Hello, everyone. This is Yoshida, CFO of Mitsui Chemicals. Thank you very much for joining in our earnings announcement today. We announced our financial results for fiscal year 2025 and our financial outlook for fiscal year 2026. I will explain based on the materials. This is today's agenda. I would like to present a summary of our financial results for fiscal year 2025, followed by a summary of our financial outlook for fiscal year 2026. Please see page 1. This page summarizes key takeaways from our financial results for fiscal year 2025. Operating income before special items for the entire group decreased to JPY 100.0 billion in fiscal year 2025, down JPY 1.0 billion from the previous year.
While profit rose in the specialty chemicals domains driven primarily by volume growth, this was outweighed by negative factors in Basic & Green Materials, including weaker demand, lower facility operating rates, and inventory valuation losses reflecting lower naphtha prices. Operating income before special items in the specialty chemicals domains rose to JPY 122.1 billion, up JPY 6.2 billion or 5% year-on-year, largely due to firm sales volume in ICT Solutions. As for Basic & Green Materials, we recorded an operating loss before special items of JPY 18.4 billion, which was down JPY 7.0 billion year-on-year. This was due to continued low operating rates, mainly at crackers stemming from weaker demand, along with factors such as inventory valuation losses reflecting lower naphtha prices, deteriorating market conditions, and major regular maintenance at Ichihara Works.
The impact of U.S. trade policies was negative approximately JPY 3.0 billion in FY 2025, as Mobility Solutions saw a slowdown in automotive production in North America, among other factors. Compared with the February fifth forecast, operating income before special items for the entire group decreased by JPY 3.0 billion, primarily due to production cutbacks linked to the Middle East conflict, mainly in Basic & Green Materials, as well as slow demand recovery in automotive applications in the fourth quarter. Please see page two. This page summarizes key takeaways from our financial outlook for FY 2026. Operating income before special items for the entire group is expected to be JPY 105.0 billion in FY 2026, an increase of JPY 5.0 billion or 5% from the previous year.
We expect positive contributions from business growth in the specialty chemicals domains, as well as from business restructuring and the elimination of temporary factors in Basic & Green Materials to more than offset the negative impact of the Middle East conflict. Operating income before special items in the specialty chemicals domains is expected to be JPY 130.0 billion, an increase of JPY 7.9 billion or 6% year-on-year. We expect firm sales in Life & Healthcare Solutions, mainly in Vision Care and agrochemicals. Growth in EBITDA in Mobility Solutions despite higher depreciation expenses resulting from capacity expansion and sales volume expansion in ICT Solutions driven by demand growth in the cutting-edge semiconductor market.
For Basic & Green Materials, we anticipate an operating loss before special items of JPY 3.0 billion, an improvement of JPY 15.4 billion from the previous year. This is due to expected benefits from business restructuring and the elimination of temporary factors, as well as price increases and cost reductions. We expect the impact of the Middle East conflict to result in losses of approximately JPY 15.0 billion arising from reduced sales volume due to production cutbacks, as well as deterioration in production yields and energy efficiency, mainly in Basic & Green Materials. This negative impact is reflected in operating income before special items of the others segment. There remain many uncertainties, we will provide quarterly updates on our business conditions as appropriate.
As our group's businesses are essential to supporting social and industrial infrastructure, we will make every effort to ensure stable product supply and will reflect rising raw material costs and selling prices in a timely manner. Please see page four. This section describes trends in the key markets related to our business for fiscal year 2025 and fiscal year 2026. First, the ophthalmic lens materials market related to Life & Healthcare Solutions remained firm in fiscal year 2025, with particularly increased demand for high refractive index lenses. We expect the market environment to remain firm in fiscal year 2026 as well. In the agrochemicals market in fiscal year 2025, although we saw inventory level adjustments in some regions, the market as a whole remained firm, mainly in Japan. Demand is expected to remain firm in fiscal year 2026 as well, despite inventory level adjustments remaining in some regions.
Next is the state of global automotive production volume related to Mobility Solutions. While there was no significant change in global automotive production volume in fiscal year 2025, there were regional variations. In particular, in North America, automotive production volume decreased due to the impact of U.S. trade policies, the semiconductor supply shortage, and an aluminum plant fire. We expect global production volume for fiscal year 2026 to remain at the same level as the previous year. Next is the state of the semiconductor and smartphone markets related to ICT Solutions. In the semiconductor market in fiscal year 2025, in addition to increased demand in the cutting-edge semiconductor market, such as AI and data centers, demand also recovered in other applications such as consumer, industrial, and automotive applications. We expect the market environment to remain firm in fiscal year 2026 as well.
