Sumitomo Chemical Company, Limited (4005) Earnings Call Transcript & Summary

It is now 03:00 p.m. So we will start. My name is Kobayashi from Corporate Communications department and I will be the moderator. Thank you very much for attending our investors' meeting for the current priority management issues and business strategy in spite of your business schedule. We will first hear from our President, Mr. Iwata followed by a Q&A session. We expect to end today's session at 04:30 p.m. With that, Mr. Iwata, over to you.

Good afternoon, everyone. I am President, Iwata. Thank you very much for taking time out of your busy schedule today to attend our meeting for management strategy. I would like to thank our investors for your continued understanding and support of our company's business. I'm very much looking forward to this opportunity. And this is today's agenda. As you can see, the right side is the main and the full version but it is quite extensive. And therefore, I have prepared -- we have prepared an executive summary just to cover the most important points. Today, I will explain based on the executive summary and make some additional comments from the main deck. I will brief and give just highlights so that we can have sufficient time for questions and answers. Page 4. Here is the outline I would like to cover today. First of all, our financial results for FY '23 was a huge loss. Even though there were many impairment losses related to Sumitomo Pharma and other valuation losses, the net loss exceeded JPY 300 billion, the largest loss ever recorded by our company and a crisis level figure and we take this factor very seriously. We are now working hard to achieve a V-shaped recovery with the core operating income of JPY 100 billion and net income of JPY 20 billion in FY '24. And we recognize that this is our biggest and highest priority management issue at the moment. The short term performance improvement measures that we have been concentrating on since last fall are progressing very well. We have increased our cash generation target by JPY 100 billion to a total of JPY 600 billion. In addition the fundamental structural reforms, that we are simultaneously considering the revitalization strategy centering on the restructuring of Sumitomo Pharma and the Petro Rabigh and we are also pursuing a growth strategy that is going to be variable companies globally in 10 years and 20 years to come. I will explain using the slides. Now, we'll start by most important area, the immediate-term concentrated measures to improve business performance. On the left hand side, you can find the original targets set in November for each area and the right side is the revised current targets. For majority of items, the progress has been faster than the original plan. We have raised our cash generation target by JPY 100 billion from the original JPY 500 billion to JPY 600 billion. With regard to rebuilding businesses, as announced in our press release, we transferred the resin color business, the post-harvest business, and LCD chemicals business in China one after another from the best owner perspective and raised the target to JPY 150 billion, up by JPY 30 billion from the original target of JPY 120 billion. In the inventory reductions, the inventory was currently reduced by JPY 75 billion, which is half the target. On the selective investment, we continued our efforts after the announcement in February and the company is on track to reduce the cash base target by JPY 150 billion, additional JPY 50 billion reduction from the initial target of JPY 100 billion. Regarding asset sales, we are aiming to achieve even more asset sales. We are now on track to generate JPY 400 billion in cash but we will continue to work steadily towards our target of JPY 600 billion by the end of current fiscal year in a speedy manner by not relaxing our reins. Next, I'd like to discuss our biggest management challenges, the V-shaped recovery of business performance in FY '24. We expect a significant improvement of approximately JPY 250 billion from the previous year. As shown on the slide, the improvement at Sumitomo Pharma accounts for more than half of the total at JPY 134 billion. As I will explain in details later, we will first stop the bleeding by achieving cost reduction of around JPY 110 billion through rationalization with SG&A and R&D expenses. In addition, we will make it a mandatory goal to return to profitability. Outside Sumitomo Pharma, there are JPY 66 billion improvement due to projects completed. This includes JPY 33 billion from the upfront investment in agrochemicals and semiconductor materials and another JPY 33 billion from business restructuring and impairment losses. These are highly assured under certain numbers. In addition, we expect about JPY 19 billion improvements due to the so-called external environment such as recovery in the petrochemical market. In addition, there will be about JPY 30 billion in short term intensive measures, concentration measures to improve business performance in the future. Overview of fundamental structural reform. The revitalization strategy and growth strategy will be explained in the following pages. For Sumitomo Pharma, one of the biggest issue in structural reform, the group will work as one to stop the bleeding quickly while pursuing all options for return to growth at the same time. The priority is to thoroughly rationalize SG&A and R&D expenses to achieve the cost structure in line with the business size. To this end, even though Sumitomo Pharma was operated with an emphasis on autonomy and independence, we will take a more in-depth approach. For example, we are leveraging a third party corporate turnaround experts and dispatching directors and other management to strengthen governance from us. And also debt guarantees will be provided to support the group wide effort to rebuild Sumitomo Pharma. For the return to growth, in addition to expanding sales of our 3 core products, we will concentrate resources on 2 promising pipeline in cancer drugs to rapidly commercialize our regenerative and cellular medicines businesses by establishing a new company. However, we do not believe that these efforts are sufficient for return to growth, and we will simultaneously pursue all options to build a sustainable growth model while taking into consideration the ideal form. Regarding another area of revival strategy, Petro Rabigh. And the current situation is that we understand that Petro Rabigh is a symbolic project for the friendly relationship between Japan and Saudi Arabia. Under the difficult business conditions, Petro Rabigh's top priority is to upgrade its refining facilities in order to fundamentally strengthen its profitability. Sumitomo Chemical is shifting our business portfolio to specialities and has already completed the technology transfer which is our biggest role in the Rabigh project. The company's stance is not to spend any more money on Rabigh, which brought a difference in our strategic direction and positioning with our partner, Aramco. These issues were shared between the parents companies at the first step at the top management meeting with Aramco in February. As a next step, the 2 companies agreed to form a joint task force team. The team will focus on the short term efforts to solve urgent and critical issues, including the strengthening of profitability. Next is our growth strategy based on our longer term vision is defined as expressed as an innovative solution provider. This expresses our desire as a company to solve society's problems by providing solutions through our innovative products and technologies. The slide shows a plan of how we intend to achieve this goal. Four business areas are tied to the 4 social issues that we need to address. We have a group of technology and products that we have developed over the years, including the top runners products listed in red letters and these are truly example of our innovative and unique solutions. In addition as a driver of new solutions beyond the top runners, we have important areas that cut across GX and digital X, and BX, bio