Thank you very much for joining us today. I'm Takahashi, President and CEO of Resonac. In today's business results meeting, as CEO of the company, I present the current priority issues, and the CFO will present the financial results. On January 1st, 2023, former Showa Denko and Showa Denko Materials, former Hitachi Chemical, were consolidated, and Resonac was born. The company name Resonac comes from the combination of resonate and C for chemistry. Our intent for a Co-creative Chemical Company to provide solutions through co-creation and connection with all stakeholders is reflected in the company name. Purpose of Resonac is to change society through the power of chemistry. This purpose shows the commitment of Resonac to change society for the better through innovation. Sincerely facing the fact that chemistry has impacted global environment as a chemical manufacturing company.
Resonac contributes to a sustainable development of global society by creating functions required as a partner in advanced material area. Our vision shown in our policy toward the Co-creative Chemical Company announced in February 2022, is still unwavering. Resonac will continue the reform to be the global top-level functional chemical company from Japan. To that end, toward becoming the company that can compete on the world stage, and the company that contribute to a sustainable global society, and the company that develops talent representing Japan's manufacturing industry, we launch various initiatives. In particular, I will spend more time to make Resonac the company that develops talent representing Japan's manufacturing industry. We change Resonac into the company with reputation for people, where Resonac people will be highly commended, and the people in Resonac will be required, and working in Resonac will be a prominent brand.
In the announcement in February 2022, Resonac defined the materiality in sustainability and provided as a higher concept in the strategy. To gain social credibility through responsible business management, we will reach to a certain milestone in portfolio restructuring and improve profitability by 2025. The portfolio we aim toward 2025 is self-explanatory when you see our segment, so it needs no explanation as a strategy. It is fully shared by CxOs, and the timeline for execution is the only remaining matter. The entire CxO team will be engaged in execution. If we divest two or three businesses and taking two or three businesses, I believe we can make the ideal portfolio. For the businesses to be divested, we'll act with agility. As for the business divestiture, we clearly show the solid track record to the market, divesting eight businesses in the last two years.
For the divestiture, if the industrial restructuring will be required, upon the forum for discussion prepared, we will sit at the discussion table. For the businesses to be added, considering the mutual interest, we continue that dialogue with potential partners, exploring the win-win formation in building the relationships through various initiatives. I'm convinced that the semiconductor and electronic materials are the final field that Japan can win to maximize the corporate value. From the perspective of industrial policies of Japan, I believe that the Japanese company with considerable scale should be born. That is why we all make utmost effort aiming this. Our vision, including the strengthening competitiveness and creating social value through innovation and fostering corporate culture that nurtures autonomy and creativity, will be achieved through the long-term effort. Our vision is a company where people share values in the future direction.
In our vision, diverse people make changes autonomously with grit through open communication across division and position, and they work in healthy competition. To realize such condition, it will take at least 10 years. As we launch various activities from last year, we like to come close to the ideal in 2030. The starting point of the work as CEO is to maximize corporate value. By multiplying the Resonac strategy of portfolio reform strategy to be a functional chemical company, individual capabilities, and corporate culture, I believe we can attain 2 goals of improving EBITDA and maximizing multiple. Let me explain these 3 factors in detail respectively. Our portfolio reform is to evolve from a general chemical company based on petrochemical business, to a functional chemical company that can compete on the world stage.
Winning proposition of a functional chemical company is to create the optimized function that customers require through the internal and external communication, including those with customers and the material science. To that end, the co-creation and the tie with various partners for communication is more important than ever, and it is a source of value.
Co-creative people are indispensable to be a functional chemical company. Top-down culture might be viable in a general chemical company, but it is unfit for a functional chemical company. My mission is to develop talent. Who can put portfolio strategy into practice, and this is a basis of human capital management in Resonac. Let me introduce the initiatives to unleash individual potentials. I do not think that the Japanese managers are doing people management in a true sense. There is a tendency in Japan that someone who knows more about certain work or has more knowledge becomes managers. Actually, someone who can foster and cultivate subordinates and also grow organizations should become managers. At Resonac, it is also important to manage diversity, which supports co-creation that is the source of value. We will make major changes to enable people management in a true sense.
