Mr. Sugimoto, thank you very much for participating despite your busy schedule. For Mitsubishi Chemical's first quarter of the fiscal year ending March 31st, 2025, earnings call. Today, we have the Executive Officer, CFO, Minoru Kida, who will explain about the operational summary for the first quarter of the fiscal year ending March 2025. We're going to join a session, and we are planning to spend 60 minutes for this meeting. Before we go into the conference, there are some housekeeping matters that we have to offer to the investors. There are some disclaimers that we are going to have. We are making some forward-looking statements in this presentation, but this entails risk and uncertainties. There are some cases that the actual results will be diverged greatly from our forecast. We ask for your understanding.
For this conference, including the Q&A, this will be posted on our website. So we ask for your understanding beforehand. So we'll start the conference. Mr. Kida, please.
[Foreign language]
Good afternoon. This is Minoru Kida, CFO. Let me present the financial results for Q1 FY 2024.
[Fore
First, as you can see, we have the summary. The business environment generally remains stable despite some different levels of strength in demand among regions and industries. Display-related sales remained brisk on the back of demand spurred by large-scale shopping events in China and international sporting events. Semiconductor-related sales recovered moderately, driven by demand related to generative AI. On the other hand, sales were sluggish in some regions and sectors, such as automotive and food-related markets.
[Foreign language]
Compared to the same period of the previous fiscal year, price gap improved significantly as a result of efforts to promote price management in each business and an increase in market prices for MMA monomer. In addition, cost reduction efforts continued to bear results in the first quarter. On the other hand, Carbon Products continued to post a loss. For some products in specialty materials and industrial gases, sales volume decreased. As a result, for the group as a whole, sales revenue increased 6% year-on-year, and core operating income went up 63% year-on-year. Net income attributable to owners of the parent decreased 7% year-on-year due to a decline in the net of special items.
[Foreign languange]
Core operating income for the first quarter was 75% of the first-half forecast announced at the beginning of the current fiscal year, meaning the progress is exceeding the initial forecast. Going forward, for Q2 and onwards, there is an uncertain outlook for demand in displays and food-related products. In addition, there is a need for further review of several business restructuring and reforming projects. Since it is difficult to incorporate such impact on earnings at this time, we maintain our previous forecast at the beginning of the year. Today, we made a release on the structural reform of the Carbon Products to improve earnings and to optimize our production scale of a Coke business. If you could refer to that release too, I'll come to this and provide more detail later on in this presentation.
On the consolidated statements of operations, for Q1, the average currency exchange rate was JPY 158.2 to the dollar. The yen was weaker by 13% compared with a year ago. The price of naphtha was JPY 79,000 per kiloliter. That's up 17% from a year ago. Sales revenue came to JPY 1,129.4 billion. That's up 6% from the same period last year. Core operating income came in at JPY 82.6 billion. That's up 63% year-on-year.
Back in May, we provided a first-half forecast of JPY 110 billion for the first half. Q1 results are 75% of that figure. Special items came to JPY 2.4 billion in gain, and that's down JPY 16.5 billion from a year ago. Operating income came to JPY 85 billion. Pre-tax income, JPY 77 billion. Net income attributable to owners of parent came to JPY 39.7 billion, and that's down JPY 2.8 billion year-on-year.
If you compare it against the first-half forecast we published in May, that's actually exceeding the JPY 10 billion figure. Now let's look at the breakdown by segment. For specialty materials, sales revenue was up 5% year-on-year, and operating income was higher by 16%. As I said at the beginning, there are differences depending on geography or the actual business, but in general, things were firm. In particular, demand related to display-related markets was strong.
As a result, the Q1 results exceeded the first-half forecast of JPY 10 billion in core operating income. For industrial gases, things are good, and revenue was up 7% year-on-year. Income was up 18% year-on-year. For Pharma, sales of Radicava in North America continued its strength. Revenue was up 10% year-on-year. Core operating income was up 85% year-on-year. And in comparison to the first-half forecast, the progress is quite high.
MMA and Derivatives now, sales revenue up 27% year-on-year. Core operating income JPY 11.2 billion up. MMA monomer market prices are higher, and that pushed up both sales revenue and core operating income. With the wider spreads, the result was that the core operating income exceeded the first-half forecast of JPY 7 billion. Basic Materials and Polymers, sales revenue up 1% from a year ago, and the loss was reduced by about JPY 2 billion. The improvements include JPY 3.5 billion from inventory valuation.
