UACJ Corporation (5741) Earnings Call Transcript & Summary

Thank you very much for joining us today for the IR Day for UACJ. I'll be serving as the moderator today. I am Kouzo Okada, Head of IR in the Finance division. Today's IR Day will be using presentation materials that are available on our homepage. If you do not have the materials in front of you, please take a look at our homepage. Some housekeeping announcements before we begin. Some of the presentations given today will be in English. Those of you who wish to use simultaneous interpretation, please click the Globe like icon that you will find at the bottom of the tool bar and select Japanese, you'll be able to hear the speaker and the interpreters voice. If you select mute original audio, you should be able to hear the interpreter's voice only. Today's session is recorded for record keeping purposes. The content of the session will be available on our homepage at a later date. You are kindly advised not to record personally. In today's session, we may cover forward-looking information, including future projections, which are forecast of the company as of now. Please be reminded that the actual performance of the company may largely differ from future projections for various reasons. And lastly, but not least, please check that your microphone is mute. Let us start today's presentation. President, Ishihara, you have the floor.

Ladies and gentlemen, thank you very much for joining us today for the UACJ IR Day. I am Ishihara, President of the company. It's been 4 years since I became the CEO of the company. And during this time, I have been actively contesting IR, SR activities. Many investors offered us advice during the earnings call and a small meeting held every quarter. In today's IR Day, I will, first of all, give you an update on the third mid-term management plan announced on May 12 last year. Then as requested by many of our investors, the hunch of each business will talk directly about the progress of the mid-term plan, growth from a long-term perspective and financial strategies as we have done last year. Engagement with the capital market is highly critical for the management of the business. And therefore, I look forward to our exchange today. This is today's program Flat Rolled Products and Finance will be covered from the Tokyo head office. UATH business in Thailand will be presented by Hironori-ki-san, President of the Local Subsidiary in Thailand; and Henry Gordinier, CEO of TAA from America; and David Cooper, CEO of UWH will be presenting from the United States. Both of them will be joining us live. Q&A will be entertained by all the members joining this call today. So let me start with an update and review of the first year of the third mid-term management plan. So I will use the slide to recap UACJ's group philosophy. The UACJ group change is not new. 1898, when we started aluminum rolling business, the company has adapted to numerous changes. In order to ensure that all employees are facing the same direction in implementing structural reforms and to clarify once again what UACJ aims to become through its corporate activities, in February 2020, we redefined our corporate philosophy. In addition, since 2020, we have been holding dialogues with our employees with the aim of instilling the corporate philosophy across the group. In today's presentation, I will take you through what we are doing based on our purpose of contributing to society by using raw materials to manufacture products that enhance prosperity and sustainability through UACJ way, how we are acting and what are the initiatives that we are undertaking under the third mid-term plan. This is what I will be covering in my presentation today. In addition to redefining the group philosophy, we stipulated our sustainability policy for the group to contribute to the realization of a sustainable society. We are addressing materialities through our corporate activities. The materialities were identified after a series of workshops attended by group employees and officers, so we're held in addition to getting feedback from outside experts. The 6 materialities are related to the 4 SDGs and the entire group is currently working on this. Building a sustainable society through aluminum, this is our vision for our future in the long-term management vision, UACJ Vision 2030. And we have a vision committee, which went through the effort of compiling the third medium-term management plan, consisting of mid-career employees will be responsible for the group in the next 10 years. And the group vision of our 2B Stage in 2030, broadcasting from the 2B Stage, the company will contribute to by leveraging the strength in the one variety of machining capabilities, supply system built around three global pillars and solid customer base and also by adding value. This is the positioning of the third mid-term management plan. Just to remind you, this covers 3 years from fiscal year 2021. The concept is completing structural reforms and establishing the foundations for future growth and achieving Vision 2030. The 3 years are critical in achieving growth towards Vision 2030. Many policies of the third medium-term management plan, are these three. In fiscal 2030, in the final year, KPI includes ordinary income, JPY 25 billion, ROE, 7.5%, ROIC, 6%. In fiscal year '21, in addition to the underlying P&L and the effect of inventory impact on income, we reached ROE of 14.1% and ROIC, 11.1%. Forecast for fiscal year '22, ROE, 6.7%, ROIC 5.5%, which is a steady improvement from pre-structural reform levels. In the fourth medium-term management plan, we will seek further capital efficiency. Nonfinancial targets are shown on the slide. Let me look back on the first year of the third mid-term plan in the following slides. I will be using 6 slides to give you a bigger picture, after which I will be focusing the important areas. The flat rolled product business is operating at near full capacity globally due to demand hike around the world. In the meantime, in addition to geopolitical risks such as the Ukraine issue, we're also facing headwinds that were unforeseeable a year ago, such as soaring global resource prices, which are putting pressure on earnings. Furthermore, while the impact of COVID remains and despite the fivefold headwind described on the slide, what we are sure of is that the direction and the 2B vision that UACJ is aiming for as envisioned in the mid-term management plan and beyond that in Vision 2030 is quite relevant. We have been taking necessary measures and towards achieving the third mid-term plan, we are taking swift and agile action to changes in the business environment, we're able to transform in such a way. The measures that you see on the right-hand side have been implemented in a speedy manner. So what UACJ has been doing and what has delivered very strong outcome is building a global supply system of can stock by leveraging the three global pillars. And this was a year in which we were convinced that the increase in demand for can stock due to growing environmental awareness around the world is not a onetime event, but actually a continuous trend that will accelerate further in the future. UATH has increased its presence not only in Southeast Asia, but also in North and South America where it has expanded its sales channels for can stock and it's now selling a full range of air conditioning, fin materials and automotive heat exchanger materials. The solid customer base was leveraged in Japan and the United States to build a business model of producing and consuming locally that enhanced our earnings capability. As a result, as you know, we marked record high profit in fiscal year '21. We can say with confidence after year's effort that UACJ Group is steadily evolving. This was covered at the earnings call for fiscal year '21 on May 12. But since it has quite a big impact on P&L, let me once again briefly cover the changes in the external environment and our countermeasures. The path through pricing scheme will be covered by Taguchi-san responsible for the Flat Rolled Products division later. Rise in aluminum ingot prices. The nature of the business model is such that it does not bear the risk of aluminum ingot fluctuations. What you see on this slide by taking the rolled margin system product price is separated into aluminum ingot price and processing fee. Inventory effects and time lag until the ingot price is passed on to the product price is seen as an impact, but this time lag will temporarily have an impact on the company's performance. Soaring energy prices in Japan, we have -- are currently negotiating with customers on shifting to price pass-through scheme from July. In TAA pass-through scheme already is in place since April at UATH towards introducing price pass-through, negotiation is customer has started. And for soaring additive metal prices, each of the markets have already introduced pricing system linked to market prices. And for rise and logistic cost, UATH has already introduced a formula of pass-through to sales prices for many clients. And the financial targets under the third mid-term plan is covered on the next slide. Ordinary income, JPY 25 billion before inventory impact, the ratio 1.2x or more ROE, 7.5%. So we are under the mercy of external factors, but the group is united in our efforts to achieve this goal, as you see in the graph. The actual or underlying operating income before inventory impact was JPY 21.3 billion for fiscal year '21. Structural reform has proven to be effective, and income grew significantly both in Japan and overseas. We are expecting impact of soaring energy and additive metal prices. But our earning capabilities have improved and ordinary income of JPY 23.5 billion before inventory valuation effect is expected in fiscal '23. It's a passing point after becoming a lean company and aiming for further growth. We will continue our efforts to achieve our goal without fail. Let me explain about the business portfolio management and as well as the CapEx plan. The growth markets include North America and Southeast Asia. Growth areas include can and automotive, this has remained unchanged. There is a further trend of increased demand in can stock and automotive parts in North America. As a result, with regards to strategic investments in the third mid-term plan period, we intend to focus our investment in North America. UATH will capitalize on its existing capacity, capture the demands of the growth market for the improvement of profitability. Through the completion of structural reform of domestic sites for each business, we are promoting improvement in profitability. There is no change from the third mid-term plan policy and CapEx plan, which is to suppress the investment amount to approximately 70% of the depreciation volume. We will strategically invest according to the plan that we have. We have completed investing in large-scale projects in and out of Japan from 2013 to 2019. In this mid-term plan, we would like to make profit out of these investments and focus on making our financial base more robust. This slide shows the earnings power of the domestic and overseas business in chronological order. And you see that there is a change in the ratio between overseas and domestic. There will be a overseas. And in fiscal year '23, there would be more profitability out of the overseas market. Moving on to the next slide. In the third mid-term plan, we have three major policies. I would like to go over these policies one by one on their progress. Major policy one, is completion of structural reform. So improvement of the management as well as the financial strength. And there has been a change in the volume as well as the product mix, especially in the domestic area. And we have announced that the expectation for the structural reform impact is JPY 18.5 billion. However, after implementing additional measures, including revision of our margin well as the further cost reduction in manufacturing. We now believe we can achieve the original plan of JPY 21 billion of positive impact from the structural reform. Next slide. We are conducting various measures to improve our governance since integration. For effectiveness of Board of Directors meeting, we have included the third-party assessment and the areas which has been identified as findings, we have taken initiatives to improve it. The rules of Directors as well as the responsibility through our initiatives, especially showing the directionality of corporate strategy and effective supervision are the areas we are trying to improve. Second is major -- the second major policy is strengthening our foundation for growth. Structural reform will complete in fiscal year 2022. We need to look beyond that point for our growth. So one of the key issue is enhancement of value added. We will work to add value to our materials. And we will look both at the upstream and downstream of the materials and add volume and we would like to expand the capability to respond to the customers' needs. We have UACJ SMART, which is an environmentally friendly product that we released last year. And in the automotive part application, light SMART that has been adopted by major automotive OEM. We have a various processing technology within our group. We would be able to provide various services. We will aim to grow profitability by expanding value-added type of business that goes in line with circular economy concept. Creation of new business domains. We now have several cases that we can share with you. There are initiatives to provide solutions to social issues and customer challenges, utilizing technology seeds, which are unique to our company, thereby creating new businesses. We created internal start-up system and approximately 40 applications were made for the in-house startup system program in fiscal year 2021. And we would like to contribute through these feed that contribute to disaster prevention and the reduction. In the UACJ way, we place importance and be curious and challenging, and that was embodied in these initiatives. Next is progress on contribution to a lighter world. Today, we are declaring our challenge to become carbon neutral in 2050. And the details will be explained at ESG briefing to be held in the second half of this year. To achieve our challenge of becoming carbon neutral in 2050, we will work to reduce greenhouse gases by 30% in Scope 1 and 2. And in Scope 3, we will collaborate with a variety of partners in the supply chain, maximize recycling and minimize greenhouse gas emission within the overall supply chain. We would like to accelerate the initiatives in the overall supply chain. I would like to -- one specific example. One is to join to the ASI. You see the objective here on the slide. Through obtaining of ASI certification, it is beneficial for us because sometimes it is required to have ASI certification to have transaction with customers. We would like to contribute further to the improvement of the sustainability in the society, and we would like to acquire new business opportunities. And we will be clarifying the -- what we have analyzed in the TCFD scenario. Aluminum has various attributes. It's highly recyclable. For example, can to can. It does not have to be wasted, and it would be rejuvenated as new product many times over. We would like to increase the types of the can to can that we would be able to make. Aluminum can be reborn into another aluminum product many times, and we would like to expand our opportunities there, and that's our mission as well. Aluminum is energy saving and fuel saving, and it has long life. The more it's used, the bigger the value of the aluminum, and it will be coming back. Once again, it will be reborn and UACJ would like to become the heart of this circular program, and we would like to create a recycled loop to increase the recycling ratio and through the supply chain and value chain. We would like to improve the value of the aluminum in the life cycle, and we would like to create a system for assessment and contribute to reducing the environmental burden globally through transitioning to circular economy. Aluminum to lighten the world. In order to materialize this world, UACJ will work towards it, and I hope that you have high expectations, and I hope to have your continued support. That concludes my presentation. Thank you so much for your kind attention.

