Good morning, everyone. I am Masayoshi Shirayanagi, President of Toyota Boshoku. Thank you very much for attending this meeting today, and thank you very much also for your constant support for our company. In order to realize our vision, looking into the future, we will create tomorrow's mobility Interior Spaces that will inspire our customers the world over. We have clarified the 2030 target and aim to achieve sustainable growth by enhancing corporate value through the practice of the CSV management. Based on the changes in the mobility environment, along with our strengths, we set to become a company as the Interior Space Creator, which contributes in solving social issues while expanding product range and customer base as the 2030 target, and we have been promoting activities toward achieving the financial and non-financial targets shown here. Today, I would like to talk about the theme shown here.
First, I would like to explain about our current issues and how we are responding to them. I would like to explain about our full year forecasts for FY 2026 and financial targets for 2030. For FY 2026, despite growing uncertainties, such as the impact of additional tariffs in the United States, we expect to see increased revenue and profit due to the effects of production increase and new products, as well as rationalization. The impact of tariffs for April is only reflected on the cost side. To achieve the 2030 targets, we will implement actions to solidify the footing by responding promptly to regional issues, such as improving profitability in Japan and the Americas, and responding to changes in the market environment in China, while accelerating upfront investment in the four pillars of our management strategy: technology development, Monozukuri, sales expansion, and strengthening management foundation.
Next, I would like to explain the issues and factors regarding the gap between the performance forecast for FY 2026 and the figures of the Mid-term Business Plan for FY 2026. First, sales revenue is expected to be achieved even after considering the impact of foreign exchange rates. However, issues remain regarding operating profits and operating profit ratio. We will persistently continue our improvement activities in the current fiscal year. Capital investment and R&D expenses have increased compared to the FY 2026 Mid-term Business Plan due to upfront investment aimed at achieving the FY 2031 Mid-term Business Plan. This shows the status of achievement of the Mid-term Business Plan targets for 2025 by region.
For Japan, since the increased costs due to upfront investment are the main factors in addition to the increased costs due to inflation, we believe that early realization and maximization of returns are the key issues. For North and Central America, profitability has been sluggish due to changes in the external environment, and we believe that a shift to a sustainable profit structure is urgently needed. For China, we believe that responding to the rapid shift to battery EVs in the market and intensifying price competition with local OEMs are necessary. Next, I would like to explain the issues for the Japan region and their countermeasures. In Japan, we will optimize short-term profits and maximize mid to long-term profits by streamlining existing fixed costs, along with accelerating and maximizing returns on upfront investment. Specific initiatives will be explained on the page of the initiatives for the future.
Regarding the regional issues under the current issues and responses, I would like to present the activities in the America region. The severe earnings condition continues in the America region. In FY 2024, we increased capital in TBA, Toyota Boshoku America, in order to reduce debts and improve their financial soundness. In FY 2025, to improve profitability of the America region, we established the America Region Support Department and have been focusing our efforts on two areas in particular, Kentucky and Mexico, where profitability has been declining. As a result of the efforts to improve productivity and optimize personnel, we were able to achieve significant improvement. However, we were still unable to turn to profitability and recorded an impairment loss on fixed assets. In FY 2026, we will deploy last year's improvement activities to other sites and further accelerate our activities.
TBJ has established a Global Craftsman Group and has been providing support mainly for TBIN, Toyota Boshoku Indiana, which profitability has been declining in solving issues that are difficult to solve and others. The entire Toyota Boshoku Group will work together to bring the loss-making company back into profitability. Specifically, to increase marginal profits, we will review our production system and promote initiatives for DX automation, implement early retirement, and other measures to optimize fixed costs. Through these activities, we aim to achieve profitability and build a solid management foundation. As part of the review of our production system, we will work on the reorganization of logistics for door trims in the Midwest area.... Currently, logistics processes are complicated and divided into individual steps.
By enabling all production processes, from producing injection parts to assembly, to be completed in a single plant, we will reduce inter-plant logistics and promote local production and local consumption. As for seat production, our new plant, TBWK, Toyota Boshoku Western Kentucky, will start operations to enable in-house production for seat devices in the America region. Through integrated production from pressing to assembly, we will improve productivity and promote local procurement. We will also introduce a next-generation transportation system to automate in-plant logistics and reduce direct personnel, with the aim of building a stable production base that is not affected by external factors, such as labor shortages and rising wages. We will deploy this initiative to other existing plants to raise the competitiveness and improve the earning power of the America region.
