UACJ Corporation (5741) Earnings Call Transcript & Summary

[Interpreted] Let me declare the opening of the IR Day seminar today. Thank you very much for your participation to IR Day hosted by UACJ. I'm the owner of [ Serin MC ], the General Manager of IR, Kaoru Ueda of Financial Division. Great to meet you all. We will be using the presentation materials posted on our web page. Please prepare your materials at your hand. Please download from the share screen of the Zoom or access to our web page. There are several housekeeping announcements. Some of the presentation will be made in English, where you will be able to access to the simultaneous translation. Should you wish to use the simultaneous translation, please access the globe icon at the bottom of this toolbar and choose the Japanese channel. You'll be able to hear both a translation and the original presentation. If you select the mute original audio, and then you will only be able to hear the translation Japanese. And at the time of Q&A session, we will instruct you for the translation procedure. For the meeting -- minutes of this meeting, we are recording and -- the video recording of this particular meeting. And contents will be shared at our home page at a later date, so please refrain from recording this session by the participants. Forward-looking statement is shared in this meeting, which is a forecast at this particular moment. There are various factors to affect our business forecast, and there might be some large differences in regard to the future forecast, so please be aware. Lastly, please make sure that your microphone is on mute. Let us start today's program. First of all, our representative Director, President, Shinji Tanaka, will take you through the slide deck titled For Achieving the Fourth Mid-term Management Plan. And this will be followed by Executive Officer, Chief Executive Finance and Accounting Division Kozo Okada, who will talk about management conscious of cost of capital and stock price. Over to you, Mr. Tanaka.

[Interpreted] This is Tanaka speaking, and good morning, ladies and gentlemen. Thank you for joining us, and thank you very much for finding time ahead of your busy schedule to join us in UACJ Group IR day to day, the UACJ Group's IR activities have been greatly supported by investors and analysts through quarterly financial reports among others, and I would like to take this opportunity to express my gratitude. We will continue to actively engage in IR activities, and therefore, your continued support is very much appreciated. Let me take you through today's program. Today's IR Day is titled For Achieving the Fourth Mid-term Management Plan, and we'll cover finances, the collaboration between the 5 businesses and the domestic Flat Rolled Products business, overseas business, TAA, UATH and UWH, and Aerospace & Defense Materials business division that was launched in October 2024. These are the topics that we will cover. As you see, next to me, we have people responsible for TAA, UATH and UWH with us in person, so please feel free to ask some questions during the Q&A session. Now let me give you an overview. This is the group philosophy that was redefined and announced in February 2020. I think I have been referring to this many times, but let me briefly take you through. Our purpose is contribute to society by using raw materials to manufacture products that enhance prosperity and sustainability. In other words, our skill and technique is our source of competitiveness and thereby contribute to realizing a sustainable and culturally rich society. At the bottom, you will find the UACJ Way, which is our guiding principle: respect and understand your associates, embrace honesty and foresight, be curious and challenging. These are the 3 guiding principles to take action. In order for the UACJ Group to remain relevant in supporting society and people's lives, it is a guiding principle for all group employees to share. These are the sustainability priorities and materialities. As you see at the top of the compass, in terms of the environment, a future where the earth can continue to be beautiful and bountiful; and at the bottom, for well-being, a healthy and harmonious society where everyone can feel well-being. These are the directions the UACJ Group should aim for, in other words, the guidelines for heading towards what UACJ envisions as a brighter world. And we are engaged in business activities along these lines. Now last year, we formulated and announced our fourth mid-term management plan. And since then, our business environment has changed significantly, starting with the tariff policy under the new U.S. administration. The future of the global economy has become increasingly uncertain, and we are now in a situation where we need to make faster decisions to respond to a changing environment. We believe that people's mindset in reducing environmental impact will continue to grow. And the past year has forced UACJ Group to strongly consider how it can connect our business to get there. This is our current business outlook. FY '24, was a year in which we were able to reliably meet customer demand for can stock and other products both domestically and overseas. In FY '25, we will capture growing demand for can stock, which we expect will grow further. We will also make capital investments with an eye towards medium- to long-term growth. We recognize the U.S. tariff policy as a risk but have not yet factored it in as its direct impact on our earnings is limited. In FY '25, we plan to make strategic investments with an eye towards achieving the goals of this mid-term plan and expanding our business beyond that in promoting recycling-related facilities and also continue to take a proactive stance while maintaining financial soundness. Towards the second half of the mid-term plan, we will capture growing demand in fields such as can stock and aerospace and defense materials, while working to expand the circular economy for aluminum and expand sales of aluminum as a value-added material. Although the business environment is changing in various ways, there is no change in the target set for the final year of the medium-term management plan, JPY 60 billion in business profit and JPY 100 billion in adjusted EBITDA. Measures taken by each business with an eye on fiscal '27 will be covered in the following presentations. This slide illustrates the initiatives and plans for recycling related measures for fiscal '24. Bottom left in the PowerPoint presentation, we have a goal of increasing the UACJ recycling rate to 88% by fiscal 2030. And against this goal, we have been putting equipment in each manufacturing site to actively utilize recycling materials. In FY '24, the UACJ recycling rate increased to 73.9%. We will continue to implement measures to provide our customers with the value of low environmental impact. To become a company of choice, we're also strengthening intangible assets such as our brand. In September [ '24 ], the various product brands within the group were integrated into a family brand called ALmitas. On April 23, ALmitas FusPlate SMART was launched. And as you see on the right-hand side of the slide, in order for UACJ to continue to grow sustainably, we are working to strengthen our management foundations, especially ensuring the safety and security of our employees, we are implementing ventures, and we -- in order to pass on UACJ's technologies to the future, we launched the Monozukuri Gakuen in April. We will systematically accumulate know-how and strengthen our training system to respond to the declining labor force. Now this is the P&L analysis from fiscal '23 to fiscal '25 in key activity areas, growth strategies and the value-added strategy set out in the fourth medium-term management plan. As you can see in 2024, auto-related materials demand were postponed, and there has been some delays in expanding materials and processing business, but we have generally been able to grow profits. Although increases in costs due to effects of inflation such as soaring raw materials and labor costs have kicked in, earlier than initially expected, we are moving ahead with the utilization of recycled materials, which we have already invested in and the development of technologies to make full use of recycled materials. As I mentioned at the beginning, there are no changes to our financial targets for the financial year -- for the final year of the medium-term plan. We will steadily implement our investment plans from now on, aiming to expand earnings and improve asset efficiency in fiscal 2030. Regarding shareholder returns, there is no change to our policy of paying stable and continuous dividends. We are planning to increase the annual dividend by JPY 10 to JPY 160 per share for this fiscal year. FY '24 was a good start for the first year of the medium-term plan. From FY '25 onwards, by balancing earnings growth and disciplined investment plans, we will aim to achieve the medium-term plan in Vision 2030. Finally, I would like to talk about our materiality initiatives. Because of interest and time, I would like to be brief. I will not go into details, but we have been able to make good progress on these items. Now let me ask Mr. Okada, Chief Executive Finance and Accounting Division, who will give an update on how to manage the business while paying attention to capital costs and share prices. Mr. Okada, over to you.

[Interpreted] Okada, Chief Executive, Finance and Accounting division. Let me take you through how we are working to achieve management that is conscious of cost of capital and stock prices. FY '24, the first year of our first medium-term management plan has ended. There were upsides to our original plan, and I think we did as we planned. I would like to explain our initiatives for FY '25, including our capital investment plans with a view to sustained improvement in corporate value from FY '25 onwards. As explained in the earnings briefing, this is the progress evaluation status of the improvement of corporate value, in other words, towards the early realization of PBR of 1x or more. The fourth medium-term management goal is ROE of 9% or more and cost of capital in the 7% to 8% range. We will realize a further expansion of the equity spread at an early stage. FY '24, our performance evaluation. ROE in FY '23 was 5.3% and it increased to 9.9% in FY '24. This is profit in 2024, was JPY 45.9 billion, and net profit was JPY 28 billion. In February 2025, we carried out a share buyback of 3 million shares, approximately accounting for 6% of total. On the other hand, we estimate our cost of capital fell from 9% in 2023 to the 8% to 9% range in fiscal '24. The risk-free rate has increased due to the rise in interest rates on 10-year [ JGBs ], but we have been able to significantly improve our beta value from 1.62 to 1.25. We believe that the improvement in beta value is due to the effects of improved accuracy of profit and loss management, improved credit worthiness and increased understanding of our company through active IR activities and information disclosure among others. Actions from FY '25 and beyond, to achieve an ROE of 9% or more, we will maintain a D/E ratio of less than 1 while working towards the fourth medium-term management plan targets of business profit of JPY 60 billion, adjusted EBITDA of JPY 100 billion and ROIC of 9% or more. And we'll engage in business activities to achieve an ROE of 9% or more on a business profit basis as soon as possible. To reduce the cost of capital, we will work hard to further promote -- further improve the better value by achieving continuous business growth, engaging in active dialogue with the market and strengthening information disclosure and implementing stable and continuous shareholder returns. Now let me cover the strategic investments in materials with more added value than before to enhance our corporate value in order to achieve our fourth medium-term management plan. First, on funds. As shown in the fund statement table for FY '24, Long-term funds raised was JPY 81.1 billion with a surplus of long-term funds of JPY 31.4 billion. Short-term funds were affected by the rise in volume prices and the depreciation of the yen, resulting in the shortfall of JPY 59.1 billion. As a result, for FY '25, initiatives will include to further generate long-term funds through the FY 2025 plan. We intend to expand sales volume and implement price revisions. We will generate an adjusted EBITDA of JPY 85.5 billion. As for short-term funds, we will focus on reducing working capital by further strengthening our efforts in CCC improvement activities. Next on our investment plans -- key investment plans for FY '25. Regarding investments to enhance production capacity, investment in hot rolling mills at TAA will be completed. Regarding investments to promote recycling at UACJ Yamaichi aluminum can recycling, investment in UBC processing equipment at Fukui Works will be completed in December. And the expansion of UBC processing equipment at TAA is scheduled to be completed in the second half of the year. Regarding investments contributing to the stabilization of the supply chain in advanced sectors in preparation for operation in FY '27, investment will begin to introduce equipment to increase production of thick plate hardening furnaces in the Aerospace & Defense Materials business. And in the Foil business, investment will begin to expand production capacity for lithium-ion battery current collectors. Looking ahead towards fiscal 2027. We will maintain our financial position with a D/E ratio of less than 1, and we will actively invest to realize our materials + alpha strategy. And in terms of shareholder returns, we will firmly implement stable and continuous dividends, and we'll firmly implement initiatives to continuously increase our enterprise corporate value and achieve the goals of a fourth medium-term management plan. And that is all for me.