X. By producing our one innovative solution after another, we hope to continue to be a company with a global presence. Now, let me talk about the positioning of 4 new businesses. We will shift our global growth model which has been based on 5 business segments being the engines of the same emphasis. But we allocate management resources in a more focused manner. We will define agriculture and ICT as our core growth drivers. And we will also position and nurture advanced medical areas excluding the small molecule drug discovery and CDMO and diagnostics are going to be our next generation growth areas. In addition, essential and green materials will operate with a clear business domain concept of value creation through technologies that reduce environmental impact in addition to the meaning of essential, meaning that a stable supply of products that support society. Those new 4 divisions will be launched in October this year. Please find long term financial targets for each of the 4 businesses. Our eye will set up according to the characteristics of each business. In the 2 areas that we have positioned as growth drivers, agro and life solutions and ICT solutions, we have already made significant upfront investments in growth and we will focus on investment management resources in these areas in the future. So we set an ROI of 11% or more for these 2 areas with a target of JPY 100 billion in core operating income by 2030 in both areas. In the new growth area of advanced medical solutions, we have a longer time horizon and expect growth in the medium to long term. So we are currently setting an ROI target of 7% or higher as a hurdle rate of return. In essential and green materials, which focuses on petrochemicals, we are aiming for at least 4% of core operating income as a base area to secure stable earnings. In advanced medical solutions and essential and green materials, we are aiming for a combined core operating income of JPY 100 billion in 2035, reflecting the full scale start of the market from 2030. This is a timeline for our growth strategy. First, we have to achieve a V-shaped recovery in FY '24 and at any cost and at the same time, we will return to our growth strategy by thoroughly streamlining Sumitomo Pharma, and by promoting fundamental structural reform, including a review of the positioning of Petro Rabigh and the reorganization of the domestic petrochemical business. Therefore, we will -- thereafter, we will strengthen our financial positions and concentrate management resources on agricultural related and ICT related businesses as growth drivers with the aim of establishing a new growth model by 2030. After that, we will aim for future and further growth through social implementations of technologies that reduce environmental impact including carbon neutrality and regenerative agriculture and full scale development of advanced medical fields such as regenerative and cellular medicines. This concludes the executive summary. Now in the remaining time, I will provide a supplemental explanation using the main deck. Now first, a brief background on the renewal of the growth model. Since the beginning of the 2000s, we have positioned 3 core strategies: to fundamentally strengthen the competitiveness of our petrochemical business, to secure critical mass in our life sciences businesses and to promote new businesses created and centered on our core information related business. In particular, related investment in Petro Rabigh Sumitomo Pharma have increased significantly. As shown on the right side, investments of financing have continued to exceed depreciation. This time, the positioning of 2 of the 3 core businesses have changed significantly. If you look at the past 20 years, a known petrochemical business has steadily become more specialized with a significant increase in sales from 46% in FY 2023 -- 2003 to 66% in FY 2023. Now we have now identified the factors that explain why we are now in the midst crisis since the company was founded. External factors include the fact that the commodity products as represented by Petro Rabigh and petrochemical business experienced a significant downturn in market conditions due to a deteriorated supply-demand imbalance and the increasing commoditization of products and the technology that we have positioned as highly functional such as large display materials and methionine. And also as internal factors, diversified management with 5 business sectors seeking to achieve its respective growth resulted in the dispersion of management resources, lack of drug identification insight and development capabilities, inability to launch a drug to cover LATUDA cliff in the required time frame, et cetera. In summary, we believe that 5 business sectors growth model has reached its limits. As a result, these are the results of FY '23. The official announcement of financial results will be on May 15, and therefore, we have forecast, but the figures are almost certain close to the final number. Revenue was JPY 2,447 billion, core operating income, loss of JPY 149 billion. Final profit was a loss of JPY 312 billion. Sumitomo Pharma's figures are shown in the next row, and you can see the magnitude of the company's impact. Compared to the previous forecast announced in February, core operating profit is almost in line with the previous forecast. On the other hand, the final PL deteriorated by JPY 67 billion despite the turnaround in financial profit and loss due to a deterioration of JPY 200 billion in non-recurring items at Sumitomo Pharma, including the impairment loss on intangible assets. Now please take a look at FY '23 core operating income by segment. It is in line with the previous forecast. Now let us go to non-recurring items. This time, the loss is a massive JPY 340 billion, of which JPY 270 billion is the valuation losses that does not involve cash flow -- cash outflow and of the JPY 312 billion in net loss, about JPY 170 billion is valuation losses. In Sumitomo Pharma, impairment losses on patent rights and goodwill, there was a loss of JPY 220 billion, including impairment of the 86 of the patent rights of MYFEMBREE. And other than Sumitomo Pharma, the total loss was approximately JPY 120 billion, the same level as in the previous announcement. This is mostly related to petrochemical manufacturing facilities in Chiba and Singapore and we hope to accelerate the restructuring progress and achieve V-shaped recovery by becoming as slim as possible. Now please take a look at the progress of the immediate-term concentrated performance improvement measurement and the forecast for FY '24. And this is a summarized table presented in the summary. I will expand item by item on the next page and onwards. You can see the progress of business restructuring on this page. Now new announcements after February in red letters on the bottom right. The transfer of the resin coloring agent business and others and about 40% is actually to be achieved and JPY 120 billion cash generation is going to be added. Additional several tens of billions will be added. Inventory reduction and selective investment initiative. With regard to inventory reduction, in the 6 months, now we had 50% of the JPY 150 billion. In our last call, we expected to reach JPY 670 billion in March 24, but we couldn't reach that target due to an increased valuation of overseas assets with a weaker yen. But we believe we can achieve a target in another year through enhanced initiative regardless the FX level. The investment is further reduced by JPY 50 billion from the previous announcement to JPY 550 billion. On a cumulative cash basis, for the 3 years from '22 to '24, a reduction of JPY 150 billion from the interim period. We take a look at the balance with the growth investment, but we are considering an additional reduction of JPY 50 billion as an emergency measures. The sale of policy holding is making a good progress. And although we do not disclose details in each years, we sold approximately JPY 41 billion in FY '23, including the sale of shares that are scheduled to be sold in FY '24, we expect a cash flow of