that time, we plan to present the results for the same period of the previous year based on the new segments quarter-by-quarter. Please refer to Page 18. For your reference, this page compares the fiscal year ending December 2022 and year ending December 2021 using 9 segments. The aluminum and SDMC segments have a decrease due to the sale of business and the Petrochemicals segment also saw a decrease due to the shutdown maintenance, but the remaining segments have increased. Please refer to Page 19. This is operating income breakdown by factor. Operating income is expected to increase in each segment due to increased volume and price hikes in response to higher raw material prices. On the other hand, we expect a significant decrease in Petrochemicals segment due to the impact of shutdown maintenance as well as the reverse impact of raw material naphtha, where we had enjoyed a positive impact in 2021. As for graphite electrodes, although there will be no significant returns from a lower of cost or market valuation, we expect profit to increase year-on-year. Please refer to Page 20. This shows capital expenditure by segment. In 2022, we are planning a large increase year-on-year by JPY 54.8 billion to JPY 133.5 billion. Our plan is to focus our investments on core growth businesses, namely semiconductor materials, such as CMP slurries and copper-clad laminates. Page 21 to 24 describe the measures for the new segments. Please refer to these pages later. If you could jump to Page 26, please. From here, I will explain our progress of our long-term vision and financial measures as well as updates. As mentioned earlier in Takahashi's presentation, starting this year, ROIC will be managed internally as an important KPI. By firmly promoting and monitoring ROIC management within the company, we will strive to attain ROIC of over 10% in the mid- to long term. Please refer to Page 27. I would like to explain our initiatives to improve our profit structure and cost reduction. Initially, when the long-term vision was announced, it was explained that we expected to achieve an improvement of JPY 28 billion by the end of 2023. In 2021, we'd already improved by JPY 20.8 billion. Now the current plan is to generate a JPY 30 billion impact 1 year ahead of schedule by the end of 2022. We are currently promoting further measures with the goal of achieving an additional JPY 10 billion improvement in 2023 and beyond. Please refer to Page 28. As you can see, we have been able to create concrete synergies from the integration of the 2 companies in terms of development, procurement, production and sales and operations mainly in the areas of Semiconductor Materials and Mobility. Please refer to Page 29. As an example of pursuing short-term synergies, this is a case where CMP slurry is used to polish semiconductor wafers. We have already started to expand our production capacity last year by utilizing Showa Denko's production sites. The 2 companies are also proceeding with developing a next-generation slurry, leveraging both their insights, and they would subsequently manifest as products. Page 30, please. This is the progress in reducing interest-bearing debt. Through the sale of businesses in line with the reformation of our business portfolio and the streamlining of our assets, we were able to reduce interest-bearing debt by JPY 209.5 billion from the previous year as of end December 2021. Together with the effect of the public offering, net D/E ratio has improved to 1.15x. In addition, although it does not affect the amount of interest-bearing debt, we issued JPY 100 billion of corporate bonds last year and made partial repayment of high interest rate LBO loans. This has contributed to the improvement of cash flow and nonoperating profit and loss. Please refer to Page 31. We had not shown this in the past, but here is our capital allocation approach for the next 5 years. Over the next 5 years, we aim to generate approximately accumulative of JPY 1 trillion in operating cash flow on a consolidated basis and about 1/2 to 2/3 of this amount will be allocated to capital investment, namely in core growth businesses. The remaining portion will be used to maintain stable dividends and reduced interest-bearing debt. If further strategic investments become necessary in the future, we will generate funds by selling assets and reform our business portfolio. Please see Page 32. In the long-term vision, we explained our target of selling businesses at an enterprise value of JPY 200 billion. As you can see, we have made about 80% progress so far through the business sales we have already implemented. However, as Takahashi also mentioned, there is no end to portfolio management. So we will continue to consider replacing our business portfolio in order to achieve sustainable growth and improve profitability. Please refer to Page 33. Lastly, I would like to talk about streamlining our assets. In the long-term vision, we set forth a plan to generate approximately JPY 50 billion by 2021, mainly through the improvement of working capital and the sale of cross-held shares, we have achieved JPY 64.7 billion in 2021. Furthermore, we have made it our policy to sell all of our cross-held shares. In addition, through the sale of idle properties, we hope to generate an additional JPY 65 billion by 2025 for a cumulative total of JPY 130 billion. Page 34, please. As was mentioned in the materials used by Takahashi, this shows the long-term numerical targets of our main KPIs. Pages 35 and onwards are supplementary documents, which we encourage you to read later on. This will conclude my explanation. Thank you for your kind attention.