I'm Taguchi of Finance Unit. I'll explain the outline of financial results. Please turn to page 4. This is the highlights of FY 2023. Due to the continued difficulties in some overseas project in Total engineering business, additional expenses were posted in Q4 as well, and partly also due to the additional risk contingencies cost, operating loss was incurred. Orders were sluggish as clients' investment decision for large contracts expected at the end of the fiscal year slid to the next fiscal year.
Page 5 shows consolidated income statement. Net sales increased to JPY 832.5 billion, up 37% year-on-year, but gross profit decreased JPY 56 billion to JPY 10.6 billion. This is due to the substantial decline in profitability in Total engineering business.
Operating loss was JPY 18.9 billion, ordinary profit was JPY 0.3 billion, and loss attributable to owners of parent was JPY 7.8 billion.
Please take a look at slide six. I'm going to talk about earnings by segments. Total Engineering segment saw progress of large projects, and the net sales grew 40% year-on-year to JPY 773.1 billion.
Large oil and gas-related and chemical plant projects underway in the Middle East and Southeast Asia resulted in a loss of JPY 22 billion due to additional expenses and a large loss provision resulting from estimated cost for countermeasures on risks. Functional materials manufacturing segment saw sales increase of JPY 4.2 billion from the previous year to JPY 52 billion, driven by increase in catalyst-related sales.
The segment income remained flat at JPY 7.2 billion due to a lack of recovery in demand for fine chemical products for semiconductor and hard disk-related applications, and as well, increase in depreciation. Please refer to slide 7. Orders for Total Engineering segment summed up to JPY 293.8 billion. In the fourth quarter, there was no order for large projects.
Turning to slide 8, the third slide on segments. We had the order backlog of JPY 1,243,900,000,000 billion. Thanks to the weakening yen, the backlog decline versus the onset of the fiscal year was contained to about JPY 300 billion. The breakdown hasn't changed since the onset of the fiscal year.
If you look at the breakdown by business area, oil and gas and LNG accounted for about 70% of the backlog, and by region, the Middle East accounted for about 50%. The 9th slide is on consolidated financial position and cash flow. First, on financial position, total assets grew to JPY 792.2 billion, driven by the increase in sales. Equity ratio was 48.7%, falling below 50% for the first time since the fiscal year ended March 2009.
There was JPY 148.1 billion of additional cash balance not posted on our balance sheet, which is the company's share of cash on the balance sheet of the joint ventures. Cash flows are shown in the table below. We had positive operating cash flow of JPY 11.0 billion.
The positive operating cash flow, despite the fact that we have posted net loss, was mainly due to our posting of large provision for construction losses that has not yet resulted in cash out. We had very large operating cash flow in the previous fiscal year due to the collection of receivables following the conclusion of disputes on previously completed projects. We had JPY 20.2 billion of negative net cash flows from investing activities due to factors including acquisition of tangible fixed assets.
We had JPY 8.8 billion of negative cash flows from the financing activities due to factors including payout of the dividend. Cash and cash equivalents at the end of the fiscal year was JPY 324.5 billion, flat growth since the onset of the year. Turning to 11th slide, forecast for FY 2024.
We expect order of JPY 970 billion for Total Engineering segment. Net sales are expected to be JPY 830 billion, on par with the previous fiscal year, thanks to contribution from continued progress on large projects. We forecast gross profit of JPY 85.8 billion, gross margin of 7.0%, operating profit of JPY 26 billion, and ordinary profit of JPY 34 billion. Profit attributable to owners of parent is expected to be JPY 23 billion.
We expect JPY 40 dividend per share. The forecast is based on the planned exchange rate of 145 yen to a dollar. On slide 12, I'm going to talk about forecast by segment. We are expecting JPY 770 billion for net sales of Total Engineering segment, flat year-over-year growth. We expect a segment profit of JPY 26 billion.
There are a few projects that ended up generating losses in FY 2023, for which we have set aside a provision for construction losses. The sales from these projects are expected to account for about one-fourth of overall sales. We are expecting net sales of JPY 52 billion, with the segment profit of JPY 7 billion, flat year-on-year growth, as we continue to see uncertainty around the recovery of semiconductor and related markets.
The last slide, page 13, I will touch on the revision on our shareholders' return policy. The current shareholder return policy was set out in 2021, when the medium-term management plan, BSP 2025, was formulated. We have just completed fiscal year ended March 2024, the third year of implementing current midterm management plan.
We have reviewed the policy from the perspective of enhancing shareholder returns in light of our current fiscal situation and future business prospects. As a result, we have decided to increase the annual dividend payout per share from JPY 15 to JPY 40. Based on revised policy, the dividend forecast for FY 2024 shall be JPY 40 per share. I'd like to stop here for my part.