about JPY 60 billion. Other asset sales includes the sale of welfare facilities valued approximately JPY 10 billion. As for the use of surplus funds, we have already generated approximately JPY 70 billion by the end of FY '23 through group financing and other means, and we are currently aiming to add more. Now sales based on this plan, this is a '24 forecast. Revenue, JPY 2,670 billion, core operating profit is JPY 100 billion. And the final profit will be JPY 20 billion, and we are aiming for the V-shaped recovery. We are conservatively set the exchange rate at JPY 145 to $1. For the core operating income year over the year, as I explained earlier, a little supplemental information is included in outside the column. As for the sensitivity of the company by the results, it is going to be exchanged with JPY 1.5 billion per JPY 1 / $1 movement. Petroleum refining margin of Petro Rabigh fluctuated by JPY 8 billion per $1 per barrel on an equity basis. And -- but it is going to be the JPY 6.5 billion of crude oil per $10. So this is core operating income by sector. I will skip details. Next is interest-bearing liabilities and debt-to-equity ratio. As we marked negative operating cash flow during the challenging FY '23, our interest bearing debt largely increased to JPY 1,570 trillion, and our D/E ratio surpassed 1.3x. Now however, we expect to improve our interest-bearing debt and D/E ratio at the end of FY '24 through immediate-term improvements as I expect to explain in the following slides. And so -- in other words, interest bearing debt at the end of FY '24 is expected to be JPY 1,320 trillion, a decline by JPY 250 billion annum from the end of FY '23. The break down is shown on the right. And operating cash was JPY 160 billion and investment cash flow is JPY 190 billion. Total free cash flow from ordinary business activity is minus JPY 30 billion, but we will apply the JPY 300 billion generated by immediate measures to repay borrowings. I would like to discuss shareholder returns. Now despite the challenging performance, we will keep our emphasis on stable dividend payout. Thus, we plan to pay a year-end dividend of JPY 3 per share as announced in February. As for the dividend forecast for FY '24, while we expect to show a V-shaped recovery, our policy is to prioritize the strengthening of our challenging financial position. And so therefore, we'd like to keep our annual dividend payout of JPY 9 per share, the same as in FY '23. While we maintain our view that the minimum line for our company should be JPY 12 per share, we do feel sorry to tell our shareholders that we need to fall short versus this level. With that said, we need to continue to improve our business performance with the aim of returning to JPY 12 per share level as soon as possible and in the future to a dividend of JPY 24 per share. And next is our outline of fundamental structural reforms. I did introduce in our summary, but please turn to Slide 35. This is the time line for growth strategy I explained earlier. So again, we will definitely achieve a V-shaped recovery this year. And at the same time, we have set our sights on the issues of Sumitomo Pharma and Petro Rabigh, and we will turn to a growth trajectory. Once we achieve structured new growth model by 2030, we aim to achieve further growth through our social implementation of technology that reduce environmental impact and a full-scale development of regenerative and cellular medicine. Let me now share with you our revival strategy. Here is the overall picture of Sumitomo Pharma structural reforms that we agreed. The point here is, will the company be able to rise positive in FY '24 from a significant deficit and what is the probability of achieving this goal? What kind of items are available for subsequent growth? Now here, we look at the change of core operating profit FY '24 versus '23. And of course, contribution from cost reduction is 80% of what we see here, but I'd like to explain further in the following slides. First of all, for HR costs, just like we already released, we've already done 2 headcount reduction in North America. And so the 2,200 employees that we've had at the beginning of '23 has pretty much halved at the end of FY '23. And this reduced headcount will contribute for 12 months in FY '24. And also, we do mean to rationalize further what we have in Japan, although the contribution to FY '24 PL will be limited. And also, the license out of Ulotaront to Otsuka as well as focusing on R&D for 2 cancer agents. These are some of the ideas behind narrowing down our development pipeline so that we'd be able to reduce our clinical trial cost. And so in other words, the cost reduction other than that JPY 31 billion that we have boxed in yellow, we have already planned how we'd be able to do. But then for this cost reduction, we are going to keep ourselves focused utilizing some help from external advisors. Now in FY '25, we do expect the rationalization in Japan will fully contribute for 12 months. On the other hand, by separating regenerative pharmaceutical development to a separate company, we do expect that Sumitomo Pharma's R&D cost should be able to be reduced as one side effect. Next, allow me to talk about expanding sales of 3 key products. So FY '24, we expect JPY 24 billion increase in gross profit. Now we do have to admit that our FY '23 budget was quite bullish with these 3 key products. That is why it gives you the image that it is quite sluggish. But as you know, as for the result, we have been able to penetrate in the market. And so therefore, the total 3 agents have been able to increase its sales by 67%. In FY '24, there is going to be a revision to standard treatment guidelines for ORGOVYX. And so therefore, because we'd be able to use this for dual purpose dual use, we should be able to increase -- expand the use of this drug. And for GEMTESA, we will be expanding the indication for overactive bladder in patients with prostatic hyperplasia. And so this is something that should work positively as we expect that the approval should be coming in at the second half of FY '24. Here, we show 2 cancer drugs on which we will concentrate our R&D resources. Both are still in Phase I/II trials, but they are for the 2 diseases for which no clear treatment has been established. The results of the trials at this stage have shown excellent efficacy and safety results. And so we believe both drugs have the potential to generate peak sales revenues of JPY 100 billion or perhaps more than JPY 50 billion. We expect the timing of the launch to become more certain around early 2025. In the regenerative cell medicine business, Sumitomo Pharma certainly is leading. There has been the world's first iPS cell-derived product, starting with Parkinson's disease treatment. And so we will be establishing a new company with Sumitomo Pharma during FY '24. And we will initiate accelerated development, including CDMO for regenerative cells. So that's it for our pharmaceutical business. Now I already did explain about Petro Rabigh. So I'd like to turn to Page 41 -- Page 44. For the domestic petrochemical business, we need to make more -- we need to concentrate our business reorganization measures. In the upstream ethylene plant, we're aiming for rationalization at existing ethylene plants and conversion to reduce environmental impact. And in the downstream area, we're discussing with related parties for possible corporate alliances. We're working to materialize what we mentioned in November last year. And although I regret for not being able to make an announcement today, we hope to be able to report on the progress of upstream operations during FY '24 and downstream operations during the first half of this fiscal year. And so again, this is something that we'd be able to do so that we'd be able to streamline these reorganization of this business. As for Singapore, we will start full fledged implementation from now on. As for upstream, we will set up a restructuring council with participation from Shell and other parent companies to start studying the optimization of the complex looking at