Next, from the Flat Rolled Products division, Senior Managing Executive Officer. Masataka Taguchi will give you a presentation.

Good morning, ladies and gentlemen. I am Taguchi of the Flat Rolled Products division. It is my pleasure to give you a presentation today. I will be covering the status update and outlook for the Flat Rolled Products division. Once again, I will be covering the status update and outlook for the Flat Rolled Products division. If we could move on to the next slide. Oh, sorry, this is not the right slide. My apologies. Please bear with us for a moment. Let me explain following the slides. Please go to the next page. As was explained by Ishihara-san earlier, the strategy for flat rolled products is based on the three global pillars. On the left-hand side, you can see Japan and Thailand. Starting with Japan, structural reform will be completed at 640,000 without much investment, we will make it lean. And in the meantime, in Thailand, we've made advanced investments. And as a result, in '21, 320 tons was achieved. No big investments will be made, but we aim to increase to 330,000 tons by fully utilizing existing facilities. In North America, we made advanced investments in '17 and '18. And that has led to increase in production. North America as we will be hearing later on, that's the market that we are expecting to see is very strong growth. And therefore, we will be making investments in that market. So for the global three pillars, as you see on the left-hand side, this is the trend in sales volume. From '21, we're seeing steady growth, '22, '23, TAA, 450,000; Thailand 330,000, and Japan, as I said, 640,000, so a total of 1.4 million to 1.5 million tons. This is our target. The graph on the right-hand side, this is P&L. Pink is Thailand. Thailand has been making losses over the years. But in '21 -- fiscal '21 was able to turn around. Blue and green. This is a TAA and UACJ Japan. In fiscal '21, we're very happy to say, excluding inventory valuation, we were able to achieve this figure. And there's a slight drop in fiscal year '22. And I'll be coming back to this point again later on. Energy unit price, to what extent it will be passed on or could have an impact on this but 1/3 is expected to be recovered, and that's reflected in the number that you see on this slide. So for the three global pillars, we expect the domestic business into three works and then there is Thailand and North America at the bottom of the slide. But let me elaborate on the three works in Japan. We originally had four, but the Nikko Works was now closed, is now consolidated into Nagoya, Fukui and Fukaya. The characteristic is that starting with Fukui, can and automobile, mass production and having by far robust competitiveness. And then in Fukaya, this is a thick plate only plant at this moment. And everything else is actually produced in Nagoya. So a variety of products are produced in Nagoya Works. This is the makeup of the works in Japan. This is a slide that shows demand growth projections for the world and for aluminum from '21 across all products, 18% at least is expected to grow, especially for automobile, 40% for can materials, 18% growth is expected. On the right-hand side, this explains why demand is expecting. And as was explained by can sheet that is can to can, environmental-friendly container that's how it is being seen, and therefore, demand is growing in the United States, and it is highly recyclable. For automobile materials, as you may know very well, it is very light. And therefore, there is a replacement towards aluminum and also EV is a driver because EV will require batteries and aluminum is used in batteries. And all of this will contribute to achieving carbon neutrality. Now I want to give you some color for the domestic flat rolled products business. This is a mid-term plan from '21 to '23 for the 3 years in this third mid-term plan is a road map for the Flat Rolled Products division. On the right hand side, you can see completing structural reform and focusing on priority areas and having our own unique positioning established and strengthening the foundation. I want to explain this very briefly. Structural reform, I've already covered briefly. This is -- was about the closing Nikko works. And Fukaya Works and other works will have their own characteristics. And the focus area is North America and Thailand and unique positioning. Let me talk about that. This is not only about seeking increase in volume. It's about contributing to the society. As was explained by our CEO, this is all about contributing to the society through environment and also strengthening our foundation. We are basically manufacture. We manufacture our products. Safety comes first, of course, quality and productivity will also be pursued and we are on track in strengthening our foundation. In the meantime, in Japan, I also talked about completing structural reform. And one of the KPIs for that is a breakeven point. What you see on the left-hand side, this is a plan from fiscal 2019. Looking at that as 100% by 2022, we intend to reduce by 10%. The blue is actual. The blue line is actual. End of '21, we're slightly short, but we are almost in line with our plan, and we should be able to achieve 90% from 2019 levels by 2020. Consolidation works plant is one thing, but the highly profitable items will be expanded to come up with the more optimal products. On the right-hand side of the slide, you can see the product mix for the Flat Rolled Products business, cans, auto combined is 60%, and then there's thick plate, which I'll be coming back to. Thick plate is also growing. And this included, it will account for 70% of the Flat Rolled Products divisions business. Energy. Energy price pass on -- pass-through. Why does this have to be implemented? Let me speak from a P&L perspective, 213 that you see on the left-hand side, JPY 21.3 billion. This is the -- excluding inventory valuations in fiscal '21, JPY 19.3 billion. This is for -- JPY 19.3 billion is -- if there is no pass-through. This is a negative JPY 19.3 billion, which will eliminate all our profit, additive metal and energy. And at least, we would want to seek pass-through of prices by JPY 6.9 billion. We are conducting activities for that. And excluding inventory valuations, we're seeking JPY 23.5 billion for fiscal year 2020. Now as for additive metals and energy, how do we intend to pass it on to our prices, that will be explained on the next slide. This is just an example, power is linked to crude oil and LNG. And this graph shows the trend in crude oil prices. It's been rising. And within reference price, and this is very important, we will have -- up until the reference price, the UACJ will bear that cost, but anything above that will be passed through to our customers. If it goes below, it will be repaid and will be paid back. That's our position in our negotiations. We're going through very careful negotiations with our customers to pass through the price increase, so that will be implemented towards the second half of the year. And this is for additive metal magnesium, silicon and manganese. Silicon and magnesium is slightly going down, but manganese is still very high. And basically, the same thinking is applied here. We have what we call a formula system, which is linked with the reference price. And we are able to receive understanding of our customers, and we are quite confident that we should be able to pass this on to our customers almost entirely. And for automobile materials, we have a cap in Fukui Works and Nagoya, Fukaya, everything will be -- has been transferred to Fukui caps the facilities have been launched and they are up and running. But it requires certification, which required involvement of our customers, and it took a little bit of time, but we are here in the end. In terms of demand or orders taking, it's slightly decreased because of semiconductors but we expect to improve from the end of June with Shanghai lockdown, having lifted and so forth. More than 80,000 tons in production, we expect to achieve once this is fully operating. And I said that the thick plate is expected to pick up going forward. And thick plate is used for semiconductor manufacturing device. It's also used for liquid crystal, but it's also used for semiconductor manufacturing devices. The bar graph is second from the left, this is fiscal year 2021. Compared to 2020, this is an increase of 40%. And going forward, we expect at least 20% growth year-over-year. And the thick plate works, the Fukaya works, improvement activities is making progress. And the yield has been improved by 10% or more, which requires very steady improvements and capacity has increased by about 30%. Fukui has been modified to be able to address the rising demand and therefore, Fukui Works is also producing partly thick plate. Now for fiscal 2023, aluminum demand for Japan, 640,000 I said at the very beginning. But from the latest numbers that we're hearing 670,000 or so to 680,000. That's the kind of demand level that we have visibility on at this moment. Select and focus and optimizing price, we will not be making big investments, but 640,000 that's the kind of level that we will achieve them in the near future, and we will refrain from making big investments. And the next slide is our sustainability. Ishihara-san has already covered this. And this is about creating a circular economy on aluminum materials. What we manufacture will go to the can manufacturer and UBC will be collected. It will be selected. And then there is the process that we'll go through Yamaichi is the company that we're collaborating with, and we want to enter into that area as well to collaboration to create the core of circular economy, and we're currently working on. Lastly, but not least, ASI certification. This is already covered by Ishihara-san in Thailand. And Japan, Japan, this is -- we are the first. Aluminum flat rolled manufacture to be certified by ASI. So metal alloy is something that is necessary is needed by the society. And the demand is growing. We are going to respond to those needs to the Flat Rolled Products division. And with that, I would like to conclude my presentation. Thank you very much for your kind attention.

Next, I would like to call up our Representative Director and President of UACJ Thailand Company Limited, Mr. Kimitoshi Inagaki to explain about the Thai business from overseas market.

