Good evening. I am Steve Dacus, CEO. Thank you very much for taking time out of your busy schedule to attend the Fiscal Year 2025 Midterm Financial Results briefing today. Today, I will primarily discuss the performance of the first half of this fiscal year as the CEO of Seven & i Holdings Co. From here, I will proceed with the explanation in English.
Good evening, everyone. Thank you for joining us today. Two months ago, I shared with you our strategic plan and our objectives out to 2030. Obviously, it's early days, but we're making good progress and are starting to see tangible results. In addition, SEI is executing on its transformation program to fundamentally strengthen our business in response to changing consumer needs. Again, it's early, but the initial results are good. SEJ will also soon launch a similar transformation program. I feel very positive about our future as we continue to implement these transformational initiatives across the group. Now, allow me to share our first half results and our outlook for the full year. In the first half, consolidated operating income was JPY 208.3 billion, which was 5.8% above our plan. This was supported by a strong performance from SEI.
Our net income came in at JPY 121.8 billion, which exceeded our forecast by 24.3%. Now, though our consolidated result was good, the performance at our Japanese convenience stores fell short of our expectations, with operating income 7.2% below plan. We expect these difficult conditions to continue into the second half, and we are therefore revising our consolidated and SEJ full-year operating income forecast downward. However, we are beginning to see positive signs of recovery in SEJ's gross profit in the second half. Now, with respect to the group's overall profitability, we continue to drive improvement, and as such, we are raising our full-year consolidated net income forecast by JPY 10 billion. Next, let me share my assessment of where we stand and the actions that we are taking.
Now, as I mentioned in August, inflationary pressures and broader economic uncertainty have continued across the world, including in our key markets. This trend is not new, and consumers are continuing to tighten their spending and be cautious about what they purchase. This has led to a decline in shopping frequency generally, and our 7-Eleven stores in each market are no exception. In Japan, convenience stores are facing increasing challenges in responding to changing consumer needs. This is driven by ongoing shifts in consumption patterns resulting from a declining and aging population, inflation, and polarization in consumer behavior. Furthermore, competition in the ready-to-eat market is intensifying, particularly from supermarkets and drugstores. In the U.S. as well, the consumer environment remains challenging, with inflation continuing to outrun wage growth. For consumers, we continue to see pressure on low-income households as the cost of living continues to climb.
Overall, convenience store traffic is under pressure, driven by online and delivery alternatives, reduced cigarette consumption, continued work from home, cuts to the Supplemental Nutrition Assistance Program, and the gradual decline in demand for fuel. Across both North America and Japan, the environment remains challenging. Anticipating this, SEI took early action last year by tightening cost discipline and launching a transformation program aimed at strengthening its business and profit structure. The program is now delivering tangible results, and I'm very encouraged by the progress we are seeing. We will replicate that success in Japan. The program will soon be underway, and while it may take time to see the full benefits, we will see it through, and we will build a structurally stronger, more profitable 7-Eleven Japan.
I am grateful for the persistence and discipline demonstrated by the SEI team, and I am confident in 7-Eleven Japan's potential as we move forward with this transformation. In addition to the transformational work, we are executing a focused set of near-term initiatives to improve margins and accelerate growth. At SEJ, in this second half, we will accelerate the rollout of our freshly prepared offerings, particularly with Seven Cafe Bakery and Seven Cafe Tea. Stores that have recently introduced the Seven Cafe Bakery line have delivered an improvement of roughly 10 basis points in gross profit margin compared to those stores that are not yet equipped. From next fiscal year, the full-year benefit will drive our growth trajectory.
We will continue to introduce high-value-added products in quick succession to strengthen our daily product lineup, and we plan to expand further across a range of categories to delight and excite our customers. Under President Akutsu's leadership, Seven-Eleven Japan is undergoing a fundamental shift towards a truly consumer-focused approach across the value chain, including merchandise development and marketing to deliver what our customers expect. Our objective is clear: to deliver visible results, starting with increased customer traffic as quickly as possible. Regarding the U.S., consumers continue to demand ever greater quality and value in food-forward convenience stores with fresh grab-and-go options. They expect seamless digital and delivery choices, and they want larger, cleaner, and more contemporary formats that fit their lifestyle. Our strategy is to meet and exceed these expectations.
