Good evening, everyone. Thank you for joining Ajinomoto's Fiscal 2024 results briefing, despite their busy schedule. I am from the IR Department. I'll be moderating. My name is Kaji. Here are the attendees from our side. Representative Executive Officer, President and CEO, Mr. Nakamura.
This is Nakamura.
Executive Officer and Senior Vice President, General Manager, Corporate Division, Sasaki- san.
This is Sasaki speaking.
Executive Officer and Senior Vice President, General Manager, Food Products Division, Mr. Masai.
This is Masai speaking.
Executive Officer and Senior Vice President, General Manager, Bio and Fine Chemicals Division, Mr. Maeda.
This is Maeda.
Executive Officer and Vice President in Charge of Finance and Investor Relations, Mr. Mizutani.
This is Mizutani speaking.
Executive Officer and Vice President Supervision of Frozen Foods, Mr. Kawana.
This is Kawana speaking.
Executive Officer in Charge of Diversity and HR, Ms. Kayahara.
This is Kayahara. Hello.
We have seven people from our side present. First, Mr. Nakamura will be explaining the Fiscal 2024 summary results and Fiscal Year 2025 forecast, as well as initiatives for enhancing corporate value. This will be followed by a Q&A session. We are planning for 90 minutes for the entire webinar. Today's presentation materials are available at our IR website on Ajinomoto's homepage. Today's content will be recorded, including the Q&A session, and will be posted on our IR website at a later date. We would like to get started. Mr. Nakamura, over to you.
Good afternoon, everyone. I am Representative Executive Officer, President and CEO, Shigeo Nakamura for Ajinomoto Co Inc. I'll be talking about the forecast for FY 2025 and initiatives for enhancing corporate value. First of all, the FY 2025 or 2024 summary results and FY 2025 forecast, and then this will be followed by initiatives for enhancing corporate value. Today's message is threefold. Sales and business profit in FY 2024 reached their highest levels since the introduction of IFRS in FY 2016, excluding the impact of the Forge Biologics acquisition. Business profit continued double-digit growth. While profit attributed to owners of the parent company will be temporarily affected by factors such as the sale of a subsidiary, it will accelerate transformation of the business portfolio to achieve vision for 2030. Revenue and profit are projected to increase in FY 2025 forecast too.
While sticking to our ASV increase indicators for FY 2025, milestones on the path to FY 2030, we're aiming to solidly achieve the forecast. In the measures related to shareholder returns, we'll work to increase dividends and repurchase shares in accordance with the policies to which we have committed ourselves in the roadmap. We have properly received the company's purpose from Mr. Fujie, and by evolving ASV initiatives, we'll enhance our corporate value and tackle the challenge of achieving the 2030 roadmap ahead of schedule. Now I'd like to talk about summary results for FY 2024 and forecast for 2025. In our consolidated results of fiscal year ended March 2025, we achieved new records in both sales and business profits. Sales were JPY 1,530 billion, an increase of 60% year on year, 4% excluding the impact of currency translation.
Seasonings and foods overseas continued to be strong, and healthcare and others recovered, leading to increased revenue overall. Business profit was JPY 159.3 billion, an increase of 7.9% year on year, or 4.5% excluding the impact of currency translation. Excluding the impact of Forge acquisition, we achieved a double-digit growth rate. The main factor behind the difference from the forecast of JPY 160 billion was a delay in shipment in biopharma services. Profit attributable to owners of the parent company decreased significantly due to reasons including the recording of structural reform expenses for the sale of Althea and the recording of an impairment loss and structural reform expenses for the sale of Hayward Plant for frozen foods in North America. This slide shows an analysis of changes for business profit in FY 2024 and FY 2023.
The change in GP due to the change in sales was an increase of JPY 32.5 billion year -on- year. SG&A, we are increasing the investment in intangible strategic assets required for future sustainable growth in line with the strategies of the 2030 roadmap. This slide shows an analysis of changes for the business profit by segment in FY 2024 and 2023. For reference, at the bottom of the slide is an analysis with changes to get the forecast for fiscal 2024 and results for fiscal 2023, as shown here, compared to the four-year forecast. We achieved solid profit growth in seasonings and foods, for which we had forecast a decline in profit, enhanced gain others too. While the shifting of some shipments to FY 2025 in biopharma services had an impact, we solidly increased profit primarily in functional materials.
Frozen foods recorded an increase in profit in North America but struggled in Japan. We increased prices in March 2025 and are working to achieve a comeback. For sources and seasonings and quick nourishment combined in both Japan and overseas, this slide breaks down sales into volume and unit price and further shows analysis of change in business profit. In fiscal 2024, sales in Japan increased 4% year- on- year, breaking down to a 2% decrease in volume and a 6% increase in unit prices. Volume decreased in the coffee business due to numerous price increases in response to inflation in coffee bean prices. However, unit price growth compensated for the decreased volume and revenue increased, as will be discussed later. With coffee excluded, we grew both volume and unit prices.
The waterfall chart at the bottom left shows that increased revenue was unable to compensate for the higher raw material costs and higher SG&A, resulting in a decrease in profit. Overseas, both unit prices and volume increased 3% from the previous year, with sales growth of 6% on a local currency basis. Business profit increased significantly due to factors including a relaxation of the increased costs from the substantial inflation of raw materials and fuel prices. This slide shows our progress toward the ASV indicators under the 2030 roadmap. ROE and ROIC declined due to factors such as structural reform expenses associated with the sale of Althea. However, with those special factors and the impact of the Forge acquisition excluded, ROE and ROIC have increased solidly year- on- year to 14.7% and 9.8%, respectively. EBITDA margin remained strong at 16.1%. This slide shows ASV indicators by segment.
These are progressing well in seasonings and foods. ROIC fell year on year due to structural reform expenses associated with the sale of Hayward Plant in North America, as well as a decrease in business profit in frozen foods. The negative ROIC in healthcare and others was due to the recording of structural reform expenses associated with the sale of Althea. Excluding those one-time costs, ROIC has been improving since last year. For fiscal 2025, we expect revenue and profit to continue increasing. We forecast sales of JPY 1,618 billion, an increase of 5.7% year- on- year, or 6.7% with the impact of currency translation excluded. Seasonings and foods will continue to drive increases overall. We expect business profit of JPY 180 billion, an increase of 13.0% year on year. In fiscal 2025, a significant increase in profit in biopharma services and ingredients will drive profit growth.
