Good afternoon. This is Kosuke Uemura, CEO. I would like to explain results for the FY 2025 that ended March 2026 and progress of the Medium-term Management Plan 2026 or MTP 2026. After that, our CFO, Makoto Shibuya, will explain details of the financial results. FY 2025 was year two of the current three-year Medium-term Management Plan or MTP 2026. We posted a net income of JPY 103.6 billion for an ROE of 10.1%, both falling short of the plan that was published together with the MTP. Business expansion and earnings contribution centered around energy solutions and healthcare, chemicals trading, as well as defense and marine product-related businesses. On the other hand, structural reforms in automotive and the Australian coking coal business had a temporary negative impact.
During the year, we continuously implemented various measures for growth toward our next stage. By implementing new investments that contribute to high-quality growth, we have been able to steadily build out clusters of businesses with clear path to success. We have also implemented measures to address underperforming businesses. It may have had a temporary negative impact on profit figures but allowed us to surely transform our earnings base into one that generates stable profits into the future. In FY 2026, we will build on the achievements and aim for JPY 130 billion in profit for the period and 12% ROE. This slide was first presented when we announced the MTP 2026. Our approach towards the next stage remains unchanged, even with the situation in the Middle East and the progress we have made to date. We will focus on both scale and capital efficiency.
By creating the Sojitz growth story, we aim to achieve our targets of JPY 200 billion in net income or profit for the period, and 15% ROE, and JPY 2 trillion in market cap. MTP 2026 remained positioned as a phase to build the footing for that next stage of growth. Our assessment at this point, after two years, is that we are making steady progress towards the next stage along with business portfolio transformation. Let me explain some specific initiatives and progress made. The Sojitz growth story is realized by expanding new investments and enhancing existing businesses, which in turn drive business portfolio transformation. New investments are expanding in business areas where we can leverage our competitive edge.
We are successfully building businesses that have clear and scalable paths to success, as well as Katamari or revenue-generating clusters of businesses that organically work together and deliver sustained profit. For existing businesses, we are bolstering earnings power while enhancing functions utilizing our existing strengths. We are also expanding earnings power through co-creation with external partners. At the same time, for loss-making and underperforming businesses, we are working with a sense of urgency to improve profitability or make necessary judgments. Through coordinated implementation, we are realizing earnings growth and improving capital efficiency at the same time. Our business portfolio is transforming into one with an earnings structure conducive to sustainable growth. Let me now provide specific examples. When formulating MTP 2026, we set forth the KATI model, K-A-T-I, as the core concept of our growth strategy.
Based on this model, our growth strategy is centered on developing multiple businesses or business domains where we can leverage our competitive edge. The KATI model starts with businesses in which we have expertise and proven track records, expands them by extending or deepening existing functions, and increases earnings power at Katamari scale. During the current MTP period, we have not just accumulated individual projects or businesses but have also steadily developed a number of Katamari through linkages with existing businesses and enhancing or expanding capabilities. The unique point is that by explicitly defining path to success, we have shifted our focus from one-time individual business opportunities to a model that structurally develops businesses and business domains capable of delivering sustained growth. In energy solutions business in the U.S., competition is intensifying around renewable energy generation.
While our starting point was power production and the insights in human capital developed through experience, we shifted our perspective to the power reduction side. This led us to focus on energy efficiency, where competition is limited and we can still leverage our strengths. Through the acquisition of McClure, we entered the ESCO business or energy savings service business. We also made a bolt-on investment in Freestate Electric, which brings in additional strength and client base, all different from McClure. We are thus expanding breadth and aggregating into a new Katamari in this area. This approach in the United States is now being replicated in Australia, where we seek to develop another Katamari of energy solution businesses. This slide shows the infrastructure development business in Australia. Prior to full-fledged participation in the PPP business, we were only a joint developer.
It meant we were challenged in our ability to proactively develop new opportunities or create multi-layered earnings opportunities. The acquisition of Capella, a major lead developer in the PPP field, has allowed immediate functional transformation and enhancement. We can now lead the full process through development, investment, and operation.
In Australian PPP, Capella has competitive advantages such as top-tier development track record, extensive know-how, and high-level professionals. With the addition of financial strengths and operational capability of our group to Capella's functions, speed and potential of growth of the business is reinforced substantially. By using our global network, we are working toward expanding into new domains and areas. In chemicals domain, based on a strong customer base of over 5,000 companies and trading capabilities by forecasting environmental changes such as industry restructuring and geopolitical risks, we've been enhancing trading functions, including supply chain rebuilding. In the areas in which we accumulated insights through trading, we are expanding into manufacturing and creating synergies with trading businesses. Acquisition of Nippon A&L in a battery material area is exactly the embodiment.