We are elevating food and beverage quality, expanding fresh offerings, and strengthening our private label portfolio to deliver more choice and value. In parallel, we are repositioning 7-Eleven as a food destination through advanced fresh programs, signature items, and investments in restaurant formats. On the digital front, we are scaling 7NOW delivery and enhancing our rewards program to make our products available whenever and however customers want them. In addition, we are investing in our store base. Based on learnings from our evolution stores, our new standard store format reflects what customers are asking for: larger, food-forward, digital-first stores with enhanced fuel offers. This is setting the foundation for our future growth. As I said, at SEJ, we are beginning to see encouraging signs of recovery, including improvements in gross profit and solid potential for next year.
At SEI, we are making steady progress in the transformation program launched last year. We are also seeing positive signs in our distinctive fresh food offerings, including QSRs, and our strong store base and the continued rollout of 7NOW. With the upward revision of our full-year outlook, earnings per share for fiscal year 2025 is now projected to grow 61.6% from fiscal year 2024. Now, while part of this increase reflects the absence of one-time losses that we recorded last year, it also demonstrates the impact of the structural reforms we have completed across the group. As well as the share repurchase program we announced in March and have been executing since. We will continue to enhance profitability through the series of initiatives I outlined today, and we remain committed to delivering on our promises to shareholders, including the ongoing share repurchase.
Our focus is on achieving earnings per share growth and maximizing our corporate value over the long term. With that, I would now like to hand over to our CFO, Marayuma-san , who will provide further details on our first half results.
Good evening, everyone. My name is Marayuma. I would like to provide an explanation regarding the consolidated financial results for the first half of fiscal year 2025 and the revised full-year performance forecast. Please turn to page six. Here are the highlights of the consolidated financial results for the first half of fiscal year 2025. Starting this time, we have adopted graphical representations to convey information to investors and analysts in a more understandable manner and to clearly highlight key points of interest. The numerical tables that were previously presented are disclosed in the appendix, so please refer to them as needed. Now, let us move on to the details. Operating revenue was JPY 5,616.6 billion, 93.1% compared to the same period last year and 97.1% compared to the plan. Operating income was JPY 208.3 billion, 114.4% compared to the same period last year and 105.8% compared to the plan.
Net income was JPY 121.8 billion, 233.1% compared to the same period last year and 124.3% compared to the plan. As a result, the consolidated figures show a decrease in revenue but an increase in profit. Additionally, goodwill amortization based on Japanese accounting standards amounted to JPY 69.2 billion. Revenues from operations for the first half decreased primarily due to the decline in retail fuel prices within the overseas CVS business. However, the impact of the price decline on fuel gross profit, which is composed of sales volume and CPG, was limited, and the fuel gross profit remained almost unchanged compared to the previous year. Operating income increased by 11.4% year-on-year, achieving double-digit growth. This was driven by the improved profitability by the SST business following structural reforms, as well as improvements in SEI's product gross margin and effects of cost structure reforms.
Net income saw a significant increase, reaching JPY 121.8 billion, 233.1% year-on-year, due to improvements in extraordinary gains and losses. I will provide further details in this later. Additionally, the impact of exchange rates on profit amounted to minus JPY 2.2 billion at the operating profit level. Please turn to page seven. This chart illustrates the year-on-year changes in operating income by segment. While the domestic CVS business experienced a JPY 5.9 billion decrease in profit, the consolidated operating income increased by JPY 21.3 billion, driven by profit growth in the overseas CVS business and the superstore business. Please turn to page eight. This chart shows the changes in operating income by segment compared to the plan. As you can see, the domestic CVS business is facing a challenging situation with a variance of minus JPY 9.5 billion against the plan.