I'm Sato, Chairman. As already announced on April 30, operating loss and net loss were posted for the full year of FY 2023 due to the additional expenses in multiple projects of JGC Corporation, the core entity of EPC business in the group, in addition to the project of overseas group companies. To recover the trust by shareholders and investors for our EPC execution capabilities, we can do nothing but achieving steady and stable performance through steady execution of EPC project that we are working on.
Following Q2 and Q3, in this Q4, the profitability has been deteriorating in the same project, and we intensively scrutinized ongoing overseas major project in terms of their execution condition, execution plan, and budget. In the review of budget, in order not to repeat the deterioration in profitability going forward, we made a strict scrutiny.
As a result, additional risk contingencies expenses were posted, but the likelihood of posting additional loss has become significantly lowered in 2024 and onward. We will strive to recover business performance by steady execution of projects going forward. The reason for posting additional expenses varies by different background and the development of each project, but we, JGC Holdings, examine the underlying causes and countermeasures with JGC Corporation.
Ishizuka will explain the details later. But we believe that the major direction to realize sustainable growth by transforming ourselves and diversifying business into the five business domains, including energy transition, that we showed in our medium-term management plan of BSP 2025 and long-term management vision of 2040 Vision, is not wrong. And this direction remains unchanged, even with the loss incurred this time.
However, as for the strengthening regional management structure to expand business by strengthening local production and local consumption type sales and project execution capabilities in growth market, which was presented in the long-term management vision, we think we need to decelerate once with loss incurred in overseas group companies.
Furthermore, JGC Corporation has strengthened its management team by appointing Mr. Yamada, who is currently President of JGC Japan Corporation, a domestic EPC company, as Representative Director, Senior Executive Vice President of JGC Corporation, and the management team will work together to address the issues that have come to light.
Looking at the plant market, energy demand is on the rise as the global economy recovers with the end of the new coronavirus infection. In addition, the importance of natural gas and LNG as transition energy has been reaffirmed, and global demand for natural gas and LNG is growing rapidly, with many LNG projects making steady progress towards realization.
At the same time, the acceleration of investment plans in fields of sustainable development, such as hydrogen, ammonia, SAF, and CCS, coupled with the support of countries' policies toward low carbon and decarbonization, has resulted in a very strong inquiry from our group's customers. In order for the JGC Group to make even greater strides, we will firmly reorganize our structure for steady EPC execution and firmly capture substantial growth opportunities that we have in front of us in the plant market.
As we have overcome major obstacles many times since our inception, we are confident that we shall once again overcome the current difficulties, build a more solid EPC execution capacity and capability, regain the trust of our shareholders and investors, and become a collaborator in problem-solving that can provide realistic solutions. Ishizuka and I are determined to continue to take the lead in this endeavor.
Thank you for your continued support. That is all from myself. Thank you very much.
I'm Ishizuka, President. I'll explain the business overview. Please turn to page 2. I will follow this table of contents. Please turn to page 4. I'll explain the business environment outlook first. In overseas transitional energy field, energy demand will increase amid the recovery trend of global economy, and demand for natural gas, including LNG, remains high, driven by energy security issues and pursuit of decarbonization.
For your reference, according to the annual publication of Shell Outlook, it is estimated that the capacity of LNG plants will increase from 400 million tons of today to 600 million tons in 2040, with the increase of 200 million tons. Clients are moving ahead with capital investment plans while taking environmental measures, such as installing e-drive in plants and CCS facilities.
In the sustainable field, national policies and other support are driving progress in plants involving hydrogen, ammonia, SAF, CCS, e-methane, among others. In industrial infrastructure and other fields, capital investment plans for storage battery components and data centers are progressing steadily, mainly in North America and Asia.
On the other hand, initial investment costs tend to increase due to higher interest rates and construction expenses, which is observed as commonality, and some clients started to be cautious in deciding investment timing. Turning to domestic, as in overseas environment, various plans are progressing, utilizing government subsidies in the sustainability field of hydrogen, SAF, and the circular economy.
On the other hand, some investment plans are postponed due to the time required to receive the subsidies with increased investment cost. In pharmaceuticals, the capital investment is expected to continue, including that for new modalities. Please see slide five.
This slide shows orders target for FY 2024. Despite such favorable plant market, due to the postponement of some projects that we expected to receive orders in FY 2023. Order target in FY 2024 is JPY 970 billion, which consists of JPY 840 billion overseas and JPY 130 billion in Japan. Let me explain major project. In overseas transition energy segment, we focus on LNG plant with E-drive in UAE, with a capacity of approximately 10 million tons.