[Interpreted] Tanaka-san, Okada-san, thank you very much. Next, we'd like to call upon Keizo Hashimoto, Executive Vice President, Chief Executive, Flat Rolled Products division, to present on the progress of the fourth mid-term management plan for the Flat Rolled Products business, and business collaboration and response to the changing external environment. Mr. Hashimoto, please.

[Interpreted] This is Hashimoto. Great to meet you. Now as is introduced now, I'd like to talk about the progress of the business collaboration and what is the progress versus the fourth mid-term business plan for Flat Rolled Products. I'd like to talk about changing external environment to be specific. Now in regard to the business collaboration, now under the fourth mid-term management plan, we are trying to endeavor into the new areas in addition to the existing 4 business areas. As you see on the left, the tree chart, that red apple is the existing business lines and the new areas are green apple, which represents the new area. And we try to expand both red and green. In order to do so, toward the right, as you see, each business lines will have to correlate each other. Beyond the boundary, for example, human resources, technology and assets, that will be fully utilized, and that is critical for promoting collaboration. Now in January, for extrusion and the April, we have established the aerospace and defense. And as such, we were able to establish 4 business divisions. And we are coordinating with marketing divisions, not just the corporate headquarter side, but also together with R&D, we tried to accommodate the new demands by the customers. And also at the bottom, as you see, we started some of the great outcomes, recyclability and the lightweight properties are winning a very good reputation and relative value is increasing, particularly the construction, automotive, IT, where there are specific demand is being developed. In regard to Extrusion & Metal Components Business division established and across plants, works and business divisions, we are trying to explore the recyclable materials now. It is not just the sales, but also production side is in the collaboration efforts and we are trying to attain full-fledged integrated collaboration to try to materialize the new growth in this area. It is a gradual process, but the new types of demand and products is increasing. Therefore, we started to see some of the specific outcomes of this collaboration. Next, I'd like to talk about the Flat Rolled Products division. Now the flat rolled has 3 locations in Japan and U.S. and Thailand. These are the major sites for the business and 150 -- excuse me, 1.5 million tons is the current capacity targeting. And 1.3 million tons was the sales so far and 1.32 million tons were FY '24 and then 1.4 million is FY '25. Now by 2030 we have depicted the desirable vision, and we presented this last year as well. We tried to make this mountain as high as possible. The aluminum demand is -- as we can see in our field, we expect that the demand will continue to grow, where a customer basis, manufacturing capability -- capacity and technology and aluminum characteristics is going to be exerted fully. And on top of that, in the middle of this mountain, our characters such as diverse product line and broad sales territory, such a comprehensive capability and synergy with other departments will be fully exerted. And these are the characters of this company. On top of that, the R&D and the keywords of reducing environmental impact are explored so that our capability will be exerted at most on a global basis. From this point of view around the world, we are the second largest group, but we'd like to make a breakthrough. Using our comprehensive capabilities, we'd like to bring our company to the top of the world. On this slide, this is the progress versus the fourth midterm management plan, and accomplishment in the first year is summarized as such. Now in regard to shift from quantity to quality in Europe such as there are a greater demand because of the tariff issues, so we will accommodate with such needs. And we established a new company sales and a service company in Germany to accommodate with the African markets. And also hardened, the plate -- thick plate, where we decided to introduce new equipments in Fukaya, that is a major outcome of this year as well. Next, from shift from goods to services, as is mentioned earlier, we provide solutions to environmental challenges, and we try to expand the sales, and CapEx is considered in this regard. I will elaborate later. For the trilateral approach, each and every company's capacity is increasing and the interoperability and compatibility is actually expanded at this moment. Now this chart on the left shows the sales volume by site and right-hand side is the business profit by site. In regard to the volume, in FY '27, 1.42 million tons is explored. and 240,000 tons is expected for FY '25. And for such extra sales volume, we have started off with a great ton. And there is a slight decrease in annual business profit in FY '25. Recycled products cost is rising at this moment, and that has contributed to a negative profit growth. But we have expanded the procurement, and also, we try to increase the volume and the square meters. And from a sales price point of view, we've already taken countermeasures and therefore, we will be able to bring back on track with FY '27. Regard to the growth potential, vertical axis is the business profit and time line on the horizontal axis. In regard to the core business, domestic business, all these countermeasures is put in place in regard to overseas, U.S. and Thailand, for such overseas business is considered growth business that we intend to grow. On top of that, creating added value is considered both in domestic and overseas. We try to make monetization out of the reducing environmental impact and converting environmental into economic value, and we are making that happen at this moment. Now for the specific initiatives, increased production, reduced environmental impact and sales strategy, so each sites are doing all these efforts. It will be overlap if we cover everything. So just the main topic is that we decided to introduce equipment for the hardened thick plates, and capacity will be increased to 460,000 in U.S. as well. And the capacity need to be introduced for using recycled products. For example, we need to change into the scrap slab, and we need a melting furnace in Thailand and Japan and collaboration with Yamaichi Metal Corporation for the joint processing that will start in 2026. For the TAA, dross process is considered and the shredder process is quite significant. And that will be started in 2026 in TAA. And sales strategy is described as such. Next slide is regarding the quenched thick plates, and production for that is about -- the total investment is JPY 11 billion, and operation start is expected to be second half of FY '27 and the production capacity as twice as large as at this moment. The areas of demand is materials for aircraft, space, defense, semiconductor and so forth. And as you can see, all these are a growth prospective industry. And we could accommodate with the needs because of the production constraints, and yet we have been able to cover the East -- Southeast Asia and other markets as well. Quenched thick plates is actually in high demand and value add is quite strong, and therefore, that will contribute to our revenue and profit growth in the future. Now by reducing the environmental impact, we'd like to turn that into the economic value. On the left, what is mentioned is that what is -- what items is included in reduction of environmental impact. And we'd like to make it visible towards the right and change into economic value. What needs to be done on the left, of course, costs some money, be it capital expenditure and operational costs. All these costs will turn into the economic value so that we will return the profits back to the operation once again, and we will try to attain the sustainable society recovering the costs on our side. Now to be more specific, this is the last where we made press releases since '22 in the can and building materials and also the thick plates where we have already made announcements. Also in addition at the bottom, you will see that home appliance, IT, PC and cosmetics and casings for cosmetics and so forth, many areas are adopting aluminum thick plates. So application is diversifying. Everyone thinking about CO2 emissions and aluminum products contribute to our customer [ companies ] to a great extent, so therefore, demand is increasing. Now in regard to the rising costs, as we are sharing from the past, labor costs or other cost increase need to be addressed and also raw materials and energy cost is rising as well. Three years ago, we have introduced the third charges, which means that we make a cost increase in quite visible way and asking the price revision if we need to absorb the cost increase. And value adds need to be increased. And by exploring the quantity increase, we need to -- we will explore absorption of the cost increases in this way. This slide shows the additional U.S. tariffs. Aluminum products, which affected us, which is 25% of the tariff, Thailand is the main market for can stock and the automotive materials. 5% to 6% of the Thailand's production is actually export to the United States, were subject to the tariff. And the raw materials are in shortages and also for the automotive components materials manufacturer is reducing. And there will be less constraints on this area. However, the mills in the local market is going to be reduced, and therefore, we need to increase the exports. But the volume on the whole will be flat, therefore, there will be no major impact. As I understand, probably still under negotiation, but for auto parts tariffs in Japan, we may subject to some extra tariff for the Japanese-manufactured products. We are forecasting some demand. And based upon that forecasting, there will be no major impact for our operation at this moment. So that is our assumptions so far. In regard to the can stocks where this is the main products for us, this is the comparison between FY '21 and FY '25. Major changes from Japan to Europe because we enjoy FDA, therefore, there is a shift from the glass bottles to can and the PET bottles to can in European market. Our customer requests us to export more to European market. So as you see on the left, there will be more export to European market. And for the Thailand, it is color coated, and the red is North American market. We've been reducing gradually from FY '21, diversifying the sales market in Southeast Asia, India, others and Middle East and Africa. And for TAA, the domestic capacity is increased in order to respond to the rising demand in American market. Last slide is that this is the domestic flat rolled product sales plan. And we are [ committing ] with a diverse range of needs in Japan. Net increase in the Japanese market will be limited, and yet there is a steady demand that we can enjoy. Toward the right, you see for can stock, particularly for export to European market, which is rising. Therefore, can stock domestic is flat. However, the can stock export is growing. For the thick plates, in the second half of this year to next year, the demand will be stronger. And for other industrial purposes such as MD and fan, there will be increase that we can expect. So 620,000 tons where we would like to gradually increase, and demand is rising gradually going forward. Later, we will hear from President Henry about TAA. And also, Mr. [ Goyi ] will talk about the Thailand situation, and we look forward to the presentation later. Thank you very much.