However, the issues are clear, and I'll explain later how we plan to address these challenges. Additionally, the eliminations in corporate contributed to the upward revision of the plan difference, as we were able to avoid spending the initially anticipated risk buffer. Please turn to page nine. At the beginning of the consolidated financial results presentation, I mentioned the significant increase in net income. Let me now explain the primary factors behind this increase. This chart categorizes the year-on-year changes in extraordinary losses by factor. The completion of the disposal of nonprofitable businesses and assets in the previous fiscal year resulted in a JPY 55 billion reduction in extraordinary losses compared to the prior year, which was a major contributor to the increase in net income. Following this, I will provide an update on the status of Seven-Eleven Japan and Seven-Eleven, Inc. Please look at page ten.
Let me begin by explaining SEJ's performance for the first half of the fiscal year. The chart on the left breaks down the year-on-year changes in operating income by contributing factors. Existing store sales for the first half grew by 0.8%, contributing positively to profit growth, while the gross profit margin was impacted by rising raw material costs, including rice and coffee beans. The strengthened sales of high-value-added products, such as just-made counter merchandise, have gradually started to show results. The impact on the gross profit margin was reduced from minus 0.6% in the first quarter to minus 0.2% in the second quarter, resulting in a minus 0.3% impact for the first half overall. SG&A increased by JPY 5.7 billion due to factors such as inflation-driven increases in rent and utility costs, as well as higher advertising expenses stemming from strategic promotions aimed at rebuilding the brand.
As a result, operating income decreased by JPY 6.1 billion year-on-year, amounting to JPY 121.4 billion. Now, please take a look at the line graph on the right. The orange line represents the growth rate of the existing store sales. The green line shows the growth rate of customer traffic, and the red line indicates the growth rate of average customer spend. Regarding the issue of customer traffic, we observed a slight improvement from the first quarter to the second quarter. However, September was impacted by last year's pleasant value campaign, which began during the same month. That said, we have not yet achieved a strong recovery in customer traffic. We will continue to analyze changes in customer behavior in greater detail and accelerate various measures to meet their needs. Please turn to page eleven. Here is a progress update on the key initiatives for fiscal year 2025.
Let me explain the status of the rollout of just-made counter merchandise as part of our efforts to differentiate fresh food offerings. This is regarded as an extremely important initiative that leverages the strength of Seven-Eleven's value chain and is expected to deliver positive effects on both sales and gross profit. During the first half of the fiscal year, the average daily sales for categories such as hot food, Seven Cafe, and smoothies increased by 5.5% year-on-year. Additionally, stores that introduced the Seven Cafe Bakery showed a plus 0.1% improvement in gross margin compared to stores without the bakery. Based on these evaluation results, this initiative, which contributes to both sales and gross profit, will be further strengthened in the second half and beyond, with plans to expand its implementation to approximately 8,000 stores by fiscal year 2025.
Furthermore, we will steadily advance efforts to strengthen the store network and expand 7NOW. Regarding the transformation of the profit structure, Seven-Eleven, Inc. has already taken the lead in implementing initiatives, achieving results through stricter cost control measures. Seven-Eleven Japan is also working to achieve results by driving transformation tailored to the unique characteristics of its business. Please turn to page 12. For Seven-Eleven Japan, we understand that it is important for us to show the path how to return to the growth trajectory. Since May, under the leadership of President Akutsu, Seven-Eleven Japan has undergone a new organizational structure, bringing about various changes, accelerating processes, and driving cultural transformation. In addition to the expansion of just-made merchandise, as explained earlier, the Akutsu team has been promoting initiatives aimed at improving profitability through an integrated approach that combines merchandise, promotions, and operations.
Let me explain how these efforts are expected to yield results. On the merchandise side, the focus is the expansion of Seven Cafe Bakery and the tea offerings. As shown, the rollout of bakery products will accelerate in the second half, and the full-scale launch of tea offerings, tea products, will also begin during the second half. This will increase the sales composition ratio of just-made merchandise. Consequently, the overall gross profit margin is expected to see a greater uplift, in fact, with each passing quarter. Additionally, as part of the strengthening daily products, we will continue to introduce high-value-added items without delay. In September, we launched iMori Omusubi, followed by noodle products this month. We will continue to introduce products across various categories that meet customer needs without delay. Promotion plays a crucial role in driving the expansion of these product offerings.