In the China region, although production is expected to decline over the next 2-3 years, we are working to transform our profit structure into a leaner one through the effects of the upfront investment. Specifically, at the Zhifuda plant in the Guangzhou area, which completed construction in September 2024, we have transformed the factory landscape and the way people work by leveraging the digitization of things and information, as you can see on the page. Through various reform initiatives, including unmanned logistics operations in the plant and automation of production lines, as shown here as examples, as well as the elimination of external warehouses, which was presented at the previous meeting, we advanced reduction of direct personnel and logistics cost. As a result, we were able to improve our operating profit ratio, which represents our earning power by 1%, despite the production reduction trend.
Going forward, we will deploy these initiatives to other sites to further accumulate their effects. Next, I would like to explain our initiatives for the future. First, let us see the initiatives to enhance planning and proposals capability and R&D capability. As an initiative for the future, our target for planning, proposal, and R&D is to become the Interior Space Creator with overwhelming competitiveness, who can plan and propose the entire mobility space from a car manufacturer's perspective. Until now, we have developed products individually as a system supplier for seats and interior, and as a parts manufacturer for unit components. But we are currently promoting internalization of technologies and developing products based on the product roadmap. We aim to be able to plan and propose the entire mobility space, including control and software.
Toward the revenue target of JPY 2.2 trillion by FY 2031, we will work to improve our product planning capabilities, with the aim of expanding the product range and providing added value, thereby contributing to profits. This page shows you the technologies that should be internalized toward realizing comfortable mobility Interior Spaces. For our mainstay seat products, we will advance efforts to improve dynamic ride comfort, performance, and support autonomous driving. For interior products, we will introduce technologies, mainly for cabin accessories, interior NV performance, and infotainment. For unit components, we will advance response to electrification and also promote the introduction of technologies related to carbon neutrality and circular economy. For technologies that we cannot acquire on our own, we will collaborate with other companies to provide added value.
Moving forward, we will incorporate the internalized technologies into the product roadmap to promote product development and accelerate our order-taking activities. Currently, in addition to our existing field of hardware, such as seats, interior, and exterior products, we have embarked on new areas such as control and software. In FY 2026, we are focusing on the development of the new products shown here. Furthermore, toward a Multi-Pathway approach, we will proactively promote the development in the fields of motor cores, fuel cells, and lithium-ion batteries, from elemental technologies to commercialization. By aligning and integrating these products, we aim to increase added value and realize the Interior Space Creator and a Multi-Pathway approach. Next, I would like to explain our initiatives for strengthening Monozukuri competitiveness. These days, manpower shortages and reducing environmental impact have been major social issues in manufacturing.
We believe that properly addressing these issues will lead to the ideal state of Monozukuri in 2030 that we are aiming for. To this end, we will work to improve productivity and quality through automation, streamline logistics, and promote DX to enhance accuracy and efficiency of operations, thereby strengthening our overall competitiveness. Today, I will present the activity roadmap toward the 2030 targets of automation and logistics, as well as the current progress and specific initiatives. First, I would like to explain about our initiatives for automation. Aiming to achieve trusted and preferred Monozukuri, we are promoting automation to realize a diversity line where anyone can work, in which people and robots coexist by 2030.
We are working to reduce processing costs while taking advantage of high skills of our production, engineering, and manufacturing sites, with the goal of lowering processing costs by half by 2030 compared to the FY 2024 level. As part of the progress, we achieved a 14% reduction in processing costs in FY 2025 compared to the previous year for our seat assembly model line. This is the roadmap for logistics. To balance solving social issues and strengthening our competitiveness, we are working on two main pillars. First, we will establish a logistics center in the Tokai region, leveraging the knowledge gained from depalletizing robots and automatic transport machines that have already been introduced at each site, with the aim of reducing manpower required for in-plant operations.
Second, we will expand pickup logistics and use AI for logistics planning and operation management, leading to overall optimization of logistics. Our goal for 2030 is to reduce logistics costs by approximately 5% compared to the FY 2024 level, and CO2 emissions by 30% compared to the FY 2020 level. Next, I would like to explain our initiatives for strengthening sales capability. To achieve the sales target of JPY 2.2 trillion by 2030, we aim to secure orders for Toyota businesses and triple sales for non-Toyota businesses. As a result of our activities in 2024, we have stably obtained orders from Toyota and strategic OEMs. We have also begun to receive inquiries and orders from other customers. So I would like to introduce some examples. In the United States, we obtained orders for seat components from an emerging battery EV OEM.