We'll also bring profit attributable to owners of the parent company back up, aiming for JPY 120 billion. This is an increase of 70.7% from fiscal 2024, during which this profit had declined due to factors including the recording of structural reform expenses. This figure incorporates presumed profit from the sale of land and buildings at the head office, which is being announced today. Regarding the impact of tariffs and other policy measures of the U.S., the direct business impact is minor, but we recognize the need to closely watch the macroeconomic environment. This slide shows a waterfall chart of our business profit forecast. We're working to increase sales GP margin and GP while solidly increasing investing in intangible assets. Within the scope of GP growth, we will grow business profit.
This slide shows an analysis of the forecast changes in business profit by segment from the previous year to get the forecast. From the current fiscal year, shared company-wide expenses will not be allocated to specific segments but will be managed and disclosed as shared company-wide expenses. We're planning for continued profit growth in seasonings and foods and aiming for a solid recovery of profitability in frozen foods, a segment in which profit decreased in fiscal 2024. We're planning to add JPY 17 billion in business profit through continued robust performance in functional materials within healthcare and others, as well as through a significant increase in profit in biopharma services and ingredients. This slide shows an analysis of sales and unit prices for sources and seasonings and quick nourishment combined in both Japan and overseas, along with an analysis of changes expected in business profit to get our forecast.
We expect sales in Japan to increase 7% year- on- year, breaking down as a 2% decrease in volume and a 9% decrease in unit prices. The impact of increased unit prices and decreased volume in coffee is large. Excluding coffee, we'll grow both unit prices and volume as we did in fiscal 2024. Regarding the increase in costs due to substantial inflation of raw material and fuel prices, we'll respond by solidly raising prices. Overseas, we plan to solidly grow volume while steadily generating unit price effects to achieve increases of 6% in volume and 3% in unit prices. In source and seasonings and quick nourishment in Japan, with coffee excluded, we plan to drive overall performance by increasing volume while steadily increasing unit prices. We will also carefully recover business profit margin over time.
In addition to organic growth in existing brands, we'll return our top line to growth through contributions to sales by new products, and we'll work to reduce costs and improve the GP margin through price increases and launch of high-value added products. Overseas, seasonings and foods continue to grow steadily. We expect further growth in fiscal 2025. While prices of raw materials have settled overall, we'll take necessary actions, including increasing the price of Birdy 3-in-1 powdered beverages in Thailand in May to address the soaring prices of coffee beans. We'll also aim to achieve unit price growth by increasing high-value added products. By increasing volume beyond the increase in unit prices, we'll work to achieve sales growth of 9%, excluding the impact of currency translation.
We'll further strengthen existing brands, provide high-value added products that capture changes among consumers, accelerate the development of areas with potential in major countries and their neighboring countries, and continuously and steadily grow profit. This slide looks at frozen foods. The segment achieved strong profit growth in North America in fiscal 2024. In Japan, however, segment profit decreased amid high prices of raw materials and the impact of currency translation contributing to a profit decrease overall. Heading toward fiscal year 2030, we'll work to grow sales at a CAGR of 7% or higher by adding new businesses while solidly growing our existing businesses. At the same time, we aim to enhance capital efficiency. For frozen foods in Japan, we implemented price increases in March 2025 as a short-term countermeasure.
In the fried rice and chicken businesses, we will consolidate the factories of the businesses into one factory and will drastically reform profitability. We have also begun commercialization of Aete and other warm plate products, with steady progress underway. In this way, we will continue drastic strategy reviews and achieve a return to growth. This slide addresses healthcare and others. Looking first at functional materials, amid an environment that included recovery in the semiconductor market and expansion of AI-related demand, electronic materials performed well in fiscal 2024, bouncing back from a decline in fiscal 2023. Assuming no major environmental changes in fiscal 2025, we expect double-digit business growth. While the direct impact of U.S. policy will be minor, we will closely monitor the risk of economic recession developing as a result. Heading toward 2030, we expect market growth due to factors such as higher semiconductor performance.
With ABF also supporting that growth, we'll work to increase the scale of the ABF business in line with growth in the semiconductor market. For ABF to support the growth of the semiconductor market, we must respond to the market's ongoing expansion through increased production of ABF. Heading toward 2030, we plan to invest JPY 25 billion to address increased demand. As our first step, we constructed a new factory at the Guma plant of Ajinomoto Fine-Techno Co. We are now moving forward with authorization by customers, aiming for full-scale operation during fiscal 2025. We'll prepare an ABF supply structure, maintain ABF's high market share, and shore up its position as the de facto standard in the industry. Next is Bio-Pharma Services, or CDMO.
We made the decision to sell Althea to accelerate our transition to a high-value added business model, capitalizing on the superiority of our original technologies based on amino science. While the sale of Althea will have an impact in fiscal 2025, areas based on our original technologies will accelerate growth. Heading toward 2030, we will aim for dramatic growth by expanding areas such as AJIPHASE, AJICAP, and Forge's Gene Therapies. This slide looks at the status of Bio Pharma Services, CDMO services by area. In Europe in fiscal 2024, we had sales nearly on par with the previous year and significantly increased business profit. Products with high business profit margin, not only medium molecules but also small molecules contributed, and we expect revenue and profit to increase in fiscal 2025 as well. In Japan in fiscal 2024, sales were flat year on year due to delayed shipment of AJIPHASE.
With the added recording of structural reform expenses, business profit decreased. In fiscal 2025, we're planning for increased revenue and profit for AJIPHASE, as well as a degree of revenue contribution from AJICAP, as will be discussed later. Orders in fiscal 2024 were strong for Forge in North America, with sales roughly doubling year on year. In fiscal 2025, we're planning to increase sales dramatically and break even in EBITDA margin. One original technology based on amino science is the antibody drug conjugates, ADC technology, AJICAP. Our ADC drug discovery support and manufacturing services have adopted a reduced asset business model centered on AJICAP technology licensing. Licensing agreements have been steadily increasing in recent years, and we expect sales to reach billions of JPY in fiscal year 2025.
By expanding applications for AJICAP and by strengthening collaborations in North America, where demand is the greatest, we will continue to increase the number of licensing agreements. This slide shows progress toward our ASV indicators under the 2030 roadmap. Regarding ROE and ROIC, there was a decrease in bottom line due to the recording of structural reform expenses in fiscal year 2024. In fiscal 2025, in addition to not having this impact, we're expecting a solid increase in profit and the further recording of profit from the sale of fixed assets to deliver a significant recovery. Excluding the impact of the Forge acquisition in particular, we're planning for ROE of 19%, exceeding the 18% originally planned at the time the 2030 roadmap was announced. We expect EBITDA margin to reach the regionally planned value because it is continuing to expand steadily. ASV indicators by segment are shown here.
