Good afternoon. Thank you very much for attending the Mitsubishi Chemical Group Corporation's Earnings Presentation, despite your busy schedule today. Now, we'd like to begin this conference.
First, Mr. Manabu Chikumoto, Corporate Executive Officer, President and CEO, will deliver his greetings. Mr. Minoru Kida, Executive Officer and CFO, will present the financial results for the fiscal year March 2025. The entire conference, including Q&A, is scheduled to last 60 minutes. Before we get started with the conference, I'd like to remind investors of the following: please be aware that the presentation may contain forward-looking statements based on current expectations, all of which are subject to risks and uncertainties. Actual results may differ materially from these discussed in the forward-looking statements. Please also note that the audio of today's conference, including the Q&A, will be posted onto our website.
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I'd like to begin the conference. CEO Chikumoto, over to you. Thank you very much, Chikumoto, CEO.
Thank you very much for joining us, despite your busy schedule today, for our earnings presentation. I would like to also thank you for your continued understanding and support and t aking this opportunity, I'd like to thank you again. First of all, I'd like to comment briefly at the outset, and then CFO Kida will give you the financial results and forecast in detail. After I took office as president, it's the second year, t ime flies. Last year, we came up with KAITEKI Vision 35, a long-term management vision for 2035, and a medium-term management plan for 2029 to achieve the vision. We just started out on these activities, but for this fiscal year, rationalization and investment growth is what we are planning to do.
Now, thank you very much for your attention.
My name is Kida, CFO. I will now explain the financial results for the Fiscal Year March 2025. The business environment, as you can see, this is a summary. The business environment during the Fiscal 2024 of January remained stable, despite some different levels of strength in demand among regions and industries. Display-related sales continued to be strong on the back of the effort of subsidy policy in China, and semiconductor-related sales remained on a moderate recovery path, 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. Core operating income of the chemicals business significantly improved from JPY 11.2 billion loss in the previous Fiscal Year to JPY 46.9 billion in profit.
In addition to year-on-year improvement in price gap, chiefly for MMA and basic materials and polymers, sales volume improved overall, despite the recording of one-time impairment loss in specialty materials. Looking at MCG g roup on the whole, sales revenue remained virtually unchanged from the previous fiscal year, primarily reflecting the effect of the transfer of shares of an affiliate, while cooperating income rose 43% year-on-year. Net income attributable to owners of the parent decreased 62% year-on-year, due mainly to the recording of structural reform expenses under special items. Net income attributable o r rather, as for March 2026, we will continue to rapidly implement initiatives aimed at portfolio transformation and profit improvement based on the three criteria for business selection and three disciplined approaches in business operations under the guiding principles of our business operations in the new medium-term management plan, 2029.
Operating income in Fiscal 2025 is forecast at JPY 265 billion. Core operating income of the chemicals business is expected to increase 78% year-on-year to JPY 76 billion on the back of structural reform in the core business, pricing policy in each business, and the effect of cost reduction efforts. Net income attributable to owners of the parent is projected to be JPY 145 billion, mainly affecting the recording of policies from the transfer of Mitsubishi Tanabe Pharma, despite the post-posting of structural reform-related expenses in tandem with the implementation of management measures. As for dividend forecasts, we project year-end dividend of JPY 16 per share and annual dividend of JPY 32 per share. In order to utilize approximately JPY 510 billion proceeds from the transfer of Mitsubishi Tanabe Pharma to boost shareholder return and increase capital efficiency, we will establish a JPY 50 billion facility to purchase treasury stock.
This shows consolidated statements of operations for March 2025. The average exchange rate for the full year is JPY 152.6, a 5% drop in yen from the previous year. The unit price of naphtha was JPY 75,600, up 9% from the previous year. Sales revenue was JPY 4,407.4 billion, up JPY 20.2 billion from the previous fiscal year. The increase consisted of JPY 102 billion due to foreign exchange, JPY 57 billion increase in sales price, JPY 6 billion increase in value, and JPY 145 billion decrease due to business restructuring. While this would have actually made the JPY 160 billion in corperate income, but JPY 145 billion decrease was also seen. Corperate income was JPY 298.4 billion, up 43% from the previous year. Details will be explained later. Special items were JPY 101.7 billion in losses, JPY 155.4 billion deterioration from the previous fiscal year.