trends at neighboring plants. As for downstream, for the time being, we will further promote high value-adding to strengthen profitability. Finally, I'd like to touch upon strengthening the management base. In our governance reform, we will strengthen monitoring function of the Board by reducing 3 internal directors to reach composition of external directors to 50%. As for our internal directors, we will select directors who oversees throughout the organization in addition to our President -- to the President and Chairman. This will enable the company to make decisions based on total optimization perspective. As for the optimization of personnel structure, on a consolidated basis, the restructuring of Sumitomo Pharma, which we already announced and the decrease in personnel as a result of business restructuring will enable us to reduce the total headcount by 10%, which would be 4,000, including 2,000 overseas compared to FY '22. And at parent company, we will strengthen business foundation through rationalization and transfer of people at indirect functions, applying 20% of our people to growth areas. Next is about our growth strategy. We focus on 4 important social issues. That would be food supply, ICT, health care and environment, and we are finding these trends nowadays. And so we have expressed how we want to be. In other words, a company that solves social issues as innovative solution provider. And so our important assets from perspectives of GX, DX, and BX are represented on the next slide, but please take note at your convenience. And let us now skip to Slide 50. So these are some of the new business domains that I've introduced in the summary. I mentioned that we will further improve the allocation of management resources. And the next slide is an example of what I mentioned. So first of all, we clarified investment management rules. Under the very current challenging environment as we are in right now, we will focus on financial discipline and control the size of investments and loans so that it will be within the size of depreciation expenses. And we also established a long-term strategic quota to release funds once certain KPIs have been achieved. But to be more specific, during the 3 years of next mid-term period, the standard is to invest within the range of depreciation and amortization expenses. Then as business performance improves, the long-term strategic quota will be set. And then -- more than 70% of the investments will be allocated to the 2 growth drivers, agro and life as well as ICT totaling to JPY 400 billion to JPY 500 billion over the next 6 years. Let me now outline the growth strategies for each of these areas. First, agro and life solutions. The vision of this division is to contribute to regenerative and sustainable agriculture, which will become mainstream in the future with 2 pillars: one being chemical crop protection technologies we have cultivated over years and the other natural products such as biorational botanicals. In other words, we've already taken quite good steps in both formulation and the footprint. Blockbuster candidates, such as INDIFLIN and Rapidicil have already been registered or close to registration. We have already established footprints in promising markets such as Brazil and India. And the next 10 years will be a phase in which we will reap the fruits of these achievements. This is the growth strategy of this division. And so again, in addition to securing sales revenue of JPY 200 billion through sales expansion of promising new drugs such as INDIFLIN and Rapidicil, as explained earlier, in the biorational and botanical fields, we aim to achieve sales of JPY 120 billion, the top share in the global market by expanding sales of biostimulants and other products. On a core operating income basis, we aim to increase profits from approximately JPY 60 billion in FY '24 to a total of JPY 100 billion in 2030. Next is ICT solutions. The vision of this division is to integrate our ICT-related business, which used to span the Energy & Functional Materials division and to propose solutions that will accelerate innovation for our customers by combining our accumulated proprietary technologies and extensive knowledge. As you can see, semiconductor chemicals and advanced semiconductor materials in which we have particular strength will drive the division's revenues for the foreseeable future. And at the same time, it is going to be important that we'd be able to expand our geographic footprint by entering into the U.S. business, which should lead us to further growth in the future. Here is the growth strategy. Over the past few years, we have made upfront investments to reinforce photo-resistant semiconductor chemicals business. The results of these investments will start to emerge together with the recovery of semiconductor industry. And we will also be focusing on how much market share we'd be able to gain in the next-gen semiconductor materials, especially advanced EUV resist, which will become more full-fledged from FY '27 and onwards. And we aim to gain top share in this space with our proprietary organic EUV molecular resist. In addition, by entering the semiconductor back-end process, which is under a technological transition, we intend to develop a larger profit model for semiconductor materials. And so that is how we aim to achieve JPY 100 billion in core operating income by 2030. Next is advanced medical solutions. The vision of this division is to integrate chemistry, biotechnology and DX technologies to provide solutions for a diverse range of medical and health care needs, contributing to healthier and more fulfilling lives for people. We will develop and strengthen our CDMO and other advanced medical and health care-related technologies as well as new growth areas. Our CDMO is unlike antibody business that other companies have embarked on. In other words, we focus on 2 main areas: cutting-edge areas catering to start-up customers such as nucleic acids and regenerative sales. And on the other hand, small molecules, which serves the majority of pharmaceuticals. Since the regenerative cell market will not be fully established until 2030, we will work to develop our platform in the U.S. in preparation for this. And in nucleic acid, small molecule, our CDMO business here needs to be steadily enhanced so that we'll be able to achieve business scale of JPY 300 billion in 2035. Finally, essential and green materials business. The vision of this division is to establish position as a solution provider that contributes to the reduction of environmental impact. First, until 2030, the division will focus on developing GX technologies such as chemical recycling. And step 2, the focus will be to deploy GX technologies at commercial scale in Japan, Singapore and other countries. And after that, we will collaborate with external parties to expand overseas licensing to further pursue being a solution provider for reducing an environmental impact. So this is the image of technological licensing. We developed several environment impact reduction technologies. But for example, with ethanol to propylene, we should be able to reduce CO2 emissions by approximately 4 million tonnes and contribute more than JPY 20 billion in value. If we just convert 1% of the world's production capacity to Sumitomo Chemical's process. So I have explained the overview of our 4 areas in terms of growth strategy. Finally, I'd like to discuss our future schedule. In November last year, we announced our immediate-term measures to improve the business performance. And today, we presented the outline of our fundamental structural reforms. We are still in discussions with our counterparties, thus are not able to fully communicate some of the details, but we expect to be able to explain more about our progress and details of our growth strategy this autumn. Once we start under the new organization in October, we will formulate a medium-term management plan and then announce the new plan, the new medium-term management plan in March 2025. That concludes my presentation, and thank you for your attention.

