My name is Taguchi, General Manager of the Finance Unit. I will give you an overview of the first half results using the presentation material. Please turn to page 4. These are the three highlights from the first half results of FY 2023. Large scale projects made progress as planned, and net sales were up year over year. Some projects, mainly executed by our overseas subsidiaries, required risk reviews, which temporarily lowered the profit margin in the first half of the fiscal year. Overseas results in new contracts remain sluggish, as we generally expect overseas projects to be awarded later in the fiscal year, while domestic project orders are steadily accumulating. Next, on page 5, this is the consolidated income statement. Sales rose, but profit fell over the previous year. Net sales rose by 51% year-over-year to JPY 403.3 billion.
Gross profit fell by 11%, to JPY 28.4 billion. Profit ratio declined by 4.9 points to 7.1%. This was due to lower profit in the total engineering segment. Operating profit was down by 31%, to JPY 13 billion. Ordinary profit fell 17%, to JPY 25.4 billion. The drop in ordinary income was smaller compared to that of OP, due to an increase in interest income. Net income attributable to owners of the parent decreased 39%, to JPY 12.5 billion, due to a higher effective tax rate caused by the losses in the overseas business. Page six shows the segment results.
In the total engineering segment, net sales rose JPY 133.7 billion year-over-year to JPY 375.5 billion, due to the progress of domestic projects related to clean energy and life science, and overseas large-scale project in Saudi Arabia and Iraq. However, segment profit decreased JPY 5 billion year-on-year to JPY 12.2 billion. Profit ratio also declined by 3.9 percentage points. I will explain why the profit was down. The profit ratio temporarily declined because we have reflected additional costs and risks identified in the implementation of two midsize project at overseas subsidiaries as a result of a project profitability review in Q2. One is the Indonesian subsidiaries project to build a new natural gas processing plant and gas pipeline, which was awarded in 2022.
Due to worse-than-expected soil conditions at the construction site, we had to anticipate additional costs, including piling and soil improvement. In addition, we expect the project workload to increase due to the disruption of internal design work caused by significant design change requests and a delay in the delivery of the pipeline site. Given the status of the project, we have judged it necessary to reflect additional costs. The other one is a Saudi Arabian subsidiary's project to expand the NGL plant, awarded in 2021. The design schedule for this project was delayed due to design verification process and concerns were raised regarding the impact on the procurement, construction schedule and cost.
Furthermore, the design delay resulted in additional requests and change orders, so we decided to incorporate the possibility of additional costs to ensure delivery dates, in addition to the risk of a surge in material and equipment prices. These two projects caused a provision for loss on construction contracts to be recorded in Q2, putting pressure on gross profit. We are aware that the reason for this deterioration in profitability is that while overseas subsidiaries were increasingly managing big projects in the magnitude of few tens of billions JPY, they were still in the process of building the capability to sufficiently analyze and respond to the risks involved in estimating the project's costs. Next is the functional materials manufacturing segment. Net sales increased slightly to JPY 25.7 billion, but profit was unchanged at JPY 3.7 billion.
Sold volume of catalyst products declined despite price revisions that secured higher sales and fine chemical products were impacted by declining demand, particularly for semiconductor-related products, which resulted in a lower profit ratio. Results in other segments are shown here.
Next, page seven is about new contracts in the total engineering segment. The amount of the new orders received in the first half of fiscal year 2023 was JPY 158.9 billion. Major contracts were biopharmaceutical-related projects in Japan. Next page is about the order backlogs of the end of September, amounted to JPY 1,484.9 billion, which decreased by JPY 79 billion from the end of the previous quarter. There were no major changes in business area and the region. Recently added major contracts include the facilities construction in Japan for biopharmaceutical and the messenger RNA vaccine ingredients. Next page shows you the financial position. There were no major changes in our financial position from the beginning of this fiscal year. Equity ratio was unchanged at 53.5%.
Our portion of cash in off-balance sheet joint venture amounted to JPY 170.5 billion. Cash flows from operating activities were JPY 16.2 billion. In the same period of the previous year, we received more cash, partly due to a collection of receivables resulting from the settlement of past project dispute. Cash flows from investing activities were a negative JPY 13.3 billion, mostly due to purchases of property and equipment. Cash flows from financing activities were a negative JPY 11.6 billion, mainly spent for dividend payments and others. Cash at the end of the second quarter was almost flat year-over-year to JPY 333.6 billion.
About the forecasts for fiscal year 2023, the full-year forecast is unchanged, except for the yen-dollar exchange rate, which was changed from 133 yen to 140 yen to the dollar. In terms of new contracts, the progress rate at the end of the second quarter was still 20%, but most of the new overseas projects are to be determined in the second half of the fiscal year. Sales increased steadily, but risks related to our overseas subsidiaries' projects were reflected in the second quarter and delayed the profit progress at 34%. We are now continuing our efforts to further improve profitability of our mainstay projects, and some good results are expected that we will be able to eliminate the downward pressure of those risks that affected the second quarter.