From this fiscal year, shared company-wide expenses are not allocated to individual segments. Accordingly, the plans for ROIC and EBITDA margin for fiscal 2025 shown in the 2030 roadmap have been revised to values that exclude the impact of shared company-wide expense allocation. Note that company-wide, in addition to ROIC by segment, there is a shared company-wide expense ROIC of - 3.5%. In fiscal 2024, total assets decreased due to initiatives to reduce inventory assets and the impact of currency translation. Up to last year, we used net D/E ratio 40%-60% as an indicator of financial discipline. From fiscal 2025, we are replacing that with net interest-bearing debt divided by EBITDA ratio of less than two. This indicator has been disclosed by many other companies in Japan and globally. While growing EBITDA, we will control the ratio to under two when utilizing net interest-bearing debt leverage.
Despite the changes in indicators, there is no change in our policy of utilizing appropriate financial leverage. In operating cash flow in fiscal 2024, we exceeded our revised fiscal 2024 forecast of JPY 195 billion to hit a new record of over JPY 200 billion in cash generation. Although profit before tax decreased by over JPY 30 billion, impairment losses due to structural reform, the main cause, involved no cash expenditure. At the same time, we reduced corporate taxes and tax-effect accounting, which boosted operating cash flow. Initiatives to reduce inventory assets are also making contributions. In fiscal 2025, we will enhance our capability to generate cash by improving working capital and are expecting operating cash flow of over JPY 220 billion. In fiscal 2024, we made growth-oriented capital investments worth about JPY 96 billion. We also enhanced our investments in intangible assets, bringing the percentage of investment in intangible assets to about 45%.
In fiscal 2025, we're planning capital investments of over JPY 110 billion and expect intangible asset investments to remain in the low 40% range. This slide shows key management indicators in the purpose-driven management by medium-term ASV initiatives 2030 roadmap. ROE and ROIC were temporarily weighed down by the recording of structural reform expenses in fiscal 2024. With the impact of the Forge acquisition excluded, ROE in fiscal 2025 is about 19%, higher than the initial target in the 2030 roadmap. ROIC is projected to be about 12%, within distance of our challenging initial target of 13%. Normalized EPS based on business profit also rose solidly in fiscal 2024. The advantage of this indicator, which does not reflect extraordinary profit over conventional EPS, has been demonstrated and leads to an increase in dividends, as will be explained later.
In fiscal 2025, we're expecting to create about JPY 220 billion in cash flow and are aiming to reduce cash and deposits to JPY 90 billion. We will also actively engage in shareholder returns, as noted in today's announcement, of JPY 100 billion in share repurchases. Next, I'd like to talk about shareholder return. As noted earlier, with the adoption of dividends based on normalized EPS, which is not affected by extraordinary fluctuations in profit, dividends will not be affected by the decline of profit stemming from impairment losses associated with the structural reforms in fiscal 2024. We will plan to increase the annual dividend by JPY 8- JPY 48 in fiscal 2025. We repurchased JPY 90 billion in shares in fiscal 2023 and 2024, and today announced the repurchase of JPY 100 billion in shares, more than in past fiscal years. We'll continue to actively, with agility, engage in shareholder returns.
Now, I'd like to talk about initiatives for enhancing corporate value. Now, once again, I'd like to introduce myself. I was born in Hyogo in 1967 in Himeji City. The picture is of me as a two-year-old on the left top corner. I'm grateful to my parents for keeping such a presidential photo of me. When I joined Ajinomoto in 1992, I worked on electronic materials at the Central Research Laboratory. In 1996, we began the development of Ajinomoto Build-up Film. In 1999, it was adopted by a major semiconductor manufacturer, and mass production began. It became an indispensable material for high-performance semiconductors, and our ABF business began to grow. Meanwhile, I had the good fortune of becoming a visiting researcher at the University of California, Santa Barbara, receiving the Chemical Technology Award from the Chemical Society of Japan and Porter Prize of Hitotsubashi University.
I was then made manager of the Research Institute for Bioscience Products and Fine Chemicals, where I was researching the area of bio and fine chemicals on themes other than electronic materials. In 2019, I took the role of Corporate Executive Officer and President at Ajinomoto Fine-Techno Co Inc. And in April 2022, I took up the role of General Manager of Latin America Division and President at Ajinomoto do Brasil, and I was appointed Representative Executive Officer and President and CEO on February 3rd. We will solidly take up the purpose of contributing to the well-being of all human beings outside the inner planet with amino science, which we received from former President Fujie. Doing so, we will evolve ASV initiatives and challenge ourselves to achieve 2030 roadmap ahead of schedule.
This is a conceptual diagram showing the structure of the evolution of ASV management that I aim to achieve. Based on the purpose and Ajinomoto Group way, with the high-speed development system as the key driving the speed-up and scale-up processes, we will bring about the evolution of a business portfolio by steadily promoting the creation of new businesses and organic growth through business model transformation in four growth areas, both by forecasting from existing businesses and forecasting from our ideal vision. Based on the corporate culture that supports renewal, we will drive the evolution of the management cycle and strengthen intangible assets, thereby supporting the evolution of the business portfolio. We will also accelerate the evolution of our business portfolio while accelerating growth in four growth areas of healthcare, food and wellness, and ICT and green.
We will withdraw from businesses for which we have determined that we are not the best owner. We will advance the transformation of our CDMO business to a high-value added business model based on amino science. The sale of Althea in North America, announced last month, marks the transfer of the sterile filling fill and finish business, which is no longer aligned with our axis of competitive advantage and growth to the best owner. We're also carrying out the sale of frozen food segments, Hayward Plant, in North America, in line with our strategy to advance asset reduction and evolve our business toward a high ROIC. As an essential element of the high-speed development system, it is to think about management resources seen as people, goods, money, information, and time, the time axis being a distinguishing element.