Now we would like to move on to the question-answer session. For one person, the questions should be limited to 2 questions, but you can raise hands as many times as possible. So at the time of expressing questions, please put your camera on, if you can. So the floor is open for questions. Morgan Stanley MUFG Securities, Watabe san, please.

I'm Watabe, Morgan Stanley. I have -- no, you said 2 questions, right?

Yes.

Unfortunately, the 5% reduction in share price today. So you have taken time in preparing this, but the market is not convinced yet. So you're going to have a fundamental reform of pharma and Rabigh. Now in your presentation explanations, in a short term -- it's a short-term improvement, but you said that you are going to consider all the options available. The equity ratio might -- have to be changed or it might be taken out of the consolidated group. It might be a possible options that you are either considering or are you going to do in the current structure? And what you can do within the current framework? Can you talk about that more in depth?

Now as you have rightly pointed out, the share price is not faring well. So it's unfortunate. But let me start with pharma first. For pharma currently, it's an emergency situation and how we can stop the bleeding is the eminent issue, whatever the structure and organization, so we have to stop the bleeding, and we have to start from there. But at the same time, if it is the situation as it is, the sustainable growth of pharma cannot be achieved, and this is not sufficient. So as a pharma, for the sustainable growth to be impossible, I think we have to consider all the options and actions available to make that possible. After all the considerations, if the Sumitomo Chemical's share price might be upheld. So no, we are not going to stick to the current share price. But we do start from like actions for the equity reduction to start with, but what is going to be the best selection? What best options for the pharma is going to be the starting point. And as a result, it could result -- possibly result in lower equity ratio. Based on the experience of the Sumitomo Chemical in the past, the drug delivery or to decide on the licensing arrangement, I think there is very little room for Sumitomo Chemical to be able to contribute in addition. And when we introduce a compound, there is a lot of financing necessary. And Sumitomo Chemical does not have a room to have a massive investment in financing for pharma. So if there is a partner, the best partner which -- who can invest, I think that's also a consideration we're going to make. And as a result of that, the share might go down and/or change. But we're not going to start from the share reductions for our considerations. But that's what I want to communicate as a message.

On the Rabigh, we now have clearly different positions by 2 companies. But in the future, are you going to have a reduced stake for Rabigh?

This is something that we have partnered and therefore, it's a difficult question to address by ourselves. But as we stated before, cross-functional team was established with the partner to consider the ideal situation that Rabigh is going to be reviewed on all the items by identifying all the issues for Rabigh, and that effort is going to start. With that in mind, at this moment, nothing is really decided. And Sumitomo Chemical cannot express publicly what we would like to do. And it might have an unfair behavior or it might put the biased attitude of us on the results. So without having the communication from Sumitomo side, I think our discussion with Aramco is going to fare better. So that's why we haven't included any ideas. But you're going to review, but we take it seriously.

My second question is the improvement of the profit in the spring last year, JPY 200 billion to JPY 300 billion, including rationalization was set and the JPY 50 billion was considered in additional in the fall, autumn. And that number. And also on Page 6, there is no changes. And I didn't know how they are coming linked together. So the numbers that you have presented and the numbers that you present on Page 6, how they are related?

On Page 6, from '23 to '24, V-shaped recovery factor analysis, and that is going to be the short-term JPY 30 billion recovery, which is not yet realized. This is something to be realized in the short term in a concentrated manner for the business performance improvement. And that is the core operating profit, a positive impact.

And out of JPY 50 billion, JPY 20 billion is already announced and the remaining JPY 30 billion is something that you're going to achieve, right?

Yes, JPY 50 billion is likely -- we want to increase it further. But as a concept, you're right. Out of the JPY 50 billion, JPY 30 billion is not decided, but JPY 20 billion is already implemented and it is done.

That means JPY 85 billion other than Sumitomo Pharma, right?

Yes. Out of the JPY 50 billion, the part of that is included in FY '23. So there is a portion in FY '24, and there is JPY 85 billion, which is other than Sumitomo Pharma, that is included.

Yes, we are counting on your results.

Next, we'd like to ask Mr. Yamada from Mizuho Securities to ask your question.

Yes. This is Yamada from Mizuho Securities. I took off my tie, sorry. I do have 2 questions. So my first question is about, for example, asset divestiture. This is something that you're trying to make sure you'd be able to keep a very good financial discipline. But then can you share more with us? There are 2 things that I wanted to confirm. So for example, it's about, first of all, your own financial status. So you have very large loss. And from here, there's probably going to be like some equity JPY 950 billion, which should be guaranteed through the parent. So once you'd be able to -- you should be able -- you probably would not have to go through equity financing as long as you'd be able to make sure you'd be able to keep a good financial discipline. That's my thought. But -- and also -- so I wanted to confirm if that is going to be right. And also, Sumitomo Pharma, probably 77% of the own equity is probably going to be diminished. Do you have any concerns? Is there anything that you need to implement, especially as a parent company.

So first of all, as Sumitomo Chemical, do we need to do any Sumitomo -- do Sumitomo Chemical need to go through any equity financing at the moment? No. So in other words, there are various improvement measures that we're trying to implement. And as long as we'd be able to implement this, execute this, we should be able to find a financial recovery. And also for pharma side, again, it is something that, in the end, Sumitomo Pharma would have to decide, but as the parent, would we have to proceed with equity financing for pharma? Now again, the answer would be no.

So in other words, at this moment, I understand at Sumitomo Chemical, you have cash flow. And so once you'd be able to achieve the plan, you would have no problem on the parent side, but then could I take it that the same can be said with Sumitomo Pharma? I guess there's going to be more disclosure later on. But then even within your own analysis, Sumitomo Pharma would not have to go to any equity financing. Is that right?

Well, yes. First of all, we'd have to make sure we'd be able to stop bleeding. In other words, stop this cost. We have to make sure that we'd be able to do some cost reduction. So that's really going to be the first priority. And during FY '24, if we'd be able to achieve all of that, that means we would not have to expect even further capital dilution. And so at the moment -- at this moment, I would have to say, but we do not believe there is this necessity for equity financing for Sumitomo Pharma side as well.

And my second question. So this is about agro and life solutions. So short-term and long-term strategy, that's something that I wanted to confirm with you. So within your business plan, I think it was on Slide 57 or 53, it seems like you have good candidates that you'd be able to expect. So what about post-harvest? It was quite unfortunate that you had to divest some of the business here. And so you've already made some announcement about which business you'd be divesting. And so in these areas, I'm sure, including Ulotaront, are they non-core now or is it close to your core business? But then, of course, if you try to look at the overall picture, the first priority to make sure that you would not have to deteriorate the cash flow, you have to make sure you'd be able to survive the business. Is that your priority? That's what I wanted to confirm. And also, in the mid- to long term, I understand your crop protection chemicals strategy. But when it comes to like CDMO and your pharma business, I still am not really clear. I'm sure there are some uncertainty around CDMO or regenerative medicine business. And how much capital resource are we going to be allocating here? At the moment, you know that it's not really going to deteriorate to the V-shaped recovery. So that is why you're going to limit the amount of capital resource -- capital allocation here. Is that the thought? That's what I wanted to confirm.