Operating income was JPY 196.7 billion. Income before taxes was JPY 150.7 billion. Net income attributable to owners of the parent was JPY 45 billion, JPY 74.6 billion worse than the previous fiscal year. Compared to the full-year forecast announced in November last year, the cooperating income exceeded the forecast, but special losses such as structural reform-related expenses were higher than expected, and unfortunately, it was lower than the forecast on the net income basis. The following table shows sales revenue and corporate income by business segment. Specialty materials reported a 40% increase in revenue and a significant 239% increase in profit over the previous year.
Although the results were below the forecast announced last November due to the impairment losses in some businesses at advanced solutions and a difficult business environment in the carbon fiber business at advanced composites and shapes. A dvanced films and polymers continued to see strong demand in display-related markets, exceeding our assumptions. MMA and derivatives reported a 16% increase in sales and a JPY 29.8 billion increase in profit year-on-year, reflecting higher market prices for MMA polymer. The forecast announced in November last year was not met due to a poor recovery in demand in the second half and declining market prices. Basic materials and polymers posted a 12% year-on-year revenue decline and reduced loss of JPY 9.8 billion.
In the materials and polymers business, sales decreased year-on-year due to the Ibaraki Ethylene Center being in the scheduled maintenance and repair year, but improved significantly from the previous year due to the improved price gap, especially for polyolefins. The carbon products business posted a loss of JPY 27.9 billion due to the negative impact of inventory valuation losses of JPY 11.9 billion. The corporate income in the chemicals business, positioned as a growth driver in the medium-term management plan through Fiscal 2029, improved significantly with a 2% decrease in sales and a JPY 58.1 billion increase in profit year-on-year. In pharma, sales of Radicava in North America remained strong throughout the period, resulting in a 5% increase in sales and a 16% increase in profit over the previous fiscal year.
Industrial gas has continued to perform well, with a 4% increase in sales and a 14% increase in profit year-on-year. This is a breakdown of the JPY 90.3 billion increase in core operating income from the previous year. Price gap was positive JPY 54 billion. Of this amount, JPY 14.6 billion was due to foreign exchange effects, mainly in the industrial gases and pharma businesses. Excluding foreign exchange impact, higher market prices for MMA monomers in MMA and derivatives, and improved price gaps for polyolefins in basic materials and polymers contributed to the increase. The volume was positive by JPY 21 billion. Of this amount, the difference in specialty materials was plus JPY 20.2 billion, with all subsegments in specialty materials and others positive. Cost reductions totaled JPY 60.1 billion, exceeding the initial target of JPY 47 billion.
Others were a negative JPY 44.8 billion. Inventory valuation gains deteriorated by JPY 13.7 billion due to the significant impact of the carbon products businesses, as well as the impact of profitability impairment in some businesses in advanced solutions, labor costs in each business, and fixed costs due to the impact of inflation. Specialty materials profit increased by JPY 17.7 billion year-on-year basis. Price gap was plus JPY 7.9 billion. Barrier packaging application worsened compared to the previous fiscal year, but we strove to maintain and increase sales prices for other products, improving the gap. The volume gap was significant and positive of JPY 20.2 billion. Advanced films and polymers, demand for polyester and OPL films increased in the first fiscal first half due to the increased operation at panel factories, reflecting the expectation of growing demand for TBS due to major sales competition in China and international sporting events.
Although a refractionary decline is expected in the second half, the segment continues to perform steadily since consumers maintain a high operation rate backed by subsidy policies in China. In the advanced solution segment, demand for semiconductor-related products varies by product and by field, but volumes increase for materials for semiconductor manufacturing processes, precision and cleaning business, and water treatment equipment. In advanced composite and shapes, the volume increased mainly for semiconductor manufacturing equipment requiring high-performance engineering, adding more profits. Also faced a tough environment due to intensifying competition for pressure vessel applications, but increase of sales for wind power generation contributed to a positive volume gap in total. Manufacturing production amounted to JPY 8.1 billion, owing to cumulative business restructuring, such as withdrawal of the acrylic fiber business and other efforts through optimized procurement and productivity improvement.