[Interpreted] Thank you, Hashimoto-san. Next, titled IR Day 2025 UACJ Thailand Corp, we have UATH Executive Officer, Vice Senior General Manager of Bangkok Office, Mr. Teerapun Pimtong to give the presentation. This presentation will be in English. Those who wish to listen to the Japanese translation, please click on the translation button with the globe-like icon at the bottom of the screen and select Japanese, where you'll be able to listen to the speaker and the translator's voice. By selecting mute original audio, you'll be able to hear the Japanese translation only. Please use the translation service. We will start the presentation. [ Goyi-san ], over to you.

My name is Teerapun Pimtong. This is my present -- first time here, so let me introduce myself first. I joined UACJ Thailand more than 11 years and worked in QA, QC and sale area. And I was appointed to be Executive Officer and Vice Senior GM since last month. I have a chance to contribute to Thai society in Aluminum Industry Club. I am Chairman during 2020 until 2024. As of now, I am honorary Chairman. In 3R Foundation related with sustainability management, I am committee member. In Thai Institute of Packaging and Recycling Management, I am Adviser. Next slide, please. Today, I will update fourth midterm plan and key activity in UACJ Thailand. As you know that UACJ Thailand already complete 320,000 ton production base in Southeast Asia, and as of now, we have employee, 1,307 people. And now we supply to the customer, mainly can stock, heat exchangers and room air conditioner fin, over 100 company, approximately 30 countries around the world. Next slide, please. And as of now, everyone know that we complete third phase since 2019, achieve shipment 371,000 tonnes in 2021, and we already recovered back from COVID impact. And last year, we can supply more than 300,000 tonnes already, we can achieve 306,000 tonnes with #4 sideward acceleration that can run smoothly since April last year. We can increase more recycle rail from aluminum by this facility, and now we can quite confident that we will achieve 236,000 tonnes in this year. And even though we have very challenge factor. Next slide, please. Next, about fourth mid-term plan procession. Next slide, please. Based on sale volume on the left side, we will stick with the 340,000 tonnes a year at the final call in 2027. And in the same time, we will stick with the business profit JPY 8,500 million. And where we need to take many actions, expand sales in strong demand area, example in India, Middle East and Africa and improved sales portfolio through the cost reduction, and prepare the new byproduct for both production side and sell side, improve raw margin based on Chinese cancellation. And now we have corporate strategy for growth already and how about quotation capacity, how to increase more another 20,000 tonnes without any new investment. Three key bottlenecks area in testing, cold rolling and finishing. We need to take the same action by increased production speed and in addition, for the casting, we need to make shorten dissolution time. And in cold rolling and finishing area, we need shortened setup time in between lot by lot or [indiscernible]. And in another area like hot rolling, we need only reduce the breakdown time. If we would like to achieve 360,000, we can do with small investment just in case that maybe we need to take more capacity to actually target like hot rolled capacity. We need investment for the casting and co-rolling area. Anyway, based on everyone know about the uncertainty situation, which would take more time to consider. Can demand, that's shown on the right side. This in line with the global can demand that already recover and growth continuously, especially in Asia, in India market. Now equal value trend is increasing. So our recycling activity is quite in line with this great demand. We plan to expand more in EU, in Middle East, Africa in near future too. We will stick with the basic policy by expanding business globally for the can stock and manage sale portfolio with a good price and to our price after Chinese tax cancellation and provide environment fairly products and expand to Europe once tight EU FGA starting. Based on automobile business are unstable, both Southeast Asia and uncertainty in North America, we need more tightened leadership with key heat exchanger customer and expand to U.S. because of our competitor shut down the plant. About rural acquisition, demand is secured based on climate chain, based on global operation growth. So we still keep expansion to Southeast Asia, Europe, U.S. and India. Next slide. Next, about the recycling and enrollment topic. This is quite hot issue in Thailand at this moment. We already have cross-loop collaboration among government agency, brand owner, can maker, collector, recycler, including us in Thailand, more than 4 years already. And we still consider how to put more and make efficient on the MOU and try to extend more this MOU within this year. Next, the new outcome of can to can journey is one part of can to can cross-loop collaboration. We select cross pilot earlier in order to redesign them to proper package develop, extending producer responsibility system and waste management and both [indiscernible] are located in Southern part of Thailand, maybe somebody know about the . It's not so far from that. MOU from was sized since past 2023, and we filed good result by reducing the glass bottle for beer 80% after sign MOU early treatment. I just got the update information before I came here, that 3 foundation that provides a quite good result they compare between the result first quarter this year compared with the first quarter last year. The [indiscernible] is already renewed 99%. It's quick. So the next about the MOU of [indiscernible] that is a 17 party already signed in December last year, and we have got to change be glass-bottled to 100%, same at Kota. This equity might be small, but outcome is quite good, good for commodity and good for UACJ. We expect that the government agency, brand owner, other stakeholder can take this more tightened collaboration. Finally, we can chair all in Thailand, same as our final ultimate goal. Next about localization management, the quite interesting. Next slide. We can see that now we have the expat in UACJ Thailand, 54 people, and we have the target to renew to 37 people in 2030. And in this moment, the ratio of local manager is almost double once compared with 2014 and female manager increasing to 46%. This is in line with our UACJ vision 2030, at least 15%. Next slide, please. We cooperate with University in order to find special talent people in S1, including expanding our reputation at the same time. And we signed MOU since March this year and we do many actions before. We left SUT alumni, that's our employees, to promote UACJ Thailand and provide information about aluminum knowledge to them. And we have another activity like Pro UACJ Award and recruit intern student, too. It's very good for this activity. So we plan to expand more to other university in order to seek our excellent human resource. Next slide, please. Okay. That's all. [Foreign Language]

[Interpreted] Thank you very much for your presentation. Next, I may call upon -- Tri-Arrows Aluminum Investor Relations Day is the title of the presentation, and please call upon the CEO, Henry Gordinier of Tri-Arrows Aluminum. This is the presentation in English in order to access to the transition, please click the globe mark and chose Japanese channel. Mr. Henry, please.