So post-harvest. So again, from the -- we decided to divest this business looking for better -- best partner or best owner. And we also did make some investment for Ulotaront. But of course, the reasons behind that would be different. For post-harvest treatment, we were struggling with this business. And the largest player -- we decided to divest this business to the largest player here. Now it wasn't really about exiting from this business; it was really about looking at the current -- the agents that the post-harvest will be making, which Sumitomo Chemical would be providing. And so when we -- and by trying to align our knowledge here as well as the buyer of this post-harvest business, this post-harvest business itself has really become very strong. And here, we'd be able to provide them the ingredients here. And we thought that, that too would contribute well to the business that we would have on the chemical side. And so anything around agrochemical. This certainly is a core business of ours. And so we still do want to make sure that we'd be able to focus on allocating capital resource -- management resource. But as we try to do that, we also do want to think -- always keep an eye open for finding the best owner of a particular business. Now when it comes to Ulotaront, I believe it was a Phase III trial that ended in a quite unfortunate manner. In other words, the placebo data, I wouldn't say it was a strange, but it was not within our expectation. And so that is why we had to end it that way. And so if we wanted to restart this, redo this, that's going to require a very large investment. And because of that -- and even if we did redo that, we still would not really know what the outcome would be, that is unknown. And so therefore, as for the pharma side, we decided that we would not be able to allocate our own capital. And so that is why we decided to speak with Otsuka, who we already partnered with in this Ulotaront. And in the end, we decided to license out to Otsuka. And so the background would be quite different post-harvest versus Ulotaront. And also for the advanced regenerative medicine and so forth, just like you mentioned, CDMO as well as the regenerative cell, especially when we look into the growth potential of regenerative cell, there are -- it is true that we still are uncertain in some areas. Now the first iPS launch. We are -- and that is coming underway. And we are, first of all, thinking how we'd be able to launch in the Japanese market, but then how we'd be able to do in the U.S. market. Probably, it will have a large impact to how this business would turn and we still would not be able to make that decision yet. But we do believe this is a very potential area. Annually, there is this almost JPY 10 billion amount of R&D cost annum. Now this still is an uncertain area. There might be a lot of expectation here, but it is still uncertain. So pharma-side may not be able to invest its own money. But then for Sumitomo Chemical, we don't want to give up the opportunity. And so that is why at Sumitomo Chemical, we decided to take the lead in paying for the expense so that we'd be able to keep our dream for the potential of the future. So that's exactly the story behind regenerative cells. And for CDMO, at this moment, it is a profitable business and low molecule business. It's something that Sumitomo Chemical had already -- have already long experience. And so this new molecular business, we do believe Sumitomo Chemical would have the largest position or presence at this moment. But then like a couple of years -- until a couple of years ago, this low molecule business was just a consignment business. In other words, we'd be manufacturing this on behalf of other pharmaceutical companies, but it wasn't an area where we'd be able to enjoy much differentiation. However, things have changed. So it could be low molecule, but we'd be able to go into a more larger mid-molecule. That's exactly how the pharmaceutical industry has been changing. And it does require experience to manufacture. You also need experience in the processing. And so we'd be able to expand our capability here. And so the CDMO and low molecule is something that we still do find potential for growth as well as to differentiate ourselves. Even in terms of technological aspects and also for the market aspect, we do believe we have good assets, and it is an area where Sumitomo Chemical still will be able to really fight. And so that is why in this little molecular area as well as nucleic acid or regenerative cells, these are areas where we'd be able to expect more future growth. And the CDMO is exactly a place where we'd be able to find seeds for future growth. That's our belief at the moment.

So there are some limited risk, but I hope you'll be able to keep your operation under a limited risk.

SMBC Nikko Securities, Miyamoto san, please.

I have 2 questions as well. Now looking at the share price, the Petro Rabigh I think might still continue to be a concern and -- for this share price, and you're going to have an immediate term concentrated effort. But what is going to be your time line for addressing the Petro Rabigh? And also if there is, how much PL improvement in the advanced purifications? I think there was also an impairment risk that you're going to continue to have as the concern going forward. So can you comment on that? And also looking at the Aramco's investment in the petrochemical area and relationship with China and Saudi Arabia seems to be strengthened but do you think this is opportunity or it's a risk or it doesn't have any impact? Can you comment on that as well?

On the Rabigh, it's quite difficult to respond and share all the information. But we have set out the form to have the task force to work on a very short term in a concentrated manner. Task force is not something that is going to take a long time, and that is going to be the short-term efforts in a focused approach. As for the time frame, we still haven't identified how long it's going to take. But since it's short term, it's not going to be over 1 year to linger on. We believe that before the end of FY '24, we would like to find directions and some addresses. But it's not that all the actions can be implemented within FY '24. There is over the CapEx of the other investment. We will not be able to do everything, including by rectifying our equipment. But it might take longer for the implementation, but we would like to have at least the directions within a year. Now for the high advanced investment, there are many options. And there is also radical approaches as well. And also, there is a partial refining and modification is also possible in a refining capacity, but Rabigh is taking initiative and take a leadership in how they are going to -- how we are going to address. And at this moment, we cannot say how much PL impact is going to be achieved. So please excuse us on that point. Now on the third point, on the improvement at the Rabigh and the level on the extent of the improvement is a main topic to be discussed with Aramco. So what are the items for PL improvement? What is going to [ invest in us ] -- what is going to be the time required and how much impact in improving the PL is something that we are going to work on a short-term basis in a focused manner in concentrated effort. So sorry that I have a little information to be able to share with you at this moment. Now Saudi Arabia and China Aramco is making investment into the Chinese companies, and that was covered in the newspaper article. But in relation to Aramco, we have never -- not discussed those issues. So with regards to the operation of Rabigh, the Saudi and China is not relevant at all at this moment. No impact whatsoever so far.

Now what is the priority of the asset disposal? Secondly, in the Yamada san's question, so you explained about the post-harvest. And I also had a question, so that I had a good understanding. And you believe that asset disposal is going to limit it, but how about Sumitomo Chemical India equity? Is that going to be changed as well or -- there was also an impairment of the cathode materials also considered. And is there necessary to sell those because it seems far from your core? And also, what is going to be the company's of the -- equity -- in equity base to company's investment that you make?

Now for the agrochemical is concerned, as I said before, the agricultural area is a growth driver. Peripheral areas in agriculture is not going to be covered at all, not all the areas are going to be covered. So and what we have been doing, we have been developing and deploying various farm is a company for the vegetables' growth and also the reorganizations and integrations was also conducted. So anything related to the agricultural for each business, we look at the businesses. Who is going to be the best owner? So we are not going to keep the agriculture business as they are. We are going to put priorities and also looking at the profitability and who is going to be the best owner is going to be considered to continuously have the focus and the selection process to be implemented. For the Sumitomo Chemical India, Sumito India, it's a company with a very high market value. 75% equity is owned. It's listed in India. In India, the agrochemical and agricultural business growth considered, this company is going to be a very important jewelry, it's a jewel -- jewelry for the Sumitomo Chemical. So we are not considering any sales of equity in the Indian business at this moment at all. For the battery materials, this time, we had the impairment part of the cathode materials in the processes. And therefore, the businesses of the cathode material is getting more difficult than before. But other than that, as listed companies and also the equity investment companies can be reviewed for possible actions. But it's a very sensitive issue. And at this moment, nothing is really decided. So that's the message that I can communicate at this moment.