Demand in the smartphone market in fiscal year 2025 remained on par with the previous year, despite the trend towards more sophisticated functionality. In fiscal year 2026, smartphone production volume is expected to decrease compared to the previous year due to supply shortage concerns of memory chips. Finally, regarding Basic & Green Materials, due to the unfavorable supply-demand environment in fiscal year 2025, operating rates of naphtha crackers remained low at approximately 70% throughout the year. In fiscal year 2026, operating rates are expected to further decrease due to the impact of the Middle East conflict. Please see page five. This is about the status of our major investment projects. The items in yellow are projects that start commercial operation or undergo optimization and restructuring from fiscal year 2025 or 2026.
Those in blue are projects for which decisions were made in fiscal year 2025. We will continue to make proactive investments and swiftly pursue restructuring and optimization projects. Please see page six. This is the summary of our financial results for fiscal year 2025. Sales revenue for fiscal year 2025 was JPY 1,668.8 billion, a decrease of JPY 140.4 billion, or 8%, compared to the previous year, due partly to lower naphtha prices and the withdrawal from certain businesses as part of business restructuring. Operating income before special items was JPY 100.0 billion, a decrease of JPY 1.0 billion, or 1%, year-on-year. Net income attributable to owners of the parent was JPY 34.4 billion, an increase of JPY 2.2 billion, or 7%, year-on-year.
The exchange rate was JPY 151 to the dollar, representing an appreciation of JPY 2 year-on-year. Domestic standard naphtha price per kiloliter was JPY 65,300, a decrease of JPY 10,300 year-on-year, resulting in lower raw material prices. We expect the impact of the Middle East conflict to become more pronounced from April onward. Please see page seven. This is the summary of a year-on-year comparison about operating income before special items in fiscal year 2025. In terms of volume, sales of Vision Care materials increased due to firm demand, and sales of agrochemicals also increased due to firm demand, mainly in the domestic market. Sales of semiconductor applications increased due to demand growth in the cutting-edge semiconductor market and overall recovery in semiconductor markets.
On the other hand, sales of automotive applications decreased due to the decline in automotive production caused by the impact of U.S. trade policies, the semiconductor supply shortage, and an aluminum plant fire in the U.S. Terms of trade were negative overall. While sales price revisions in PP compounds provided a temporary improvement, this was outweighed by losses from yen appreciation, inventory valuation losses due to decline in raw material prices, and decreased energy efficiency due to low operating rates of crackers and derivatives. Fixed costs and others contributed positively to overall operating income before special items, as the positive effects from improvement in equity in earnings and business restructuring more than offset higher repair and maintenance costs.
Looking at the results by factor within the JPY 1.0 billion decrease in operating income before special items compared to the previous year, the volume difference was + JPY 5.7 billion, terms of trade were - JPY 8.5 billion, and fixed costs and others were + JPY 1.8 billion. Please see page eight, sales revenue and operating income before special items by segment. In the specialty chemicals domains, sales revenue accounted for more than 60% of the group's total sales revenue, and the ROS exceeded 11% in FY 2025. We will continue working to expand profits and, consequently, improve profit margins. The following pages provide a detailed explanation of the increase or decrease factors for each segment. Please see page nine.
Life & Healthcare Solutions reported operating income before special items of JPY 34.2 billion for FY 2025, an increase of JPY 0.1 billion compared to the previous year. The volume difference was +JPY 3.4 billion. This is mainly due to the firm sales of Vision Care and firm sales of agrochemicals, mainly in the domestic market. Sales volume of oral care decreased slightly due to inventory adjustments. Terms of trade worsened by JPY 0.5 billion due to the impact of losses from yen appreciation on agrochemicals. Fixed costs and others were -JPY 2.8 billion, due largely to the impact of gas leakage at Omuta Works and an increase in registration maintenance fees in agrochemicals, which more than offset benefits from business restructuring in oral care. Please see page 10.
Mobility Solutions reported an operating income before special items of JPY 51.0 billion in FY 2025, a decrease of JPY 4.1 billion compared to the previous year. Volume and terms of trade deteriorated as U.S. trade policies, the semiconductor supply shortage, and an aluminum plant fire in the U.S., among other factors, had a combined negative impact of approximately JPY 4.0 billion. Fixed costs and others were -JPY 0.8 billion due to an increase in inventory fixed costs. Please see page 11. ICT Solutions reported an operating income before special items of JPY 36.9 billion in FY 2025, an increase of JPY 10.2 billion compared to the previous year.