First, we started face-to-face trainings, mainly for communication with subordinates and psychological safety, feedback, and how to conduct one-on-one meetings. As CEO, I keep sending a message to employees that careers are built by themselves, not by HR department. Although equal opportunities are given, equal results are not guaranteed. Try not to compare themselves to colleagues, but rather to think where they can find their happiness. We focus on better mobility of talent through internal job posting. There are 23 divisions at Resonac. To work in various divisions will develop talent with wide-ranging experiences and lead to minimize conglomerate discount. Let me now talk about our unique co-creative collaboration training. This is for all the directors, and I am showing you my results for an example.
It starts with 360-degree feedback from superiors, colleagues, and subordinates on these soft skills, including psychological safety, unconscious bias, active listening, influencing, and facilitation. Since I do not have a boss in the executive team, evaluations were given from all the directors. Best score is five. You are scored and receive comments from everyone. You go through training on five soft skills. Three months after the training, the same people will give 360-degree feedback once again to check on the improvements. If you look at my results, maybe there was a consideration because I am CEO, overall evaluation scores are high. As for influencing, town hall meetings, roundtable meetings, and frequent updating of the corporate blogs were highly evaluated. After the training, my score was five. There is room for improvement for unconscious bias.
After looking at this result, I am consciously trying to eliminate unconscious bias. This year, this training is offered to all the employees who have subordinates. I believe that those five soft skills are source of organizational capability and potentials during VUCA times. I want all the managers to understand this. Next, let me introduce fostering of the corporate culture. Even if individual potentials are high, without corporate culture to embrace and promote them, employees' potentials cannot be unleashed. Recently in Japan, various companies are working on similar HR measures. Uniqueness of Resonac that differentiates us is the fact that I, CEO, have experienced what kind of environment and situations come after these thorough initiatives. I worked at GE during its golden days. At that time, all the employees shared corporate values and were fully engaged. There was thorough meritocracy.
I do not think GE was right in everything, we can learn much from them. Among Japanese companies, it is often the case that the CEO alone advocates human capital management, HR does not follow, or HR tries to focus, CEO is not interested. When Industrial Human Resource Department of METI talks about the human capital and key drivers to promote human capital management, they said that key is to set the role of CHRO as someone responsible to link HR to management strategy from management perspective, which is completely different from conventional role of HR. That is exactly the foundation of Resonac's transformation and reform. At Resonac, whole HR organization led by CEO and CHRO are doing our utmost to instill purpose and value. Last year, CEO and CHRO visited 70 locations, conducted 61 town hall meetings and 110 roundtables.
These town hall meetings and roundtables still continue this year and evolved into the interactive problem-solving communication called Moya Moya Kaigi in Japanese. As I explained so far, since I became the CEO, I have been doing my best to work on talent development based on the portfolio restructuring. From now on, to respond to the disclosure requirements as human capital management, we will formulate a talent materiality from the company-wide materiality to visualize initiatives and KPIs and communicate with the market. First, through the next integrated report and others, we will provide step-by-step updates, please bear with us. Ultimately, we hope to disclose how non-financial KPIs are connected to financial KPIs, showing the relationship between the two. With that, I'd like to end my presentation talking about the initiatives. Thank you for your attention.
Good evening, everyone. I'm Somemiya, CFO of Resonac Holdings. Thank you very much for your consistent interest in our business results. Though the tone of my presentation is considerably different from Mr. Takahashi's presentation, I present the financial results of the fiscal year 2022 ended in December. There are three key takeaways. First is the overview of the FY 2022 financial results. Second is about the put off of 2023 full-year forecast and the forecast for the first quarter. Third is about the execution of structure reform to achieve 2025 income target. As for the overview of FY 2022 results, net sales decreased JPY 27 billion year-on-year, and operating income decreased to JPY 27.8 billion year-on-year.