Good morning. Welcome, everybody, to be here. I appreciate your time and attention, the folks at UACJ to help make today possible. My name is Henry Gordinier. I'm the CEO of Tri-Arrows Aluminum, also a Managing Executive Officer with UACJ Corporation. First slide. First slide, next slide. There we go. So Tri-Arrows is headquartered in Louisville, Kentucky. It's in the Midwest of the United States, about 80 people in our corporate office. Our manufacturing facility is in Russellville, Kentucky. There's about 1,500 employees there. It is about 52 acres under roof. So a pretty large industrial facility. It is a production joint venture between ourselves and a competitor, Novelis, and our interests are shared, which is why the plant is successful. We're focused on safety. We're focused on quality, efficiency, in terms of output throughput, right, and cost. And right now, our take of it is about 1 billion pounds or 490 kt. We are focused on can sheet, and we are a preferred supplier in the market. Next slide. I wanted to talk a bit of culture because that certainly sets the table. Our mission and our strategy. We are relentlessly focused on building a culture that's going to be durable. It's not just what we're trying to accomplish today but over the next mid-term plan, over the next coming decades. And we're focused on 2 things: tactical execution -- excellence and tactical execution on the one hand, on the other side of that, connectivity. So the connectivity means that there's no independent decision. We link together across our functional areas to make sure leads us to our mission, which is about driving value, economic value, I've highlighted that for everybody to understand. That's how we make decisions across our organization is cross checking around what benefits us the most financially on the one hand, but also being forward thinking. So the decisions that we're making today those are setting the table for where we'll be in 3 and 5 years from now. So very proud of where we are with that. That leads us into what our strategy is to be today, the preferred supplier in the can sheet market but also looking tomorrow to enhance our capabilities to enhance our infrastructure. If you look over to the right, you'll see a little graphic with the word ikigai on it. That's kind of our management philosophy. And that philosophy really it's our reason to be. It's our purpose. And around that are our principles. So this is really about how we do our work, not what the work is, but how we're doing it. The significance is when you pull back a philosophy, a concept, how do you make that real. How does that translate into work. Well, underneath this, our management systems that we've designed to help build the cross-functionality we've talked about. We've got data systems underneath it and an IT infrastructure to help organize how we work and how we manage. Next slide. Big picture. All right. So the big picture for us is our business is ready to compete and it's ready to grow in a marketplace that we all know is changing. So we are further strengthening what is already a cost advantage position, and we're doing that, delivering strong financial returns. So when I think about what to know about our business, number one, we're growing our production, most important thing out there for us, growing our production. Second to that, it's around how we sell. Our business has been sold out since it was commissioned in 1983. Every single year we've been sold out. That's how we manage it. It's how we run it. We're sold out today through 2027, which is the entirety of the mid-term plan. We've got -- we've got contracts that are built out over '28, '29 and '30 and we have ongoing negotiations. Our balance sheet is strong. Our cash flows are strong. Our balance sheet, our debt-to-EBITDA is less than 1. Tariff exposure. Very little. When you think about what's happening from a policy perspective in the United States, it's based upon companies that are sourcing input materials domestically that are producing these materials domestically and that are selling those products to domestic customers. That's us. That's what we do. So actually, the current environment that we're seeing, while there's puts and takes everywhere, it is supportive for our business. And lastly, just to know about us recycle content. So our recycled content is industry-leading, as are our Scope 1 and 2 emissions. Next slide, please. So kind of key accomplishments. You know a little bit about us now. First thing that is an accomplishment for us is driving that culture of connectivity so that we can make the right decisions to drive the most economic value that helps us balance kind of like the near-term opportunities that we see today, but also allowing us to make sure that those set a table for the longer-term stuff that we're working on. We have exceptional cost controls from an accomplishment perspective where we're actually beating inflation. So I'm very proud of the results there. We're broadening our sales -- our customer base, broadening our sales portfolio. We now have business with every single major brand in the United States as well as every can maker in the United States. Continued debt reduction on plan. Capital execution, very important. Prior projects that are in production today, all of them -- all of them have exceeded their capital justifications. Current projects that are underway, all of them. They are on time and they're on budget. So excellence when it comes to capital investments. We've done a lot to enhance our information and technology. Don't talk about that a whole lot. But if you're going to grow your business, if you're going to scale your business, you better have the right structure and systems underneath there to do that. So building out our Oracle ERP system, enhancing that with other complementary systems, data analytics, data lake on top of that. So all this infrastructure is behind -- it is what we're working and executing on today, a lot of good work we've accomplished. And lastly, we've identified more ways to grow. So we have a list. Next slide. What does that mean for FY '24, as you may know, but we've met our mid-term plan commitments. We've actually exceeded it quite significantly. As you see in the chart, there were $226 million of EBITDA U.S. GAAP last year. Kind of shaded out for you a little bit about what I think folks are aware of, which is just some really historically advantaged pricing when it comes to input materials. That's given us some tailwinds. So when we release the mid-term plan, what's important to see here is that we've -- obviously, we have grown our business, but particularly been able to take advantage of some of these external market conditions. About halfway through this year, we saw the spreads on input materials tighten up. And we found ourselves in a much more challenging environment. We'll talk about that relative to sourcing input materials. But nonetheless, in this space, our production exceeded our production plan. So we finished the year strong there from a manufacturing cost perspective, we finished favorable from a conversion revenue perspective, we finished favorable. In fact, we put together some incremental volumes that weren't in our budget relative to getting slab sales. We actually were able to, in addition to that, reduce the amount of prime we're doing, reduce the amount of high-cost hardeners like magnesium we are doing. So overall, exceptional year even with the market conditions changing and hitting those results very properly. Next slide, please. So we're going to look forward now. Talk a little bit about demand. So over the coming decade, what we see is about a 3% CAGR between today and 2030. And that's kind of broadly held around the industry. And we're seeing it in kind of some numbers. The 7% increase in can sheet demand that we saw from '23 to fiscal year '24, about 4% of that was destocking or restocking with customers, 3% of that is true demand growth. So it's kind of in line with that. Now it's important to understand, too, when we look at demand today, there's about 350 million pounds of import metal that's coming into the market still, and that import metal is coming in because we simply don't have enough sheet domestically to meet demand. When we think about the 3% and the growth, our customers share the same view, whether it's a brand, whether it's a can maker. So you're seeing investment being made broadly throughout the supply chain. Everybody is kind of preparing as we kind of had the steady drum over the coming 5 years. In that period, we're going to maintain our position of supplier of choice. Next slide, please. Manufacturing focus, super important. It's important because we all know that the input costs are pretty material to our business. And so we can -- we will see -- have seen and will see variability right to our earnings. Never lose sight of the fact we're a manufacturing company. We're not a trading company. We have the skills to trade. We certainly use those in terms of optimizing and how we manage our input material, but the value of the business comes from the products that we're making. We are growing our portfolio by 13%. We've got $120 million of capital that's in play. Right now, we're increasing our coil capacity. Should probably slow down. I'm talking to fast for translators. And increasing our coil capacities, we're also adding new capabilities at the rolling mill, and it will also improve reliability. Increasing recycling and our recycling capacity. We'll be -- we are -- that is underway with these set of projects. drive scrap, it drives higher recycled content. The other thing it's going to do for us is help improve utilization and reliability again. Lastly, we have continuous improvement, the continuous improvement. The reason why is, as we improve recycling, we'll be making more ingot. That ingot is designed, right, from a system perspective to feed our hot mill. As we feed that hot mill more volume, we are actually going to be moving downstream to our cold mill offerings, our slitting operations, our coding operations. So it's around readiness for them to manage an increasing amount of volume. So we're focused on debottlenecking, as you can see, and we're focused on continuous improvement. Next slide, please. Production growth. So I'm trying to again focus on manufacturing our core from a production growth right now, what we're seeing is the benefits that that's actually providing to us from a low-cost provider. These are some pretty remarkable statistics when you look at them. If we look at ourselves and compare Logan aluminum to our competitors in North America, our cost to relative to can body is 40% lower, 4-0 percent lower. When we estimate where we're going to be from a volume perspective between this year, fiscal year '25 and fiscal year '29, we anticipate 14% growth overall in our volume. But by managing our costs flat, we're seeing an 11% -- we anticipate an 11% decline overall in what our copper tonne is. That right there has us ready to compete in the markets as we see them. Next slide. So looking forward, kind of what does that mean for us, okay? Specifically, we'll kind of look at FY '25 from a budget period. You'll see it; in FY '25, our budget was set at $208 million, right? So part of this the $233 million and the $254 million and the $226 million as part of that historical kind of tailwinds that we've had with input costs. Nonetheless, what I want to impress upon everyone, nonetheless our budget set at $208 million. That $208 million was our mid-term planned commitment that we are able to achieve the mid-term plan budgetary even in the worst scrap market that we've seen in a decade. So what that really means is as the environment changes, we're positioned only to grow our earnings further this year, and that's exactly the market that we see. Since the time the budget was done, we've seen spreads opened up quite a bit, which means import costs are falling. And in that space, what I really hope to do this year is be able to see -- to considerably beat our budget numbers, find ourselves in a space right now from an outlook that has us more flat to what we did achieve prior year, assumptions in there, right? It's early in the fiscal year. But I see a path right now where we're going to at least meet or grow beyond what we achieved last year. Next slide, please. Sustainability. All right, we are demonstrating year-over-year improvement. So making headway measurably every year. I mean I'll go straight to the graph because it's telling. We've seen a 45% reduction in our carbon emissions per tonne of aluminum, 45% between 2017 and where we are today. It's remarkable. Scope 1 and 2 -- that's Scope 1, 2 and 3. So our Scope 1, 2 and 3 are 2.24 industry-leading. When we look at Scope 1 and 2, same thing industry-leading. And that's coming from efficiency, cost throughput, right? We are putting more volume and averaging cost across that sources of power that we're bringing in, not a lot of power that's coming in. It's nonhydrocarbon-based. We select projects, and this is really, really important. We select projects for our company around sustainability to make strong financial sense. What we're looking to do is to move projects that improve our sustainability environment, but while we're doing that are helping us decrease our costs or increased recycled content and our recycled content numbers are industry-leading as well. And it's important to understand as well. When we talk scrap, we talk broadening that out. It's not just the UBC. It's not just the can. It's part of what our next -- our current capital project means to us in terms of financial performance. It widens out the kinds of scraps that we can consume in our mill, which means there's more supply in the market. And so we're developing flexibility inside that system, but it helps us support our sustainability goals around recycled content. Next slide. So I'm just quick summary and outlook. I'll just hit on some things that you've already heard me talk about. But the punchline, punchline is our focus. Our organization -- our organizational focus is on a readiness to scale. Everything we're doing from an infrastructure perspective, capability per structure, growing our capacities, what we're doing with people and equipment. It's around our ability to scale this business. So we have an advantaged competitive position. You got to take that away, hopefully, today to see in the marketplace who we are. And that's driven a lot by our -- the culture we are, and it's driven by the focus on value creation, driven by connectivity between functional areas. North America demand is healthy guys, it's growing. Important to have confidence in that market and our ability to participate in that market. Our cost position is low. It's the lowest in the market. Again, what I want you to take away from today is it's not just low, it's getting wider. We are separating ourselves further from the competition. Our customers are rewarding us. So they're coming back and they're signing up for more. In fact, last year, we had 2 multinational company brands recognize our business as -- globally as a supplier of choice. What an incredible recognition that we're doing the right things. Capital execution, demonstrating excellence. And then lastly, we have identified ways that we can kind of keep this going, whether we can continue to grow our business. So right now, I think we are well positioned. We're executing well. I'm extremely pleased with the results of last year, and I'm very, very positive in terms of the outlook for the business in the future. There is more to come. Thank you.

[Interpreted] Thank you very much for that. Next, IR Day 2025, UACJ Whitehall Industries, Inc. We have UWH President, Mike Wegener here with us to talk about the UWH business. This presentation is also in English. Click on the translation button at the bottom of the Zoom screen in order to listen to the translation audio. Wegener-san over to you.