My name is Inagaki. I'm President of UACJ Thailand. I have assumed my role from April of this year. Let me start my presentation. First of all, I would like to introduce to you the overview of UACJ Thailand. It started its operation in 2014, so it's in the eighth year. And we're able to achieve the 320,000 ton at sales. And so this can stock, automotive heat exchangers and fin material for air conditioners are the product, and there are some general materials that we sell. This is the first -- this is the only, the rolled aluminum plant in Japan. And this is the main plant for UACJ in Asia. And which we will be working to increase the volume with a robust demand in this region. On this slide, you see the other CapEx from 2014 and casting and the surface treatment investment had completed in the first phase. And in 2020, there was -- due to the COVID, there was a negative impact to the sales. And in 2021, we were able to have a significant recovery and it increased -- it has exceeded 300,000 tons and up to 320,000 tons that we had targeted. I would like to explain about the mid-term plan, which started from 2021. And we want to have a strong presence of UATH, through a contribution to the circular manufacturing. So there are two major policies and one is to fully utilize existing facilities and material gains from the three phases of investment. We would like to capitalize on the robust demand. And we need to improve the productivity, yield and work to more efficiency through making our factories more smart. So another is initiatives to reduce the environmental burden. We will work to develop the recycling technology and create can-to-can close loop. These are the two major items that we need to work on. Through the obtainment of ASI certification, we have become member of the companies who will be working for more sustainability. I would like to talk about the sales strategy, which supports mid-term plan. We are the only mill in Southeast Asia, and we want to have competitive edge. And also, we are a global supplier. We want to improve our competitiveness. The can stock demand is very high in North America, and we will be helping in that area. And also, we will strengthen our relationship with the Asian customers, and we would capture the growth opportunities in Asia. So we will maximize our opportunities. We will be strengthening our information collection capabilities, and we will improve our sales capabilities as well. In order to make our work more efficient, we are introducing a new sales system. And we are now negotiating the price revision with various of our customers. I would like to explain the specifics. 80% of our sales is coming from can stock. The supply is still tight to the robust demand. As for the automotive heat exchanger due to the impact from the semiconductor shortage, but we are seeing increased sales, especially around North America. As for the fin materials for air conditioners, we believe that there would be a higher demand. And in Thailand, there is a demand for lighter vehicles and we are -- there is a demand for those automotive part. And now with the collaboration with the customers, we are seeing the appropriate pricing. And in addition to the pass-through, we will be working on to the base up in terms of the pricing. So after the third phase of the investment, so this shows the evolution since then, the demand is expected to continue to grow. And we believe that the asset sales volume will increase to 340,000 by 2024. We need to capitalize on the existing facilities. And in terms of the P&L, 2020 -- in 2021, we were able to turn into the black for the first time since our operation started. And there would be improvement in inventory valuation. But there are -- there is an impact from the energy price hike, but we believe that the profitable level -- profitability level it will be about the same as last year. And we believe that there would be an impact from the improvement in the various initiatives that we have been taking. So these are the issues that we need to overcome. There are 5 of them. We will be conducting various initiatives in a timely manner. In terms of improvement in productivity, we will be responding to the 340,000 tons and we will work to improve further our yields. And also transferred to the local employees, and we are enhancing our training system, and we are having the system for the work. The solar panel operation as well as expansion of the recycle facility will be conducted. In the current mid-term plan, we are working on this -- on becoming a smart factory. By fiscal year 2023, we will have put in the things that would be needed for SMART factory. We will be digitizing the paper so that we can control everything real time. And also, we will be implementing the WiFi around the plant for the utilization of data digitally. And the production plan will be linked to design system so that the reduction of the labor can be realized. So this shows the initiatives that we have taken in the past several years. In Thailand, and also in Japan, we are the only plant which has the state-of-the-art plant. And without UACJ, the sustainability cannot be realized and we contributing in this area. We will work to increase the furnace for recycling by 2024 and we can expect further efficiency in this area. Last year, as part of the CO2 reduction initiative, we have introduced the solar panel system. And this is the biggest project in Southeast Asia. And this was completed as of the end of May, and we started the pilot operation from this month, and we will be going into the full-scale operation from October, we will be contributing to the reduction in CO2. That will be all for my presentation from UATH. Thank you very much.

We now will take a short break. The second half of the program will start from 10:00 Japan time. [Break]

Let us resume the session. We will now start the second half of the program. With regards to can stock business in North America, Tri-Arrows Aluminum Inc. CEO, Henry Gordinier, will give a presentation. This presentation is going to be made in English. Those of you who wish to listen to simultaneous interpretation, please click the icon at the bottom of the toolbox and select Japanese, in which case you'll be able to listen to both the original speaker and the interpreter's audio. If you select Mute Original Audio, you will be able to listen only to interpreter's audio. Now please start the presentation.

Good morning. Thank you for being with us today. My name is Henry Gordinier, and I am the President and CEO of Tri-Arrows Aluminum. First, a little bit about the company. Tri-Arrows Aluminum, co-owns Logan Aluminum, which is a world-class aluminum rolling mill located in the Midwest of the United States. Logan is a manufacturing plant that is a production joint venture, and it has over 1,400 employees. Logan is a low-cost producer, and its cost position primarily is driven by world-class productivity. The culture is results based, it's performance based and it's really grounded in teamwork as well. From a sales perspective, the plant produces and we sell approximately 490 kt on an annual basis. We service the North American can sheet market, and we are a preferred supplier to our customers. So when I think about recent past, what we've seen is from a transition perspective, we are moving from a period of rapid growth into a period where we're going to see more stability, and we're focused much more on earnings stability, particularly during an inflationary environment. We have seen -- we have got -- as you can see, our sales capacity has been sold out all the way through FY '25, and our business is currently moving forward with a project that's going to yield some additional capacity, modest in nature, and that capacity will be realized in our next midterm plan, which will be FY '24 through FY '26. And I'm going to stop just for a moment because this slide seem to be out of order. I am not getting the right slides. My apologies. Okay. I think we're back on track now. So I'm going to back up just a touch, and I want to focus in on the mission of our company. The mission of Tri-Arrows is to create value, and it's to create value both for our shareholders, for our customers, for our partners. And it's to create value and be looking for opportunities for future growth. We've really focused on our partnerships, and we look for partners that together with us have a forward-thinking approach to business and have a value just around dependability. Most importantly, when I think about Tri-Arrows and our values, it's that we want to be ready to act and we want to be ready to act with systems and with processes that are scalable and that operate under very strong governance. So in FY '21, we've actually achieved -- it was our fourth year of consecutive earnings growth, which we're very, very proud of. In fact, since FY '17, you can see that the company has more than doubled our earnings. And the growth during this period of FY '17 through FY '21 was fueled by capital investment. And this capital investment helped us expand our capacity. It also was key in helping us lower our manufacturing costs and, in addition, our ability to increase the consumption of recycled material. Specific to FY '21, Tri-Arrows achieved record performance in 5 areas for the company. We achieved an EBITDA of $165 million, which was the highest in the history of the company. We achieved the greatest total sales volume for the history company. We had the largest coil production in the history of the company, the most rolling slab production in the history of the company. And as well, we had the largest amount of used beverage can and recycled scrap consumption in the history of the company. So it was a banner year and really represents a strong performance and a lot of effort over the past 5 years to scale and bring on the capacity and the investments that have been supported by UACJ. So now I'll go back to and touch on -- having talked about FY '21, now let's take a look on -- at the forward years. So you can see again what we saw from FY '17 to FY '21, in this period of rapid growth. And I just mentioned to you it was driven by a lot of capital investment that was made into the business. And right now, we're really going to be focused on, having brought those assets up and having brought that capacity to the market, operating the business and providing a steady earnings flow to -- for the company. And again, we do have a focus of making sure that we're really, really mindful of our earnings and protecting costs, particularly during this inflationary environment. At the same time, while we are executing and trying to maintain this stable earnings platform, we also have an eye to the future, and we're working on a project today that is going to help us expand and get that next bit of capacity out of our hot mill to increase our total rolled coil production. And again, we expect to see that production and the results of that in our next midterm plan. A little bit about the demand. We've seen tremendous amount of demand in the North America market for aluminum cans. In fact, we're seeing close to 8% on a year-over-year basis when we look at FY '20 to FY '21. And as we look forward, what we expect to see is 6% on a year-over-year basis through FY '25, and there's no real signs that, that growth is going to stop. Many folks see that rate of growth continuing through 2030. The growth itself is worth reflecting on. It's driven by consumers. And it's driven by consumers in two different ways, primarily. The first one is going to be around an environmental perspective and consumers got -- consumer concern for the environmental impacts of single-use plastic packaging. And the second big area for growth is just around consumer perception, and the perception has really changed over the last 5 years to aluminum being a premium package and for premium products going into that package. So between the consumers looking at the aluminum as a premium package as well as understanding that aluminum itself is infinitely recyclable and certainly advantaged relative to other products in the marketplace for packaging, all that is driving increased demand for our products. So now let's turn to can making. We've seen there's demand by consumers for products. So on the can-making side, there's having -- there have been tremendous amount of expansion in capacity as well in order to meet this consumer demand. In fact, last year, there was a constraint in the system in terms of the production of cans. So there were almost 14 billion empty cans that were imported into the United States as new can-making capacity was brought online. Today, the can makers are growing and they're continuing to invest. Current capacity in the U.S. market is about 125 billion units, and there's -- more can plants are coming. So when we think about geographically where this growth is occurring, we're seeing a lot of new investment taking place in the Southwest of the United States. As you can see on the map, we've circled a few of those key areas in the Nevada market. There's actually four different can makers now that have made investments in that area of the country. But we're also seeing growth in new capacity that's occurring in the Midwest as well as in the Mid-Atlantic area of the United States. So let's talk about demand. just to touch. So the U.S. demand itself in terms of sheet, we're seeing a tremendous amount of -- with the demand, a tremendous amount of growth that's being required from suppliers of can sheet and flat rolled products. Currently, the market is in deficit and that the balance between supply and demand has been coming from imports. And what we're seeing today is pretty much everyone who is in the market as a producer is finding ways to bring new production into the market around -- with brownfield-type expansions. In addition to that, the recent news that we've seen just here in the last couple of months is we've seen two brand-new greenfield rolling mills having been announced. Both of these rolling mills will likely be commissioned in the 2026 to 2028 period. Not exactly clear when that capacity will be coming on, but what we believe when we look farther out to 2030 is when that capacity is there and we couple that with the demand that we're seeing in the market, that by 2030, we'll start to see some market balance between supply and demand on a kind of a run rate basis. And now I'd like to talk just for a moment about sustainability. It's one of the areas that I'm really, really proud of for our company, and it's a strong message to the marketplace, a strong message to our customers as well as to consumers. Tri-Arrows and Logan Aluminum specifically is industry leading relative to Scope 1 and Scope 2 emissions, which -- carbon emissions per ton of aluminum. From a value perspective, we're seeing our numbers around 0.4 tons of carbon per ton of aluminum produced, which is truly world class. When we think about our product, we use a tremendous amount of used beverage cans and recycled scrap, post-industrial scrap, post-consumer scrap. Altogether, though, when we look at the products that we're producing, about 75% of it comes from recycled content. So we're minimizing the amount of primary aluminum we're using, and we're optimizing and maximizing as much recycled content as we can, which is important to the consumers, and it's important to our business and the environmental footprint that we have. There is opportunity to go further in this area and expand. We're working and partnering with UACJ in some -- on some R&D particularly around alloy development and 5,000 Series alloy development that will just enable us to increase further the amount of recycled content in our product. As well the aluminum, we are working closely with the United States aluminum association as well as the Can Makers Institute (sic) [ Can Manufacturers Institute ]. We're partnering with our customers there in trying to advance public policy in the United States that would create the right kind of incentives to increase recycle rates. We've seen -- unfortunately, recycle rates in the United States are fairly low. About 45% was the recycle rate in 2020. We've seen some increases in FY '21 up to about 57% of the reported numbers, but what we would really like to see is recycle rate to get closer to 70% to 80% here by 2030. So a tremendous amount of effort that we're doing with our partners and our customers industry-wide to try and improve recycling. The last thing I'd like to talk about just briefly is just how our business also engages with the community because it's incredibly important to us, and it's something that I think really -- I think we really -- we stand aside in the marketplace and certainly is something that I know that our customers see but that our employees value. And it's the amount that we are engaging with the community directly itself. Tri-Arrows has over 30 charitable organizations that we support. And last -- and every year, what we do is ask our employees to select the top 5 that would be most meaningful to them and the ones that we think that as a company, that we can make a difference between to. And we like to pick on charities that are of a size where our contributions and our involvement in time and in talent can make a difference particularly for those that are in need. We donated last year or contributed over $600,000 to these organizations. And in addition to that, we supported some emergency relief funds as necessary that occurred. This is something that's tremendously important to our employees. The company is really, really proud to be involved in the community in this way, and I think it's an important part of our message as well. So in summary, my outlook. The North American can sheet market is growing. And we see -- we have a strong degree of confidence in that growth because it's backed by a consumer trend. And consumer trend is not fickle. It's something that we've got a lot of confidence in. So we're focused on at this point in terms of making sure that we're operating our business as soundly as we can to deliver as much value as we can to our customers and our shareholders. We are well positioned in the market. We're doing business with the can makers as well as brands, and we're a preferred supplier. We have a very strong balance sheet, and we generate strong cash flows. We've got very strong risk management practices in place, including commodity price risk management, interest rate risk management, management on energy as well as inflation and some pass-throughs. So in this sense, we're doing what we can to be good stewards of our business. And the last point that's important for the outlook is this growing focus that we have on sustainability both as a society in the United States and our company but also globally and in Japan. And this sustainability movement, it's truly driving new opportunities for us. It's driving opportunities where we can differentiate our company and differentiate the product that we're making and really be advantaged, I believe, over our competitors and over other materials. So thank you very much for your time this morning.