Sales decreased affected by the business divestitures in the previous year. The profit decreased affected by profit decrease in chemical and the semiconductor and electronic material segment. Compared with the full-year forecast announced in November, net sales were down by JPY 17.4 billion. Operating income was up by JPY 3.4 billion. Excluding the impact of divested businesses and based on the ongoing businesses, net sales increased JPY 133.9 billion. Operating income decreased by JPY 18 billion. Second, we have been announcing the forecast for the next year in the full year results meeting every year. This time, due to the increasingly uncertain external environment in semiconductor and electronic materials industry and the difficulty in projecting the recovery time as of today, it is difficult to present a reasonable full year forecast. We calculated and disclosed a forecast only for the first quarter.
In the first quarter, operating loss of JPY 14 billion is expected with a continued sluggishness in semiconductor and electronic material segment. Third, despite the recent tough business environment, we keep the already announced 2025 income target unchanged. For its achievement, we promote the drastic structural reforms along with the investment for growth. I explained the initiatives today. This slide shows a summary of consolidated results of FY 2022 versus FY 2021. Please turn to the table on the left. Net sales were JPY 1.392 trillion, down JPY 27 billion or 2% year-on-year. Operating income was JPY 59.4 billion, down JPY 27.8 billion or 32% year-on-year. Ordinary income was JPY 59.4 billion, down JPY 27.5 billion or 32% year-on-year. With a decrease in extraordinary loss, net income attributable to owners of the parent was JPY 30.8 billion, at JPY 42.9 billion year-on-year.
EBITDA was JPY 168.9 billion, down JPY 33.7 billion or 17% year-on-year. The EBITDA margin was 12.1%, down 2.1 points. The ROIC was 3.2%, down 1.1 points. Table on the right shows the year-on-year comparison based on the ongoing businesses. From this time, ongoing businesses results exclude those of ISOLITE of Mobility segment, which was divested in FY 2022. Net sales increased JPY 133.9 billion or 11% year-on-year. Operating income decreased JPY 18 billion or 23% year-on-year. EBITDA decreased JPY 17.2 billion or 9%. EBITDA margin to sales worsened by 2.7 points. This chart shows a breakdown of operating income change, JPY 27.8 billion by factor from JPY 87.2 billion in the previous year to JPY 59.4 billion this year. From the operating income in the previous year, JPY 87.2 billion, impact of business transfer was minus JPY 9.8 billion.
Changes in volume were minus JPY 24.7 billion. Changes in raw material prices, et cetera, was plus JPY 12.9 billion. This is the net figure of cost increase by raw material cost increase and selling price hike impact. Absence of the reversal gain in graphite electrode inventory write down was minus JPY 19.8 billion. As in 2021, one off gain in inventory write downs, JPY 19.8 billion was posted. This year, the absence of the gain negatively affected the profit. Finally, within plus JPY 13.6 billion in others, major part was the impact of depreciation of yen and feedstock adjustment of graphite electrode. Sales, operating income, and EBITDA by segment are shown year-on-year. The details of each segment will be explained from the next page onward.
Others adjustment in the previous year include the sales and profit of energy storage device systems, aluminum cans, aluminum rolled product businesses, which were divested in the previous year, and Shoko Company Limited, which was excluded from consolidated due to decreased equity holding. Page from seven to nine show the detailed performance by segment. Performance overview is described on the right on each slide, so please refer to them later. I'll comment only on the outline here. As for semiconductor and electronic materials on page seven, front-end semiconductor materials were firm throughout the year. While back-end semiconductor materials were affected by production and inventory adjustment from the second half, in device solution, large scale inventory adjustment happened among hard disk media customers, and the performance in the fourth quarter drastically slowed down.
Backed by the robust demand in the first half of the year, sales increase was sustained in both sub-segments. As a result, in the entire segment affected also by the transfer of printed circuit board business, sales increased by 1% year-on-year. Profit decreased by 11%. On page eight, net sales of Mobility increased 4% year-on-year, with a recovery in automotive production from the second half of the year. Operating loss was recognized this year due to the amortization of goodwill with the consolidation of the former Showa Denko Materials, in addition to the raw material cost surge. In Innovation Enabling Materials on page nine, despite the selling price increase following the raw material cost surge, due to sales volume decline, net sales decreased 2%. As the price pass-through of the raw material cost increase was not sufficient, profit decreased by 28%.