Another subsegment, Materials and Polymers, this was up with regard to core operating income from a year ago. There was a scheduled maintenance turnaround at Ibaraki Ethylene Center, but profit was secured. For carbon products, the Coke's market remained sluggish and posted a loss of JPY 8.3 billion. This is a breakdown or the analysis of the core operating income year-on-year difference.
The price factor had a positive impact of JPY 20.1 billion, particularly for MMA and Derivatives. The MMA monomer market prices coming up had a great contribution. For specialty materials and industrial gases, our continued efforts for price management yields bore fruit, and the effect was positive. The volume factor was a positive impact of JPY 8.1 billion. For specialty materials and industrial gases, this figure was actually negative, but that was more than offset by the positive from Pharma.
Basic Materials and Polymers suffered from a different and challenging business environment, but the volume factor was positive. Cost reduction had a positive impact of JPY 12.1 billion. For this financial year full year, we have a target figure of JPY 47 billion, and we believe that things are in line with that plan. Others had a negative impact of JPY 8.5 billion.
Inventory valuation improved by JPY 3.5 billion, but in various businesses, fixed expenses such as labor expenses increased. Now let's look at the breakdown by segment. First, on specialty materials. This segment had a core operating income increase of JPY 1.6 billion. The price factor had a positive impact of JPY 4.8 billion. Demand is still weak, but in each subsegment, efforts were made to retain or improve pricing, and that led to this improvement. On the other hand, the volume impact was a JPY 2.5 billion negative impact. For Advanced Films and Polymers, in China, there was this major shopping event, and there were international sports events, and there was anticipation of the demand for television increasing, and the panel makers increased their capacity utilization. That drove up the demand for polyester film and OPL Film.
But for the barrier packaging material, EVOH, the things appeared down compared with the Q1 in the previous year where things were very strong. For Advanced Solutions, for display-related materials, just like the films business, demand increased. For semiconductor-related products, again, there is some difference between product or area, but overall, things are on a recovering trend and volume increased. For Advanced Composites and Shapes, the high-performance engineering plastic used for semiconductor production equipment recovered and volume increased.
For carbon fiber, volume increased for use in wind power stations, but if you look at the higher margin products such as the use in pressure vessels, that volume fell, so the volume factor actually came in negative. With regard to cost reduction, we are exiting from the acrylic fiber business and other business structural reform and rightsizing of procurement and improving productivity.
All those effects came to a positive JPY 2.8 billion. Others had a negative impact of JPY 3.5 billion. That includes the fixed expenses such as labor. It also has the impact of the CPC, which we made a consolidated subsidiary last year, and that led to an increase in the intangible asset amortization. For industrial gases, core operating income increased by JPY 7.3 billion from the same period previous year.
Volume-wise, there was some softness, but thanks to price management efforts in various areas, the volume factor was a positive JPY 5 billion, and productivity improvements led to cost reductions. And that had a positive contribution of JPY 5.7 billion. As a result, we were able to post a higher core operating income than the same period previous year. Now, on Pharma, Pharma came in up JPY 8.5 billion compared with the previous year.
With regard to the price factor, in Japan, there was an NHI drug price revision, and that had a negative impact, but the foreign exchange impact was positive, and so there was a net positive impact of JPY 800 million. With regard to volume, that had a positive impact of JPY 10.4 billion. In North America, the Radicava ORS sales grew.
In addition, domestically, Mounjaro sales is strong, as well as the five-way combination vaccine GOBIK sales. And therefore, this volume factor was a large significant positive. Now, on MMA and Derivatives, compared with a year ago, core operating income increased by JPY 11.2 billion from a loss in Q1 a year before. So this Q1, we posted a profit of JPY 10.5 billion. The price factor was a positive JPY 10.7 billion. The MMA monomer market prices are higher, so this price factor came in quite large.
With regard to the volume factor, for coating and additives business, demand for use in adhesives, inks, and additives recovered. Now, on basic Materials and Polymers, this posted a smaller loss by JPY 2 billion compared to a year ago. The price factor was a negative JPY 1.7 billion. Materials and Polymers saw some improvement here, but carbon products were down because of the Coke market weakness, and so the net total was a negative impact.