Tender is already finished, and we received LNTP limited notice to proceed for early engineering. LNG plant in Africa is another promising project. In sustainable segment, there are multiple CCS projects in Asia, including major project. We have high expectations for them as well. E-methane FEED North America and a FEED project of hydrogen MCH of ENEOS in Malaysia are expected.
In Japan, project of waste tire recycling plant, storage battery installation, and SAF FEED are progressing in sustainable segment. Pharmaceutical plants, as mentioned, and lab for biomanufacturing, which invested, will contribute to achieve the target of JPY 130 billion. Further down the road, what will be the development in FY 2025? Some projects are in our scope today.
Tender is already finished for LNG plant in Papua New Guinea. Unfortunately, there was a delay in the upstream process, and we were requested to provide support for early engineering by an operator of ExxonMobil. Another project is also LNG plant. Following the ongoing phase I of LNG Canada, the estimate for phase 2 with the same capacity of 14 million ton, 7 million times two, super large capacity facility is now being finalized. We are having a negotiation with client.
In Japan, a series of large projects, including large SAF plant and waste plastic recycling facility, are expected in the sustainable segment. This is the overview of FY 2025. Page 6 shows progress in major projects. I wouldn't elaborate one by one, but LNG Canada, that I mentioned before, is shown on the left above. Startup will be in this year, and commercial operation, 2 trains, will be in the middle of 2025.... Basra Refinery in Iraq, as shown in the middle above, has been progressing steadily.
Mechanical completion will be in the middle of next year, and delivery will be at the end of the next year. It is described as API facility in Shizuoka on the right above, and it is the large project of Chugai Pharmaceutical. It is making steady progress toward the completion in October.
Nearshore floating LNG in Malaysia is shown on the left below. We received its order in 2023, and it is close to Kota Kinabalu. First steel cut was conducted in Samsung Heavy Industries in Korea, and the production stage started. In the project shown on the right, partner is an American construction company, Kiewit. Foundation work is progressing steadily. That is the progress in major projects. Page seven. On April 30th, Terajima, CFO, announced a posting of loss and downward revision.
I'll explain the most important point of countermeasures, how we are going to respond going forward, later. But let me briefly explain the background and the previous development first. As for the previous development, we announced the downward revision in Q3. We have been closely monitoring the deterioration of profitability in multiple projects, including some in overseas group companies.
At the end of last year, we started to scrutinize Q4. In the process, JGC Holdings and JGC Corporation implemented additional reviews for the progress of loss-making project, their execution plan, and their additional expenses upon further deteriorating trend of some projects. As Sato mentioned before, we examined major project strictly. The resulting numbers were already presented by Taguchi. As background, two points are listed here.
We have been promoting business diversification in five business areas under the long-term management vision of 2040 Vision. It may not be the appropriate expression, but we expanded omni-directionally. Second, we have been promoting the framework for regional management, seeking business expansions through more capable local sales and project execution in growth markets, led by JGC Asia Pacific. As measures, as shown here, in JGC Corporation, we have been promoting three solutions-oriented divisions: energy solutions, sustainable solutions, and facility solutions.
Sustainable solutions, of course, included the feasibility study and FEED. Members of three solutions strived to receive orders and worked on numerous estimates. We faced with the issue of resource allocation, which I will explain later. As for overseas subsidiaries, JGC Asia Pacific took on challenges of receiving orders, project, whose capital investment sites have expanded. There might have been mismatch between the content of the project and the capability.
Now, for the countermeasures, please turn to page eight. First, I need to touch upon this. With this issue, starting from the beginning of this year through February and March, we have been having intensive discussions. The contents should have been explained to you at the announcement on April thirtieth. But since it was before the institutional authorization of personnel and organizational changes, the explanation was delayed.
Today, we had a final board meeting for the results announcement, and after obtaining authorization for personnel changes and other issues, we are now ready for announcement today.
There are two issues, the issue for the head office of JGC Corporation and the other for its overseas group companies. Page 8 is explanation on the issues for the head office. As I have mentioned this a number of times, we have divided the business into five areas and three solutions, and strived to cover all of them. That made it very difficult for us to sufficiently allocate resources, causing confusion.
In order to prevent this confusion, we had to bring in more people resources, only to cause more confusion, getting ourselves into a negative spiral. We also relied on external resources for designing, but the effort collapsed, and we had to bring designing back to the head office, furthering this negative spiral. The knock-on effect has made the negative spiral more and more vicious.
In Saudi Arabia, we were able to manage the disruption to a certain extent, but there was significant change in the market that resulted in loss on our projects. The key here is to execute design work with optimal personnel allocation. This would be common sense. We shall take diligent steps to bring this into reality. We aim to enhance our human resources management to win orders for all three solution businesses.