Hello, everyone. This is my first presentation for IR Day, so let me introduce myself to the next slide. My name is Mike Wegener. I am the UWH President. I've been a committed member of UACJ Automotive Whitehall Industries since 2002, serving in various capacities in engineering and engineering management within the extrusion and manufacturing sector. Throughout my tenure, my team and I have played a crucial role in precision extrusion capabilities and creating high-quality automotive structural extrusions. I have successfully managed major plant expansions and was responsible for the installation of several extrusion press lines. Following 15 years in engineering management, I was elevated to Vice President of Extrusion operations in 2023 and then this year in January, promoted to President in 2025. Next slide, please. A few things about me. For 23 years, I've been deeply involved with Whitehall Industries. I have faith in the commitment of the individuals of this organization. I prioritize operations with a strong emphasis on safety, quality, delivery and cost. My management approach is hands-on, results-oriented, and I'm dedicated to achieving our objectives. Next slide, please. A little bit about UWH. We have 5 manufacturing facilities. 2 of them are in Ludington, Michigan, one of them is in Paducah, Kentucky; Flagstaff, Arizona; and San Miguel de Allende, Mexico. Throughout all of the facilities, we have over 1,100 employees. In 2024, we were $246 million in revenue with $21 million in EBITDA. Our products include sunroof tracks, bumper systems, crash boxes and battery housings. Next slide, please. Let's talk a little bit about quality. UWH has grown from a small Tier 2, 3 supplier to a reputable Tier 1 supplier recognized for high-quality automotive extrusions. Quality is a way of life for every employee at UWH. This past year, we have won multiple quality awards. The picture to the left shows that UWH was the only supplier in North America to win the Excellence in Quality, Delivery and Value award out of 600 suppliers. Strengths of UWH. We're vertically integrated process flow. We start with purchasing billet, and then we extrude, we fabricate, we assemble. We have superior aluminum extrusion process control. We do automotive crash critical extrusions. Our fabrication, we've been precision machining for over 50 years. We also do laser cutting, bending, punching, forming, automated assembly, welding. We have excellent quality. Next slide, please. Let's talk a little bit about our performance for 2024 and what we're looking at for 2025. As we came out of COVID, we increased our sales to a peak in 2023. And in 2024, we dropped off a little over 13% in revenue. But as you can see, in our EBITDA performance, we've really worked hard to increase our EBITDA from $2.6 million to over $21 million. In 2025, we have a higher outlook in revenue and also a higher outlook in EBITDA. Some of the things that we worked on were safety, quality, delivery, cost, we had an organizational effort to reduce scrap. We had head count reductions, and we focused on continuous improvement. In 2025, we have a few new launches. We're going to continue working on continuous improvement projects and cost reductions. Next slide. Our head count reduction. At the beginning of 2024, we were over 1,300 employees. And with continuous improvement projects, we have reduced our head count down to around 1,100 employees, a 19% reduction. Other cost reductions were done. There was a significant priority put into scrap reductions, direct labor content was lower, and we worked on many purchasing cost savings. We also expanded and built upon our visualization and management of our KPIs with our Power BI system. We implemented safety, reports, quality, gross margin, scrap, labor efficiency, inventory and OEE. And these documents are live, and we use them on a daily basis. Next slide, please. Let's talk a little bit about sustainability. From 2023 to 2024, UWH reduced our Scope 1 and Scope 2 emissions by 12%. We've also implemented a guide to good environmental practices, created a waste management plan, CO2 reduction planned monthly meetings between the plants. We also got ASI-certified aluminum stewardship initiative at our San Miguel de Allende, Mexico facility. And we are working on planning on having audits for our Ludington and Paducah facilities by the end of 2025. Next slide, please. Now looking forward, so as in our business, there's headwinds and there are tailwinds. So I'll talk about the headwinds first in North America. EV consumer adoption rates is not a sharper curve as what was originally predictive. OEMs are adjusting vehicle planning, pausing and rethinking strategic portfolio plans. The current U.S. administration is not inclined to offer incentives for clean manufacturing. What will -- what does this do for EV rebates, some other economic headwinds. There's economic uncertainty and consumer confidence may be wavering. Now there's also tailwinds for UWH. Many new EV vehicles are going to be launching in the coming years. We are actively talking to multiple OEMs about future prices. We demonstrated a high-quality delivery as a Tier 1 supplier, and we have received multiple quality awards. More aluminum demand as lightweighting becomes more important with fuel efficiency targets. There's also some economic tailwinds in the U.S. There's a strong push for U.S.-produced products due to the tariffs. Customers looking to resource product to the U.S. to avoid tariffs. Next page, please. A little bit about the business environment. North American automobile sales will remain around 15 million units, while internal combustion engine vehicles are declining, EVs are on the rise. By the 2030s, market is expected to be roughly equally divided among internal combustion, hybrid and electric vehicles. Next page, please. There is a segment shift in North America. Americans have been buying midsized cars and full-size trucks for many years and that is starting to shift more towards compact SUVs. Many products that we are quoting on for the future, align with what we're seeing here. Next page, please. Now I'm going to talk a little bit about vision. UWH is addressing the growing demand for lightweight solutions driven by battery electric vehicles, lightweighting and environmental initiatives in North America. As I look back over the past 10 years of what we did as UWH, we can build upon that and looking forward to the next 10 years. Next page. So UWH, we grew it the last 10 years to $258 million in sales, supported by a product mix of sunroof track, North American E-structural products, and we did a lot of rapid expansion. As I look forward, we can see a significant growth opportunity in the American automotive market. I can foresee us getting to $600 million in sales with a diversified product mix, business profit focused, more vertical integration, including billet casting and advanced manufacturing technology with a focus on environmental. Next page, please. Aiming for profitable growth, we will diversify our portfolio and reduce order volatility by securing new orders, primarily from customers in the growing EV sector. We see a path to achieve USD 600 million in the North American market. Targeted customer mix. We vision going after multiple Japanese OEMs and multiple North American OEMs, also supported by a diversified customer mix. Next page, please. Teamwork and our people is what make UWH strong. Next page. Key takeaways. UWH has a fantastic, stable team of bright, dedicated people. Top line growth has paused due to delays in the adoption of EVs in North America. This pause will allow us to redirect our efforts to cost reduction, improve productivity and quality. Our quality, agility and processing capability are well known by many EV OEMs and now being recognized by traditional automotive OEMs. Automotive structural extrusion demand is expected to grow significantly in the future. We are well positioned to take advantage of this market. Thank you very much.

[Interpreted] Thank you very much, Wegener-san. Next, challenging on the further growth for the UACJ Group, Overview of the Aerospace and Defense Materials Business division. We are delighted to call upon Mr. Minami Takahashi, Managing Executive Officer, Chief Executive of Aerospace and Defense Materials Business division to make a presentation.