With regard to volume, for Materials and Polymers, this year, we have a scheduled maintenance and repair turnaround in Ibaraki at the Ethylene Center, and that had a negative impact. But this was offset by what we suffered a year ago with regard to the one-time trouble. The cost reduction impact was a positive JPY 1.5 billion. For petrochemical derivatives, we had a structural reform, and we added some benefit of that.
Others came in at positive JPY 1.9 billion. This includes JPY 3.5 billion from inventory valuation. For carbon products, the coking coal prices are down, so inventory valuation was pushed down. But for Materials and Polymers, naphtha prices are rising, so that had a positive impact. Now, today, we made a release about our carbon business and our policy about improving the earnings or the profit margin and profitability and the optimization of the production of Coke.
S o let me add some description here. Back in 2021, in December, we announced our management policy, and in line with that, we have been looking at the possibility of carving out our carbon products business. On the other hand, currently, we have a very difficult business environment. Particularly around China, there is this weakness in steel products demand, and the international Coke market is very sluggish.
Against that backdrop, rather than focusing on a carve-out, we judge that it is more urgent to look at our production setup and sales policy. So at Kagawa, we have a number of Coke ovens, and we decided to reduce the size of our capacity. In addition, we are also reviewing our sales portfolio both domestically and outside of Japan. We are also implementing additional rationalization measures so that the business is less susceptible to market fluctuations. So we made a resolution on this structural reform. We will steadily implement that so that the carbon products can be profitable from the year-ending March 2026 or FY 2025. In conjunction with the reduction in the capacity, we will post a special loss of about JPY 7 billion in Q2. That will be an impairment loss for property, plant, and equipment.
In addition, from Q2 or sometime later, we will have to book some removal expenses, but we have yet to establish an amount, and once we know that and once a disclosure is due, we will make an announcement on that. We are also looking at the long-term positioning of carbon business within the group portfolio, and we will continue to review this. This is the consolidated special items. In the first quarter, the consolidated special items was in total plus JPY 2.4 billion. During this April to June period, we have had some sales gains and losses due to the sales of the fixed assets and reversal provisions. So this was accumulation of small items. There was no major structural reforms cost that has been booked.
In the previous year, in the Pharma business, JPY 15 billion impact was coming from not having to return the upfront payment for the Pharma which we received through a product supply contract. So there was a plus JPY 15 billion of positive impact in terms of the special items. Compared to the previous year, the special items have been declining. Next is the consolidated cash flow. In terms of the operating cash flows, it was a received JPY 73.9 billion. In terms of the cash flows for operating receivables and payables, it was JPY 30.2 billion of cash in. Inventory cash flow was JPY 14.6 billion of cash out. For the working capital in total, it was a JPY 15.6 billion received of cash.
Through the periodic repair, there have been some ups and downs, but on each of the businesses, we are strengthening the management of working capital, and I think that this effect is showing up steadily. In terms of the cash flow related to investment activities, this was a cash out of JPY 80.5 billion for industrial gas, specialty materials, mainly in these areas. So we have conducted investment for growth in the basic Materials and Polymers.
At the Ibaraki, we have conducted the periodic maintenance, and we have conducted maintenance and renewal investment. In terms of strategic shareholding and through the sales of unnecessary assets, we had a cash inflow of JPY 4.4 billion due to asset sales. As a result, free cash flow was JPY 6.6 billion of cash out. In terms of the financial cash flow, it was a cash out of JPY 17.3 billion.
Next is the consolidated statement of financial positions. The total asset was JPY 6,291.1 billion. Compared to the previous year, it was an increase of JPY 186.6 billion. The major reason behind this is due to the foreign currency that has been the impact, the JPY 187 billion of the increased impact. So most of this impact is coming from foreign currency. The net interest bearing debt compared to the end of last fiscal year has increased by JPY 80.5 billion, but the net DE ratio was 1.14.
This is a 0.02 point improvement compared to the year-end of last fiscal year is 1.16. In this slide, this is about the quarter-on-quarter comparison of the operating income of the segments, of core operating income by business segments, comparing the fourth quarter of last year and then putting in some insight in terms of the direction of the second quarter.
The first quarter core operating income was JPY 82.6 billion compared to the fourth quarter of last fiscal year. It has increased by JPY 58.4 billion. In May, we have disclosed the first-half guidance, and the core operating income was JPY 110 billion. So if we simply calculate from the first quarter results, the second quarter should be JPY 27.4 billion, but we think the second quarter will be over this calculation.