As for the exchange rate impact, just for your reference, each one in exchange against the U.S. dollar would affect net sales by JPY 2 billion, gross profit by JPY 0.4 billion, and ordinary profit by JPY 0.8 billion. This concludes my presentation. Thank you very much.
I am Masayuki Sato, Chairman and CEO. I would like to share with you our view on the current market environment and where the JGC Group stand today. Looking at the current business environment surrounding the JGC Group, in total engineering, energy demand is on the rising trend as the global economy is recovering with the pandemic behind us. Furthermore, the client inquiries and for projects are also strong, compounded by the following factors: Europe diversifying the energy procurement sources for natural gas and LNG against the backdrop of striving to reduce their dependency on Russia, and policies advocated by various countries toward low carbon society or decarbonization, accelerating the investment plans for hydrogen, fuel ammonia, and SAF projects.
In functional materials manufacturing, demand for catalysts, especially for petroleum refining catalysts, remain strong in Japan and abroad, and demand for high thermal conductivity silicon nitride substrates for power semiconductors used in electric vehicles continue to grow. Based on clients' strong inquiries in the plant market, we have set a target of JPY 800 billion and for orders in the total engineering business for FY 2023. In the first half, we received orders for large-scale biopharmaceutical plant construction projects in Japan, one after another, resulting in a total of approximately JPY 160 billion in orders received. As I mentioned at the beginning of the fiscal year, the outcome of large-scale projects overseas, and for which we expect to win the contracts this fiscal year, will be concentrated in the second half, especially in the fourth quarter.
The JGC Group will continue to closely monitor the global environment and market trends, selecting projects that are highly feasible with high visibility over solid earnings, and continue to strive toward achieving the order target of JPY 800 billion.
As for the financial results, regret to say that there were some unprofitable businesses incurred in our overseas subsidiaries, but we review it well and make utmost efforts to achieve the full year forecasts we announced in the beginning of the fiscal year. I feel now that JGC Group is in an important phase for realizing its sustainable growth. Currently, the world is facing exactly the same issues that we raised in our 2040 Vision. Issues such as securing both stable energy supply and decarbonization, and reducing the environmental impact of resource consumption. From now on, it is necessary for the JGC Group to expand five business areas, such as transition energy, and diversify our business models for solving issues stated in the 2040 Vision.
In other words, based on its technologies and integration ability, JGC Group is in a position to be able to contribute to solving those problems surrounding the world. We are having a great opportunities to enhance our presence by becoming one of the collaborators who can provide realistic solutions.... Together with Chairman Ishizuka, I'd like to steer the group to take such a chance for sure. 2 years and a half have passed, and we are now at the midpoint of our 5-year management plan, BSP 2025, which is considered to be the initial stage for realizing JGC's sustainable growth. We are working on various programs to achieve the medium-term goals, including transformation of EPC operations, expansion of manufacturing business for high-performance functional materials, and establishment of future engines of growth. Fruitful results have been made already.
For transforming EPC operations, we established new operation center in India to respond to the fast-growing LNG plant market. As for expansion of manufacturing high-performance materials, we are carrying out active capital expenditures to meet future demand increase. In order to establish future growth engines, we captured the accelerated market growth of hydrogen, fuel ammonia, and SAF to make new businesses and won EPC project orders. Currently, we are preparing for various new plans, and I hope we can announce some of them within this year. On the other hand, it is also important to fulfill this year's order target and business forecasts to achieve numerical goals of BSP 2025. Let me repeat that we will do our best to attain our goals against the uncertain environment, including geopolitical situations. That's all from me. Thank you very much.
I am Ishizuka, and I will give you the business overview. As indicated on page 2, I will cover the topics in this order. Page 3 is the market environment outlook for total engineering. As Mr. Sato has already provided the high-level view, I will focus on specific topics. In the energy field, energy transition-related demand for natural gas projects, including LNG, remains robust, with continued active CapEx. Second point to note is that massive investment is underway in the Middle East, which is likely to continue for some time. Starting this year, Saudi Arabia is spending JPY 8 trillion to ramp up the crude oil production capacity from 12 million to 13 million barrels per day. Not only that, the country is also investing into new types of chemical plants, like crude- to- oil, and also for energy transition projects like ammonia.
Similarly, in the UAE, annual spending of roughly JPY 5 trillion is carried out, mainly led by ADNOC for LNG and chemical products. Below are the topics for sustainability field and others. The first point will be explained in detail later using a different slide. Another topic is that overseas, we were awarded contract for plant manufacturing chemical for semiconductors. We have also started the FS and FEED for electrolyte for lithium-ion battery. For the domestic business, as Mr. Sato mentioned earlier, EPC projects such as hydrogen, SAF, and storage batteries are very active, and we see brisk trend in biopharmaceutical field as well. Please turn to page 4. Let's have a look at the order trend in the first half. Against the target of JPY 800 billion, the result was JPY 160 billion, the progress rate being 20%.