[Interpreted] Great to meet you. I am Takahashi. I will talk about under the title of Towards Further Growth for UACJ Group. It was on the 1st of October of the last year that we launched the Aerospace and Defense Materials Business division. I'd like to introduce the division today. I will follow this agenda focused on 4 topics. As Mr. Hashimoto mentioned earlier, UACJ Vision 2030. The green apple is described as such and at the left bottom, we have Aerospace and Defense division. The company has decided to make this as an independent business division. Toward the right, there are 5 businesses, including foil, and these are the business areas where we are conducting. Among those, the flat rolled, automotive, extrusion and metal and the aerospace and defense is actually comprised separately by extrusion metal and the flat rolled and we've been doing a marketing and sales activities being in Aerospace and Defense. And because of the constraints of the manufacturing constraints, we were not quite proactive in penetrating into this particular markets thus far. But in FY '23 and '24, forged products and the extruded products were now upgraded to the business division and also the -- there was a proactive business reorganization of the process machined products. And therefore, it is not just the casted and processed products. However, all these 4 products, forged, plates, extruded and process and machine products that will be under one roof of Aerospace and Defense Materials business division, altogether. Targeted customers are as follows: All these are the prime manufacturer of this industry. In regard to the aerospace and defense, the demand have been flattish, stable, ratably subdued, but we are expecting that demand will grow in this area going forward. And the prime manufacturers in Japan from the past, we're using the materials for the U.K. made materials, and they are changing into the aircraft products and then selling back to the other global aircraft manufacturers. And because of this reason, we were only selling a very limited range of products. During COVID, U.S. aluminum manufacturers have prioritized the U.S. aircraft integrator and the 4 Japanese integrator have been struggling so much. And visibly the materials took more than 1 year and the quality wasn't very satisfactory. And integrators have been struggling so much and we received so much request that UACJ should sell such products. We thought that COVID was one of the catalysts where they strongly demand us to get involved in this business. That situation was fully contemplated that UACJ started to think about how to more proactively. And the flat rolled and the thick plates and the forged product and we were calling the products in the -- based upon the types of products. However, started to declare and thus industry name -- and we, for the first time, put the industry name into our business division. It's been effective as of the 1st of October, it's been about 8 months then. And the prime makers are saying that we are so courageous to say those divisions new out, and they are very appreciative of our decision. In the very center, the aerospace and aviation and defense in this area, all these products are the area where our materials are used. So this is the overview of our demands in this area, aviation, aerospace and defense. So these are the composites of this division. In the aviation demand, this is showing the air passenger and data lines were the expected number without the COVID. The global air passenger demand will increase like green dots. But at around 2019 for over 4 years long, the number of air tourists were reduced. However, U.S. and Europe, 2 top aircraft manufacturers, they need to cover the increase of the such demand and the large aircraft has to be becoming a smaller aircraft so that they can provide more flexibility for the airlines, and there are so many new types of demand for the newly built aircraft. Now this is the demand for aerospace. Number of rockets launched in Japan. It's not growing, and it has been very small for a long period of time. But most recently, be it private sector, and be it government sector, they are all willing to launch the satellites. Otherwise, they are not able to catch up with the demand for the satellite telecommunication and that actually means that more rockets need to be launched. Therefore, the number of rockets launched in Japan itself is growing now. So this is the aerospace demand represented by the number of rocket launch. Now in regard to defense, a budget is described as such. Starting in 2022, there was a trend of a search and JPY 43 trillion of a budget is set by the national government comparing 2023 to 2025, there is 1.5x increase in defense spending. This is the share of the domestic prime manufacturers. Blue UACJ, who place extruded products and forged products. We have such market share. Flat rolled, we have very small share. The pink is representing North America. As you can see, we have very small share. As mentioned earlier, domestic primary integrator manufacturers are struggling in sourcing, be it quality and delivery time. And they need countermeasures how to replace the sourcing from the United States. And all of the prime manufacturers tried to support us in this regard and asked us to provide more. And with such a strong support into this aluminum product area, we've went through and certified our products and trying to gain the market share at this moment. U.S. manufacturers are not the only one, however, European aircraft manufacturers are something that we would like to make an inroad as well. For rockets, this represents domestic flagship rockets H3 share. This is a Japanese manufactured rocket. So UACJ's share is high, but there are some portion that still reliant upon North America. Overall market will grow. The number of rocket launches per year is going to increase, so we will accommodate with the increasing needs. And also, we try to gain in market share by reducing North American share. In the rockets market, we are capable of producing the largest aluminum products. And therefore, we can produce the integrated products. And therefore, we are better useful for the rockets company. And also, private rockets company are increasing as well. And all of them related to aluminum or not, we are visiting and selling and tried to develop the business at this moment. In addition to Japan, we will try to enter to the overseas rockets manufacturers market as well. For defense, as I mentioned earlier, defense spending have increased and the budget increase. We already have high share, but we are preparing to increase the production being a Japanese domestic aluminum manufacturer. For the defense equipment like the rockets where the large integrated forged aluminum products is something that we are very good. So high functions, delivery time, quality of production, we'd like to demonstrate our character strength. And next is about strengths and challenges in this segment. As I mentioned earlier, we are able to provide the large, the forged products. But as you see in the challenges section, how large is the product is and also U.S. and Europe products usually enjoys a high level of heat treatment facilities. And that actually was the area which we had constraints. But Mr. Hashimoto mentioned earlier, the quenching materials -- quenching facilities, where we decided to make capital investment. We are certifying our equipments and products and try to make progress in increasing the capacity. For the forged products there are some areas where we are not able to accommodate when they need. And these are the ones were imported from the United States. So therefore, we will expand or proactively in this area to cover all this demand. In regard to the CapEx for the late, we have decided the heat treatment CapEx so that we can promote the switch from the U.S. imports to the domestically produced. For cast and forged products in the second half of the last year, we already started this initiative. We built the building and introducing installing machines. And in the second half of this year, we will start the production by making such capital enhancement, we will increase our production volume. The large forged products commitment is going to be introduced, and we are now assessing the equipment at this moment. Finally, I will talk about the future perspective and the material press strategy. Now for the aerospace, aviation and the defense we were doing this business separately by product groups, but we will combine this as 1 unit. According to the current forecast, we will be able to grow 2.3x as large compared to FY '24. And by 2040, we will be achieving 3x larger of FY '24 sales. There are 2 examples how we are going to market the aerospace and defense area. We've been focusing on materials and also the forged and the casting products where the final finish was conducted by our customers. However, we won't finish until the finished product level, so that these components will be provided by us rather than finished at the customers. Now Inspection business is something that we would like to expand on the left. We have the material and the final inspection was something that we were asked to do. Manufacturers, our prime manufacturers are hiring the first tier manufacturer for processing. And of course, prime manufacturers are doing some inspection, but they also asked us to do the final inspection. But we would like to shift toward the right-hand side. We will provide integrated production. All of the Tier 1 manufacturers outsourcing work will be also managed under our roof, so that from the prime manufacturer's point of view, they will be consigning the whole processes to us in the eyes of them. So there are quality assurance, engineers will be needed and inspection facility exists in the company, which is already certified by the prime manufacturers. So the summary is -- from our point of view, this is the new area, which is aerospace and demand, and we would like to respond to strong demand in this area. In addition, new production and the marketing methods will be used so that we'd like to establish this market. I hope that all the investors will expect this new division a lot. Thank you very much. Takahashi-san, Thank you.

We will take a break. We are 1 minute ahead of time, and we will take a break until 11:15. We will take questions from the floor from 11:15. Thank you. [Break]

[Interpreted] We will now begin the Q&A session. From this point on, interpretation from Japanese to English will be simultaneous, and from English or Japanese will be consecutive. We are now open for questions. [Operator Instructions] First question is from SMBC Nikko, Yamaguchi-san over to you.

[Interpreted] I am Yamaguchi from SMBC Nikko. I was able to learn a lot today. A couple of questions. First of all, Furukawa Electric sold their shares. And it took the form of share buyback in order to absorb the shock in the market, I appreciate that very much. 2 weeks ago, Furukawa Electric had their own share IR day, and they wanted to quickly sell their shares, and they wanted to have a conversation with you. As an investor, this is a grave problem. And so I would like you to give some color on that. What are your thoughts on that? And my second question is on TAA. Let me ask this question in Japanese today. Second question, on TAA. So there is metal benefit you briefly talked about earlier, but I want you to elaborate on that. In June, steel dynamics, new mill is going to be launched. It will be up and running. Aluminum, I think it will take some time for launch. I'm not worried about today or tomorrow. But with increase in supply and scrap purchasing and procurement is also going to increase. So how should I view the market 3% CAGR? With that kind of growth, even with that kind of supply, will you be able to absorb? That's my simple question. And my third question is about aerospace and defense. Delivery of aircraft takes time. It requires many years of certification. And finally, you're able to enter into that space. That's my understanding. In space and defense, I think it's the same in areas where you have here, it might not be a problem, but certification in doing business, the time gap between the 2, how should we look at it? So those are my few questions.

[Interpreted] Tanaka speaking. Thank you for your questions. So 3 questions. Furukawa Electric, with regard to our -- your question was on our shares. And the second question was on the metal benefit of TAA with the new mills up and running and with the market expanding, what is going to happen? And the third question was about entry into the aircraft certification and business. So with regards to share buyback of Furukawa, let me ask Okada to respond to that question. And the second question will be taken by Henry and the third question by Takahashi-san in this order, please.

[Interpreted] Okay. with regards to Furukawa Electrics exit, what is the view of UACJ? I think is your question. As explained in the presentation, 6% of share buyback was conducted in February. And looking at the current situation, are there any specific talks that are ongoing? The answer is no. But what UACJ can do is kind of limited. But what we can do and how we can engage. We have been deliberating on that so that we can take the best action at that right point in time. That is all for me. Let me elaborate with Furukawa. We're having ongoing regular dialogues with them. And of course, they have their own issues, and therefore, we're hoping to engage with them so that we can take the right action at the right timing. I cannot elaborate more than that for now. So I hope you can bear with me.

So the second question about the metal benefit of TAA, let me ask Henry to respond.

Okay. I believe the question was around metal benefit, but more specifically, understanding how we think about metal benefit as we see new suppliers come into the market. And as you have market growth.

Current state [indiscernible] ?

Better. It's better. Current state is better. It's a lot better than it was towards the end of last year, certainly. And I think there's a couple of different reasons for that. If you want to know my honest answer, I think fundamentally, some of it was the buyers in the market, right, learning it to understand how do you operate under different market conditions. Market conditions have been really stable, widespreads for the last several years. So the procurement strategy, and how you respond to the that. We've changed our approach between where we were towards -- as the market scrapped as it tightened up. We've just changed our approach and strategies around how we procure metal in the market intentionally. And we did it intentionally in a way that would increase supply in the short term. But at the same time, those mounting inventories have put -- it put pressure on suppliers to kind of turn their cash and put more cans in the market. We saw spreads widen out some. So there's actions that we can take in the market, but to influence it, we are going to have to learn to manage volatility and variability in the markets, and we're demonstrating we can. Current market though is significantly improved, and we maintained that outlook for the balance of the year.

[Foreign Language]

[Interpreted] I hope that answers your question.

I mean it's a -- obviously, we have a new competitor joining the market. They should be putting coil, publicly released information, has them putting coil into the market sometime middle of this year. With the ramp up to 75% of their capacity is what they're stating next year. I'm not real concerned about it. Quite frankly, I mean, they're well capitalized company. right? They've got a strong history on the steel side and on the automotive side. So from our perspective, kind of my philosophy is winners focus on themselves and losers focus on the competition. So it's always about turning inward to say, are we doing the right thing to enhance our business and where it is as we see new supply come into the market. And supply, as I noted, the market needs, right? We've been in deficit. And when I look at the numbers for 2030, where we believe we're going to be, we're going to need new production in the market. So all in all, what I see is a pretty vibrant healthy marketplace that's growing, and we've got a new participant that's joining.

[Foreign Language]

[Interpreted] Those are the questions. Over to you, Takahashi-san about aircraft certification.

[Interpreted] And your question was about aircraft -- and it does require time for certification. 5 years, 10 years, we've been told. But from last year, for aircraft manufacturers, U.S., European, the certified materials were procured by prime manufacturers. That was the scheme. But from last year, the prime manufacturers have given up on procuring and therefore, it's the aircraft manufacturers that will supply. And therefore, the prime manufacturers no longer have to procure on their own. And as I said, the lead time to bring those materials to Japan is so long, and therefore, they are backing us up and the number of prime manufacturers are working together with us, collaborating with us in order for us to get certification. And we are also working with Japanese subsidiaries who have business in the United States and Japanese prime manufacturers are complaining to the U.S. and saying that, that is exactly why they're working together with us. So instead of thinking about 5 or 10 years, for extrusion, we believe we can be certified this year. And for flat plate from the second half of 2025, mass production should be able to start, still that's quite lengthy, but CapEx spending in that cycle should be shortened than before.