In specialty materials, the first quarter, JPY 11.5 billion, compared to the JPY 12 billion loss that we have booked in the last fourth quarter, there was an improvement of JPY 23.5 billion. In the fourth quarter of last fiscal year, we have adjusted the utilization, aiming to adjust the inventory to appropriate level. We have proactively conducted this, and it has some impact of the end of the year book closing.
So there was a JPY 8.5 billion negative one-off factor. Because this one-off factor for the year-end has been removed, and on top of that, as I have been saying initially, the polyester film for display applications and OPL films, and high-performance engineering plastic for semiconductor production equipment, and the carbon fibers used for wind power generation and sports. On each of the products, the demand has started to recover, and this led to increased income. For the second quarter, in terms of the display market, because the panel makers have conducted a high level of utilization of first quarter, we are anticipating that, again, we're going to adjustment stage. And based on this, our polyester film and the OPL film, these display-related products' demand is anticipated to soften.
Each of the businesses in the United States and Europe, there are summer holidays in place, and this will be impacting their business. Compared to the income level of the first quarter, the second quarter will be a bit weaker. For the industrial gas, in each of the regions, we are promoting price management, and this has started to show effect, and the SG&A cost has gone down, and there has been some impact coming from foreign currencies. Compared to the fourth quarter of last fiscal year, which was JPY 40.5 billion, so this first quarter was JPY 47.4 billion, so we saw an increase in core operating income. The second quarter, we anticipate this continued robust trend. In Pharma, for the domestic Pharma business, so the last fourth quarter last year, there was a declining trend in sales revenue.
We saw a rebound through the sales growth of Mounjaro, and GOBIK has shown a very smooth ramp, and this led to increased sales. For the overseas ethical drugs business, the North American Radicava sales has continued to be strong. On top of that, the SG&A cost and R&D cost, which has been concentrated at the year-end, but going to this first quarter, it has declined. Due to this situation, this JPY 900 million of the operating income was the fourth quarter last fiscal year, but we saw a JPY 17.6 billion increase. So the first quarter, the core operating income was JPY 18.5 billion. For the second quarter, normally, SG&A compared to the first quarter tends to increase. Compared to the first quarter, this means that the operating income will decline.
For MMA and Derivatives, the fourth quarter of last fiscal year was JPY 1.5 billion, so this first quarter was JPY 10.5 billion. We saw a JPY 9 billion increase. MMA monomer, due to supply-side elements, the demand-supply balance in Asia has been tight. And in terms of the market prices, it has gone up. The price differences have improved. For the coating and additives, demand is on a recovering trend. For the second quarter, the spread of MMA monomer, more or less, we think we'll be able to maintain the current condition. At the Hiroshima ACH MMA, an acrylamide product will be terminated, and this will start to show its impact in terms of income improvement. Compared to the first quarter, we think that the direction is on an improvement on the operating income.
For the basic Materials and Polymers, this has been a JPY 2.3 billion improvement of the loss. For the petrochemical business, there has been an impact of the periodic maintenance of Ibaraki, but in the previous fourth quarter, Phenol, Bisphenol A business, we have booked an impairment loss on the fixed costs. Due to the increase of the inventory valuation losses, we have seen gains of JPY 3.7 billion improvement.
In terms of carbon products, the coking cost has dropped, so the cost price differences have improved. Through the revision of inventory valuation, the loss has expanded by JPY 1.4 billion. For the second quarter, for the petrochemical business, there will be less impact coming from periodic maintenance, but the inventory valuation will worsen. On top of that, Phenol, Bisphenol A, additional booking of the impairment loss coming from this business, such one-off factors will come into play.
For the carbon products, as of the first quarter, we anticipate a tough situation in terms of the profit. In the second quarter, we will try to improve our profit by reviewing our sales portfolio. With this, I would like to end my explanation. We would now like to take questions from the floor. From Morgan Stanley MUFG Securities, Mr. Watanabe.
Good afternoon. This is Watanabe from Morgan Stanley. Thank you very much. So only one question. So my question would be on specialty materials. So thank you very much for your detailed explanation. So comparing Q4 and Q1, and you see that there was this one-off of JPY 8.5 billion was gone, but things are gone. And then you have this increase in top line by JPY 10 billion plus. What was the impact? So maybe the cost-down efforts.