The other difference of JPY 18.5 billion minus includes the impact of an impairment loss of minus JPY 12.9 billion on production facilities in tangible asset and Gelest, which is under the advanced solution. Currently, Gelest aims to launch next-generation EUV dry resist precursor, but given the latest demand trends, we expect that there will be a delay in the contribution to profit compared to the time of the acquisition. Therefore, we estimated it to a recoverable amount and recorded an impairment loss on intangible and in tangible asset in the fourth quarter financial statement. We'll continue to strengthen our development system and expedite the launch of new products while improving our profit structure by streamlining in manufacturing and sales. Other factors include an increase in fixed costs, such as labor costs and R&D costs, and an increase in amortization of intangible asset due to the consolidated Italian CPC as subsidiary.
MMA and derivatives posted a significant increase in profit from the previous fiscal year to JPY 29.8 billion. The price gap was significant, plus JPY 28.2 billion. The market price of MMA monomer improved compares to the previous fiscal year, widening the spread. Also, the coating and additive business improved the price gap. The volume gap also improved compared to the previous fiscal year for both MMA monomer and coating and additive, resulting in plus JPY 2.8 billion. Cost reduction includes the one associated with the discontinuation of the Hiroshima ACH process MMA production. Materials and polymers saw a drop of its deficit by JPY 9.8 billion year-over-year. The price gap was plus JPY 20.6 billion, and in materials and in polymers had improved due to the timing gap in the sales price of a polyolefin.
In the carbon business, the price gap improved compared to the previous period due to the stabilizing coking coal price. The volume gap in materials and in polymers was minus JPY 2.5 million, despite the absence of the previous year's trouble attributed to lower sales due to sluggish demand for each product and irregular maintenance at the Ethylene Center in Ibaraki. The impact of the cost reduction was plus JPY 6.7 million, thanks to the structural reforms in the petrochemical derivative business and optimized procurement of equipment and repair costs. The others of minus JPY 15 billion includes deterioration in inventory valuation loss of minus JPY 13.5 billion. In carbon, the price of coking coal was on the downward trend, causing valuation loss to fall sharply. Pharma saw an increase in profit of JPY 9.1 billion year-over-year.
The price gap was minus JPY 100 million due to the domestic dry price and a revision despite the preferable exchange rate. The volume gap was plus JPY 8.5 billion. Sales of Radicava ORS in North America remained strong, supporting the profitability of the pharma business. Sales of Mounjaro and Gove combination vaccine for five diseases in Japan also saw a cost reduction and was plus JPY 2.7 billion. Others were JPY 2 billion due to an increase in SG&A. Industrial gas profit increased by JPY 23.1 billion year-over-year. The profit increased year-over-year, thanks to great impact of the cost reduction as well as productivity improvements in each region. Next special items for the period just ended totaled negative JPY 101.7 billion. In the first quarter, additional loss of JPY 44 billion was posted in extraordinary losses.
Of this amount, minus JPY 33.7 billion was an impairment loss in the fourth quarter. In addition to additional JPY 15 billion in impairment losses related to hydrogen production facilities and industrial gases business, several impairment losses were recorded in specialty materials as a result of structural reforms. Loss on sales and disposal of fixed assets recorded in the fourth quarter was minus JPY 8.8 billion, of which JPY 5.9 billion was for expenses related to the closure of MMA's Hiroshima plant. This is a cash flow statement. Operating cash flow was JPY 552.8 billion. This was a net in cash inflow. Cash flow from operating receivables and payables was JPY 30.7 billion, and cash flow from inventories was JPY 13.4 billion for total working capital inflow of JPY 44.1 billion.