Next, I would like to invite Mr. David Cooper, the CEO of the UACJ Automotive Whitehall Industries, to talk about automotive parts business in North America. This presentation will also be in English. Please select Japanese Channel if you would like to listen to the translation using the globe icon On Zoom. This presentation starts now.

Thank you. Thank you for inviting me to tell you about our business. I'm David Cooper. I've worked with this company since 2004, starting as the VP of Operations. I've been President here since 2014 and CEO for a little over a year. A little bit about our company. Whitehall Industries began in 1974 in Whitehall, Michigan as a small machine shop serving customers like Xerox and Kodak. In 1996, White Hall entered the automotive market in a niche area, sunroof cracks. This is a part that the glass and the sunshade travel in. And so we became quite good at making these very challenging parts. At the same time, we had to take our already strong quality culture and bring it up a level to the very high standards of the automotive industry. And so we were able to successfully do that, and we maintain that today. We've been producing our own aluminum extrusion since 2001 because we need a better control of extrusion dimensions and the material properties. And over the years, we've become a very capable extruder as well. We began supplying the new electric vehicle market in 2012, which has been a major driver for our growth since then. White Hall was very fortunate to become part of UACJ in 2016. And we now have 6 locations in the U.S. and a plant also in Mexico and employing nearly 1,300 employees. Shortly after the acquisition, we were challenged by what we called mission impossible. UACJ asked us to grow from $125 million to $500 million in revenue within 10 years, a 15% CAGR. We got our heads together and developed a strategy to try to accomplish this mission, which we keep up to date and adjust it based on market and competitive information. Execution of this strategy has been successful and has transformed us from a little known niche Tier 2 sunroof crack supplier with 1 large EV customer to a sought-after Tier 1 supplier of structural aluminum parts. White Hall was not really well known to OEMs at the time of the acquisition. So part of our strategy was to improve our already excellent quality performance and our level of quality through all the expansion and growth and, through COVID and labor shortages, has remained excellent. Last year, it was below 20 ppm, which was world class. Another element was pursuing Japanese OEMs, and UACJ gave us a really -- a real advantage here, and we've been awarded substantial business by two major Japanese OEMs. We decided also to place an emphasis on extrusion technology and process control, and now we're recognized as one of the best. We have a really talented technical team and strict process control that results in a continuous expansion of our capability, consistent quality and steadily improving productivity. We've also expanded our fabrication capabilities. We're not cutting aluminum with lasers, whereas we were all using traditional machines before. We're welding in highly automated cells. We weren't doing that. We're a friction stir welding, where you're applying adhesives. And now we are far more automated than we were 6 years ago when we were acquired. So we're on a path to accomplish this objective. Current growth potential for aluminum parts, particularly in EVs, is like nothing we've ever seen. So a few of examples of some of the program awards. Now we're at -- as a Tier 1 -- now a Tier 1, if you don't know, automotive supplier supplies directly to the OEM whether GM or Toyota, whoever. That's a Tier 1. And so we have a direct relationship with the automotive manufacturer. But as a Tier 1 or Tier 2, we're typically awarded business through the life of the program, the life of the vehicle program. We're almost always the only supplier of these parts through to the cost of the customer-owned tooling. Sometimes, the same parts are used when the vehicle design is updated, so sometimes these programs can last up to 10 years. So here are some examples of some of the business we've been awarded since we began executing this growth strategy and going after new markets. So there's a large EV customer that's awarding us $139 million of [indiscernible] in 4 new program awards. Now $139 million is an annual volume. So that's what you get each year for the life of the program. We've got a couple of new, as I said, large Japanese OEMs. One is a truck bed structural program at $20 million a year; 2 bumper beam programs at $44 million a year from another Japanese OEM. And then we continue to grow and expand and add customers to our EV segment, one startup that gave -- awarded us $9 million annually for a truck and SUV. Another EV maker awarded us $8 million for a sedan. And then over on the internal combustion engine side, we have 2 customers for $12 million and a large structural program for a sports car that you see over there to the right. And those are the kind of parts that we produce in our plants, and supplier [indiscernible] get welded into that structure there. So all told, this -- we've achieved business awards that will total $400 million once these programs reach volume. So when we set about this strategy, assuming the average automotive program has a life of 5 years, then if we're going to achieve this $500 million target we were given, then we need to be awarded $100 million per year. Now we didn't want to take a step up. We wanted to gradually achieve that goal. So as you see in this chart, in 2019, we had established a goal of $60 million of new program awards, followed by $75 million in 2020. We'll actually more than double that in 2019. So that required us to really accelerate our expansion in plants NS equipment. And for those 3 years, 2019, '20 and '21, we actually were just under $100 million in sales, so we're well on our way towards achieving the target. And this year, in 2022, we're actually lowering the target because our presses are going to reach capacity in 2023. So this is what the sales history and forecast looks like. We're seeing rapid growth in our top line. Although we'll reach capacity in '23, and you can see the flat spot there, assuming we can get approvals for a couple more extrusion press lines, we'll continue to grow in '25 and '26. And you can see as we rose above our break-even point towards the end of '21, the profitability comes with that. But growth was -- growth -- that rapid growth was costly. So a little bit about what this takes to grow this fast in our business. That target was given to us in 2016. We called it mission impossible. But we went after it, developed a new strategy and we had to start expanding. We built a new plant in Michigan. We expanded our plant in Paducah in 2017. In 2018, we put in our third extrusion press, which was a state-of-the-art, 8-inch water clinch press. We also opened a Detroit sales office, as most of our competitors have. In 2019, we started adding new technology like laser cutting, friction stir welding, dramatically expanded our extrusion capability and new alloys and high-strength [indiscernible]. And really, really great things came out of that team. We also started working on our management of our people and performance management systems, new ways of leading them in the plant and also recognized, as we become more automated, the types of skills that are needed and need to be developed, too. So we have a technician training program as well. In 2020, we started up our fourth press and started preparing for the 3 Japanese OEM launches I mentioned earlier and the new EV program launches. In 2021, we reached over $200 million in sales, and we also expanded, adding a new plant in Flagstaff, Arizona, so that we can be closer to some EV customers in California, Nevada and Arizona. We also expanded Progress Drive for a second time and launched -- continued to prepare launches for these Japanese OEMs. This year, we -- our sales, we expect to be above $300 million. And as we finally launch these new programs that we were awarded back in 2019, they start launching. Now one of the Japanese OEM launched last year. The other two start this summer. We're starting up our fifth press. We're actually starting it this week. And we have a significant amount of automation going in place also. But what I really wanted to emphasize here is how much work this is, how much work it is to launch new automotive programs at that rate during a pandemic, during a labor shortage, during all these supply chain disruptions. It was a very difficult challenge. Some challenges to overcome, but it's a fantastic team of people we have here. A great management team, great people in the plants and an excellent culture. So I can't say enough good about the team of people that make all this happen. So just a little -- a couple of illustrations here to show you. This is what we had when UACJ acquired us. We had 2 plants in Michigan, 1 in Paducah and 1 in a nice town in Central Mexico. Now we have 3 plants in Ludington where I am. We have a sales office in Troy. We have expanded that Paducah plant. The plant in Mexico is 3x the size. And we just started last year at Flagstaff, Arizona, and that's been going very well. So this is a glimpse into some of our extrusion plants, the three presses that we put in. With these additional press lines, our extrusions and actually our sales capacity is now up by a factor of 3. Just a glimpse inside what our plants look like. You can see they're dense with automotive fabrication equipment. As I said, we had the -- our Progress Drive plant in Michigan, added the Flagstaff, Arizona plant and did quite a bit of expansion to all of the plants over the past 5 years to get at the new business that we've been awarded. So in automotive manufacturing, the OEMs award business and fund tooling to a single supplier, usually for the life for the program. These fabrication cells are dense with complex machinery and automation. They must be put in place well in advance of the start of production. They have to be validated for process capability and capacity. Traditional OEMs require that this capital and tooling be validated 6 to 12 months before the start of production. EV customers are different. They produce -- they proceed much faster and sometimes don't even give you the time to get the capital in place, and we had to put temporary systems in place. But you can see the type of technology we've added for these programs such as the laser cutting machines in the upper left and the robotic friction stir welding in the lower right, automated welding cells in the lower left. So it's just quite a bit of work to get all that stuff put in place well in advance of the start of production. So all this time, all this growth, we have to put this stuff in advance, and we ended up with fixed costs twice what they were when we started. We'll end up with 3x the capacity and extrusion and the amount of sales we can generate with the capacity, but it has been costly. At the same time we attracted all this business, I mean, all this expansion, we also fundamentally changed the labor component as labor costs continue to rise in North America. In an acquisition, only 7% of Whitehall manufacturing was done in a low-cost country or in a highly automated work cell. This year, almost 60% will be done either in our Mexican plant or with highly automated work cells. This more than offsets the wage and benefit inflation over the last 6 years. And so while our direct labor content as a percent of sales was about 12% in 2015, this year it'll be below 8%. And also, I'll add that our automated plant in Arizona will have the same labor content as a percentage of sales than our plant in Mexico. So a fundamental change was achieved there. Also, over the past 5 years, we've transitioned from our traditional Tier 2 or even Tier 3 status that is supplying directly to the automotive manufacturer to predominantly a Tier 1 supplier. So we were about 50% at acquisition, almost 80% for this year. We've also moved away from our -- what was our core business of sunroof cracks. They have become more complex, more resource demanding and actually lower margin than the new stuff that's being presented to us. So you can see we went from 40% of our business being sunroof to 12% this year. Our share of EV has gone from 50% up to 65%. And now structural, the non-battery electric vehicle, is up to 22% from nothing. So we've had a lot of new business to launch. It really would be great if it had been operating in capacity by now, but we had a number of headwinds that prevented that. The major Japanese OEM bumper program had been delayed. All this stuff has to do with COVID-19 and the supply chain disruption caused by COVID-19 and the chip shortage. So we've had lots of delays by these new launches. All of our OEMs have been affected by COVID-19 and the supply chain problems. So as a result, we've been operating below break-even point with all the added costs we've had since we started expanding. But we have the capacity in place. You'll see that there's the North American automotive production, and you can see a dip there in '20 and '21 caused by COVID-19. And that's a dip in production, not demand, which means that demand is building, the car lots are empty, the inventories are gone. So all that had to be replenished. The future, the next several years, there's going to be higher North American production than we had, and it's like we saw in the last 5 years. Couple that with the transition from internal combustion engine to battery electric vehicle and hybrids. This chart shows [ the auto ] is expected to be [ fully ] electric by 2035. So we have growth in North American production, and we have conversion to battery electric vehicles, which benefits us. We're -- that's our core business right now, and it really favors us to -- for the vehicles to switch to battery electric. Here's another way of looking at it. The number of new battery electric vehicles is expected to skyrocket. By the end of this decade, the number of new battery electric vehicle models is expected to grow from less than 10 now, 10 battery electric models, to over 100. But we've never seen so many opportunities coming to us. And these opportunities are large, too, to put that in perspective. Prior to getting into this type of business, it took us years to fill up on extrusion press. When opportunities would come to us, there might be 10 pounds per vehicle of aluminum. Now when a customer comes to us, it might be 100 or 150 pounds per vehicle: bumpers, rocker panels, cross members and battery box parts. So we're in an exploding market as far as the number of new battery electric vehicles that are coming. And also, that just multiplies the value and the content that we get awarded. So we're only limited by how fast we can put capacity in place and launch a new program. Here's another chart showing the annual expected production of electric vehicles in North America over the next several years. So to conclude, we have a tremendous growth opportunity after executing on this strategy and the favorable market that we're in. New business comes to us now, now that we have established a reputation as a preferred structural automotive supplier. We were overwhelmed with new program opportunities. We can't accept them now because our press capacity is now booked. Major customers are pushing us to install more as they see a shortage developing overall for extrusion capacity in the future. So there's never been a time like this to be in our business. Thank you.