I understand that the films are strong, but it appears better than that. So if you could perhaps elaborate on that, please. Thank you very much for the question. The question will go to Hirasan. Thank you very much for the question. Demand is recovering. So it's not just sales volume increasing, but capacity utilization is coming up. And so that's actually pushing down costs, and that is significant.
Earlier, you talked about the one-off items in Q4, and we really focused on inventory reduction or right-sizing. So we actually chose to control capital utilization to reduce inventory, and that's having a positive impact. So capital utilization is going up, and for specialty materials overall, JPY 8.5 billion or JPY 9 billion, that's the scale that we're looking at. And expenses are also going down. So that's part of cost reduction, perhaps. Like the corporate allocating or R&D.
Well, R&D, we are more selective as to what we do and what we don't. And so we do invest when we have to, but we don't invest when we think we don't have to. So we're taking that more seriously than before. So that has an impact of about JPY 5 billion or JPY 6 billion. I hope I'm answering your question. So that will bring us to JPY 15 billion.
So that's effectively what we have now. Well, so inventory is actually increasing at the end of June. Is that too much, or is it mostly because of the foreign exchange rate? And volume-wise, it's not so much. Volume-wise, no, inventory hasn't really increased. With regard to inventory, from the end of the previous financial year, there has been an increase. That's mostly not specialty materials, but the maintenance turnaround at Ibaraki.
So we had to build inventory upfront, and that's why we have higher inventory levels there. But then, yes, things may be a little up than before. But the largest factor is the foreign exchange. JPY 14 billion actually was increased in inventory valuation due to the currency exchange. And then if you look at the whole group, for example, if you look at Pharma, Mounjaro is really selling well, so we are building up inventory.
And then for carbon products, bad things come altogether. The coking coal arrival was kind of delayed, and that kind of coincided with others. But it's really about the foreign exchange. Thank you very much. Thank you very much. Next question would be Daiwa Securities. Umebayashi, please ask your question. Thank you very much. I am Umebayashi from Daiwa Securities. Well, I congratulate you for the good performance.
Well, I would like to ask about MMA. For the first quarter, it seems to be showing a good performance on the consolidated utilization rate. How has this been trending? So the first quarter results and second quarter outlook, would you please refer to that? And by region. So the new ethylene methodology, I think this is getting a lot for SCH, SC4, these sites that used to be tough. I think basically they are turning profitable. And the U.S. project, so MMA situation has become much better.
And by September, I think the interest rate in the United States will start to go down. In terms of investment, the environment seems to be more friendly for investment. So in terms of the final decision, how are you proceeding towards that decision? I would like to ask these questions. Thank you.
So this is about the utilization of MMA and the U.S. project progress. So Kitasan, would you please answer? Well, thank you very much for your question. So I think all of you are aware that on the supply side, specifically in Asia, it has become tight. So the market consensus is good. So we were thinking that maybe this will be a one-off.
So we were looking at the situation very carefully, but I think this trend is going to continue for the time being. And for other peers, I do not know in detail what's happening, but more or less in the first quarter, utilization was about 70%. So maybe people will say that this isn't that high, however. So this first quarter, so the Arabia has gone to Sabamak has gone to the periodic repair. So this had a low utilization rate. They weren't able to work.
So that's the reason we have a 70%. Going forward, we have terminated ACH in Hiroshima. So we basically don't rely on the byproducts of other plants. So the second quarter onwards, maybe 80% utilization, I think more or less we can secure that level. Against this backdrop, the U.S., I think basically you're seeing an active environment. I won't go into specifics in terms of numbers, but for each of our sites in each. So I think basically we have a high utilization rate. So if you look at the MMA in the U.S., compared to before, the performance has turned to the better. So going forward, towards the decision-making of the future CapEx, this will be a tailwind for us. So with the potential customers in the United States, we have started talking with them.
So sooner or later, I think basically we can communicate whether we're going to conduct this CapEx or not. Thank you very much. So one follow-up. So in the loss-making sites, do you have loss-making sites in this business? Currently, if I may confirm, I think the number has gone down a lot in the first quarter. Oh, maybe. So in the first quarter, to be frank, there's no site that's loss-making for the first quarter, that is.
Understood. So if the current market condition continues, it means that it will be sustainable. The situation is sustainable. Yes, I think so. Because, well, let me put it this way. So we've shut down the U.K. site. As a business overall, I think that was a positive factor. Understood. Thank you. Thank you very much. SMBC Nikko Securities, Miyamoto-san, please. SMBC Nikko Securities, Miyamoto-san. Thank you, Miyamoto-san.