On the promotion side, we are enhancing two-way communication with customers to better understand their detailed needs. This information is then reflected in product development and operational strategies. To support this, we have established an organizational structure that enables effective execution of these initiatives. In terms of operations, we believe that it is especially important during challenging times to reinvigorate franchise owners. To strengthen the trust between headquarters and the franchise owners, we have completely reevaluated our approach to communication. For example, we have transformed the conventional product exhibitions, which was held twice a year in spring and autumn, into a zone conference in autumn. This conference aims to deepen mutual understanding through enhanced communication with franchise owners. We believe that advancing these initiatives with a sense of urgency is the most critical step toward returning Seven-Eleven to its original growth trajectory.
Personally, I have witnessed the changes that President Akutsu is bringing about under his leadership and the initiatives implemented so far. While it may take some time, I strongly feel confident that recovery is indeed underway. Please turn to slide 13. I will now explain the impact and the timeline of realization of the strategic initiatives, such as the efforts related to the just-made merchandise and high-value-added products that I mentioned earlier on SEJ's overall gross profit. The chart in the upper left illustrates that as a rollout of differentiated products, such as Seven Cafe Bakery and also Seven Cafe Tea, expands, the increase in overall gross profit also accelerates. Furthermore, the effects of these initiatives implemented this fiscal year will fully materialize by the fiscal year 2026, delivering even greater benefits.
However, while the increase in gross profit from these initiatives will manifest gradually, as shown in the chart in the lower left section, SG&A are expected to rise even more significantly in fiscal year 2025. This increase will primarily be driven by inflation, upfront costs, and expenses related to the systems and digital transformation. Therefore, it is imperative to fundamentally reform the cost structure to ensure sustainable profit growth in the following fiscal years. To address this challenge, SEJ will also execute this program, undertaking a comprehensive transformation of its business and profit structure without exception. This includes addressing cost increases due to inflation and optimizing SG&A expenses, including system-related costs. As for the operating income for fiscal 2025, as explained earlier by Mr. Davis at the beginning, we will revise it downward due to the recording of upfront costs.
However, from the next fiscal year onward, through the expansion of the effects of the operational initiatives and the execution of the fundamental transformation program, we will restore Seven-Eleven to its original robust profit growth trajectory. Please turn to page 14. I will explain SEI's midterm business performance. On the left, in the merchandise business, despite being affected by inflation in the US, we implemented a pricing strategy that carefully assessed consumer trends. As a result, the merchandise gross profit margin improved by 0.2%. However, same store sales fell below the previous year's level, leading to a decline in profits from the merchandise business. As for the fuel business, although sales volume fell below the previous year's level, CPG exceeded the previous year's figure. However, this was not enough to offset the impact, resulting in a decrease in profits.
Regarding OSG&A expenses, the ongoing cost structure reform we have been implementing helped offset the profit decline in the merchandise and fuel business. As a result, operating profit increased by $47 million year-on-year, reaching $905 million. Please look at the right. Line graph. Although customer traffic is still experiencing negative growth, it is steadily showing signs of improvement. Same store sales have also recently recovered to levels exceeding those of the previous year. Please turn to slide 15. This slide shows the progress of SEI's key initiatives for FY 2025. In the current North American market environment, in order to meet customer needs and realize a convenience store centered on food, we are steadily advancing initiatives such as expanding stores with restaurants, increasing private brand product items, expanding the store network with a focus on new standard stores, and addressing delivery needs through 7NOW, as shown on the left.
At SEI, in addition to the impact of these initiatives, we are beginning to see tangible effects from a transformation program aimed at improving profitability across the entire value chain. As indicated in the chart at the top right, gross margin on merchandise has increased, and we have also been able to contain SG&A expenses. These initiatives are driving both business growth and improvements in profitability. Next, I would like to explain the revisions to the full year performance forecast. Please turn to slide 17. Let me begin by explaining the details of the revisions to the consolidated performance forecast. Revenues from operations have been revised downward by JPY 162 billion to JPY 10.56 trillion, and operating income has been revised downward by JPY 20 billion to JPY 404 billion. However, net income attributed to the parent.