The next presentation is on financial strategy. Member of the Board, Vice President Teruo Kawashima, will take you through this part.

This is Kawashima speaking. Thank you very much for this opportunity to take you through the financial situation. There are two things that I want to cover today. Number one is the main theme for today, which is the update on the midterm plan. And I also would like to take you through what has happened in the past 1 year and what actions we have taken against the midterm plan. But before that, in 2021 -- I would like to give you an update on our performance for fiscal 2021. So those are the two topics that I will be covering in my presentation. Starting with the third midterm plan, there are three points that we highlighted in the plan. The first is as we have covered a lot of topics today, Southeast Asia, Japan and North America, we have made big investments; as a result, have our balance sheet become vulnerable. We intend to strengthen the balance sheet. That was a key point under the third midterm plan. Generating cash is one thing. And as was explained by Henry and David, aluminum business is growing quite robustly and how to allocate our resources has become a topic. And we want to strengthen our balance sheet. And by strengthening our balance sheet, we will build our net worth. This, we believe, is a major challenge. And another major challenge for the company is to strengthen our business management. We had three KPIs in this regard. We are using the three KPI in managing our business, and I would like to take you through some updates on that. The third point is shareholder return, increasing the value of our business and returning the profit to our shareholders. So these are the three topics or key points under the current midterm plan. And on the next page, I want to recap the situation in fiscal year 2021. Profit -- P&L business was already covered by our President as well as Taguchi-san, so I want to briefly cover cash flow and the financial situation. As you see on the left-hand side, this is the cash flow as of fiscal year 2021. This is the same information that I've shared at the earnings call, so I won't go into it. But as you can see, we were able to generate profit, but natural -- raw materials has increased and therefore our working capital has gone up. And looking at it from a different angle, as shown on the right-hand side, this is the capital investment list. This is very basic, and I personally think that this is the easiest way to capture the situation. It's a question of how to give color to the numbers. And if you look at this on the table on the right-hand side, long-term capital, we were able to generate a lot of that because the foundation of the company has -- is more established. And as you can see, profit, depreciation and other investment, so JPY 21 billion. Of the JPY 21 billion, JPY 7.9 billion, strategic investment, and general investment, JPY 13.1 billion is the breakdown for capital investment. So long-term capital is a source of growth for the company. JPY 32 billion was generated. But as we have spoken multiple times, ingot prices have soared and, therefore, impact on our P&L. From our business model, it doesn't have a [ big ] impact, but it does have impact on cash flow. Therefore, there was a shortfall in the order of JPY 45.2 billion in short-term capital. And so free cash flow was negative JPY 13.2 billion. So it's a negative free cash flow, but JPY 32 billion of capital was generated, which is a part of the business that we can -- we have control of. So we were able to generate capital, which will become a source of strengthening our financial base through long-term finance, but there was an increase in working capital. And the next page is also a page that I have explained multiple times in conference calls and so forth. So basically, there was a increase in net worth. That has increased. And therefore, there was an upturn in D/E ratio, although interest-bearing debt has increased. 1.2x is our target. And in the short term, we want to achieve 1x. This is our aim. In terms of D/E ratio, if I could briefly talk about that, on the right-hand side, 1.56 to 1.36 to 1.3x. This is the upturn. And as I said, the working capital has gone up, but this increase in working capital is being covered by long-term capital. So this, I think, has been minimized and that we are seeing a buildup of net worth. The source of strengthening of financial foundation is about net worth. And long-term capital, how will that be allocated into strengthening of our financial base, and the corporate value is very important. We need also to make efficient use of our capital. It's not only about the resource prices. If we're going to increase our production to 1.4 million, to 1.5 million, that means that it's going to incur costs for production. So we need to work on enhanced efficiency. And I've been asking Taguchi-san over and over, but improving -- the inventory turnover has to be improved because that will allow for efficient use of our capital, and it would also enhance the -- improve our balance sheet. And so that was the situation in '21. From the next page onward, I want to speak from -- more from a medium-term plan perspective about the three KPIs: ROE, ROIC and D/E ratio. These are very important KPIs for the company, which I will take you through on the following slides. Starting with the ROE. For ROE, managing business using ROE is very difficult from a practical perspective. So in order to achieve our ROE target in our business, we need to look in ROIC and also look at D/E ratio because these are the two important KPIs for better business operation. And I've been asking that to our people. And as a result, it will lead to improved ROE. In ROE, as was mentioned by Ishihara-san earlier, 14%. This is a very good number which we were able to achieve. The inventory valuation impact was quite significant. Sales and assets is almost the same. And therefore, there has been an improvement in that area. And also, borrowing was high and D/E ratio has gone up. But the foundation is that we have come to a point where we have originally aimed to achieve 6.7% for fiscal '22 and 7.5% for the midterm. Our goal is 8%; and in Vision 2030, 10% in ROI is being called for. In order for us to stably achieve that level, that is what -- where we would like to achieve. So therefore, we would need to further improve our profitability. Another point is the equity spread. It's not that the ROE 10% is great. We need to reduce our capital cost and improve capital efficiency. And therefore, focusing on equity spread will also be critical. Next, I want to talk about ROIC. Internally, what I have been saying is the importance of the capital efficiency in the past 1.5 years. So I think that this term has penetrated into everyone's mind. So what we tell the businesses is we have the number for invested capital, how much capital has been invested in that business. In addition to that, before this midterm plan started from the finance division, we had made a request about the hurdle rate. And with the multiplication with that, the P&L is being managed. So the target is there, that's WACC, and that is the basis for making the calculation. But we have just started this process. So we are at the starting line, and we are running towards the goal little by little. So the P&L will be managed using this format. ROIC, because it was affected by the inventory valuation, there was impact of 11%. And it's 5.5% this year, and it's still low. Moving on to the next slide. The financial base is what I would like to mention next, our big challenge. So we have to think about the numerator and the denominator. And numerator is the cash flow. We would not be able to increase the profit without the cash flow. But now we have better power to generate free cash flow. We have a improvement there. It is slow -- this shows the chart of free cash flow. And in 2021, it's negative JPY 13.2 billion. And profit -- so we were to strengthen our basis for better profitability. And we have strengthened our basis, and we have improved our capital efficiency. We also have a target of PE ratio. So this is the financial basis for us. This year, there was a lot of operating capital and working capital. But with the increase of the net worth, we were able to improve our financial base. And another point is financing capabilities. So when we have -- so even when we have the good financial base, it doesn't mean that we will be able to have the stable financing capabilities. So we have to work both on the financial basis strengthening and also improve the financial -- financing power. We need to work together with the financial institutions in operating our business and improving it. You see D/E ratio and interest-bearing debt and EBITDA, evolution of those 3 items. EBITDA, we only had JPY 40 billion, but now it's JPY 60 billion. And we would be able to get to JPY 610 billion -- JPY 61 billion, and we want to get to JPY 70 billion. And if we are able to get 1.5x bigger, this means that we have been able to structurally reform ourselves and create a better business environment. So this will be a game changer. And with this -- and the strengthening of the financial basis is something that we have to continue to work on. Now I would like to talk about the dialogue with the capital market, the last page. As I have been saying, we need to have the understanding of the capital market of our business. With the KPI as a basis, we need to work on -- to improve our corporate value. In addition, we need to disclose the known financial information so that we can disclose the comprehensive information about the company. And we would like to do that proactively better than we have done in the past. There would be an ESG briefing in the fall of this year, and we are now creating materials for the briefing. And through these initiatives, I hope that we can show to the market what we are doing and also that there is the strong wind that's blowing in our -- for the preference of our direction for aluminum, and we want to share what we are doing with our shareholders. And we were not able to generate so much profit in the past several years, but next year, we would like to get to JPY 85 in terms of the dividend. And by increasing the profit, we are hoping to improve the dividend. And in order to do so, we need to further work on the management of the business. That's a huge mission for our division. And in this midterm plan, I think that we are working towards the path of improvement. And that will conclude my presentation. Thank you very much for your kind attention.