The high-speed development system is a speedy and agile way to address today's fast-paced market and customer environment. Based on a healthy sense of urgency, the high-speed development system is built on the three key success factors: anticipating customer needs, developing multiple solutions quickly, and continuously defining solutions and streamlining processes based on feedback. This was an essential approach for the success of Ajinomoto Build-up Film, but can also apply to other businesses and functions and could be evolved further still. Put another way, the high-speed development system means not putting off until tomorrow what can be done today, every day. As the distinguished economist Peter Drucker said, "The future is created by what you do today, not tomorrow." Next, let me present an example of a high-speed development system based on Ajinomoto do Brasil. This is from the consumer food business. We start by identifying the needs.
To do this, we analyze future consumer data and consumer trends and brainstorm ideas to address the needs. Next, we develop a strategy that builds on our strengths. We analyze rivals and study possible production systems with the R&D team from an early stage. We apply a technique for mass innovation, a press release from the future. The press release is discussed by all directors. Ajinomoto Group technologies are applied to new product concepts and product design. This follows a high-speed parallel development model, moving to manufacture and launch. We have co-creation in the middle here. In some cases, this will mean aiming to speed up and scale up in collaboration with another company. This has indeed had the positive effect of increasing the number of new product launches in Brazil.
As I've spoken about today, the high-speed development system is not just about speeding up the process by anticipating customer needs. The concept also incorporates doing things properly or chanto. In Japanese, chanto has the meaning of properly doing what needs to be done without a hitch right on. I believe that executing a properly thought-out strategy will lead to enhanced corporate value and a stronger corporate brand for the Ajinomoto Group. This is our important philosophy. A purpose alone is just idealism. What must follow are practice and principles. Rather than stopping at simply stating our purpose, we aim to refine our company-wide strategy and business function strategies based on ASV and the Ajinomoto Group way. We will then translate these into concrete and personal goals for each organization and employee, pursuing them with passion to enhance our execution capabilities. Human resources are the lifeblood of a company.
Going forward, we are shifting from activities to instill our purpose to a stage focused on strengthening our ability to think well and do well. This includes enhancing our capabilities in both planning and execution while valuing and involving the human resources, organization, and corporate culture that support them. In particular, to create human resources who can drive global business growth, we aim to achieve true diversity management that goes beyond gender and nationality alone by promoting overseas work for women and foreign nationals, promoting them to key positions, and creating human resources with diverse experience through career paths that cross business divisions and functional divisions. I have summarized my views of the challenges and the key points, as well as the approaches to actions for challenges identified using the cross-swot analysis framework.
Challenge one is harnessing the company's strength and opportunities presented by the market to maintain and expand existing core businesses. Challenge two is enhancing the efficiency of management resources, promoting talent diversification, and fostering a culture of challenge in order to overcome weaknesses and seize market opportunities. Challenge three is to take up the challenge of new products and new markets by backcasting from the future customer and market needs in order to leverage the company's strengths to prepare for threats from the market. Challenge four is to firmly recognize the company's weaknesses and threats from the market and consider driving the evolution of portfolio management, boosting SCM resilience, and strengthening governance as a company-wide strategy management initiative. Who will be responsible for the initiatives to address the challenges?
We will clarify the points that are difficult to understand and review the 60-day plan with regard to company-wide strategic themes based on that. This is an outline of the 60-day plan. The purpose is to move toward further growth and the evolution of ASV management, review the management issues that should be addressed, and set out a direction for actions. Several themes to be reviewed are selected from the perspective of a company-wide strategy based on the challenges identified through the cross-SWOT approach discussed earlier or established by combining different themes. In short, we feel that the issue lies in the lack of concrete medium-to-long-term strategies, and we aim to properly articulate the essence behind this issue, as well as the measures to address it.
Over the course of these 60 days, I think it would be ideal to create opportunities for launching action or transformation and to set up the framework. I'd like to explain the results of the 60-day plan at an appropriate timing. Finally, here's my message. I have three. Although we are in an unclear economic environment, we will aim to solidify and solidly achieve our targets for fiscal 2025, a milestone along the path of the 2030 roadmap by promptly responding to changes. Secondly, we will strive to achieve the 2030 roadmap one year earlier. We will accelerate business growth, particularly in bio and fine chemicals, speedily and properly. Thirdly, under our 60-day plan from April, we will articulate a strategy and lay rails for its implementation to achieve further sustainable growth beyond the 2030 roadmap.
For investors and analysts, I hope today's presentation kicks off a start to our dialogue, and I will be open to your candid feedback. In order to raise corporate value, I'd like to ask you for your ongoing support. Thank you.
Thank you very much, Mr. N akamura. We'd like to move to the Q&A session. First of all, I'd like to explain how to ask questions. If you have any questions, please push the raise hand button. We will call your name. If your name is called, please unmute yourself and go ahead with your questions. Those of you who are participating from overseas, you can ask questions in English. There will be answers translated simultaneously. If there are too many people who are asking questions, we may not be able to cover everyone. I'd like to ask for your kind understanding. Let me get started.
Now, the first question, Mizuho Securities, Saji-san, please.
Thank you very much. There are two simple questions. The first one is about CDMO. The business forecast for by segment is what I'm looking at. There is sale of Althea, so it's a bit difficult to see clearly, but the sales is JPY 600 million plus and JPY 800 million business profit increase is shown. If possible, excluding Althea this year, what would be the top line growth rate is what you're expecting? About JPY 10.8 billion, JPY 5 billion is probably from the effect of Forge, but the rest is quite sizable. Can you give us more color? You talked about AJICAP, Ms. Nakamura, but I think there's a sizable amount of profit. Can you explain more about the background? Can I continue with my second question?
Yes, please go ahead with your second question.
It's just simple.
A JPY 100 billion share buyback was announced, but JPY 5.5 billion is the book value. And there is JPY 100 billion cash. There will be more than JPY 30 billion cash inflow. JPY 100 billion has incorporated that to some extent, but this JPY 35 billion, the cash inflow after the competitive bidding, has that been incorporated to some extent to make the decision? Because the share buyback size was a bit larger than previously done. Can you explain more about that?
Thank you both for your questions. About the CDMO business, in this fiscal year, the structural reform impairment loss has been recorded in large amounts, but from next fiscal year, there will be growth in revenue and profit, and AJICAP profit increase is expected. Maeda, our Bio Fine business head, will explain.
Thank you very much for your question, Mr. Saji.