In the carbon business, the completion of a 40% reduction in production capacity contributed to a reduction in working capital. Investment cash flow was negative JPY 275.4 billion. Capital expenditure cash flow was minus JPY 325 billion. In addition to gross investments mainly in industrial gases and specialty materials, maintenance and renewal investments were made in materials and polymers for the scheduled maintenance and repair of Ibaraki. Cash flow from asset sales was positive, JPY 54 billion. We proceeded with a review of our business portfolio and record the proceeds from the sale of shares in subsidiaries and associates, as well as proceeds from the sale of cross-holding shares and unneeded assets. As a result, free cash flow was plus JPY 277.4 billion. Financial cash flow was minus JPY 246.7 billion.
Consolidated statement of financial position, total assets amounted to JPY 5,894.6 billion, a decrease of JPY 209.9 billion from the end of the previous period. Due stronger Yen over the year of March 2024, which caused a decrease of JPY 34 billion, and sale of business including Kansai Koken Chemicals Company Limited, resulting in decreases of JPY 110 billion. The impact of the year-end holidays at the end of the previous fiscal year contributed to JPY 47.0 billion decrease. Net interest-bearing debts decreased JPY 191 billion, reflecting a steady progress in reducing interest-bearing debts. The net debt-to-equity ratio was 1.06, a 0.1-point improvement from 1.16 at the end of the previous fiscal year. On this page, we'd like to supplement the transition of core operating income from the third quarter to the Fourth Quarter of March 2025.
Core operating income for the fourth quarter was JPY 51.2 billion, down JPY 23.6 billion from the third quarter. Specialty materials decreased by JPY 19.2 billion from JPY 9.9 billion in the third quarter to minus JPY 9.3 billion in the fourth quarter. In advanced films and polymers, the profit decreased by JPY 4.3 billion quarter on quarter due to the impact of seasonally lower sales of food packaging films and the impact of scheduled maintenance and repairs on Saranol and OPL films. Sales of films for displays continued to be strong, partly due to the effects of China's subsidy policy and last-minute demand before the U.S. tariff hike. In advanced solutions, the main reason for the quarter-on-quarter decrease was an impairment loss of JPY 12.9 billion at Gelest, which develops, manufactures, and sells silicone chemicals.
In advanced composites and shapes, sales volume increased mainly in high-performance engineering plastic due to the elimination of seasonal factors in Europe and the U.S. in the third quarter, but the loss expanded due to the impact of the year-end closing of the carbon fiber business. MMA and derivatives, the profit declined from JPY 5.9 billion in the third quarter to JPY 2.7 billion in the fourth quarter, down JPY 3.2 billion. MMA monomer demand did not recover well after the Chinese New Year, and the Asian market fell further from $1,694 per ton in the third quarter to $1,580 per ton in the fourth quarter. In basic materials and polymers, the deficit widened by JPY 2.7 billion from JPY 0.8 billion in the third quarter to JPY 3.5 billion in the fourth quarter.
In materials and polymers, inventory valuation gains improved from the third quarter to the fourth quarter, but the profit dropped by JPY 1.1 billion due to sales declines in some businesses such as polyolefin and concentration of year-end expenses. In carbon products, there was no significant change in demand for Cokes, but the deficit increased due to the impact of scheduled maintenance and repair and production adjustments in the carbon materials and carbon rubber businesses, as well as fiscal year-end book closing adjustment. Pharma posted a JPY 2.2 billion decrease from plus JPY 13.1 billion in the third quarter to plus JPY 10.9 billion in the fourth quarter.
Although steady sales of Radicava and Mounjaro contribute to the increase in profit, the decrease in profit was due to the conservative purchasing before the drug price revisions, decreased sales of long-listed drugs under the selective treatment system, and increase in SG&A and R&D expenses at the end of the fiscal year. Industrial gas sales increased by JPY 3 billion quarter on quarter, mainly due to an increase in sales volume in the U.S. and cost reduction efforts. Please note the figures for FY 2024 as a reference year do not include the pharma business. The exchange rate is JPY 140 to the dollar, and an after-unit price is JPY 65,000. Full year revenue is expected to be JPY 3.74 trillion, down by 5% compared to FY 2024. Core operating income is expected to increase by 16% to JPY 265 billion. Operating income is JPY 202 billion, up by 44% from FY 2024.