Chemicals net sales increased by 22% year-on-year. Its profit decreased at 34%. Sales increase in chemicals was mainly due to the impact of naphtha price surge and the price hike of graphite electrode. Profit decrease was mainly caused by volume decrease with the shutdown maintenance in petrochemicals and inventory valuation deterioration. This slide shows the non-operating income and expenses and extraordinary profit and loss. Non-operating income and expenses improved JPY 3.3 billion year-on-year. Interest expenses increased with the refinance of preferred stocks to subordinated loan. Due to foreign exchange gains with weaker yen, slight improvement was posted. Extraordinary profit and loss improved substantially by JPY 53.2 billion year-on-year. It was mainly due to the gain on sales of non-recurring asset with the sales of land in Yokohama, JPY 32.8 billion posted as business restructuring expenses in the previous year, and a decrease in loss on sales of businesses.
Please turn to consolidated balance sheet. On asset side, inventories increased substantially at end of this fiscal year, partly due to the raw material cost surge. Tangible fixed assets increased with CapEx, while intangible fixed assets, including cash and deposit and goodwill, decreased, and investment and other assets decreased with sales of strategic shareholding. As a result, total assets decreased JPY 42 billion year-on-year to JPY 2,100.4 billion. As for liability side, interest-bearing debt increased due to the subordinated loan finance with an aim of repurchase of preferred stocks in the first half, and the total liabilities increased by JPY 201.8 billion year-on-year to JPY 1,525.7 billion. As for the net assets, shareholders' equity increased JPY 8.5 billion and the total accumulated other comprehensive income increased JPY 27.8 billion due to the increase in foreign currency translation adjustment with the progress of depreciation of JPY.
Non-controlling interest decreased substantially with the increase of interest-bearing debt, as mentioned, and total net assets decreased JPY 243.8 billion year-on-year to JPY 574.7 billion.
As for major indicators, adjusted Net DE ratio improved 0.08 points to 1.08 times. Equity ratio improved 2.2 points to 26.2%. Higher Forex translation adjustment pushed up the net asset balance and contributed to this improvement. As shown in the notes at the bottom in small letters, to calculate the Net DE ratio, 50% of the preferred stocks and subordinated loan, respectively, are added as equity capital based on the capital credit rating, rather, by Japan Credit Rating Agency. Next is 2023 Q1 forecast. As mentioned at the beginning, at this point, we are unable to estimate 2023 full-year consolidated forecast because rational estimation is difficult. We are disclosing only the Q1 forecast now. The reason for this difficulty is increasing uncertainty of external environment, which prevents us from making rational estimation of factors that greatly impact business performance in Q2 and onward.
Especially, we believe it is difficult to foresee when the recovery from the lower demand and inventory adjustments will take place in semiconductor and electronic materials industry. Therefore, we decided to disclose only the Q1 forecast. We will disclose a full year forecast when it becomes possible to make rational estimation. Consolidated Q1 forecast is JPY 320 billion for sales and JPY 14 billion for operating loss. Due to the worsening business environment, grim income figures are forecast company-wide, in particular in semiconductor and electronic materials, significantly lower demand of hard disk media in Device Solutions face production adjustment and deficit is forecast. JPY 10.5 billion operating loss is estimated for this segment. Next is 2025 financial targets and 2022 results. As I've mentioned so far, despite the tough external environment, we maintain 2025 income targets in the long-term vision.
We do not believe short-term difficulties lead to the collapse of the long-term growth strategy. We will make sure to closely monitor the situation and make steady forward-looking investments for coming years. In addition, we will proceed with structural reform to drastically improve profitability in coming three years. Details of the structural reforms are shown on the next page. As for the sales target, since we put more emphasis on profitability over size, sales targets are communicated as reference. We decided to take back 2025 sales target. However, we believe to have JPY 1 trillion sales give us a ticket to enter into the global competition, so we will try to maintain at least JPY 1 trillion sales. This page is the path to achieving EBITDA margin target of 20% in 2025, showing how to bridge the gap of eight points from the current 12% in three years.