17 billion year- to- year could seem to be quite large in 2025. That's what you're asking about. There are several factors. In 2024, the structural reform expenses, not just from Althea, but from other businesses as well, were incorporated. As we explained the one before last, in 2023, the profit was quite bad, but in 2024, the revenue was good, but profit was recovering later on because cash conversion is longer in Ajinomoto compared to the average. In terms of cost, we haven't recovered fully, but in 2025, there will be some benefits in cost, and there will be more stable revenue. Demand remains strong in Europe, and AJICAP royalty income will be billions of JPY, as Nakamura said. For JPY 17 billion, we're not presenting that much stretch targets.
As shown on the slide, Bio-Pharma Services and ingredients, the breakdown, the JPY 10.8 billion, there will be probably JPY 5 billion or less from Forge. In terms of cost, and there will be revenue increase and also cost reduction and revenue increase and royalty, I think that will constitute JPY 5 billion.
Is that what you're expecting to achieve?
EBITDA was expected to become positive. I haven't disclosed BP, but as Saji-san, you said, it's not that off the mark. Excluding Forge, there will be double-digit growth in profit, and about 13% is the total.
So 3% is what I have derived by subtraction. In terms of top line, in terms of percentage, what will be the percentage that you're expecting for CDMO growth this year?
There will be a strong growth, especially in Europe.
India that is related to Europe is expected to grow strongly. Overall, there will be steady growth that has been incorporated, but not double-digit growth. We have not disclosed that.
Thank you. The share buyback and the headquarter building and land sale, bidding has yet to be done. There is some assumption incorporated, but details have not been disclosed yet. Suppose there is a large amount of cash generated, then we will consider shareholder return in a more agile manner and proactive manner. For this JPY 100 billion decision, the JPY 35 billion cash inflow based on the base price or standard price has not been incorporated. Is that correct?
It has been incorporated to some extent, but we cannot disclose the exact amount. When the bidding is actually done, then there will be finalized price.
There is some certain assumption that has been incorporated.
Saji-san, thank you for your question.
Let's move on to the next one. From UBS Securities, Ihara-san.
Thank you very much for the explanation. This is Ihara from UBS Securities. I have two questions. The first one is about tariffs. Regarding direct impact, you were saying that you're not expecting much. Can you walk us through the details of that? For indirect impact, there may be some impact, I presume. As the tariff discussions are underway regarding ABF or CDMO order trends or any changes in passing on prices, have you been feeling any changes so far? If you have a worst-case scenario, I would appreciate it if you can share it with us. Also, to be honest, the macro environment is something you are not able to control.
Because you're not able to control it, you need to well manage your business portfolio. For ABF and CDMO, even if the businesses were to decelerate, that JPY 180 billion of business profits, I believe, can be achieved by growing the seasonings and foods business as well as cost cutting. Is that how committed you are to this business profit guidance? That's my first question. My second question is regarding the plan for seasonings and foods. For domestic, price increases are likely to expand even more, but there will continue to be a drop-off in volume. For overseas, your plan says that you're going to grow volume even more. What has changed comparing this fiscal year and last fiscal year that will enable you to grow top line this fiscal year? Please share your views on this. Thank you. That's all from me.
Thank you very much for your questions. Regarding your first question about tariff impact, for our company, historically speaking, our overseas subsidiaries are strong. In the U.S., for example, Frozen Foods, Ajinomoto, and the amino acids business are underway. We manufacture within the U.S. and sell in the U.S. It is locally produced and consumed. Of course, some products are exported. However, the tariff impact on a group-wide basis is not that substantial. That is why we believe the direct impact is negligible. Regarding indirect impact, on the other hand, last month, in the Nikkei, it was covered about fiscal 2025. The tariffs impact was going to be a JPY 28 trillion impact, according to a survey by IDC. If server network investments are stagnant, that may impact the sales of ABF. For the CDMO business, we are expecting some impact from tariffs.
Like explained earlier, for Forge Biologics, we manufacture in the U.S. and in Belgium, as well as in India, we produce as well. All we have to do is ship from an appropriate location. Regarding changes in the macro environment and how we respond, whatever kind of environment we are in, we want to ensure that we are able to well supply, and we are able to well supply, whether it be electronic materials or CDMO. Of course, if global demand drops off, we believe still food will be a business that will continue to be stable. We would like to stay committed to our business profit expectations.
For seasonings and foods in the overseas business, we will be proactive in introducing new products, and we will focus on premium brands like we do in Japan, and also add more new values in our new product launches. This will be done in a proactive way. Overall, volume is likely to grow. Because of inflation, we would like to ensure unit prices increase as well. That is our strategy. If Maeda-san has anything to add for the first question, and if Masai-san has anything to add for the second question, please go ahead.
Ihara-san, thank you for your question. Mr. Nakamura pretty much answered your question, but for the specific businesses, there are some products that we ship to the U.S. and ship to China from the U.S. For individual products, we are responding to what is happening with urgency.
We do have advantageous businesses as well where we locally produce and consume. Basically, we will handle the situation with agility. We often talk with people from the market, and we do understand that policies tend to change from time to time. We do not want to be too reactive. That is the consensus we have reached at this point in time. Masai-san, do you have anything to add?
This is Masai speaking. Regarding your second question, I would like to add some comments. As Mr. Nakamura said, it is exactly as he said. Just to add a few more commentary, mainly in the ASEAN region, for fiscal 2024, the performance was great. However, in fiscal 2024, there were some negative things that happened as well. They were such as in the Vietnamese market, competitors advanced into the market, so it was a harsh environment.
For fiscal 2025, solutions have started to work. Good things, good parts of the business should grow even more, and the negative trends that we saw and addressed should improve. That should be an add-on to what we did in fiscal 2024. For example, the Vietnamese market is symbolic in explaining the situation we were in in fiscal 2024. Just one thing about tariffs, I would like to ask a follow-up question. For direct impact, you were talking about positives and negatives.
Should we think that it is a net positive or indirectly currently for the CDMO business if customers are not investing as much into the pipeline, or are you seeing any stagnant trends in orders for the ABF business? Have you not felt that happening yet?
This is Maeda speaking. Thank you for your question, Ihara-san.
As you said, whether it be CDMO or ABF businesses, in the following month or in three months' time, we're not expecting that something is going to happen immediately. If we see an economic slowdown or stagflation in two or three years' time, there is a risk that we might see a deceleration, but we don't think that we're going to see a sudden change in two or three months or in six months. So far, we haven't been seeing any signs of that happening.
Thank you very much.
Thank you very much, Ihara-san, for your questions. Moving on to the next question, Goldman Sachs Securities, Miyazaki-san, please.