Income before tax is JPY 165 billion, up by 68% year-on-year. Profit from a continuing operation is up today 107% or JPY 119 billion. As for Mitsubishi Tanabe Pharma, we announced our decision on the transfer of the business in February. In our financial forecast for FY 2025, pharma business falls under a discontinued operation from the beginning of the fiscal year, assuming that the transfer will be completed. Profit from discontinued operation of JPY 94 billion for FY 2025 includes Mitsubishi Tanabe Pharma's first-quarter profit, gain and disposal, and tax expenses. Profit from the year-end derivative to owners of the parent company is expected to increase by 122% to JPY 145 billion. Core operating profit for FY 2024 without the pharma business will be JPY 228.8 billion. Let me explain the JPY 36.2 billion increase in profit in the view of JPY 265 billion of forecast for FY 2025.
The current midterm managing point, we are committed to promoting three discipline approaches, namely pricing policy, investment decision-making, and asset optimization in order to improve profit in the chemical business. We expect the effects from the measures based on these three principles to be JPY 56 billion in FY 2025. Of this, the effect of the pricing will be JPY 29 billion. Specifically, we will offset the impact of the profit decline due to the worsening market condition in the MMA business by pricing policies such as passing on the cost increase to prices by extending the cost-linked formula and minimizing performance volatility. In addition, in conjunction of its downsizing of the production capacity in the carbon business, we'll reduce deficit by cutting unprofitable export sales and shifting to a cost-linked formula. We'll also promote a price increase in specialty materials, coatings, additives, and materials in polymers.
The finalization is expected to have a JPY 27 billion as an impact. Besides the cost reduction through the reduction of production capacity in the carbon fiber business, we have factored in several restructuring projects, including withdrawal of loss-making businesses. Including selection and concentration in the chemical business, we plan to achieve JPY 400 billion in sales revenue from Fiscal 2024 to FY 2029 and have already made a decision on JPY 290 billion out of JPY 400 billion. The list of major projects is on page 24. We'll steadily proceed with the resolution and the sales of those non-core businesses. As reinvestment effect, some growth investments such as CBC are scheduled to be completed in FY 2025 in a summer to bring more production capacity, but significant contributions to profit won't be generated until FY 2026.
For FY 2025, we will first push forward with pricing policy and asset optimization, f orecast by segment. Now, I would like to comment on the impact of the U.S. trade policies on our business profit. U.S. sales ratio of our group is about 18%, and most of the business is conducted within the U.S., so that the direct impact of the tariff on our business is minor. The business forecast for FY 2025, currently presented here today, has already factored in the expected direct and indirect impact of the downward trend in business, including the impact of the recent apparent decline in the MMA market. We'll continue to closely examine factors including indirect impacts such as customers' demand trend and the supply chain impact, and we will promptly disclose any additional information with you.
On specialty materials, while there will be a cost increase due to inflation, we expect an overall improvement in volume on top of the effects of the price increase, business restructuring, and a cost reduction, as well as the elimination of the impact loss of JPY 12.9 billion. We expect a positive volume gap in advanced films and polyester films in the rear packaging application, advanced solutions and conductor-related in the battery materials business, and advanced composite in a shaped high-performance engineering plastic and carbon fiber business. In MMA derivatives, despite the review of the cost-linked formula for MMA monomer and the pass-through to prices, the effects of refraining from purchases in falling market prices due to the tariff policies are already appearing, and in light of current market trends, we expect a decrease in profits for the FY 2025.