In the same way, in area of rare earths, we ensure KATI model, forecast changing international situation, and materialize Sojitz growth story by committing to path to success. There is something common to these initiatives, namely we move beyond the starting point, find a path to success, transform functions, expand the scope of our business by applying the functions, and aggregate businesses for discontinuous growth. As a result, reproducibility and scalability of profit is enhancing, which is leading to sustainable earning base resilient to external environments. We continue to discover our path to success in each business, enlarge the scale of Katamari, centering around KATI model to expand earnings. Based on KATI model, we are growing businesses with competitive advantages into Katamari through addition and transformation.
If competitive advantages are not expected, we maintain stable profit generation as earning base, implement initiatives for reinforcement or conduct a review, including the possibility of replacement and withdrawal in each business. Even if we cannot strengthen competitive advantages on our own, when we judge leveraging partner strengths will lead to sustainable growth, we form a business or capital alliance. For example, in marine vessel business, rail car leasing business in North America, and commercial facility business, through capital alliance or co-creation with external partners, we can enhance probability of scale expansion and profitability improvement. In businesses where establishment of competitive advantages is difficult, even with various initiatives or reviews for business improvement, we determine withdrawal promptly and ship resources to growth areas. By executing these in parallel, we will enhance profitability and capital efficiency of existing businesses.
For business portfolio review and withdrawal, we already set exit strategies and will complete them early in this fiscal year. We are promoting Digital in All as a foundation to support the transformation. Specifically, we enhance the precision of strategies and execution by running a cycle of data-driven, accurate understanding of the current situation, hypothesis setting, execution, and verification. Given advancements in AI, firstly, we are promoting AI utilization in the field and visualization of insights and experiences accumulated within the individual. Through these initiatives, we will review our business process itself and enhance business quality and speed by incorporating the necessary AI. Besides, through sharing and horizontal development of insights gained through this process, we will establish competitive advantages and aggregate businesses. In addition, through cultivation of DX experts, we will reinforce our business foundation, enabling us to anticipate environmental changes and define and execute our path to success.
Under MTP 2026 towards achieving next stage, we are focusing on reinforcement of human capital, source of competitiveness of Sojitz Group. Centered on strengthening individuals and organizations utilizing individual potential, we are transforming human capital and organizations. In a rapidly changing environment, it is important for each individual to think, try, and keep learning through that process. We basically think such autonomous thinking and actions enhances individual potential. To translate individual potential strengthened with autonomous thinking into growth of organizations and empowerment of the front line, we value two-way and multidirectional feedback to create an environment in which we support growth as a whole company. Through insights obtained by actively listening to and accepting each other and thinking through dialogue, we create a cycle of growth opportunities and sense of growth to strengthen frontline capabilities.
In FY 2025, aiming for next stage from various perspectives, we've been steadily implementing actions for growth. In this fiscal year, the final year of MTP 2026, we aim to add at least three business clusters, new Katamari. Through this, we'll complete solidification of foundation for next stage, including structural reform. The path to reach next stage by further expanding businesses which are becoming Katamari and realizing this continuous growth is our story for next stage. That concludes my presentation.
Good afternoon. This is Makoto Shibuya, CFO. My part will be using the presentation materials part titled Financial Results for the year ended March 31st, 2026, and Full Year Forecast of fiscal year ending March 31st, 2027. Slide 15 summarizes FY 2025 results. Consolidated profit for the period was JPY 103.6 billion, down JPY 7 billion year-over-year, and 90% of the full year forecast of JPY 115 billion. Core operating cash flow rose by JPY 1.2 billion year-over-year to JPY 136.4 billion, 97% of the full year forecast. ROE came to 10.1%, although we were expecting the number to be in the 11% range.
During the fiscal year, while various initiatives for growth made progress, one-time losses were recorded in the process of structural reforms, and the numbers fell short of the full year plan. In FY 2026, however, now that the negative factors for FY 2025 have been addressed, we will re-accelerate our efforts towards the next stage. The full year forecast is for JPY 130 billion in consolidated profit for the period, up JPY 26.4 billion year-on-year. Core operating cash flow is expected to rise accordingly. For ROE, we aim for 12%. The FY 2025 year-end dividend is JPY 82.5 per share as planned. The full year dividend forecast for FY 2026 is JPY 180 per share, reflecting shareholders' equity at the end of March. Further details are provided in slide 16 and onwards.
Slide 16 shows the summary balance sheet. Total assets came to JPY 3,648 billion, up JPY 560.7 billion from the end of March a year ago. Operating assets increased due to trade or transactions related to aerospace, defense, tobacco, and marine products. Acquisition of new consolidated subsidiaries and the effect of foreign currency translation at overseas affiliates also pushed up the number. Total liabilities increased during the year by JPY 414.5 billion to JPY 2,494.2 billion. In addition to new financing, there were an increase in operating liabilities, an increase in newly consolidated subsidiaries, and the effect of foreign currency translation at overseas affiliates.