From Goldman Sachs, Miyazaki speaking. Thank you. I have two questions. Firstly, it's about the actual results compared to the modified forecast. There's a downside. What was the factor behind this? Can you share that with us?
More specifically, at a glance, frozen food and biopharma and services and ingredients stand out. Is it derived from structural reform? Is it the one-time downside figures, or to look at this from the opposite side, is it going to be an improvement factor, or you just simply have not been able to achieve this target? Can you explain more about the background for this underachievement compared to the target in your actual results? That is my first question. Second question, seasonings and food was mentioned earlier. As you showed in the screen, the appendix phase three, by country, the local currency sales are shown. From January to March, 3% for Indonesia and 1% for Vietnam, and 24% Thailand, 3% Vietnam, 2% for the 12 months.
In the new fiscal year, how much recovery can you expect in each of the countries, and are there reasons behind that? Those are two questions.
Thank you for your questions. For your first question about the actual results, for frozen food, the raw materials cost increase and Forex impact had the effect in decreased profit and revenue. There was an underachievement. In 2025, we are already increasing the prices, so we're aiming for a recovery. Kawana will add more. As for biopharma services, the planned CDMO shipment has been delayed to the following fiscal year. There was some downside. As for the major countries, what will be the current status in the fiscal year? We are planning to grow more than the current fiscal year. Masai will add more. Kawana-san,
as for frozen food, what is the background behind this underachievement?
As Nakamura said earlier, in Japan, the raw materials cost increase and Forex were the major reasons. To this, by increasing volume and reducing cost, that was the measure to respond to this. We were a bit late coming in. We expect this to recover. In the U.S., the structural reform expenses were posted. This can be seen as a one-time factor. That's all. I'm sorry for the second question. Masai will answer the question. I'm sorry.
As posted here, major countries, what we call five stars, the growth rate remains strong. One of the major factors is that in terms of sales, we're expecting the same pace as the previous years. One good news is the raw materials and by side ingredients, the prices are becoming stabilized. That's how we have come up with this through this calculation.
This is what we have come up with as estimate.
Thank you for the answer.
As for the second question, 3% for Thailand and 2% for Vietnam, if that remains the same, then it seems a bit weaker. Maybe you can have an upper single-digit or lower double-digit percentage is what you're expecting to see. As for frozen food, there is a sale of Hayward Plant business. In terms of business profit, are you posting this as a loss? As for Bio-Pharma, as their sale, has it had a negative impact in the business profit level? Or is this only because of the shift in the shipping timing? Let me answer about the Thailand question. As for Thailand, in ASEAN countries, Thailand is the largest one. The product mix is quite complicated. Therefore, honestly speaking, Thailand has very positive factors.
For example, instant noodles, raw materials. Raw materials are going down in prices, but farm oil is a bit higher. It is a bit complicated. For other countries, the cost structure is more simple. That is why you are seeing what you are seeing. As for Hayward Plant business, the profit decrease, I think half and half is what you should look at. The compensation for restructuring expenses, those expenses are really incurred. Also, there is an asset impairment in the sale of the business. Those two factors are on an evenly divided basis.
Thank you.
As for the healthcare and others, I think you are asking about page seven, the difference between 111 and 74. We are not disclosing the breakdown, but what is more impactful is, as Nakamura said, the timing of shipment.
It's not just a mid-size molecule, but small molecule in Europe was a bit more than expected. Also, structural reform is the second one, including ASEAN in quarter four. The structural reform-related business profit level expenses were incurred. This was at the peak of the deals. There was a burden imposed on the business site, and there was some underachievement there. In March, foreign exchange rate has fluctuated and changed. If the yen appreciates, then in functional materials, we see the loss side. For CD in North America, it's more upside. In 2025, there will be slight increase, but the impact, but it's going to be minor. Thank you.
Miyazaki-san, thank you for your question. We'll move on to the next question. Igarashi-san from Daiwa Securities, please.
Hello. I'm Igarashi from Daiwa Securities. Thank you for taking my question. I have just one question.
For the CEO message in the end, as you show in the middle, bio-amplifying chemical is going to drive your performance this fiscal year. I think this is a key part of this fiscal year. Apart from this business, will there be other areas that we can look forward to? You talked about around JPY 100 billion of share buybacks, and you talked about Althea, as well as the sales of the headquarter property, which are things you have been considering from the past. We've been seeing a series of positive news. For this fiscal year, with agility, can we expect more progress in your restructuring efforts?
Thank you for your question. For bio-amplifying chemicals and growth prospects, for functional materials, this fiscal year, we're expecting a substantial improvement, and we're expecting that next fiscal year will be favorable.
For biopharma services, finally, the structural reform efforts are over, so we do believe that we can grow it substantially. Apart from that, regarding contributions as a business, we're not sure yet, but there's going to be COP30 in Brazil this year. Towards this event, amino acid feed that reduces greenhouse gases that come from the burping and from cows has already been certified in Japan. We believe that we have heard about an announcement that has been made regarding an agreement and partnership between Brazil and Japan. In order to recover deteriorated farmland, we have decided to join a project regarding fertilizers. In this way, we are going to be engaged in these businesses or projects. We hope that we'll be able to make substantial progress this year in generating economic value and environmental value. That's all for me.
Thank you very much.
Let us move on to the next question from JPMorgan Securities, Fujiwara-san, please.
Good evening, Fujiwara from JPMorgan Securities. There are two questions. First question. Earlier, cash-generating power was mentioned. Working capital, it seems to be improving. In terms of CCC, there has been improvement. As raw materials costs remain high, there is improvement. That is impressive. More specifically, what other actions have you taken? Going forward, is there going to be further improvement in CCC? Is there any target that you have? Second question is a quick question. Earlier, you talked about biopharma shipment timing shift delay, and this is going to be the next quarter. In the last fiscal year, in the biopharma services, profit was down by JPY 6 billion. Part of the factors were one-time factors.
In the first quarter, of the JPY 6 billion, majority would be recorded in the first quarter. That is what I am guessing. That could be too large. Is that correct understanding? It is just a short-term question, thank you.
As for the cash generation and working capital, I talked about inventory reduction that we have taken and accounts payable and accounts receivable. In terms of those in finance, there were some strategic movements. Mizutani will give you more details later. For the second question, as for biopharma, first quarter effect, how much positive effect can you expect? Omaida will take that up.