This concludes the presentation from the company. We now would like to take your questions. [Operator Instructions] First question is from SMBC. We've got Yamaguchi-san.

Yamaguchi speaking. I am Yamaguchi from SMBC Nikko Securities. I have four questions. I think we have enough time to ask. My first question is the structural reform that started from September 2019, I think, is bearing fruit. But in the meantime, share price is not going up. I have my own answer for that, but could you share with us your view on why share price is not rising? And I guess if you are able to deliver on what you presented today, that will lead to increase in share price, but what is your view? That's my first question. And my second question is, after listening to all your presentations, and what I felt was that you have come to the full capacity, and Kawashima-san talked about strengthening the financial base. You talked about both aspects. And looking at the North American market, which is very robust, and if you wait and -- if you assume a wait-and-see attitude, you will be behind the curve and also there's a great opportunity in the Southeast Asia. You don't want to lose your opportunity. But in the meantime, you also have to talk about the discipline in your finance, opportunity loss and discipline in financing. You also talked about D/E ratio. Is there a particular target that you have in mind where you will switch your attitude and be more open? That's my second question. And my third question, I'll make this my last question. In terms of price, magnesium and metal -- silicon, prices could go down. And if there is a lag in passing on the prices, will that trigger an increase in profit? Or if crude oil prices would soar, and if you're able to pass on that the price increase from the second next quarter, will that time lag might lead to a drop in profit? There could be problems -- similar problems in other industries, but what kind of time lag impact do you expect? Those are my 3 questions.

[Interpreted] Okay. So Ishihara-san, if you could respond to those questions or if you could call on someone to respond?

[Interpreted] This is Ishihara speaking. Thank you very much for those questions. Starting with the share price, what is the view of the company was your question. Kawashima-san, may I call on you to respond to this question?

[Interpreted] Yes. With regard to share price, yes, I also agree, it's low. And I think there are risk views on that. But from a net worth situation and a PBR situation, it is still very low. I think there should be more transaction in our shares. But one thing I can say is that from '21, our business has transformed. That's something that I will want the market to understand. For example, as I mentioned earlier, 2018, 2019, comparing that with beyond '21, the business environment is completely different. And with time, I'm sure that you'll be able to appreciate that we were at a completely different level. And that I think would lead to a better appreciation of our shares. And it's also important for us to use opportunities like the one today to disclose about our business and also to seek understanding of our business.

[Interpreted] And this is Ishihara speaking. Talking about share price, share price reflects the true ability of the company, and it also reflects the expectation by the market. So how to increase our corporate value is where we need to make more effort. And of course, we'll be working on that, but also how to show the future value of the company. Beta value, as I said, is a very important point as part of our KPI. And we hope that will be reflected in our future share price. So that's about the first question. And the second question is about seeking volume, there's volume increase, and in a growing market, operating at full capacity. In other words, we're able to catch up with the market with the already invested capacity. And in the meantime, we want to strike a good balance with disciplined financing. We have not been able to share with you near-term road map at TAA and Whitehall. You talked about the opportunity loss and we fully understand that. But in the meantime, we, of course, need to strengthen our balance sheet financials. And maybe Kawashima-san can talk about that in more detail when we're going to step up our effort in investment. But I think the important point is where to prioritize, where our focus is. And for us, we want to optimize our sites and consolidation has made its way and automobile materials, panels has grown in that area. And beverage cans is, of course, a very important area. We will be making investments in an efficient way. And the key is to make sure that the customers use highly recyclable aluminums and collect those aluminums so that we contribute as a company to reduce CO2 emissions. It will require environmental investments going forward. So in Japan, we will focus in investing in those areas and also in Thailand in TAA. This is an area that is indispensable. In terms of capacity, the focus will be in North America. As we heard from Henry, 6% CAGR growth in can stock is expected. So capacity in TAA has not reached full capacity. So removing bottlenecks in order to achieve maximum capacity. And for auto materials, the newly operated press will be replaced by new materials and -- within the span of like 5 years. So how to make use of the existing lines and to convert it into new ways is this needs to transform into a cyclical business. Otherwise, it would not be -- make much sense from an economic perspective. And therefore, ensuring the kind of circularity is in place so that we can shift it to a more highly profitable business. In that way, we should be able to capture growth opportunities. So from a financial perspective, what is our target? Let me ask Kawashima-san to join in.

[Interpreted] Yes. This is Kawashima. If I could talk about from a financial perspective. I talked about that a little bit earlier, but the D/E ratio of 1x is one thing. Currently, it's 1.3x. And in 2023, 1.2x, I think, can be achieved. I think it is possible to achieve that level. And if you're going to achieve that level -- if we are putting so much emphasis on financials, and therefore, will not invest, now it's a question of how to allocate EBITDA JPY 400 billion to JPY 650 billion, it's completely different. There is a big difference when there is EBITDA. In other words, when free cash flow is generated, in 2016, 2017, and today, it's completely different. We are at a different level. Capacity building is not about the building fund from scratch. So investment required is completely different. And therefore, we will generate free cash flow. So therefore, to a certain extent, we can invest in growth, and also investor environment, as Ishihara-san mentioned. And at the same time, strengthen our financials is possible. We don't invest at all. I guess we could strengthen our financials much quicker, but to invest. And since we are generating EBITDA, we're able to invest and also improve our financials and achieving EBITDA of 1x -- sorry, D/E ratio of 1x as soon as possible is a key. And also about the energy prices and additives. That could have an impact on sales and profit, the time lag of that. How should we view that time lag? I think that was the third part of the question. And this is really based on negotiation with our customers, and therefore, we cannot guarantee the timing and whether or not that such a time lag is going to occur or not or how, we cannot elaborate. We cannot avoid such time lags. Every quarter, we have opportunities to speak with you, but to give you an update on our performance and our outlook for the year. To what extent the price increase -- cost increase is expected and how that will be reflected in our performance will be shared with you every quarter when we have dialogues with the market. I hope that answers your question. Thank you, that's all for me.

[Interpreted] We would like to move to the next question from Morgan Stanley MUFG Securities. Shirakawa-san, please.

[Interpreted] My name is Shirakawa from Morgan Stanley MUFG. I have 3 questions to ask you. The first point. So in terms of the review of the midterm plan on Page 16, and flat-rolled current status, Page 14, I have questions from those pages. So when I look at those 2 pages, what I see is that the adjusted EBITDA for overseas is improving. In terms of the domestic business, it is recovering volume-wise. But in terms of the profitability, adjusted EBITDA, compared to 2016 to '17, it is still inferior. And you are working on the structural reform domestically. And when there is a completion of the structural reform, in order to improve the profitability domestically, what do you need to do domestically? The second point is about Thailand business. So according to the explanation that you have made on Page 6 of the Thai presentation. So for fiscal year '21, you said that you went into profitability, excluding the inventory valuation. And if I look at Slide 6, for 2025, I don't know whether this pie chart is correct or not. But in 2025, there would be JPY 5 billion of the ordinary income, excluding the inventory valuation, and that's what you will be targeting according to the slide. So I was wondering if this is the target. And so when the volume is not increasing, how would you be improving the profit to this level, maybe cost reduction? I don't -- if could talk about the countermeasures for the next several years? And I would like to ask about TAA. So I would like to ask Henry-san on this matter. So on your presentation material, on Page 5. So last year, in IR Day, fiscal year '21, '22, '23 were presented and it's at stable performance. And this is a stable phase, but I think that the profitability level that you have been working at was $157 million, what you were aiming for. But now it's $165 million now and it is in $187 million for fiscal year '22. And I was wondering what the background it is -- there is for this improvement. And after fiscal year '24, it seems that -- if we exclude the green portion, it seems that is coming down, and I was wondering what the background to that was. So those are the 3 questions.

[Interpreted] Thank you very much for your question. So Taguchi-san will be answering to your first question.

This is Taguchi. In fiscal year '22, there will be completion of structural reform. So what would we do? So that -- I think that's what your question is. The first point is, according to the assumption that we have now, it's a slight overhaul. And -- so selection and concentration is what we have to eye on. So if the -- if the product price -- I mean it's not appropriate, we will work to make the price appropriate. And also we will be reviewing the product and make selection and concentration of the product lines that we have. So there are differences in the product business mixes like the increase in the automotive, for example. So the United States, Thailand and Japan. So if we have the double stack or the certification, then we would be able to respond to anything. And that is the strength of UACJ. So we will continue to work on that. Also, improving of the yield and the productivity will be something that we will continue to work on. So we would like to increase what we say is for 640,000 tons to 650,000 tons and 660,000 tons. That's all.