Owners of the parent has been revised upward by JPY 10 billion to JPY 265 billion. As a result, EPS is expected to be JPY 107.66, representing a 161.6% increase year-on-year. EPS before goodwill amortization is projected to reach JPY 150. While the recovery of business profitability is underway, we are committed to delivering results that exceed our initial promises, particularly in terms of net income to our shareholders and other stakeholders. Please look at slide 18. This slide presents the breakdown of the revised earnings forecast by segment. The top. Revenues from operations reflects a downward revision in the assumptions for existing store sales at SEJ in the domestic convenience store operations. The overseas CVS operations, which is most significantly impacted, is primarily affected by the decline in the fuel unit prices at SEI.
While fuel sales have been revised downward, the impact on gross profit, which is composed of sales volume and CPG, remains limited. The middle row, operating income, is mainly affected by the downward revision in the domestic CVS operations. This is due to adjustments in sales, gross profit margin, and an increase in SG&A expenses at SEJ. I will now explain the factors behind the expansion of the revised amount compared to the initial plan difference. From the first half. Within the SEJ standalone operating profit for the first half. Approximately JPY 4.5 billion in expenses primarily related to system costs have been deferred to the second half. As a result, this deferral makes it appear as though the plan difference will expand in the second half.
However, in reality, we anticipate a similar level of operating profit plan difference as in the first half, considering the increase in costs ahead of the realization of benefits, such as the higher system costs due to the operation of next-gen systems. We hope you understand this point. In response, we are advancing various initiatives with a sense of urgency to achieve early earnings improvement, while also working with a strong sense of crisis to implement a fundamental transformation program. The bottom row, EBITDA, has been revised primarily due to the impact of operating profit in the domestic CVS operations, as well as factors such as a decrease in diffusion expenses in the overseas CVS operations. Please turn to slide 19. Here are the revisions for the three key companies for fiscal year 2025. SEJ.
Existing store sales and merchandise gross profit margin has been revised downward, resulting in a JPY 30 billion downward revision to operating profit. SEI, both existing same store sales and product gross profit margin has been adjusted based on the latest trends, but operating income remains unchanged from the initial plan. Seven-Eleven Australia. The same store sales have been revised based on the recent trends, but product gross profit margin and operating profit remain unchanged from the initial plan. Please turn to slide 20. Let me explain the forecasted EPS based on the revised plan for fiscal year 2025, as discussed earlier. To help you understand the significant improvement in our EPS, we have prepared this slide, which takes into account the ongoing share buyback program, a key shareholder return initiative announced in March. The green bar represents EPS based on the net income under JGAP.
The orange bar graph shows the EPS before goodwill amortization, and the middle chart illustrates the EPS forecast for fiscal year 2025. Thanks to substantial growth in net income and the execution of the share buyback program, EPS before goodwill amortization is expected to reach a level of JPY 150. The denominator for EPS calculation is the average number of shares during the fiscal year. The chart on the right shows the EPS calculated using the number of shares outstanding at the end of the fiscal year. In this case, EPS before goodwill amortization is projected to be JPY 159.37, indicating that we are planning for even greater EPS growth in the coming fiscal years. This concludes my explanation. Now, once again, let me hand over to Mr. Davis for the closing message. Mr. Davis, please.
Thank you, Marayuma-san , a s I've explained, despite the challenging environment, SEI has made steady progress in its transformation program to improve profitability and drive growth. SEJ will soon be launching a comprehensive transformation program as well. In addition, I am seeing signs of recovery for SEJ through the nationwide rollout of freshly prepared items. I am personally very encouraged by the progress we're seeing across the entire Seven & i Group. The leadership team remains firmly committed to strengthening net income and EPS and to delivering our promises to our shareholders. Our commitment to the company-wide initiatives for 2030, as outlined in the transformation of Seven-Eleven announced on August 6, remains unchanged. We have fully implemented the management process change and are now in a position to ensure faster and more disciplined decision-making and execution. I see the positive momentum firsthand, and I'm excited about what's next.
We'll provide further details at our upcoming IR day, including concrete roadmaps for each business unit on the path to 2030.
Please continue to keep an eye on us.