Next, from Daiwa Securities, Mr. Umebayashi.

This is Umebayashi from Daiwa Securities. So for petrochemical, I want to ask situations other than Rabigh. So in the material, I guess, it's Slide 28 and 44 together. So for example, on Slide 28, you say that in next year or from this year -- for this fiscal year, there's going to be improvement by JPY 56 billion vis-a-vis FY '23. But with that said, there is JPY 35 billion loss. And so with that in mind, I want to look at, like, for example, Japan, Singapore or Rabigh, how are they to improve? And I wanted to sort this out if you would be able to help me. That's why I wanted to -- that's the intention behind my question. And so if we'd be -- if I'd be able to look at Slide 44, here, you have domestic Japan and Singapore. And you look at you have 4 mass domestic Singapore, be it ethylene, propylene or polypropylene. I feel like you have different action. So if you'd be able to explain actions behind each box and what is going to be the time line?

So first of all, again, on Slide 28, that's about the essentials, the PL. Just roughly speaking within that JPY 56 billion improvement, there are some areas where we consolidated or marked impairment loss or exited. And then at the moment, the coal price has become lower. And so the power price electricity has become much lower in terms of cost. And so there are some things that we already know to happen in FY '24. And so out of that JPY 56 billion, 1/3 would account for what I just mentioned. So in other words, there's going to be improvement by JPY 56 billion, but 1/3 is something that we already know. And the plans have already been implemented for that. Now as we look ahead, for example, further change of the selling price or further sales expansion or perhaps better margin because of better external environment, if -- that's an expectation that we have, which contributes to another 1/3 of that JPY 56 billion. And again, there could be like immediate action that we'd be able to take so that we'd be able to make some concentrated improvement. And that's the remaining 1/3. So that's the breakdown of that JPY 56 billion. So be it Japan or Singapore, if we look into these 2 areas, we want to turn profitable for these 2 areas. And also on Slide 44, in terms of time line, the upstream for domestic side, again, during FY '24, we do want to show some result. And again, our conversion to reduce environmental impact, it's not that we'd be able to complete this entirely during FY '24. But at least what we're trying to do, in what direction is something that I hope that we'd be able to explain -- disclose during this year. And for downstream. So as we'd be able to go through this reorganization of unprofitable non-core business is something that we want to do. But therefore, polyolefin collaboration is something that we do want to make some announcement during first half of FY '24. That's the time line I would have in mind for Japan. Now as for Singapore -- upstream for Singapore, this is an area where we -- this is a place where the Japan group would have 50%, the remaining 50% would be for Singapore. There are some other companies even in the Japan side. And how we'd be able to improve the performance is something that is not really going to be easy. So including Shell and the Qatar, we need to make sure that we'd be able to speak with other parent companies. So that means we will need a little more time before we'd be able to see some results. Of course, we can't just keep it as it is. And so I would very much want to see the results during FY '24, but at least by the end of FY '25, we should be able to announce some direction forward. And for TPC, the downstream. First of all, it's about enhancing our own competitiveness and some specific reorganization. We still are not really at the point of really disclosing some of the details. And this TPC, we thought was a very good entity. And in other words, it would involve very good customers in Asia and would be able to provide products that other companies would not. And so we have been expecting this organization to be more profitable, and that's exactly what we want to see if there's going to be any potential. So in other words, compared to Japan, we will need a little more time for Singapore.

So again, a follow-up on the Singapore side. So the upstream, I understand, yes, there are various companies involved that you need to speak with. So that means, yes, you will need a little more time. And for downstream, I think this is an area where you had been working on. And because of extension of that, maybe that's part of the reason why we'd not be able to say a specific time line. But then how are you to turn profitable here? And for example, like market environment, would the market environment recovery help or -- and then how you'd be able to do for MMA?

Well, in terms of the market environment, like the sale price, that's going to be a determining factor, but then at the same time, how much electricity bill could be reduced is going to be a large factor here. And included that and also MMA impairment loss, how that is going to be done? It would also be a determining factor. So you have to aggregate all of that. It's not that I'd be able to give you specific numbers at the moment. So for Singapore, once we have further analysis, we'd like to make sure that we'd be able to update everyone.

And my second question, it can be brief. So you said the annual dividend payout is going to be JPY 9, which is very good. But when I try to look at this interim versus year-end payout, that's going to be JPY 3 interim payment and the year-end is going to be JPY 6. And so of course, you probably will be making this more official announcement at the point of May. But then that means you are thinking that there's going to be a further result of all your activities more towards the second half rather than first.

Well, we said JPY 9 annual, and that's exactly where we want to start. The allocation of JPY 9 is not something that we have really come to this deep thought analysis.

And so how would that JPY 9 be split first and the second half?

And so this year-end, payout is going to be JPY 3, and so that's why we could just start from there in the interim payment -- payout and have the remaining JPY 6 as for year-end payout.

Now I would like to invite Nomura Securities, Okazaki san, please.

I am Okazaki, Nomura Securities. My first question is the pharma's approach to pharma. You are going to just stop the bleeding in the short term, but you said that you're going to consider all the options. That means that after some improvement is the seen, are you going to consider options or are you going to parallelly consider all the possible actions and options? And you are going to -- there is a possibility of guaranteeing the liability and debt. But in the case of Rabigh, you are not going to spend any more for additional investment. But how about pharma for additional support? Can you comment on the possibility? That's my first question.

With regards to your first question, we are going to stop the bleeding. That's a matter of course. But after you stop the bleeding, in order to become healthy -- I mean we need to become healthy and then consider options, that's too lengthy. We don't have a luxury of the time to wait to be healthy. So while we stop the bleeding, we have to consider all the options and actions possible at the same time. So at what juncture what could be the possible good ideas and partners? Not yet known, but earlier, better to take actions. So that's the undertaking that we are trying to do. Now as for guaranteeing the liabilities and debt of Sumitomo Pharma, we are going to consult with the main banks to have the arrangement but at this moment, we are not going to make any additional capital. There is no necessary -- there is no necessity to have any additional capital from us. And that's the plan of the Sumitomo Pharma. But if there is necessary for additional fund, I think it depends on what they're going to spend their capital to. But we will consider whether we are going to make the additional capital investment or not at that point.