Thank you very much. As for JPY 6 billion, if JPY 6 billion comes in, then that will be quite helpful. As we answered to Miyazaki-san's question, JPY 3.7 billion was under achievement in Q4.
Part of that was because of timing of the shipment. We are not expecting JPY 6 billion recorded. Is it going to be in Q4 exactly, or is there something that will take more time? We have yet to see. For the timing delay, we can recover that in Q1, but that will be only part of JPY 3.7 billion. Now, as for the cash generation, first of all, what is most important is that in ASV indicators, EBITDA margin is the most important. As you can see on page 23, every year, there has been improvement. In ASV indicators, EBITDA margin is the most important indicator in all subsidiaries and in all business units. They are working on this. Twice a year, we get together to have discussion, and we just learn from each other's best practice.
That's how we have been making improvements, firstly. Secondly, that's not just that, but if SEM head and finance head talk to each other, and then in supply chain, how you can improve CCC is what they discuss. Then we see some results coming out of that. That's how it was reflected in fiscal 2024 and also incorporated in fiscal 2025 plan. Also, as CCC improves, if the sales increases, then there will be always benefit that you can enjoy. In all subsidiaries and business units, we would like to continue to work on this. In this fiscal year, the working capital improvement of JPY 20 billion could be expected or cash generated of JPY 20 billion as was in the last fiscal year. We expect more, actually.
You are expecting more than you have achieved in last fiscal year.
Yes.
Thank you.
Fujiwara-san, thank you for the question. Let's move on to the next question. Miyake-san from Morgan Stanley MUFG Securities.
Thank you very much. This is Miyake from Morgan Stanley. I have a question about the functional materials business. First, for Q4 sales, compared to Q2 and Q3, sales was slightly lower and margin was slightly lower. Although you were able to show year-over-year improvements, compared to the good Q2 and Q3, it looks like there was a dip. Also for the new fiscal year, you're expecting 11% growth, but with lower margins. That's your assumption. Can you talk about what's going on? If you can add more flavor, that would be great. By improving product mix, is unit prices improving or margins improving, which what you were explaining before?
I was thinking that over the medium to long term, these things should continue to be the same. Because of recent events that have been occurring, have you been feeling any changes? Please provide us with some commentary.
Thank you for your question regarding electronic materials or functional materials and its Q4 business. You pointed out that it was lower than other quarters. Actually, in April, performance has improved again. I think it is because of the order timing of clients. Compared to 11% sales growth, you were saying margins were lower. We have explained that operations at a new factory are going to start. So depreciation is expected to kick in, leading to lower margins. Overall, we do expect double-digit growth to take place. For margins, it will be impacted by depreciation. Maeda-san, do you have anything to add? Ms.
Thank you for your question. It is hard to follow what Mr. Nakamura said, especially because of functional materials. April is doing well. Because of calendar timing, the final shipment in December was quite big. When you look at volume momentum by customer, we have not been seeing a deceleration, and unit prices are steadily increasing. I do not think you need to be concerned at this point in time. For margins, like Mr. Nakamura just said, depreciation is going to kick in because of capital investments. Also, in this industry, it is hard to acquire personnel. We need to spend more in intangible assets so that we could raise our competitiveness. We are planning to spend more SG&A so that we can be well prepared.
Thank you for your answer. I understood your comments very well.
One more thing I would like to ask about is in your plan, are you assuming that the current environment is going to persist? Have you accounted for a more conservative environment?
Not in particular. We have not accounted for any conservative environment. WSTS, the latest data came out in December, but for logic IC growth, they have announced 16% growth. Although tariff developments are uncertain because of these latest trends, as well as because of our customer plans, we have put together our plan in this way.
Thank you.
Thank you very much for your question, Miyake-san. Let us move on to the next question. Nomura Securities, Morita-san, please.
Morita from Nomura Securities, I have two questions. First question is about Trump administration's policy, how you approach that. In terms of short-term impact, there is not much. That is what you said.
In terms of CDMO, you have to increase the local production ratio. That is what they are asking you to do. Also, semiconductor tariff is quite uncertain. Given these changes in the environment, in terms of mid to long-term strategy, is there any plan to change that? In terms of CDMO, the competitors are making drastic capital investments in production. With these foreseeable changes in the environment, is there any long-term initiatives that you have in mind currently, especially for non-food businesses? That is my first question. Secondly, the food overseas business, plus 6% growth rate is, honestly speaking, quite impressive, quite high. In my image, maybe lower single-digit growth was what I have been expecting. In this 6% growth rate, is there any tangible results that you have seen from your initiatives? You talked about Vietnam earlier.
What I'm asking about is that is it a one-time phenomenon that you saw 6%, or you have raised the bar for mid to long term? In next year or year after next, maybe mid single-digit to upper single-digit growth rate is what we can expect? Is it because of just Vietnam business in the new fiscal year? Is it a one-time factor?
Thank you for your questions. As for our approach to a Trump administration, as Maeda said, the policies have not been finalized. In terms of semiconductors, as you know, in AI and in servers, the big major companies are all in the U.S., so it's different from the automotive industry. Like in the tariff on smartphones, I don't think that much tariff would be imposed in those areas. That's what we are guessing.
We're just closely watching whether there will be a major impact or not. In CDMO, we produce in the U.S., and for amino acid for pharmaceutical use, the production is made, it's done in the U.S., and it can be done in Belgium and India. There's not much effect that we are expecting. In terms of mid to long term, as we have done previously, if we can produce in the U.S., we would continue to do so using local materials. Maybe that will be accelerated, but we have to closely watch to what extent the policies will be stabilized. As for food growth in overseas, the premium new products should be launched. Also in Vietnam, as Masai said, Ajinomoto has been pushed back by competitors. We are taking actions against counterfeit products together with the authority.
With the active promotion, we can move forward. 6% is a very strict target, but we would like to work hard to achieve that. Is there any additional comments? Maeda-san or Masai-san?
As for food business, Masai will make some additional comments. As Nakamura said, if I can add more, there are two. Firstly, the regional geographical strategies. Currently, as you saw, as you see, it is five-star major countries that are shown. There is also frontier development. For those five stars, these are the growth rates that we are looking at. For frontier regions in ASEAN, there is some political uncertainty. Myanmar, Cambodia, one of those, and Laos that we are selling from Thailand, and Bangladesh, there is strong growth. In Latin America, Peru, Ajinomoto is taking the central role. Like Chile and Colombia, those neighboring countries are fast, growing fast.