Total equity attributable to owners of the company increased by JPY 121.4 billion during the year to JPY 1,090.4 billion. The number exceeded JPY 1 trillion despite dividend payments and stock repurchase, thanks to accumulated profit. Shareholder equity, which is the basis for dividends, increased by JPY 39.2 billion to JPY 818 billion. Slide 17 shows key financial indicators and the FY 2026 forecast. Overall, the balance sheet will expand, but Net DER will be managed at around 1x. ROE declined in FY 2025, but we aim to raise it to 12% by increasing profit for the period. Towards the 15% ROE target for the next stage, improving ROE in the current year is one of the management priorities. Slide 18 is the PL summary.
Gross profit rose JPY 20.7 billion year-on-year to JPY 367.5 billion. Newly consolidated subsidiaries contributed significantly to the increase, but the effect was offset by declines such as in the Australian coal business. SG&A increased by JPY 35.2 billion year-on-year, of which approximately 90% was attributable to newly consolidated subsidiaries. Other income and expenses included gains from the sale of businesses and assets as part of operating activities, gain on share-outs for co-creation with external partners, impairment losses in Australia for the coal business and used car sales business, both associated with the restructuring process, and gain on partial sale of equity stake in Sakura Internet. Share of profit or loss of investments accounted for using the equity method came down JPY 5.6 billion year-on-year to JPY 44 billion.
With all that, consolidated profit for the period came to JPY 103.6 billion. For FY 2026, the forecast is JPY 130 billion in consolidated profit for the period, up JPY 26.4 billion or 25% year-on-year. Slide 19 and onwards provide information by segment. Let me go through this part with a focus on profit for the period. Slide 20 shows a year-on-year comparison of profit for the period by segment. The overall trend was similar to how it was up to Q3. Main factors driving year-on-year differences are listed on the slide. Earnings contribution mostly came from infrastructure-related businesses in Aerospace & Transportation Infrastructure, and Energy Solutions and healthcare, as well as from chemicals. In Retail & Consumer Service, profits from co-creation with external partners contributed to the increase.
On the other hand, automotive posted a loss. Metals, Mineral Resources & Recycling Division was significantly down due to impairment losses associated with restructuring. In the other segment, we recorded gain on a partial sale of equity stake in SAKURA internet Inc. as part of structural reforms. Slide 21 compares the results against the forecast as of Q3. The difference mostly comes from gains and losses related to structural reforms. Slide 22 shows a breakdown by segment for the FY 2026 forecast. It describes our current outlook based on FY 2025 profit for the period. Let us go through each segment.
Automotive expects an improvement in losses from the Australian used car sales business and unprofitable businesses in Japan, as well as earning contributions from new automotive sales business in Latin America. Regarding the Australian used car sales business, we reviewed our business plan at the end of the previous fiscal year, took stock of current business conditions and improvements made, and decided to book impairment loss. Profit margins are improving. The focus will be on improving retail margins in the state of Victoria, which has been an issue for some time. We expect downward pressure on the market to continue with rising fuel prices and interest rates. We plan to turn to profitability during the first half of the fiscal year and then increase the number of vehicles traded.
For Aerospace & Transportation Infrastructure. Existing businesses such as aerospace, defense, business jets, and overseas industrial parks are expected to deliver solid profit growth, including through broadening their operations into new areas. We also expect earnings contribution from new investments and improvements in loss-making businesses. In Energy Solutions & Public Infrastructure, as mentioned by our CEO, new Katamari that will drive earnings growth for the entire company are developing. This includes the energy solutions businesses in North America and Australia and the Australian infrastructure development business. In addition to existing hospital PPP and thermal and renewable power generation businesses, the electricity retail business is also expected to make solid earnings contribution . For the LNG business, while we expect an increase in cost for the Indonesian interests, the Australian interests are expected to contribute to earnings from the second half.
The situation in the Middle East requires close attention, but we do not expect a major negative impact. In Metals, Mineral Resources, and Recycling, we incorporated the improvement of loss in coal business structural reform . In chemical, although we need to closely monitor the impact of the prolonging situation in the Middle East, we expect steady performance of existing businesses and profit contribution from NIPPON A&L consolidated newly in the previous fiscal year. This is one of the segments driving the entire company as Katamari of the continued growth business area. In April 2026, Industrial Minerals was transferred from Metals, Mineral Resources, and Recycling. In Consumer Industry and Agriculture Business, the business of Sojitz Foods, previously included in Retail and Consumer Service, was transferred to this segment. In particular, food-related businesses, mainly meat businesses, were consolidated in this segment to put more efforts in this segment.