How about in terms of the relationship of a CapEx spending with Quench thick plate, we're trying to be aligned with that, want to have orders and also increase the capacity. Same timing.

[Interpreted] Yamaguchi-san, thank you very much for your question. Moving on to the next question. Next question is by Nomura Securities, Matsumoto-san.

[Interpreted] Matsumoto-san of Nomura Securities. 3 questions. First, referring to Hashimoto-san's presentation, reducing environmental burden reflected in the products, there is a product risk. And are they selling on a premium prices? is this positive on your earnings? I would like to learn that information from you. Even if the environmental burden is reduced and it seems that it is really hard to sell at the premium prices. If you are succeeding in selling in premium products, and please give us some tips why customers are accepting. Next in UATH. Now FY '25 quantity was trending very close to the medium-term plan, However, business profit is quite far away. And in order to attain the business profit stipulated in the medium-term plan, assuming the volume of FY '25, what are the profit contributed? What will improve the profits better then? Third question is regarding the aerospace and defense. Now for the quenching facility investment. Like Takahashi-san mentioned earlier, because of this reason, all the flat rolls that manufacturing constraints will no longer be existing. Is that the correct understanding? Probably, the contribution will be made in the next medium term and so forth put -- how much of earnings profits that we can expect to have. It is very hard to imagine. So therefore, give us some ballpark number.

[Interpreted] Thank you very much. Three points. The first is for environmental friendly products, what is the situation of the selling prices. And the second is UATH. 2025 volume seems to be trending quite well, but what is the business profit achievement. And the third is the CapEx. So the first is Yamada-san. Second, Takahashi-san, please answer the question.

Now regarding the environmental premium that I have to talk, we are realizing environmental premiums to be success. Well, environmental countermeasures is taken such as the recycling content is increasing and also hydropower, the bare metal is actually increasing. And hydropower made bare metal is actually pricey to begin with. So there is an extra cost. In addition to that, CapEx is needed as well, like I mentioned earlier. So how we explain to the customer was that like the cycle that I mentioned earlier, there are some costs incremental and there are some investment incremental. These the customers are fully understanding. And the cost that we are paying outside is clarified in the feasible way. So we make it very clear. And the premium is that in fact CO2 reduction is made per ton basis, which means that carbon value could be increased per ton basis. And we set carbon price to a certain level, and we estimate on our side, and we ask them -- ask the customers to pay. Of course, there are extra CapEx made. Therefore, customers understand this. And customers are understanding that we are incurring extra costs, and we are starting to charge the premiums now. Going forward, well, the carbon price will change and the level of premium will change accordingly. We will fully illustrate and we will explain to the customer. Well, they understand that it is a variable number, and that is the start of this pricing mechanism now.

[Interpreted] In regarding to UATH Yamada-san.

[Interpreted] UACJ Thailand, I am Yamada. Thank you for your question. Your point exactly. The volume is coming very close to the limits of production capacity. But sometimes the profits are falling short. Manufacturing side, sales side, efforts so far has been made, but the largest difficulties now is the sourcing of input materials, particularly UBC's procuring it is becoming very expensive now. Price is surging and we are trying to take countermeasures, meaning that we diversify the sourcing and tried to secure as much as possible, but still the price increases is really hard to overcome. So therefore, for a medium-term for Thailand businesses, business profit is struggling at this moment. And that's why we shared the forecast that I said earlier. But we are not complacent about this from a sales point of view. For example, once we entered into a contract, we ask another price increase to the customers. We will make sure that we will do. And from manufacturing, we already implemented everything we could do. So we need to robustly proceed with that going forward as well. So that -- for the business profit, would that be announced in the medium term will be achieved in the future. Another concern is the foreign exchange rate. Most recently, Thai baht is surging drastically now. that is not controlled by ourselves. Of course, we apply hedging to some extent, but all depends on the trends for the foreign exchange rate, and that still remains as a major concern. That is all.

Thank you. Yamada-san mentioned relatively bearish view. But another factor I'd like to emphasize is China, that payback is no longer valid. And therefore, there are many business approach made the Thailand player because customer will have to absorb the cost increase. And therefore Thailand, there is a short contract, but there are some annual short-term contracts as well. And at the time of annual report, we are asking for the price increase as well. So customers want high-quality, stable supply in some cases that we tried to gain market share in such area. That's something that we do. Hashimoto, anything to add?

[Interpreted] Yes, exactly. That is actually a tailwind for us. Chinese players particularly the Shanghai bare metal price is really high. And it seems that there is a production constraint. And in regard to the VAT tax in China, it seems that new contracts are being renewed and entered into, and that may be reflected on business performance in Thailand in the near future.

[Interpreted] Thank you very much. Moving to the third topic regarding the aerospace and defense. And regarding the heat process. For the flat rolled the production constraints is very limited at this moment. But when I think about the long-term demand future, such as 2030, we will have to install the second equipment as well. This has been new key heat process equipment where this is in the flat rolled business in Fukaya and there are 2 sites that we are dealing with and aircraft aerospace. And also, there's another thing which is that overseas products for the semiconductor, particularly Southeast Asian markets where we may be able to start selling and the U.S. material will not be delivered to such market. And then think about all this demand, we will have to think about the second equipment, but we are focusing on the first equipment at this moment. So we are going to be running quite well with that. And then in the future, we will think about the second, if needed going forward. Hashimoto-san?

[Interpreted] Right. As you commented correctly, the range that you mentioned is correct.

[Interpreted] Next question Morgan Stanley MUFG, Shirakawa-san over to you.

[Interpreted] Shirakawa from Morgan Stanley. I also have 3 questions. First question. IR Day 2025 page presentation material, Page 10. In the current mid-term plan, 2025, there is analysis in line with MTP. And there are some postponement for materials and processing and cost increase due to inflation, it was factored in, but it earned in earlier before than expected. But in the meantime, there is recycling that was promoted and also another factor for pushing up profit is -- has had a big impact -- a positive impact, but there are so many different numbers that are all mixed up. And for each of these items, if you could analyze, take us through, that will be very much appreciated. And my second question is UBC. Again, sorry for repeating, but Japan, United States and Thailand. What is going on? If you could explain once again. Earlier, it was said that in the United States, one of the reasons why there is improvement is that the understanding of the market has improved. I didn't get that. So if you could explain why is it increased in the steel dynamics starting operation from June, but I don't think you were collecting yet -- so why was there was a tight market? And why suddenly have improved. If you could elaborate on that? And what is going on in Japan, there are Korean suppliers who are buying and also the same in Thailand. What is going on today? And what do you expect going forward? And my third question is on Whitehall. Last fiscal year, in '24, according to your presentation material, there was head count reductions and fixed cost were also reduced in order to generate profit. And this year, in '25 main reason for profit growth will not be in cost, but rather a volume increase. EV sales is not that positive. How do you intend to increase sales? So those are my 3 questions.

[Interpreted] Thank you very much for your questions. We received 3 questions. The third question was the categorization in the fourth mid-term management plan. I will cover that. And the second question on UBC, Japan, U.S. and Thailand. Hashimoto-san will give the broad picture. And Henry, I think, is the most appropriate person to respond about the U.S. situation. And the third question was on Whitehall, Wegener if you could cover the situation, including the EV market. So with -- starting with the first question, this is on Page 10 of the slide deck, the waterfall chart of the value-added strategy. So there is existing area and recycling. I think this is not very easy to understand. It's very difficult to separate because the can would affect both, and, especially in can materials, the orders that we have been receiving for exiting business will be regarded as existing business. But by increasing recycling and when customer has needs, and we were able to address that demand, it will be regarded. It will be captured under recycle promotion or promoting recycling. And in non-can areas, recycled-related inquiries are also captured as under this. So in the expanding materials and processing business, automotive-related materials are included here and also heat, heat-related, everything related to heat will be included in here. And the fourth segment, which is supply chain and stabilization. So semiconductor and also aircraft and defense materials business is included here. And semiconductor business is not -- or did not grow as much as we expected. That's one factor that's included. And there is also others, not big ones, but there are small ones that are growing. So those are included in expanding new domains in others category. So existing domain and recycling, there are overlaps, making it difficult to categorize between the 2. There's a big overlap. I would say they are both categorized into different areas. But if you could see it in that way, I would appreciate. So that's my response to the first question. And the second question is about UBC about the situation in Japan and Thailand. Hashimoto-san?

[Interpreted] Thank you for your question. So the reason for price increase, there are basically 2 reasons. One is UBC consumption volume has increased and people are working to increase recycling, and that's a need across the society and can material manufacturers are also looking into that, and we are also eyeing that as well. So that's a big trend. And the new mills to be launched in the United States and also in Korea. UBC processing facility has been enhanced, so did we. So at the same time, this is taking place and also taking place at a very similar timing. That's another reason. And another big factor is in China, they are recycling and using it as a bullion and using it because the bullion prices are up in China. And if they use recycled materials, it contributes to cost reduction. So those are the main factors contributing to price increase. And procurement has diversified and being able to use lower quality products and way in which we buy, and this was mentioned by Henry earlier, it's not that we'll continue to buy, but we will look at our competitors and suppliers. And we need to take different approaches in how we buy. And another reason is China, with this kind of increase, they lose their benefit. And that's why we're seeing a decrease in volume for using recycled cans. And all these were taking place at the same time. Things are gradually settling down, but the volumes to be reduced and how we approach is also being revised, and we're trying to see how things will settle down going forward. The movement is taking place around the world. And when prices go above a certain level, people will stop buying from there. It's almost like one market. Of course, there are individual markets as well, but I'll ask Henry to cover about the U.S. market situation.