Those are the new frontier that is growing. Another thing is what we call orchestration in our company. In each of the countries, we are doing businesses. Ajinomoto's food business is actually taking on challenges to the food culture in each of the countries. The subsidiaries are doing their business for their own countries. We are now trying to collaborate with doing best practices and also solving problems with collaboration. One example is the instant noodle business. Ajinomoto is doing in Thailand, Peru, and Poland. They have been doing their own businesses independently. By having collaboration, we can solve common technological challenges and also take some common sales promotions. They are actually producing results. Instant noodle sales are growing. This has not been done previously, but this will be further accelerated in fiscal 2025.
We seem to be quite bullish, but that's what we are going to do.
Thank you very much. CDMO and semiconductor impact, that's what you are asking about. We're not in a position to refer to the policies of the U.S., but as we talk to the industry people, the policies are coming out quite abruptly, and they keep changing. That puts us in a very difficult situation. We are actually selling semiconductor substrate. There's an international long value chain. In the pharmaceutical business, there's international collaboration. This is very close to people's daily lives. Compared to the automotive business, where a single major company produces one product for the first time in several years, I think the administration is more sensitive to our products.
I believe that their policies will be at a reasonable level, probably in the end, before the midterm elections. I do not think there are so many companies that are considering drastic changes in terms of geographic locations and others. As for CDMO customer geographic structure, can you give us some specifics?
Like what would be the sales to U.S. customers in CDMO?
In particular, as for global major companies in Japan, Europe, and India, those are the countries that we ship out from. We are not in a position to refer to the final customers that the products are sold to. Global major companies, Japan, Europe, and India are the countries that we are shipping out from. For mid to long term, you are just closely watching the situation. Yes, that is what we have to do.
Thank you.
Morita-san, thank you very much for your question. We are available for additional questions. You could ask your second question if you would like. Thank you for the question. From SMBC Nikko, Furuta-san, please go ahead.
This is Furuta from SMBC Nikko. Can you hear me?
Yes, we can.
Thank you. Regarding your ROE target, for fiscal 2025 plans, excluding Forge, your plan is 19%. You originally had a target of 18% ROE. I think you were commenting that it was a challenging target. For this fiscal year, do you still feel it is a challenging plan? Do you think that the probability of achieving it is higher? Can you talk about the opportunities or risks associated with achieving the ROE target?
Thank you for your question. For ROE, for the numerator, we would like to ensure that we steadily grow net income.
For the challenging 19%, excluding the Forge acquisition impact, as well as some extraordinary factors like the headquarter property sales that we have been accounted for by a certain degree. We would like to achieve this target. In any event, without the extraordinary factors, we would like to strive to grow the business and make it stronger so that we could reach our longer-term target as well. Does that answer your question?
It does. Thank you.
Thank you very much for your question, Furuta-san. Let us move on to the next question. Watanabe-san from Citi Group Securities.
Watanabe from Citi Group. Thank you very much for taking my question up. I'd like to ask about functional materials, TSMC and the U.S. Hyperscalers earnings call. When I'm listening to that from 2025, there will be no dumping. AI demand and server demand will remain strong.
Those are the strong comments. As for 2026, there is not much clear stance that has been presented. Whether there will be upside or downside, we do not know yet. If those are the conditions, then your functional materials business demand and sales, of course, you would have some response earlier than that. What would be the time lag? What would be the time shift? For example, functional materials, ABF is really at the upper stream of the value chain. At what timing will there be a response? The second question is a follow-up on Miyake-san's question. You are making investments in intangible assets. That is what you are trying to do. Of course, talent acquisition is quite difficult in any industry, especially in semiconductor industries. Investment in intangible assets, what are you referring to specifically? That is my second question.
Thank you for the questions.
As for the first question, functional materials, no company. There are major customers, and we have close communication with them. On a regular basis, there are long-range plans presented from the customers, and there is always a regular update and regular revisiting. Sometimes there is major change, but there are some cases where there is not much change. There is a long-range plan that has been reviewed with the customers on a regular basis. There could be some time lag, but we are responding quite quickly to make sure there is no supply shortage. We have the inventory enough to do that. As for intangible assets, there is talent and technologies. As you said, of course, enhancing talent is a given. Investments in R&D and technologies are done not just in functional materials, but in all R&D areas.
We are investing in brands like corporate branding and product branding and making investments in marketing. Those are the intangible assets investments that we are conducting. Yes. With the close communication with customers, you have come up with this sales target. Is that what you are saying?
Yes. Thank you.
Thank you for your question, Watanabe-san. We are drawing close to the end of the webinar. Does anyone else have a question? Thank you for the question. From Daiwa Securities, Igarashi-san.
This is Igarashi again from Daiwa Securities. Thank you for taking my second question. One thing I would like you to tell me about in detail. You have been talking about the delay in biopharma chemicals, and I am not aware about the basics. Please entertain me. Do these types of delays happen frequently in this sort of business?
Is this simply something where you were planning those shipments to happen this month, but it was delayed to next month? Is it because of changes in customer demand or problems in operations? If everything from Q4 is not going to be recognized in Q1, is it going to take place over the longer term? Have you lost an order? That is my question.
Igarashi-san, thank you for your second question. For biopharma services, it is basically the CDMO service. It is outsourcing. Delays do occur due to customer reasons. Miyake-san will talk about the details. As you rightly said, for consumer or the food business, compared to that, every month, sales from this business is not level. We recognize a significant amount of sales once every several months, depending on the nature of the agreement we have with a customer.
That one-shot sales can be a substantial amount. There are times where we see a month or a two or three-month delay in when it is recognized. To answer your question, our understanding is that we have not lost an order. We have already confirmed when this is going to be delayed until. It is not as if we faced any huge problems or we lost an order, or it is not about a structural issue either, or it is not about the market performing poorly.
Thank you. I learned a lot. That is all from me.
Thank you very much, Igarashi-san. Now, we would like to close the Q&A session. Thank you very much for your questions. Now, last but not least, I would like to ask Nakamura to give us closing remarks.
Everyone, thank you very much for your attendance.
Ajinomoto Group's continued corporate value enhancement, we get together and think properly and think well and do well. That is what we're going to do. I'd like to ask for your continued support. Thank you very much for your presence today.
That concludes our earnings call briefing. Thank you very much for your attendance. Thank you.