I have a question on Pharma. First, on Radicava, Relyvrio has suspended sales. What impact would there be? I mean, some patients may have just been using Relyvrio, and so how much switch has been among the users in Q1, and what would happen going forward? And Mounjaro, on a Q&Q analysis, you mentioned that. And in Q4, I think you said that Mounjaro's sales was JPY 2.3 billion. This time, you are not mentioning that figure. If you could share with us that figure, share with us that figure.
And then with Parkinson's disease, I understand that you actually get the completion. But what about the impairment risk of the work in process R&D and the voluntary retirement program that you just released? How many are you expecting to be part of that, and how much cost reduction would that deliver? Thank you very much. Okay, first on Radicava.
So with regard to Radicava, with regard to the administration and the trend, Amylyx decided to withdraw Relyvrio. We haven't seen much change, and sales are steady. As Kitasan mentioned earlier, there's this impact of the foreign exchange pushing the profit figures up. Maybe I said this before on a previous occasion. Radicava and Relyvrio, some patients actually use both drugs in combination. Those patients would probably continue to use Radicava. But then Relyvrio will be withdrawn from the market now. There will be some patients considering a switch to Radicava. There should be a considerable number. For us, we need to be prepared to supply to such people, and we are preparing in that way. That would be about Radicava.
And then with regard to Mounjaro, in Q1, we had the supply restriction lifted, and then rather, the administration restriction was lifted in April, and the supply restriction was lifted in June. So we have more hospitals and clinics adopting the drug, and there are more new patients using Mounjaro. So as Kitasan mentioned, we see sales growing steadily. But then with regard to Q1 sales figure, I'm afraid, according to our agreement with Eli Lilly, we are not in a position to release that.
With regard to the voluntary retirement program, I think that was the next part. And your question was, how many are you expecting to apply for this program? We do not really have a specific target number. And then about ND0612 and the situation around that. So we received a complete response letter, and since then, we have been studying and discussing what to do.
We are in discussion with FDA as we speak. So with regard to the future development plans and the agreements with the FDA on ND0612, we haven't come to that. So in the absence of that, we can't really provide any numbers. So we will just continue our consultations in due form. I hope I've answered all of your questions. Yes, thank you very much. One follow-up question on Radicava.
So some patients potentially switching to Radicava from Relyvrio, and you said you are preparing to supply to that people. So towards Q2, that might push up sales figure in Q2. Is that a right understanding? Well, the currency exchange, as I've been saying, is actually much larger, perhaps. So it really depends on how the foreign exchange goes. But then, as of now, we are expecting a similar amount in Q2.
Actually, back in the 15th of May, we actually published a full-year outlook, and it's really the same. So you don't really have much benefit from this discontinuation of Relyvrio. Is that correct? As of now, if you look at the number of patients that are administered the drug, we don't really see any significant uptick. So as of now, the answer is no, it's just continuing the trend that we were on before. Thank you. Thank you very much. So, please ask your question. So, this is Okazaki from Nomura. Thank you very much. So this is about the structural reform. I would like to ask about that for the carbon products. You said that you're going to review your sales portfolio and then cost reduction. It was one of the factors you've given.
Is it the right understanding that they're going to start discussing about that? Inclusive of that, from the March 2026, the first quarter, making profit at that level under this current business condition, can you turn profitable in the first quarter of March 2026? Three months ago, when you conducted the earnings call, so the CEO said that towards autumn, a very structural reform is going to take place. Even before autumn, he said that he would like to announce these initiatives. Up to now, in terms of carbon products and Pharma and the voluntary retirement, I think these are the two initiatives that you released. But towards this autumn, can we expect that more is going to come? Thank you very much. First, about the structural reform about carbon products, Kitasan, would you please answer the question? Thank you.
Well, in terms of initiatives for cost reduction, we have already started that initiative. So this time around, around 40% capacity is going to be reduced. For instance, so this is inclusive of the cost reductions, 40% of capacity reduction. You may know that the coke plants, we have to operate that or else the facility will break down. Even if we don't sell or, well, this is a hypothetical, but even if we can only sell under the cost, we have to continue manufacturing. So to be frank, in last fiscal year, the coking market was very, very bad. So this was temporary. But even more than the coking coal, the coke was lower in terms of the cost. So it was short, but that happened. So in terms of the cost reduction, we have been doing very steadily.