Looking at the activities more closely, on the right, you see that against the target of JPY 100 billion for the domestic business, the order intake was roughly JPY 115 billion. We were awarded a construction project for a new bioactive pharmaceutical ingredient manufacturing facility by Chugai Pharmaceutical, and a construction project for Takeda Bio's production facility for vaccine ingredient. We believe we can achieve a level close to the full-year target of JPY 180 billion by working on the pipeline in the second half, such as the integrated bio foundry, which we are invested in, and pharmaceutical manufacturing plants. Order was JPY 45 billion in the overseas market, including the hydrogen project in Australia and the binary geothermal power plant in the Philippines.
As we explained with the first half results presentation, as well as at the main result meeting, discussion around finalizing large-scale projects is mostly taking place in the second half of the year, and many decisions that will be made are in the third quarter and the fourth quarter. That is actually what we are going through in reality. I will not ex
plain every single opportunity, but the scale of the project is in the range of JPY 100 billion, and as big as JPY 400 billion at the top end of the range. Floating LNG project in Africa already has a commitment to deliver the LNG to EU countries, and so this project must be completed, and the value is around JPY 120 billion. In Oman, there is a LNG bunkering project.
With the newly built nuclear power plant, UAE is trying to monetize their excess gas, for which the client has already purchased compressors, so this project also needs to be completed. The order value for this project would be roughly JPY 200 billion. There is a large-scale processing plant opportunity in Saudi Arabia and Algeria. Algeria and Italy have signed a gas purchase agreement, so the project is now trying to move forward with speed. This project is also deemed to be a solid opportunity. The opportunity in Indonesia is for CCS and boosting compression. Given the commitment from the operator, BP, as well as the Indonesian government with their commitment for low carbon society, this project also must get done. As you can see, we have challenges and more work to do for the remainder of the year.
Having said that, all of these opportunities are large in scale with solid reasons to be executed, and hence, we are confident about the order intake. Having said that, based on our experience, we know that there could be some delays in the plan. For instance, if the project is in the form of JV, with the partner being a sovereign oil entity, the final process within the government could be a little lengthy. So some of the opportunities may slip to next fiscal year. However, I'd like to reiterate that they are all large and critical projects with solid reasons to be executed, so we will strive to win the orders for sure.
Please look at page 5. This chart shows you a summary of the major projects in progress, both in Japan and abroad. Various projects in the sustainability segment are launching in full scale. Gray arrows indicate the projects that we are currently undertaking. There is a CCS project in Indonesia, and below that, you may see the Asia Green Hydrogen and Japan Dehydrogenation. These projects are for Asia. Hydrogen produced in Asia will be carried to Japan and dehydrogenated in Japan. We are doing FEED for these projects. As for ammonia, both Middle East one and two are large-scale projects to be launched next year. About SAF, we work with Cosmo Oil Company for Osaka SAF production demonstration, which already started EPC. Also, for SAF, one is an Alcohol-to-jet plant construction, and the other is a plant using waste cooking oil for SAF.
On the bottom is a waste plastic recycling project, and its FEED will start next year. From the next page, I'd like to show you some of our completed projects and the projects in progress. This is a photo of a floating LNG plant in Mozambique, which we have completed and delivered. It is 410 meters long and total weight is 210,000 tons. This huge facility has production capacity of 3.4 million tons per year. It was safely carried to the site last year, and after successful test operations, delivered to the client. This is the fourth floating LNG plant that JGC has built, and we are proud that our company is now firmly positioned as a leading contractor in this field. Next page is the photo of LNG Canada, large-scale project with two trains of 7 million tons each.
All the modules were constructed in China, and now all of them were installed. Please look at page 8. This is an ongoing project of synthetic API for a Japanese pharmaceutical company. It is called FJ3 project, and next to this site, there is FJ2 plant, which our company built last year. FJ2 plant was awarded the winner in the innovation category of the Facility of the Year by International Society for Pharmaceutical Engineering. Now, most of the housing parts construction has been completed, and the works are shifting to installation of internal processing equipment. Page 9 shows the biomass power plant using wood pellets with capacity of 75 megawatts in Tahara City, Aichi Prefecture. Among 5 biomass power plants JGC is now working on, this project is progressing very well as well and scheduled to launch operation next year. Last page is about the functional material manufacturing.
In the catalysts market as a whole, business environment is favorable, especially about the FCC catalysts. In the fine ceramics and fine chemicals market, however, semiconductor-related demand is leveling off, but we continue our capital spendings in this field, assuming that the market will recover in 2024 and beyond. Furthermore, in terms of catalysts, we are shifting the businesses from oil refinery to sustainable resources, such as synthetic methane and ammonia. For this purpose, we purchased land for construction in Agano City, Niigata Prefecture, and in Wakamatsu Ward, Fukuoka Prefecture. We are planning to invest JPY 20 billion for catalysts and fine chemicals segment.