In the basic materials and polymers, profits are expected to drop due to the worsening evaluation loss and rising costs due to inflation. Pharma expects to see a significant increase in profit for FY 2025 due to a review of sales portfolio following the reduction in Coke production capacity and cost, and improvement in inventory evaluation loss. In the industrial gases, we expect a profit increase for FY 2025 backed by continued strong demand and a cost reduction such as improved productivity. For the third dividend forecast, we expect the year end dividend on May 20. As for the dividend for 2025, the second quarter and year-end dividends per share will be JPY 16, the same as the year-end dividend for FY 2024. As a result, the forecast for the annual dividend per share for FY 2025 will be JPY 32.
Finally, I would like to talk on share buy back. As we disclosed separately today, we will use the JPY 510 billion in funds gained from the transfer of Mitsubishi Tanabe Pharma to setup JPY 50 billion to limit for share buy backs in order strengthen shareholder returns and imporve capital efficiency. As originally included in our midterm management plan, the remaining transfer proceeds will be used for growth investment in the chemical business, and the remainder of what usage is yet to be decided will be used for either new growth investment or a debt repayment. In order to increase shareholders' value over the mid and long term, the company will cancel all the treasury shares it has acquired. This concludes my presentation.
Thank you. Kida. Now we would like to move on to the Q&A session. If you have a question, we would like to introduce the first questioner. From Morgan Stanley MUFG Securities, Mr. Watabe, please unmute yourself and go ahead with your questions.
Thank you for the presentation. There are two quick questions. The tariff impact has been incorporated in terms of what you have seen in MMA and others, but can you give more details, like not just direct impact but indirect impact as well? Also, front-loaded demand may have been seen, but inventory seems to be reducing toward the end of the fiscal year. Has that been the effect impact of U.S. tariff? Can you give more colors?
With regard to tariff impact, as I said in the presentation, to the U.S., there are very few that we are importing from outside to the U.S. What we are selling is mostly produced in the U.S. In terms of indirect impact, if there is anyone who knows, we would like to know, and let us know, because it's so difficult to predict. In China, if you look at the MMA, there's no recovery seen. Why?
Because people are just sitting back and watching the inventory levels in the customers, and the flow of the products are becoming slower. We are engaged in polymers, but in the manumer customers, like manumer manufacturers and automotive manufacturers and other industry players are actually taking that approach. More or less, because of indirect impact, the market could slow down for the time being. In others, polyolefins, for example, Japanese automotive players in Mexico, we are supplying some products, so there is uncertainty there. In terms of value, those are more than JPY 10 billion but not exceeding JPY 20 billion. That would be the order of impact. That has been incorporated in JPY 265 billion that we have come up with. That has been incorporated.
Also, for the front-loaded demand, overall, the way I put it may have been not appropriate, but not that many last-minute demand or sales of products before the tariff increase. H onestly speaking, i n the films, especially, there was slightly such trends that we've seen, but overall, there's not much. The inventory levels have declined. That is what you have stepped out. The major reason behind this is basic materials and polymers. Downsizing in the metallurgical coal and other coal businesses has declined, and that has had a controlling impact.
Thank you very much. Page 33, I think it's easier to see the last impairment loss. There is a direct impact, but other than that, in fiscal 2025, structural reform effect was there, and carbon fiber was also one of the factors in the year-end closing.
What kind of effect can you expect in terms of fixed expense reduction?
Quantitatively, it's very difficult to say how much we can expect in fixed expense reduction, especially for advanced composite and shapes. In terms of cost reduction impact, it's not just this, but in total, JPY 7 billion worth of cost reduction has been incorporated. While some of the equipment will be optimized in terms of production capacity, that's what we're doing already. As Chikumoto said, and also I said, in carbon fiber, there are upstream and downstream capacity imbalance that has been the drug on the profitability. We have started working on that. I just showed the value, but in advanced composite and shapes, especially, there will be more impact that we may expect. There's not much in advanced solutions.
For that segment, in semiconductors and others, there will be some that we see, but the most that is expected is advanced films and advanced composite and shapes because the measures that we have taken in this fiscal year will be the one that I just said. In the specialty materials or specialties, you have already completed your measures. Thank you.
Can you move on to the next question? SMBC Nikko Securities Miyamoto-san, please unmute yourself.