In addition, production for robotaxi service providers is expected to increase. In China, we received orders for door trims from a Chinese OEM, and also received inquiries for seats and door trims from other Chinese OEM. In addition, in Asia, we obtained orders for seat devices and air cleaners from a Japanese OEM in Indonesia. In Europe, we received inquiries from a Tier 1 seat supplier in Turkey for seat covers for European and American OEM. Next, I would like to explain our initiatives for sales expansion towards 2030. In addition to strategic OEMs, we will approach new OEMs. Specifically, we will systematically organize market analysis and results of customer interviews, as well as the affinity with Toyota Boshoku in terms of technology and production, to narrow down targets and proceed with sales expansion activities.
Firstly, for Japanese OEMs, we will organize our sales structure along with the increase in inquiries from them. Secondly, by utilizing our existing plants in Poland, we will promote sales expansion to nearby European OEMs. Thirdly, we will promote sales expansion to Indian OEMs in the Indian market, which is expected to grow in the future. Through these initiatives, we will continue efforts to achieve the 2030 targets. Regarding India, we have positioned it as a key country where the market is expanding, and we put resources on a priority basis, aiming to expand our business and sales in line with the market growth. In order to be able to promptly plan and promote our future Indian business strategy, we have established the India Strategy Department in Japan, and we are working to strengthen its structure and considering establishing a new base.
For India, we have classified the business items to be expanded for each region of North, West, and South, while working to expand existing businesses along with market growth. We are also enhancing our efforts to receive new orders while considering the introduction of new products, such as airbag-related products for safety features and seat ventilation units to meet our user comfort in line with the Indian market and regulatory trends. Finally, I would like to explain our initiatives to strengthen management foundation. Toward realizing our target and business strategies for 2030, we have been working since FY 2024 to create an organization that optimizes and mutually enhances diversity, which is the foundation for strengthening human capital management.
In FY 2025, to further advance towards the realization of the business strategies, we focused on clarification of required human resources, securing of talented human resources, and support for growth, which are the themes for People Gather and Grow Together. Specifically, we have clarified the need for personnel with software and DX skills in our human resource portfolio and are securing such talented personnel through career recruitment and hiring from overseas. In addition, we are also working to secure human resources through a variety of methods, such as starting course-based recruitment for new graduates. In addition, to help each member make full use of their potential abilities and skills, we offer opportunities of holding multiple jobs within the company and cross-border learning to experience new value and learn from outside of the company. Through these initiatives, we will maximize the performance of our human capital as an organization.
Regarding human resources with DX skills, there is still a shortage of foundational personnel who can implement improvement of operations using digital tools. We are promoting training and re-skilling within the company. Developing human resources with DX skills will make operations more efficient and create spare capacity to enable members to take on new challenges and tasks. Through this, we hope to achieve our business strategy while keeping the expansion of the existing workforce minimal. Up until now, we have been working on DX human resources development through initiatives such as establishing DX Lab to train leaders for production sites and offering operation reform experience at the DX and AI Expo. As part of the initiatives for FY 2026, we will promote autonomous improvement of operations in each department by using a low-code development platform.
We will also certify DX Evangelists in each department to promote the use of AI tools, such as Copilot. Furthermore, by introducing internal job posting and side job programs, we will allow members to experience specific DX initiatives at the IT department, thereby accelerating the development of human resources with DX skills. Regarding environmental initiatives, we have set new environmental targets for 2030 that are linked to our 2030 Mid-term Business Plan. We will strengthen our efforts to achieve the 2050 vision by setting more specific numerical targets for six challenges based on three key initiatives of global warming prevention, resource circulation, and coexistence with nature.
These include new targets, such as establishing technology that enable the use of recycled resin at a rate of 30% in terms of resource circulation, water quality management, and management of green spaces equivalent to the area of production activities in terms of coexistence with nature. In terms of global warming prevention, we achieved the target for renewable energy introduction for 2025 ahead of schedule. The Illinois plant in the U.S. has completed the installation of solar power generation and will achieve 100% self-sufficient in electricity through future improvements. In Japan, we signed a long-term virtual power purchase agreement in Abe River Hydropower. We will continue to promote the introduction of renewable energy globally.
In resource circulation, in order to realize a recycling-oriented society, we are collaborating with Kameoka City, Kyoto Prefecture, and others to promote the development of technologies to recycle plastic waste, sorted and discarded by citizens into automobile parts. In coexistence with nature, our test course in Tajimi was certified as a Nature Coexistence Site by the Ministry of the Environment in Japan. We will continue to contribute to natural capital restoration through nature symbiosis activity. We will continue our efforts to make Toyota Boshoku a company that makes our stakeholders feel, "I like Toyota Boshoku." I would like to ask you for continuous understanding and cooperation. Thank you very much for participating in this meeting.