Volume difference was + JPY 6.7 billion as sales volume increased in semiconductor and optical materials and ICT films and sheets due to the demand growth in the cutting-edge semiconductor market and overall recovery of the semiconductor market. Terms of trade were + JPY 2.7 billion, driven by an improvement related to fluctuations in raw material prices for some products, despite the impact of losses from JPY appreciation. Fixed costs and others had a net positive impact of JPY 0.8 billion as the effects of business restructuring in nonwovens and inventory impact more than offset increases in depreciation expenses due to capacity expansions. Please see page 12. This page outlines temporary factors and restructuring benefits in Basic & Green Materials in fiscal year 2025. First, please take a look at the restructuring benefits hatched in yellow.
We have implemented three restructuring measures this fiscal year. Benefits from the restructuring have steadily materialized from the second quarter onward, improving losses from the three businesses, which were approximately JPY 3.0 billion in the first quarter before the restructuring. In fiscal year 2025, the full effects of these restructuring measures have not yet been realized, leaving room for a further improvement of approximately JPY 5.0 billion in fiscal year 2026. Items hatched in gray are temporary factors in fiscal year 2025. The losses from these temporary factors totaled between JPY 7.0 billion and JPY 7.5 billion. In the fourth quarter, production and sales decreased due to the impact of the Middle East conflict, resulting in approximately JPY 2.0 billion-JPY 3.0 billion of losses.
When all of these negative factors are combined, they had a total negative impact of approximately JPY 12.0 billion-JPY 13.0 billion, and together with major regular maintenance at Ichihara Works and levies, this resulted in an operating loss before special items of JPY 18.4 billion in FY 2025. Quarterly performance is gradually improving. As this has already been explained on the previous page, details are omitted here. Please see page 14. This is non-recurring items. Non-recurring items totaled -JPY 26.2 billion, a deterioration of JPY 3.5 billion compared to the previous year. In FY 2025, we incurred an impairment loss on an equity method affiliate in Life & Healthcare Solutions and an impairment loss on business restructuring in Basic & Green Materials.
In addition, as a result of structural reforms in the specialty chemicals domains, we recorded losses in related business of JPY 4.0 billion. Please see page 15. This is the consolidated statement of financial position. Total assets were JPY 2,151.7 billion, down JPY 2.3 billion from the end of March 2025. This was mainly driven by a reduction in accounts receivable and inventories resulting from lower raw material prices, as well as measures to make the phenols business in China asset light, which more than offset asset increase associated with plant constructions, major regular maintenance, and other factors. Please see page 16. This is the consolidated statement of cash flows.
Cash flows from operating activities were +JPY 213.0 billion, up JPY 12.5 billion from the previous year due to improvements in working capital. Cash flows from investing activities were -JPY 134.8 billion. While making necessary investments, we are also progressing with the sale of affiliates as part of our business portfolio transformation. As a result, free cash flows were JPY 78.2 billion. Next, I will explain the financial outlook for fiscal year 2026. Please see page 18. This is the highlights of consolidated financial outlook. For fiscal year 2026, we expect sales revenue to be JPY 1,900.0 billion, an increase of JPY 231.2 billion compared to the previous year due to the impact of yen depreciation and raw material prices.
Operating income before special items is expected to be JPY 105.0 billion, including the impact of the Middle East conflict. This is an increase of JPY 5.0 billion from the previous year. Net income attributable to owners of the parent is expected to be JPY 45.0 billion, an increase of JPY 10.6 billion from the previous year. The exchange rate for the year is expected to be JPY 155 to the USD, a depreciation of JPY 4 from the previous year. The domestic standard naphtha price per kiloliter is projected to be JPY 95,000, representing an increase of JPY 29,700 compared to the previous year. Please see page 19. This is the summary of our outlook of operating income before special items for fiscal year 2026.
Compared to the previous year, we expect sales volume to increase mainly in the specialty chemicals domains. Sales of Vision Care are expected to remain firm, and sales volume of agrochemicals is expected to increase globally. Sales volume of elastomers is expected to increase, driven by the expansion in product applications and markets. As for semiconductor applications, we expect increased demand in the cutting-edge applications, driven by the expansion of generative AI. As for terms of trade, we expect positive contributions mainly from the elimination of negative temporary factors in fiscal year 2025 in Basic & Green Materials, as well as sales price revisions and cost reductions.