But this 40% with reducing 100 furnaces, I think maybe this will be able to accelerate this cost reduction. That is the reason why we have made this decision. And FY2020, March 26, this is FY2025, from the very start, whether we're going to start this year and be profitable, we can say. But so for March 26, as a full year, we will put in measures so that we can be profitable during this one year. And towards November, we have been announcing about the coke and Pharma. Do you have any other things to announce?
Well, we will announce when we are ready. But the strategy or the initiatives, the main portion will be announced in the November final results meeting. But this is a repetition. But if something is decided in a timely manner, we will communicate that to the market. Thank you.
This is a confirmation. In that sense, without using 100 ovens and reducing that to 150, as an impact, that's quite meaningful. In terms of the revision of the sales portfolio, do you have any specific things that you can talk about that? Well, I think this is quite impactful. In terms of the revision of the sales portfolio, I cannot because basically, these are some trade conditions that we have with the customers, so we can't release this today.
But as you know, basically, we have done a lot of consigned baking, and gradually, it has gone down, meaning that our major portfolio revision is being conducted. Exporting coke, that is. We have been continuing that activity. But if you export, exporting is a quite different environment, meaning that based on various requirements, we have been doing business with each of our customers.
But these trade conditions by customer, we are starting to review or negotiate the terms with the customers. And I hope we can do that. That's all. Thank you. Thank you very much. Let's go to the next question. The next question would be from Mizuho Securities, Yamada-san. This is Yamada from Mizuho Securities. I have a question about Pharma. So if you look at slide 9 and the ups and downs, volume was up to JPY 10.4 billion.
And so that's royalty increase, JPY 2.8 billion should be part of this. So if you subtract that, then you get JPY 7.6 billion. And so if you look at that JPY 7.6 billion, that would include JPY 8.2 billion from Radicava and domestic. Neither has been some increase. That should be all part of that. Is that correct? That's my analysis, but am I correct?
With regard to the +JPY 800 million in prices in Japan, the NIH revision, I think that was expected to be about a negative impact of JPY 9 billion over the full year. Is that correct? Is that happening? But then the foreign exchange exchange is pushing things up. And that's why you came in a net positive impact with regard to pricing. And Remicade, I understand that prices are coming down as expected, and that's only natural.
But I just want to confirm that because there should be a larger impact from the NIH price revision. But is that offset by the impact of Forex? And then with regards to the ND0612 and the balance sheet, there should be some related intangible assets and the work in process R&D. How much is still on the books? First, about the JPY 10.4 billion, yes, your analysis is correct.
Thank you for confirming. The next part about the domestic, the price factor difference of JPY 800 million, you mentioned the NIH price revision. But the Mounjaro, and we touched upon this briefly, we have this administration period restriction as well as supply restrictions lifted. So that's an impact. And then we have GOBIK that was launched in March, and the sales is good. Against that, the NIH revision in Q1, the impact was about JPY 4.5 billion.
So if you add and subtract as appropriate, you will come to JPY 800 million. And your last part about ND0612 and the outstanding amount or the balance, I'm afraid I don't have that on hand. So we'll check that and get back to you later. I think you have about JPY 40 billion, but I'm not so sure. So thank you very much for checking. Yes, we'll contact you later.
Thank you very much. Thank you. Going to the next question. UBS Securities, Omura-san. Go ahead, please. Omura from UBS. Thank you for taking the question. So my side, I would like to go to page 7 in terms of the differences of each of the elements. In terms of the volume difference, you talked about the display-related business is quite strong.
So for your display-related business, the PET film, OPL, ClearFit, I have these three product majors, three products. So in terms of the volume trend in the first quarter, how much better was it? How good did it do year-on-year comparison in total? And the volume difference is negative. So where was this negative seen in terms of product-wise, which was you saw a decline in volume? So Kitasan, would you please answer the question? Well, thank you. So specifically, OPL, that was very strong.
This is a display-related product. On top of that, we can't give you the exact numbers, but polyethylene film, that was a big contributor. On the other hand, in terms of the negative side of the volume differences, so the major Soarnol, that was the major contributor, EVOH, because last year, this is a barrier film, package film, we had more volumes, and there was some decline in demand.
This is one of we thought that in the first quarter, we're going to start a recovery. But relatively speaking, these package films are used for more high-end food. And it seems to be the case that the European US market, more high-end food products are not selling well because inflation is in place. They are suffering a very harsh inflation. So Soarnol has been slow to recover. Another negative side is the carbon fiber.