[Interpreted] I would like to make supplementary comment. This is Ishihara. The flat-rolled business, we would be able to make anything. That's our strength. So we would like to grow there. But of course, we have to shift to the profitable product. And so profitability, it's important. And also in addition to flat-rolled business, we have a business -- we have other businesses. And we have to think about how we would be able to utilize the place to what customers want. And the key will be how short of a time frame we would be able to make for delivery. So processing the thick plate. And by doing so, we can contribute to delivering to customers the products in a shorter time frame. And we would like to expand the businesses through that. It's not just profitability. We need to work on to improve the corporate value by responding faster to our customers. To your second question about the Thai business, the target for profitability is your -- is the question. And Inagaki-san, can you answer to that question?

[Interpreted] Yes, I will take that question. In 2025, the P&L there, the level of accuracy of our target is not so high yet. 340,000 tons is what we are aiming for in 2025. And I think that we would be able to get the profit level, which is higher than now, 340,000 tons production. The yield and capacity improvement that we need to implement, it includes cost reduction and also improving the scrap rate of the UBC. And we are setting a target for that as well, reduction of the fuel cost. And also supply and demand situation is quite tight. And we are working on to negotiate the '23, '24 contracts. And we expect that we can get the approval for those contracts. And considering those, we believe that we can improve our profitability in 2025, as you see on the chart.

[Interpreted] So the third question, question towards TAA. On Page 5, stable performance. So there was a mention of $157 million, improved to $165 million and $187 million. Why did it improve? And the fiscal year 2024 on EBITDA proportion is excluded. It seems that the EBITDA is declining, and he wants to know the background for that. So Henry, could you answer to that question, please?

Certainly. So really excellent question. And Logan is an interesting plant. It's -- one of the things to understand when you evaluate profitability, particularly on a year-over-year basis, and when we look at our production, is it's 100% loaded. So every second on every piece of equipment, just about -- but every second of time on the constrained asset for certain is being used. And what this means is through continuous improvement activities through better utilization through higher tons per hour, improved recoveries, for any incremental pound that's made that's above what that plan is, those pounds are basically produced for free. All our costs, there's very little variable cost in those last pounds. So if you recall, when I was talking about FY '21, some of the things -- some of the achievements of that year, we had record production in coil. And we also had record production in ingot. And so when we achieve those, when our base plant is already 100% loaded, we're really picking up some very, very profitable pounds. And you see that value flow through into our final earnings number. And when we look at FY '22, we can think about baselining our production against what was the prior record, but I'm going to add another dimension to it, which is material strategy. So we've been very successful in FY '21 and in FY '22, again, on the production side of increasing the amount of scrap and increasing the amount of recycled content that's being used into the production of our product. So the increased usage -- or the increased consumption of scrap is also a good determinant of overall profitability. So by being able to find incremental production, we've driven more value into the business. And by finding incremental production that allowed us to consume more scrap, that as well allowed us to deliver more value for the business. So that gives you a good look, I think a good flavor for FY '21 and as well kind of a preview for our expectations on FY '22, and why we see a lift in our overall performance versus a year ago. When you look further, it may just be the way the slide presents because, in fact, our expectations for the market and market conditions further out really are consistent with where we were a year ago. So we still have -- we still see it being a very strong market, and we see some incremental value that's going to come to grain section that would be driven by a modest step change in capacity off of our hot mill. But outside that, we show a pretty strong -- a strong business with stability relative to our cost controls and no real change from last year. So I apologize if the chart seems to indicate anything different.

[Interpreted] So as Henry has responded, so the scrap at the preprocessing plant is what we have invested starting from 2019. And through this investment, we were able to add value. So through the utilization, it is not just the utilization of the scrap, but we have made investment. And now we are able to capitalize on that scrap. And after 2024, it will be declining. And that's why the green portion will be added to supplement that. So the green portion is the volume and it will continue to grow. And the blue portion includes a material portion and there would be fluctuation because of that.

[Interpreted] Let us move to the next question. Nomura Securities, Matsumoto-san.

[Interpreted] This is Matsumoto from Nomura Securities. I have a question to Henry-san. Aluminum demand in the United States is expected to be very strong until 2030. I understand that very well. But how about a comeback of other materials? Because of lack or shortage of aluminum, would that happen? I was watching a video that was aired during the break and the recycling of pet bottles is very high in Japan, but not high in the United States. But if that would pick up, would that have an impact on aluminum demand? And also, in terms of premium, other materials, I think, are going to use their ingenuity and work to compete in the market? That's my first question. And my second question is to David-san, if you are still here. You talked about orders taken and I was impressed with that. And you also talked about the capacity and so forth. But I think you didn't talk much about profit. And Kawashima-san was talking about ROIC and about profit margin. How do you view profit levels or manage profit levels at UWH? That's my second question. And my third question is about lowering capital cost. And other companies will rarely talk about reducing capital cost at this kind of setting. So I wonder if you could share -- give some color to that.

[Interpreted] Thank you for your questions. Starting with TAA, about demand in aluminum, up until 2030 growth is expected, but other materials could be using their ingenuity to compete better, but -- and also with better recycling, what kind of impact would that have on aluminum? Can I ask Henry to respond to this question?

Sure. Happy to. And that's an excellent question. A lot of folks are asking that. And here's the answer that I'll tell you, and I can't speak directly to what the recycling dynamic or consumer preferences are like in Japan. But I can tell you in the United States that -- what gives me confidence in this market and actually what gives hundreds -- the confidence for, I think, what's now close to $4.5 billion of investment that's moving in for 2 new rolling mills, plus hundreds of millions of new can lines, is that it's consumer preference. It's not a marketing play. It is truly the fact that consumers have now really kind of anchored in on both looking to products in an aluminum package because they perceive the -- because of the brand, because new products are being launched in aluminum and also because they see plastic as garbage. Because, frankly, black plastic is garbage. And when you recycle plastic, it degrades and is not able to go back into the same form. And so the reason I think this market is so sticky, and there's so much money that's going to work, it's because there's confidence in consumer behavior. That's not fickle. It's pretty sticky. So when I look at what my children drink and what their friends drink, it is purely out of aluminum cans. We're seeing products like water now beginning to enter the marketplace where before it had been dominated by PET. And now we're seeing aluminum water at most large-scale venues, whether it's concerts or sporting games, et cetera. So a lot of confidence. I don't think there truly is a recycled market for plastic that is going to be challenging the containers. And I think there's enough margin in the products that are being put on the shelves today, energy drinks and craft beers, where the difference in packaging strategy is not going to be material relative to the choices that are going to be made by the brands themselves. When you see large brands, very large brands, brands like Coca-Cola that are putting Recycle Me on the sides of their aluminum cans, it tells you that they're bought in as well. They're fully committed. And when the brands are committed towards moving product in the aluminum package, I think we can have a lot of confidence that this is a trend that's going to continue for a while.

[Interpreted] And with the increase in the recycle rate, what kind of impact would that have on aluminum materials? Or could you also comment on that?

Yes, absolutely. I mean I think increased recycling rate would be a really, really good thing for us. As I already mentioned, there's a couple of rolling mills coming up. Those rolling mills themselves are going to have a recycling strategy. They're going to want to have as low a carbon footprint as possible. And that's part of the advantage of the aluminum can, is the infinite recyclability that, that can brings the more recycled content. So increasing -- an increased recycling rate will just put more material in the market. And as we have more scrap availabiity, it's going to make those scrap units themselves more cost effective. So it is good for the environment. It is well -- it is good overall in terms of taking cost out of the system for us to be able to increase the recycle rate. So the increases that we see and the legislation and policy that a lot of us are advocating for across the United States, all these things are positive towards supporting kind of, I would say, a longer-term trend in terms of adoption and growth of the aluminum package.

[Interpreted] Thank you for that. Plastic is waste is what Henry said. Plastic is likely to become waste at the time of disposing whereas aluminum will not become waste. It will be recycled and reused. I hope you would interpret -- understand it that way. So the second part of the question was for David. Will you be referring to ROIC or other financial KPIs? How do you manage those financials? That was the second question. David?

Yes. No, I didn't talk a lot about -- I didn't throw up a lot of charts for productivity because most of our effort and energy has been on this challenging growth target, and all that goes with putting in -- expanding and putting in all these new automotive lines. But we never look -- we never take our eye off profitability. What's been so difficult is as we add these costs, these fixed costs in advance of the sales, we're still waiting for those programs to launch. We're not putting the capacity in. Hopefully, someday, we'll have the sales to go along with it. It's just that these programs have been delayed. In spite of that, the delays and waiting on the sales to cover the fixed overhead, which I did talk about how our fixed costs had doubled, but our fixed costs doubled in order to triple our capacity. So when all these programs launch and all these programs hit their volume, we will have that fixed cost covered and we'll return to profitability. We actually were profitable for the fourth quarter of last year for the first time since we started going through this growth journey. But we are well experienced with Kaizen and cost reduction, productivity improvements. We put a lot of emphasis on automation, which is being significantly ramped up this year. Our plant -- our new plant in Flagstaff is going to be almost totally automated. And as I mentioned in one of my slides, the amount of our work that's done in Mexico has significantly increased, too. So the main challenge of profitability has been the top line growth that we're waiting on until these programs that have been delayed by COVID and supply -- chip shortages and supply chain issues, which will go away. This is -- these are good programs that will reach the volume that we anticipate. But we continue, as I said, through doing purchasing cost reductions, automation, constantly working on direct labor productivity and also managing our business and trying to phase out the lower-margin traditional sunroof business, which have become very costly and very complex, and focusing on more profitable growth -- more -- business that has more profit potential than we've had in these traditional products we've had. So this year, we'll be profitable and then we'll continue to go from there. If we get more press capacity, we'll still have some upfront fixed costs that we have to endure, but we'll be over that breakeven point. If we end up due to capital constraints, we install a little bit, then we'll just accelerate more cost reduction and more focused on just productivity and scrap reduction and profitability. So I hope that answered your question.

[Interpreted] TAA is a production system that caters to the needs of the customer. And therefore, the investment efficiency for each of the products compared to materials, it's very easy to track. And therefore, that kind of system is already in place. Past investment is well managed, and we will improve the accuracy of managing the investment. And also, there was another question about the capital cost reduction. Kawashima-san, please?

[Interpreted] It's kind of difficult to explain that because it's not something that we can manage on our own. But as a company, we want to generate corporate value, which is very critical. And naturally, it leads to the question of capital costs. And capital costs for the company, I think it's very easy to calculate. It's very high. And the reason why capital cost is high is because of the beta value that Ishihara-san talked about. Do we want to increase our corporate value? And by raising for group value, we want to better understand the situation. And I think -- and better communicating to the market that will lead to increase share price. In the meantime, in the business, we're asking businesses to increase capital efficiency and reduce capital cost, and that will lead to generating equity spread. And that is an important objective for our company. So that's the kind of mindset that we have of reducing capital cost. And we talk about that inside the company, and that's what I've mentioned on my slide.