We had to engage ourselves in countless number of RFQ. We had to engage ourselves in extensive efforts for seeding, feasibility study, and FEED to penetrate into sustainability field that eventually caused us to lose control on human resources management. In the future, we shall not proceed in all directions. We shall focus on three priorities.
First priority is to focus on projects that are highly feasible in securing profit in the near and medium term, and as I mentioned earlier, we are expecting JPY 970 billion of such orders. We shall focus our resources only on such opportunities and disregard others. Proper resource allocation. Plus, as Sato has mentioned, our policy of focusing on sustainable fields will remain unchanged. We focus on work that will be valuable in the future.
Particularly over the next year or two, we will focus on the first two points, securing profits and securing resources, in order to win back the trust and confidence from the market. Second priority, resource allocation will be controlled centrally and globally, not independently by three solutions to ensure solid execution of projects. We will be very selective on the RFQ for seeding, FS, and FEED.
As I mentioned earlier, once a project collapses, more resources will be allocated for its recovery, and this will lead to a negative spiral that will negatively affect next projects. Our objective, therefore, is to prevent this at all costs. Third priority, our overseas group companies, especially in the Philippines and India, had both their own engineering centers and as well, local EPCs for local demand.
However, they shall now basically focus on serving as engineering centers for global projects won by the head office. These are the issues related to the Yokohama head office. Please take a look at the next page, page nine. These are issues for our overseas group companies. As the scale of each customer's capital investment increases, we start to receive orders for multiple medium-scale projects, and as a result, we incurred losses in our Indonesian business.
This was not our first attempt, and we had already successfully completed some projects in Indonesia and Saudi Arabia in the past. With the confidence, we proceeded, but due to the increased complexity of the projects, we ended up engaging in projects that were beyond our capacity and capability. The issue is to focus only on projects that are within the limit of our overseas group company's execution capabilities and capacity.
For that purpose, as Sato mentioned earlier, we are putting the brakes on our efforts to strengthen our regional management system. We are not permanently stopping the effort, but shall step on the brake pedal until we regain the profitability of the business. We will redefine and review the roles of overseas group companies. Our overseas group companies have three roles. First, the engineering center is mainly responsible for engineering work on projects won by Yokohama head office.
The second is to be the contracting entity for JGC Corporation projects. For example, in Indonesia, they have a system in which only a local company could become the contracting entity for their national projects. The third role is the execution of local EPC projects. These are the three roles....
We are going to substantially slow down the execution of local EPC projects to concentrate only on projects in which we can leverage on our differentiation. We would go as far as considering the closure of one or few of our offices. Moving to page ten. As Sato explained earlier, we are changing our leadership team. The new management team will implement the various measures I have just mentioned.
To strengthen the management team, Yamada, who is currently the President of JGC Japan Corporation, will be appointed as the Representative Director and Senior Executive Vice President, and will join hands with the current President, Mr. Farhan Mujib. Yamada is 64 years old, and he has sales background. He managed the overseas sales network and was the leader of the Mozambique floating LNG project that was completed last year.
He made a significant contribution to the project as the lead. He also took a leadership role in the integration of the former JGC Project Services and the domestic group companies in Japan, and successfully completed the integration, and later took a hands-on role in the management of projects carried out by JGC Japan Corporation.
Through these actions, we will revitalize JGC Global's EPC execution and achieve positive results in our business performance to restore confidence in the EPC execution capabilities of the JGC group as soon as possible. JGC Holdings shall provide whatever the support needed. Let me turn to the functional materials manufacturing business. Please refer to page 12. As Taguchi has already explained, market for semiconductor manufacturing equipment, the mainstream customer of our fine chemicals and fine ceramics business, appear to have bottomed out, but there is still a sense of uncertainty, and we expect sales in FY 2024, therefore, to remain unchanged from FY 2023 at JPY 52 billion. One topic in this area, markets for catalysts and fine chemicals, such as FCC catalysts, are very solid.
In fine ceramics, demand for high thermal conductivity silicon nitride substrates, which are used in EV and HV vehicles, has grown significantly, and we are continuing to ramp up our production capacity. I'm going to talk about this on the next page as well. Please move to the next page. The next page on our growing CapEx to increase production capacity.
We have newly acquired land in Wakamatsu, Kitakyushu City, and City of Agano, Niigata Prefecture, for increasing capacity for both catalyst and fine chemicals business. In these two locations, we are investing to build facilities for production of such carbon neutrality products as catalysts and e-methane synthetic fuel, and also CMP for semiconductors. We expect these product to substantially grow in the future.
For fine ceramics, we acquired 12 hectares of new land in the last year, and as you can see from the photo, we have started construction of the plant to increase production of the high thermal conductivity silicon nitride substrate I have mentioned earlier. This is it from myself. The appendix is attached, but I hope you will take a look at it later. Thank you very much.