In terms of volume, depending on the field, net pure net sales maybe have not been going down. If the margin, with the high-margin products, goes down, it means that basically this will have a huge impact. Roughly speaking, the high-margin areas in the US, fisher vessels, we have struggled. Rather than demand, it's more that fisher competition is the story behind that. The volume has declined due to this factor, and that led to the first quarter results. Thank you. As a follow-up question, these display-related products, it has been strong. In terms of magnitude, in terms of the utilization, how much was utilization under this situation? The second quarter, with this, I said that it's going to slow down a bit in the second quarter. How far is this slowdown going to be in the second quarter?
Swanol, carbon fiber, for those type of products, from the second quarter onward, what will be the recovery? In terms of the utilization rate, well, it's very difficult to give you a clear number, or we can't give you the clear number. Specifically for the polyester film for overseas in Asia, specifically in Asia sites in Asia, they are supported by display, and the utilization rate was quite high.
That's what we feel. And another part of your question was about Swanol? For Swanol, for the second half, we are expecting that this will start to recover because for the high-end food, in terms of customers, they have a higher ratio. So we're in just capsule coffee. So this basically was selling well. But for the second half, we anticipate, we are expecting that these type of products will start to recover.
You also asked about the carbon fiber volume trend. Are you anticipating a recovery for carbon fiber in the second quarter onwards? Well, carbon fiber, maybe rather than it's going to recover, and that's difficult to say. Basically, with the windmill blades, there's a lot of strong demand. I think from the second quarter onwards, we're going to see a recovery for those type of applications.
For the U.S. pressure vessels, well, this is more than the fiercer competition. So we have to close the books and see whether the volumes have gone up or down. At this point, it's very difficult to say. In terms of the volume, in terms of sales volume, the carbon fiber, that's happening in the second half, maybe the windmill blade is going to recover in the second half onwards. Thank you. Thank you very much.
This will be the last question. Goldman Sachs Securities Ikeda-sama, good afternoon. Ikeda-san, from Goldman Sachs Securities. Goldman Sachs Securities Ikeda-san, yes. Thank you very much. This is Ikeda from Goldman Sachs. Thank you very much. Swanol and EVOH, I have an additional question. You talked about PET stock is coming up, the price coming up. So what about that impact?
And what about the volume of Swanol? In the United States, there's recovery, but is Europe weak? So if you could talk about that, please. Ikeda-san, please. First, with regard to pricing, yes, we are conducting right pricing. So it's not really acidic, but it's more of a vinyl acid. So regardless of that, we are making sure that the price is factored in the correct right level of feedstock costs. But then it's really about the volume and sales that we are focusing on.
With regard to Q4, so from Q4 and how much difference there has been in Q2, well, maybe 5%? Maybe that's just a ballpark figure. You mean volume of Soarnol? Yes. Well, on an annual basis, that was double-digit in terms of volume. So you're not there. And there is some recovery in volume, but not so strong. Oh, on a year-on-year comparison, that's one thing. And then Q on Q, that's another thing.
Maybe I got things a little mixed up. So compared with a year-on-year basis, we're down significantly. But compared with Q4, Q1 is actually recovering. And we believed that there would be stronger recovery. So this 5% is compared with Q4. So compared with Q4, we think roughly there has been a 5% recovery in volume. And we were expecting more. So we are kind of disappointed about that.
対応詳細にありがとうございました。
Thank you very much for that.
That's all from myself. Thank you very much. With this, we would like to close the Q&A session. So, Kitasan, would you like to say a word for closing, please? Thank you very much. So, in April, the new organization has kicked off. And luckily, for the first quarter, I think we have been able to make a good start. And I have been saying this and repeated this, but still, whether it be customers, whether it be the region, the situation is different. But I think we have been able to come from the worst situation. I think for the second quarter forward, we'd like to keep up this business. So, in terms of the current business structural reform, we had made an announcement. This is a big step for us.
We will try to improve our capital efficiency for the group with the structural reform, rationalization, maybe some surgical initiatives unnecessary. But by doing so, we want to enhance the corporate value. I would like to ask for your support going forward. Thank you very much for your participation. Thank you very much. With this, we will end the meeting. This conference will be archived on the website, and you can view this anytime you want. So with this, we're going to end today's conference. Thank you very much for your participation.