Thank you. Like most things in life, there's never one simple explanation. So -- but there are a lot of factors that are easy to explain. I think when you look at the improvement, it's probably about a 10-point improvement overall in terms of purchase value of UBC relative to the U.S. transaction price. Part of the reason that the spreads we think opened up. One factor is the U.S. transaction price is higher. So the tariff policy itself is factored into the Midwest premium. So the premium is built into the import price of metal. So the U.S. transaction total is higher. So the higher the U.S. transaction goes, that tends to widen spreads out a little bit. So some of the tariff policy itself is supportive relative to managing input costs. So kind of one important thing. Derivative from that, though, is it's with a higher -- relatively higher value for scrap in the United States. It's created an arbitrage. So what we've seen is more UBC or metal flowing into the United States as well. So spreads widened, it created an arbitrage. Now you have more supply going in. That's certainly very helpful. Companies are likely doing what we're doing. Our strategy though has been all the way through equipment design is widen it out, so I'm not dependent upon one material type.

[Foreign Language]

Okay. I'll go slower. So 4 things: higher U.S. transaction price, that's led to an arbitrage, which helps increase supply, more coming in. With that, you also have for us, at least, but I'm sure others widening out the kinds of material you're using. So that's induced more supply as well. And then the fourth adjustment is what Hashimoto-san referenced, I know in our company, we just put together a more strategic approach to how we approach the markets. We can't always project linearly what you're doing on a month-to-month basis. So you got to figure out a way to move in the market and out of the market in an advantaged way. So I think that's also helped lend to improvement in the overall cost of raw material.

[Foreign Language]

[Interpreted] I hope that answers your question. Yes. Third question, Whitehall sales situation from Wegener, please.

To answer your question about increasing sales and increasing margin, we have a few new launches happening in 2025. That doesn't necessarily mean new vehicle launches. We are taking on more content in existing vehicles, increasing our revenue. And we're continuing to work on continuous improvement activities to increase our margins.

[Foreign Language]

[Interpreted] I hope that answers your question. Thank you. Thank you very much, [indiscernible], for your questions. Next, there is a hand up in Zooms and Goroh-san of UBS, please raise your question.

[Interpreted] Goroh of UBS. Can you hear me?

[Interpreted] Yes, we can hear you well.

[Interpreted] There are 2 points. First, in the Page 10 of the presentation -- first presentation. [indiscernible] -san based question. This is factor by factor. The factor analysis is made. And this is really easy to understand. And the pink area, particularly the high cost from inflation that you've received the impact, ahead of the schedule, and it is probably the time lag as well. In your mid-term plan, the outcome of your growth strategy could be erased completely in the pink inflation area. That's what I read from your results so far. And this is probably based upon the roll margin improvement and so forth. As an outcome of what you have done so far, can you recover this pink area based upon the efforts so far or you will be recovering with extra efforts and premium products where you need to recover this cost as well? And unless you recover this portion, you will not be able to attain the scenario that you depicted in the fourth medium-term plan of higher sales and the margin. And there's an improvement of the domestic sales and also the China VAT repayment is terminated and so forth, and there might be some positive impact for your company. Is the company fully conscious of how to recover this big area, domestic, U.S. and other major markets, what is your understanding of how to recover this cost increase? There are some time lag. There are some efforts that has been already put in place and something that you need to do going forward, if you could summarize and describe more. Second question, in regard to the volume recovery for the flat rolls in Japan, where can sheets, you have increased in your plan. And in Europe, where the company is expanding your businesses. But in your medium-term plan, the volume that you're going to recover such as automotive and the thick fleets and others, where the demand is not recovering at all and probably not everything is on track with your scenario. Think about the product mix and others. Are the serious enough that you will fell short of achieving the medium term? Or you will be able to grow more in Europe and expanding the business which will be able to cover extensively. It seems that the capacity enhancement in U.S. and Thailand is going to be reflected in the sales growth, but what is the recovery that you project in the Japanese market? That is my question.

Two questions that I recognized. The first question was, well, think about the waterfall chart in growth and value add. How the company is prepared to recover the higher cost from inflation? Second is U.S., Japan, Thailand volume increase, where are there any risk of the shortfall versus the medium-term plan? Now in regard to the higher cost from inflation, Okada-san will be commenting, and I will supplement afterwards.

Okada speaking. Your point is correct. Now the pink area is quite uncertain. Now most recently, roll margin improvement is observed and partly, we will be able to recover. But in this waterfall, pink bar seems to be quite outstanding. For overseas market, volume may increase. However, there is a price increase in recycled materials, and we need to carefully monitor the progress. And that is the company's position at this moment. In regard to inflation, by securing the roll margin improvement, we will cover the labor cost increase. And for overseas, for the Chinese material users, we will capture the customers and reflect on the higher prices and being a part of such efforts, JPY 46 billion of business profits, there is some risk coming from inflation. So -- that's our company's understanding.

Tanaka speaking. In our medium-term plan, in FY '27, this point was 209 so twice as large. And as you see, many items related to inflation is incorporated. And therefore, it is a front-loaded realizing ahead of the time. Now in regard to price increase and seeking premium prices and can we recover that? Yes, we are trying to think so. And that is actually spread into other bars on the left. There are something that we are going to take action that is actually outside of this chart, which we are going to implement. So FY '27, JPY 20 billion or so of this inflation, ultimately, inflation impact is going to be smaller than that by implementing some extra measures. And on top of that, the sustainability products are really popular, many approached by the customers where we can enjoy some premium prices out of that. We will realize such demand, and we try to recover such inflation impact. UBC prices versus inflation, there are some front loading of realizing this impact for the recycled materials, use of recycling will increase, and we take actions to enable us to do so. So there are more rooms to recover this cost increase. That's all for the first question.

So roll margin improvement, you said roll margin improvement in January and a part of that roll margin improvement is incorporated. But unlike the previous years, it seems that the roll margin improvement is really hard to realize? Or can you commit to a very good progress or a flat roll margin?

Well, cost in general is rising. Like I mentioned in January, so cost increase is something that we asked for our customers, 3 to 4 months passed so far. For overall Japan, for cost increase, customers are showing a very good understanding. We need to realize a price increase. Otherwise, because of the shortages and labor, we will not be able to continue the supply. There is a risk of delivery and therefore, being a part of the supply chain, customers are showing a very good understanding. That is a total picture. So something that we said in January was that what we said was something before we start to take action. So forecast for this year is rather reserved or may be lower. So therefore, recovery is happening. And this waterfall, particularly the recovery in pink area is going to be increasing and the pink area will become smaller. So that's the current situation, and that's the progress so far.

[Interpreted] Thank you. Moving on to the second point. What about the volume increase for the flat rolled. Now Japan, Thailand and U.S., are there -- are you comfortable to achieving the volume number?

[Interpreted] Are you asking about Japan mostly? Is that so?

[Interpreted] Yes. My intention is about Japanese.

[Interpreted] If you could turn to Page 17 of my slide, that actually shares the volume for the domestic market. If you could look at some number, we appreciate it. For domestic, as you see on the left. Now are the export, domestic, automotive and so forth. And we are in a very diverse business. And for export, exports to Europe is increasing tremendously. And the core balance is such that we try to export the balances, anything available. However, for domestic demand nothing is reducing significantly. For example, the automotive, there are some tariff impact and there might be some minor decrease. But when we exclude that, it is very stable. And aluminum use is actually increasing. Application is increasing among the automotive companies. And also for the heat exchange, the price competition versus China, we are actually winning this competition, and there are so many approach. And for foils, the batteries are using our foil and also for printing, there's no negative, and it is increasing. Air conditioners. Needs for air conditioners are growing on the whole and thick plate, it will grow for semiconductor, be it IT and MD. MD is usually used for AI, investment will increase, and it is indeed increasing. Building and others materials or other. So that is general industrial purposes. So there is not so much of a negative direction. There is an edge up in demand in automotive. Perhaps, let's say that the tariff, if that could affect the automotive export drastically, then we could actually adjust and increase the export to European market. So risk of lower volume in Japan is actually very small at this moment. That's our take. Thank you very much.

[Interpreted] Understood. Thank you very much.

[Interpreted] Kaoru-san. Thank you very much. We have passed the time allocated for Q&A. But if possible, we would like to take one more question. Is there a question? SBI Securities, Shibata-san. Please ask your question.

[Interpreted] Shibata from SBI Securities. I have just one question. Your target for recycled products. When this number comes up, nonfinancial value is to be enhanced, I understand that. But with increased recycling, it could lead to cost reduction. And is it correct to assume that there will be reduction impact as well? That is my question.

[Interpreted] Thank you very much for your question. So rise in recycled items. That does not lead to cost reduction, unfortunately. So collecting recycling materials and be able to make use of it. So that needs to be enhanced in order to increase recycled materials that are suitable to -- that are appropriate to reduce the CO2 emissions. That's the request and needs from our customers and how to combine materials in order to reduce or increase recycled material, we need to put a lot of effort on that. So just because recycled items take up a large part, that does not necessarily mean cost reduction. More, I guess, it's towards increased cost. And it would also contribute to environmental impact. And I think customers expect those environmental -- reduced environmental impact and therefore, looking for recycled items. Thank you very much for that. Shibata-san thank you for your question. And with this, we would like to conclude the Q&A session. If you have further inquiries, please contact the IR department. And with this, we would like to conclude UACJ's IR Day. We will strive to respond to the expectations of our stakeholders, including our shareholders. Your continued support is very much appreciated. Thank you very much. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]