There are 3 tiers. Shown in pale blue, three points or more improvement through business growth. With investments for growth, we will grow greatly and expand profitability of high margin semiconductor and electronic materials segment. This could be the driver to push up the overall margin. At the same time, we would promote the price revisions in each business and improve product mix to realize more than three points improvements in total. The second tier is margin improvement through structural reform, and two points or more from structural reforms of unprofitable businesses, and three to four points from portfolio restructuring. Specifics are shown on the next slide. To overcome worsening external environment and achieve income targets, drastic structural reforms will be promoted for three years until the end of 2025. There are three specific initiatives. First is portfolio restructuring.
As CEO Takahashi said, based on the three criteria, namely the profitability and capital efficiency, matching with the strategy, and whether we are best owner or not, we will strongly promote review and replacement of business portfolio. For Life Science business, we started examining the strategic options, including alliance with outside partners. The second is getting rid of products making losses. The third, pursuit of capital efficiency, correspond to the structural reforms of unprofitable businesses on the previous page. To eliminate the loss-making products, a list of loss-making product is made across the entire company, and we will either raise price to secure reasonable margin or discontinue or contract so that we can focus on products and businesses where we can expect customers to accept premiums. We are monitoring monthly progress for all businesses.
As for the pursuit of capital efficiency through the sale of unutilized assets and consolidation of the bases and plants, we will streamline the assets and monetize to reduce fixed cost. In FY 2022, impairment loss of fixed assets of regenerative medicine, plastic molded products, and powder metal products were booked. We will accelerate the review of the assets of the businesses facing challenges to see whether they are suitable to achieve the reasonable profit or try to eliminate unsuitable ones as much as possible. When we announced the financial results last year, we said that as 2022 to 2026 capital allocation, we would generate JPY 1 trillion operating cash flow and about two-thirds go for CapEx and one-third to reduce interest-bearing debt and dividends for shareholders. Based on the latest outlook, operating cash flow is expected to be about JPY 800 billion.
We plan to make up for the shortage of JPY 200 billion through the asset sales and others without making major changes in capital allocation. As I mentioned on page 11, at the end of 2022, net DE ratio improved to 1.08 times. Without the full year forecast, 2023 net DE ratio is not calculated, but is likely to result in a slight increase without any action. To offset this, we aim for an additional cash generation and debt repayment. Bottom half of this page shows the changes of financing cost, including interest expenses and preferred stock dividends. In 2022, through LBO loan refinance and with the borrowing on the subordinated loan, we acquired preferred shares. Financing cost in 2022 was reduced to JPY 21.1 billion.
As a reference number for 2023, without the preferred stock dividend, whose procurement cost was high, we expect to reduce the financing cost to JPY 14 billion. This slide and next, page 21, show the forecast and the results of the integration effect with the former Hitachi Chemical included in the long-term vision two years ago. This page focuses on the assets, showing mainly the pre-integration cumulative numbers. As for the working capital improvement, unfortunately we were unable to achieve the target due to the higher inventory, reflecting rising raw material cost and others. As for the asset sales, we sold almost all the cross-held shares and sold unutilized assets steadily, including the land in Yokohama in 2022. As a result, the totals significantly exceeded the target in the long-term vision.
Among the integration effect included in the long-term vision, this page focuses on the cost reduction, showing the total reduction per year compared to pre-integration. Total cost reduction realized in 2022 was JPY 28.4 billion, achieving long-term vision target one year earlier. It was slightly below the previous year estimate of JPY 30 billion. We achieved a certain level of results before legal entity integration, same as asset streamlining. Business environment has worsened from the time profit improvement initiatives were formulated, and we are facing much lower marginal profit rate. From now on, we will focus on structural reforms mentioned today and report on the progress as needed. Page 22 and onwards are appendix for your references. With that, I'd like to end my presentation. Thank you for your attention.