As for fixed costs and others, while we expect the full contribution of restructuring measures implemented in fiscal year 2025 and an improvement in equity and earnings, we anticipate an increase in fixed costs such as depreciation expenses, mainly due to capacity expansions in the specialty chemicals domains. Regarding the impact of the Middle East conflict, we anticipate a decrease in sales volume due to the production cutbacks, as well as a deterioration in production yields and energy efficiency. We will make every effort to ensure stable product supply and will reflect rising raw material costs and selling prices in a timely manner.
Consequently, the projected increase in profit of JPY 5.0 billion over the previous year is attributable to a number of factors, including a positive volume difference of JPY 19.5 billion, a positive terms of trade impact of JPY 10.0 billion, and a negative impact of JPY 24.5 billion in fixed costs, and others, including the impact of Middle East conflict. Please see page 20. This is our outlook for sales revenue and operating income before special items by segment. In the specialty chemicals domains, we continue to expect sales revenue to account for more than 60% of the group's total sales revenue, with ROS remaining above 11%. The impact of the Middle East conflict on sales revenue and operating income before special items is reflected in the others segment.
The following pages provide a detailed explanation of the increase or decrease factors for each segment. Please see page 21. Life & Healthcare Solutions is experiencing steady profit growth, with operating income before special items for fiscal year 2026 projected at JPY 38.0 billion, an increase of JPY 3.8 billion compared to the previous year. Volume difference is expected to be plus JPY 5.5 billion, mainly due to a steady increase in the sales volume of Vision Care and agrochemicals. We also expect the full contribution of restructuring measures in oral care implemented in fiscal year 2025. Please see page 22. Mobility Solutions consistently maintains operating income before special items exceeding JPY 50.0 billion. Operating income before special items for fiscal year 2026 is expected to be JPY 51.0 billion, about the same as the previous year.
The volume difference is expected to be + JPY 6.0 billion. This is mainly due to higher sales volume in elastomers driven by expansion of product applications and markets. We also expect firm sales globally in composite materials. Terms of trade are expected to be + JPY 1.5 billion due to cost reductions in raw materials and logistics. Fixed costs and others are expected to be JPY 7.5 billion, driven by higher fixed costs such as depreciation expenses due to the operation of a new facility, while are expected to more than offset the full contribution of restructuring in the solutions business. Please see page 23. As for ICT Solutions, the recovery trend began in the latter half of fiscal year 2024, and this trend accelerated in fiscal year 2025, leading to an expansion in semiconductor-related sales volume.
In particular, pellicles and ICROS Tape have been driving our growth in the cutting-edge field. Operating income before special items for fiscal year 2026 is expected to be JPY 41.0 billion, an increase of JPY 4.1 billion compared to the previous year. Volume difference is expected to be +JPY 5.0 billion, as sales volume is expected to increase due to demand growth, particularly in the cutting-edge semiconductor market, driven by the expansion of generative AI. Terms of trade are expected to be +JPY 1.0 billion due to improved productivity. Fixed costs and others are expected to be -JPY 1.9 billion due to increased fixed costs such as depreciation expenses resulting from the operation of a new facility. Overall, while fixed costs are expected to increase, we expect this to be sufficiently offset by higher sales volumes.
Please see page 24. This page outlines the breakdown of improvement factors in the fiscal year 2026 outlook for Basic & Green Materials. First, for the restructuring benefits shown in orange, we expect an improvement of approximately JPY 5.0 billion from the full contribution of the restructuring measures implemented in fiscal year 2025. Next, items shown in gray represent temporary factors in fiscal year 2025, and we expect the elimination of these temporary factors to total JPY 7.0 billion-JPY 7.5 billion. In addition, we have factored in approximately JPY 4.0 billion from sales price revisions and cost reductions, shown in blue, to improve fundamental profitability, and we expect underlying earnings to be roughly breakeven.
Before the impact of the Middle East conflict emerged, raw material prices had been falling, so we have also factored in a certain amount of inventory valuation losses. As a result, we expect an operating loss before special items of 3.0 billion JPY. As we work to eliminate these temporary factors, in particular to thoroughly prevent plant incidents, we as a group will return to the fundamentals of safety first and make every effort to avoid recurrence and further strengthen safety awareness among all employees. Please see page 25. As this has already been explained on the previous page, details are omitted here. Please see page 26. Regarding our shareholder returns, at this time, we have maintained our annual dividend outlook at JPY 75 per share due to risks related to the Middle East conflict.
That's all for the explanation about our financial results for fiscal year 2025 and our financial outlook for fiscal year 2026. Thank you very much for your kind attention.