Now my second question is related to the PL improvement of JPY 50 billion. In the new fiscal year, 3 months ago, 2/3 was temporarily excluding impairment. But what's the progress? What is the current status for the new year --new fiscal year? What is going to be the temporary impact for the improvement? If you have a numerical numbers, please share that with us.

For the FY '24 analysis, I think I already covered some of the points. So it's going to be overlap on Page 6, for the JPY 30 billion in immediate and concentrated effort, that is going to be the contributions by that effort. And that is going to be the transitional temporary impact. So what we have announced is not included in temporary impact. The part of that in FY '23, for example, CASE -- there was a sales of CASE, post-harvest sales and that was the temporary ones in FY -- included in FY '23. And that was the biggest factor in FY '23. So there are some included in FY '23. So in the fourth quarter, if you calculate back in agrochemical, there is a substantial profit. It is about JPY 30 billion of profit in the fourth quarter alone, but it was -- some portion was sales of the harvest, post-harvest.

What is the amount?

No, we don't disclose the total amount of sales. That in the fourth quarter, the impact was being calculated is included in the fourth quarter.

It's not a small amount, is it?

I don't know what -- it's not a small amount. But in the third quarter, there was unusual weather and also inventory adjustment in Brazil.

But looking at the agrochemical, it is showing a good improvement. Is it true that it's an improvement? And I think you are going to explain more in the days to come.

For FY '24, in FY '23, the South of America was a very difficult situation. But including the distribution inventory was also accumulated in FY '23, but we were able to resolve the excessive inventory. And therefore, in FY '24, we can start afresh and to have the supply matching with the demand. And Brazil is steadily growing. And therefore, in FY '24, no, we can have a good profit as expected.

Next, from Tokai Tokyo Intelligence Lab, Nakahara san.

Tokai Tokyo. This is Nakahara. I have 2 questions, too. My first question is about your ICT business. Within your presentation, I didn't really find much explanation about your display business. So display related. What is the position of display related, especially as you look into FY '24, how do you position this display-related business for ICT? And also, as you head towards 2030, what is your thought? For example, within the profit structure in the past, it was like 50% contribution, but then for next fiscal year. Semiconductor, 80% and display 20%, I think, is that really going to be the change in the structure or with the structural reform, you should be able to, again, expect display related to contribute half to the profit of ICT?

For the display related business, it's not that we're ignoring its significance, but it really goes into various areas, and we weren't really able to express at all within the presentation material, but the display business is certainly one very important business field within our ICT business at the moment. Within LCD, especially LCD for China is where we are trying to focus our structural reform, but then other areas, for example, for automobile or OLED, these are areas where we know that there's very strong profitability or ability to gain profit. And FY '24, how do we expect in terms of profit? So pretty much the same with what we found in FY '23. In other words, overall, it is going to grow, but -- so the overall profit is going to grow, but proportionally speaking, everyone is going to grow. Semiconductor may grow more than display, but still display profitability is really good. It is going to have an important position. And as we head towards 2030, now that's something we yet need to analyze after we'd be able to do some buildup exercise for what we expect for FY '23 and ICT solutions. So again, once we have the new organization, we should be able to explain more about what the next mid-term plan is going to be. And once we come to that point, we do expect that semiconductor weight might be more than what we'd be doing on display related.

So if I'd be able to ask some follow-up from LCD. So for example, Nitto, there's this difference in what profitability you'll be able to generate? And how is that happening? And is it -- within your analysis, do you think you fare squarely with Nitto in terms of profitability or if there's going to be any potential for catching up with what Nitto will be doing, what would be your thought?

Well, again, Nitto Denko, we know that within their segment, they only -- we only disclose data -- aggregated data that would include tape business. So we can't really compare apple-to-apple, our display versus theirs. But in the past, Nitto Denko used to have more polarizing film in terms of profitability contribution. And so it was because they'd be able to internally manufacture. And in the past, we didn't really have much products that we would internally manufacture. In other words, we procure all the components from other parties where we could in a sense, assemble so that we'd be able to create our own tapes and displays. But then Nitto Denko would be doing more internal manufacturing. And probably that's one difference of the difference, and that's how we analyzed. But then after that Sumitomo Chemical, we've also tried to internally manufacture. In other words, we try to increase the proportion of what we'd be able to internally manufacture. And so we do have very special films within our production lines. And so at the moment, in terms of profitability, the capability of creating profitability, I do not believe there is much difference between us and Nitto Denko. Now when it comes to this most advanced area, the capacity to create -- generate profit, I'm sure we are at par. Now Nitto would -- did downsize their China business in the past, where compared to that, we would have some sizable China business. And so if we try to aggregate all, how would that look? But then at least on the high function areas, I do not believe we have anything different to Nitto Denko.

And my second question is something that -- for example, Mitsubishi changed their management structure, and it seems like they're very interested in making sure that they continue the petrochemical business. They made their strong intention to do so. And Resonac are doing it on a more partial basis. Mitsui, on the other hand, would be working together with Idemitsu. So I guess they probably will continue this petrochemical business. But what about Sumitomo? As far as I look at your material, I can't really tell which is going to be your choice. So you don't really want to go, but because there's a lot of background, you can't really step out. That seems to be the nuance that you're trying to tell, but what is your position, Mr. Iwata, as you try to look forward with this petrochemical business?

Well, as one business division, as we have already explained, the petrochemical business that we've had in the past, within the future carbon neutral trend, I would not really be able to sustain or survive. Now again, we need to strike what environment friendly or less environment impacting business we'd be able to pursue, and that's really our thought behind our petrochemical business. And so each companies would have their own thoughts -- all the Japanese chemical companies would have their own ideas and thoughts and how to pursue this business, I guess. And again, like I mentioned earlier, in Japan, the upstream ethylene was something that we stopped. And so this -- it's really this KO area that we're going to be focusing to do. So that this upstream ethylene business, that's really going to be the KO ethylene. That's exactly where we want to really see how we'd be able to remain as one member of the -- all the Japanese parties, but then Singapore is another story that we'd have to consider further.

I believe that there are those who are raising their hands. However, it's about time to conclude this session. So we would like to finish today's meetings for the current priority management issues and business strategy. And quite a few people are looking at the homepage live distribution, and there was a concentrated access and temporarily, it was quite difficult to be connected. And I'd like to take this opportunity to apologize for any inconvenience that it may have caused you. Now for the presentations later tonight, we are going to have archived file, so you will be able to review -- replay the meeting. Now I would like to conclude this session. Thank you very much for your participation indeed. Thank you very much once again. [Statements in English on this transcript were spoken by an interpreter present on the live call.]