[Interpreted] Thank you very much. We will go to the next question from UBS Securities, Goroh-san.

[Interpreted] This is Goroh from UBS Securities. I have one big question and 2 breakdown questions out of the one. You talked about the growth strategy. You said that there was a big game-changing situation to demand and I was wondering how you would be -- and I think that you talked about how you would be responding in terms of the volume. And within the existing business model to grow volume, I wondered whether that would lead to the significant change in ROE or ROIC. And you talked about the strengthening of the basis, for example, increasing the added value business and also creating the unique position as Taguchi-san has explained. And I think how that should be implemented is critical. So the value provision and the value-added business, I think, and the solution-type businesses. You talked about in the slide, but I was wondering how you would be proceeding it. And how is -- how internally you are managing the KPI, including the milestone is what we cannot see from the outside. So if you could talk about that, I would appreciate it. And in terms of the unique positioning, work on recycling. What is the differentiation point for you compared to other competitors? And I think that you wanted to be the industry leader, but I was wondering how the progress is at this point and how you are intending to create a target and manage the implementation.

[Interpreted] Thank you for your question. In terms of the growth strategy, I have said that there is a -- there was a game changer in terms of the demand, domestic and abroad. The -- we believe that the improvement of the existing business is critical for us. And how we add value is important and how we can build a unique position in that market is what we have to think about. And I will go first, and Taguchi-san will add on to what I would say. And also Kumamoto-san, who is in charge of the strategy, and also Sato-san, who is in the area of the automotive business. So they will comment as well. In terms of the existing businesses, it will be about how we'll be adding the value. And in existing businesses, it's more difficult to do. It is not just about the flat-rolled business, and how we would be able to have the collaboration amongst our businesses within the group will be important. The battery package for EV is the air and the bumpers -- is where we are working on. And not just the extrusion, but we are adding on the bending, et cetera, to create the other products like bumpers. So our design capability and our assessment capability, for example, the durability, the life of the product and the attributes when it is craft, we have the capability to assess those and combining those capabilities will lead us to new businesses. In the field of aluminum cans, by adding water, there is an extended life. And you don't have to replace that in 3 years. So we need to show to the market that we are able to provide the kinds of value. And I think that would be conducive to increasing our business. And combining that with the existing services is something that would give us additional opportunities for growth. By 2030, we want to get to the profitability of 6% with the revenue of JPY 800 billion. I would only be able to show you that number at this point. But we need to consider how we will be able to add JPY 200 billion to the current JPY 600 billion to get to JPY 800 billion. We will be looking into the specifics going forward and how we would be building our unique position. How that will be done, will be explained by Taguchi-san.

[Interpreted] In terms of the unique positioning, I said rather than pursuing volume, we need to look more into social contribution, like environment. On the left-hand side of my material, it talks about the environment. One is recycling. And together with Yamaichi, we would be working on the upstream so that the recycle rate can go up and contribute to carbon neutral. That's first point. The second point as Ishihara-san has supplemented. So our business is not just a flat roll, but we are able to process the plate before providing that to our customers. So combining the upstream and downstream, we would be able to contribute more to our customers, and that would create a unique position for us. That's all.

[Interpreted] So in order to recycle, volume is important, how much product that we have out in the market. And because we're recycling it, we need to have a capacity to receive it. And we need to have a sales capacity to be able to sell the recycled aluminum. And I think that we have that capability, and I think that there is a good value in aluminum to do so. And through those initiatives, we want to create a unique position.

[Interpreted] Look, this is Kumamoto, and I would like to respond. So there are things that we are making preparations. As Ishihara mentioned at the beginning, in the new field, we want to expand by JPY 100 billion for the creation of new business field. Recycling initiative is something that has come to our attention in the past year and this is something of a new opportunity for us. Vision 2030 can identify 3 areas where we would focus on. And that would be the starting point for us and how we will be add on [ flush ] to it is something that we have just started. And I would be able to elaborate on the specifics at this point. But Goroh-san, you have asked about how you would be -- how we would be measuring those value added and that gave me a tip on what we need to work on. So we will be thinking about that going forward.

[Interpreted] So through automotive business, where you would be adding on to the growth and also David has mentioned about the automotive business in that it -- the management is done client-by-client. But if we elaborate too much, we may be elaborating on the confidential information. So it would be very difficult. But -- this is Sato, and I would like to comment. As David has mentioned, there is a change in the environment in the automotive industry. And there is an increase in the demand from the customers, a lot of requirements, snowballing, and we have to balance it with the technology that we have in place. And the situation is changing by the minute. And we share that information within the UACJ Group so that we can make appropriate decisions in a timely manner. When the customers come to us, they are asking to do things. And with regards to value added, I think that if we are able to work more with the customers, we would be able to have a bigger opportunity, and we are in the Tier 1. So I think we will be looking into the preparations for capturing new opportunities and to aim for growth. And I think that we have a good trust from the customers, and we have a very good technology. And with that as a basis, we would like to go up further in the ladder. And in terms of the financial index, I would not be able to elaborate so much at this point. We are talking about the strategic growth and we had focused more on EBITDA, but we will be recovering the investment going forward. And we will be looking into the KPIs, as Kawashima-san has mentioned, and we may be able to disclose on a future timing. So within the automotive parts business, they are working on scientific approach. And inclusive of the cost, we have high expectations for the reduction. That is all. Thank you very much.

[Interpreted] Thank you very much for your questions. We have passed the scheduled time, but since this is a valuable opportunity, we would like to entertain as many questions as possible. If there are any further questions, from the investors, including those of you who are joining us from phone, please feel free to ask your question. Our next question is from Ozaki-san of Daiwa Securities.

[Interpreted] This is Ozaki from Daiwa Securities, and I have 2 questions. My first question goes back to the earlier presentation about the Thai side, operating income of JPY 5 billion could be aimed for. And when this is achieved, ROIC, or hurdle rate that you use internally, would that be achieved? That's my current question. It's a site that has -- for which you've invested JPY 100 billion. So I think you would want to generate more profit. In order to see more upside in profit, what kind of initiatives do you have in mind? So that's my first question. My second question is with regards to TAA. Local demand seems to be very strong. But looking at Page 5, looking at your profit forecast, you're not expecting much of a growth going forward, which is a bit regrettable. But by using [indiscernible], would it not be possible to increase profit in the U.S.? So those are my 2 questions.

[Interpreted] Starting with Thailand, operating profit of JPY 5 billion. And when this is achieved, the hurdle rate for UACJ, will that be achieved or not? So let me ask Kawashima-san to take that question.

[Interpreted] Well, this is Kawashima speaking. JPY 5 billion, well, it's not a midterm plan goal. It's just a projection that we can achieve. And when we come up with the fourth midterm plan, we will, of course, come up with a more detailed number. So please do not insist too much of the JPY 5 billion number. But having said that, if the operating income reaches JPY 5 billion, it still does not meet our hurdle rate because the total investment is JPY 100 billion. And invested capital will be lower than that, but it's still not a level where we will have achieved a hurdle rate. But we have 3 global pillars. So hurdle rate, as we see, has to be seen from a comprehensive manner. Just reaching a hurdle rate in just one pillar is not possible. We have 3 pillars. And having 3 pillars is very important, in Japan and in Asia and in North America, and be able to achieve the hurdle rate and be able to generate profit across the 3 pillars is very critical.

[Interpreted] The second question was about TAA. So I think this is a question that was raised earlier, but let me ask Henry once again to talk about the growth in orders and demand. And the profit growth, it does not seem to be in line with that, that was pointed out in the earlier question. It's kind of overlap with an earlier question, but over to you, Henry-san.

Sure, sure. It's an overlap, but I can touch on it again and maybe from a different perspective. I'll comment on pass-throughs because that was a good -- that was a very good item to note. Trials actually has pass-throughs already part of our contracting. So when we think of things like magnesium for hardeners or when we think of logistics costs and what we're seeing right now, a lot of that is already embedded into the contract formulas that are in place and that are -- and that have been part of an industry structure for quite some time. So when we think about looking forward, there are not structural changes in terms of how we are approaching the markets in that area. Or maybe said differently, we're not picking up new efficiencies in terms of how we're contracting. So a lot of that value -- or I would say, maybe cost protections, those are already in place. And so for our business, when we think about increased profitability looking forward, it really is going to come down to -- for us, it's going to come down through production gains and step increases in capacity. So you can see we have some investment that's being made. That should be helpful. And then the other area where we can get more value that's going to be delivered outside of the capacity, it's going to be on our material strategy. And it's very difficult to know what the forward markets are going to look like relative to scrap pricing, scrap discounts or where the U.S. transaction price is going to be. So we think we've got some real strong assumptions right now in terms of the forward look that you're seeing. We do not see opportunity for increased value relative to kind of cost containment or cost management mechanisms that would be new to the business that we have today. And so our focus really is going to be on capital project execution to make sure we're on time and on budget with the strategic capital approved from UACJ and as well as just making sure that we're as efficient as we can, selling the volume that -- or producing the volume that's already sold out through 2025.

[Interpreted] This is Ishihara speaking. Let me supplement some points. 2019 and 2020 for TAA, DC4, including scrap, this DC4 was introduced and the CM4, which was cold rolling, which was also introduced. In other words, I guess the growth in demand has increased, introduced as a greenfield. So it will push up. But going forward, we will maximize the existing capability. We will be operating the existing machines, and we'll be investing such as speeding up the rolling mill also for the increase in the capacity and so forth. So as you see on Page 5, from '23 to '25, you'll see that the growth is quite modest. But during this time, we will need to suspend operation and construct -- or work on it. So it doesn't generate that much, but then we will be able to see growth in -- beyond '26. So that is the background to the difference in growth as you see on the graph. I hope that answers your question.

[Interpreted] Thank you very much. We have responded to all the questions that were raised today. Are there any other questions from those of you who are joining us on Zoom? If not, we would like to conclude the Q&A session. If you have any further questions, please send them to the IR group. We would like to conclude the IR Day of UACJ. Thank you so much for participating on your busy schedules today.

Thank you very much.

I hope to -- we hope to have the further support from all of the participants here. We ask you to cooperate in answering the questionnaire for this briefing. We will be sending you an e-mail to through the [indiscernible]. And I hope that you would be able to respond to the questionnaire. Thank you very much. Those of you on Zoom, you can leave the meeting. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]