Expansion of food business as well as initiatives to strengthen sales in overseas fertilizer businesses that struggled in the previous year, optimization of selling prices, and strengthening cost control will lead to increased profit in this fiscal year. In retail and consumer service, higher profit is expected due to steady performance of marine products, tobacco, and domestic retail businesses and partial asset replacement. Although retail businesses in Vietnam are sluggish, we aim to increase profit through growth of high-end foods in commercial food wholesale businesses and portfolio review and improvement of other loss-making businesses. Slide 23 shows pathway from FY 2025 to FY 2026. First, there is net negative impact of about JPY 10 billion from impairment losses in Australian coal and used car sales businesses booked in the process of structural reform and gain on sales of equity holdings in SAKURA internet Inc. booked in FY 2025.
Based on that, there we consider JPY 115 billion as a baseline excluding restructuring impacts. We expect plus JPY 10 billion from turnaround of loss-making businesses which booked impairment losses. In addition, despite businesses which will decrease profit year-on-year, such as LNG business, we expect + JPY 6 billion from profit growth of existing businesses such as overseas fertilizer, defense tobacco, and overseas industrial parks. As for-profit contributions from MTP 2020 and MTP 2023 new investments, - JPY 4 billion is expected due to profit impacts of asset replacement and restructuring in FY 2025 despite profit increase in energy solutions businesses in North America and Australia. From MTP 2026 investments, profit contributions of about + JPY 12 billion is expected due to accumulation of profit from infrastructure development businesses in Australia, aircraft-related businesses including business jets and NIPPON A&L.
About 90% of this + JPY 12 billion is profit from investments already made and decided. By deducting positive factors such as foreign exchange gain on asset recovery and tax cost reduction, we forecast profit for the year will be JPY 130 billion. Although we need to monitor closely the impacts of the prolonged situation in the Middle East, we judge there is a reasonable probability in realization of the forecast. Slide 24 shows cash flow. Cash flow from operating activities recorded an inflow of JPY 16.8 billion due to accumulation of Core operating cash flow despite increases in working capital. Cash flow from investing activities recorded an outflow of JPY 86.6 billion, mainly due to new investment. As a result, free cash flow recorded a net outflow of JPY 69.8 billion.
Slide 25 shows cash flow management in the current MTP. Two-year aggregate Core operating cash flow was JPY 271.5 billion, and investment recovery from asset replacement was JPY 108 billion. Progress versus three-year aggregate forecasting MTP is 60% respectively. We'll continue to accumulate cash profit. In this fiscal year, we assume more than JPY 100 billion of investment recovery from asset replacement. Three-year aggregate is expected to exceed the plan. About JPY 300 billion of new investments were executed compared to plan of JPY 600 billion. There is visibility to cash outflow of about JPY 200 billion, and we'll execute the remaining JPY 100 billion if there are good opportunities. Main cases of new investments and asset replacement are shown on slide 26, so please refer to that. Slide 27 presents status and outlook of earnings contributions from investments.
As for return on investment under MTP 2020 and MTP 2023, earnings contributions are lower than expectations due to losses in Australian coking coal and used car sales businesses. ROI to year-end balance is about 7% excluding the two businesses. As for return on new investments under MTP 2026, contributions are higher than expectations, both in scale of profit and profitability. For profitability improvement by segment, we set and monitor Cash Return on Invested Capital target. On slide 28, you see progress by segment versus target ROE of 15% in next stage. In FY 2025, although supported by investment recovery through asset replacement, profitability of Aerospace & Transportation Infrastructure and Energy Solutions & Public Infrastructure, operating infrastructure-related businesses increased to the level of value creation targets. In chemicals, high profitability is maintained while new investments are made.
We will continue to enhance profitability by accelerating earnings contributions from new businesses and improving loss-making businesses through ongoing structural reform and ensuring portfolio review of underperforming businesses. Slide 29 is about dividend. There is no change to shareholder return policy. Our policy is progressive and predictable stable dividend. As a result, as I discussed in the beginning, annual dividend forecast for FY 2026 is JPY 180 per share, up JPY 15. Please refer to slide 30 for commodity prices, foreign exchange and interest rate results and assumption, and slide 31 onward for segment information and supplemental information. Last three, this fiscal year is the final year of MTP 2026. We need to assume the situation which cannot be controlled by one company, such as the situation in the Middle East.
However, even in such a situation, as President explained, we will add at least three business clusters, which will be new Katamari, accomplish structural reform, and complete solidification of foundations for next stage. In performance, we aim at JPY 130 billion on profit for the year centering around infrastructure-related businesses and chemicals. We also aim at ROE of more than 12%. I would appreciate your continued understanding and support. That concludes my presentation.