I have two questions as well. I have also been looking at SMBC, and thank you very much for the easy-to-understand presentation. For the pricing policies, MMA cost-linked formula was brought up. In carbon and other businesses, what is the allocation? How much of the contribution MMA can I make? Also, as for the asset optimization, the carbon's reduction of the bonus is a significant threshold, but actually, the other one is kicking in as well.
Can you elaborate on the optimization of the pricing policy?
To answer your question on the pricing policy is, it's really hard to give you the specific numbers for the carbon. Carbon is also significant while making a business. It's going to be the one that we're going to quit, and we have to be committed to that. Maybe just one third for each, so the remaining is others. As for the asset optimization, we have done so many different things. Finally, these groups contribute to the results because many of the brands we withdrew and started to make contributions. One of them is a carbon business. Also, the restructuring of the locations on a harmless production is going to be discontinued, which was announced the other day. JPY 27 billion comprises multi-different projects.
The carbon and fibers production capacity production, and in the past couple of months, multiple business resolvers have been announced. Some of them are about the closure of the business in 2026. A certain amount of the contribution will be kicking in the next fiscal year, and then the following year, can we see even a greater impact. Its part of the five-year plan. 2024. Since the time of the announcement of the mid-term business plan, we've already started in 2024, so we've been preparing for a while. I appreciate your understanding in that point. As for the carbon fiber specifically, the optimized production and capability has been already decided, and it's listed on this presentation for the specific numbers. A nd the money-wise, w e would like to refer from commenting on that.
The pricing policies and asset optimization, how much have been already completed for the negotiation, how much more you need to nail?
The hint to you, it's really difficult. For the carbon, about 40% of the total plan have been already nailed under the cost-linked formula. The remaining is still under negotiation with our customers.
The second question is about the MMA business. Utilization was 80% in New Year's utilization. That's what I would like to know. Also the market trend and 158 billion. What's the number for the new year, a new fiscal year? After the Chinese Lunar Years, what's the trend right now? Where can we expect more demand coming? The eagerness to capture the demand coming from the last quarter. Also the limahou has been ramping up. Is there any impact?
Utilization for this fiscal year, we are expecting also to be around 80%. So Nikkota ikou, $1,500 on the U.S. dollar is something that we're expecting. A little bit one level higher.
Another question. The demand trend, especially for which application you see more opportunity or not? This is actually the same as Kobe. For the glass application. Continuing for the glass. We do not see much visibility out of it. Limahou. Any impact coming from that?
That's the other competitor's trend, so I cannot make any comments. We have not heard anything giving us any impact because of that. Thank you.
Thank you very much. Now moving on to the next question. Daiwa Securities. Mr. Uebayashi, please unmute yourself and go ahead with your question.
Thank you very much. One more question. In this fiscal year.
Page 17 is what I'm looking at. Discontinued operations, there's net income. JPY 94 billion is included. This is about Mitsubishi Tanabe Pharma. This confirmation included, how much, to what extent has it been reflected in the forecast? Mitsubishi Tanabe Pharma's net income is only incorporated in the first quarter. Is that correct? Also, proceeds on gain of the transfer will also be included in here. That's what he said. What would be the timing in the, is first quarter or second quarter? If possible, if you can give us a breakdown of the values between these two.
Thank you very much. As for the breakdown of the values, I'm sorry, but we're not in a position to disclose that. Also, as you said, the whole thing will be included in the first quarter.
What's included is proceeds on the transfer and also tax expenses associated with that. Also, in the first quarter, there will be still consolidation. Net income from Mitsubishi Tanabe Pharma is included. Also, the intercompany expense reallocation within the group is included. That will constitute JPY 94 billion.
Thank you very much. Follow-up question. After the first quarter, balance sheet status. How should we understand that? Share buyback timing could affect this, but mainly what would be the cash position and shareholders' equity? How am I supposed to expect that?
With regard to impact from share buyback, it's only JPY 50 billion. That would not affect the balance sheet so significantly. Also, in terms of working capital, JPY 510 billion will be incorporated coming in.
There will be some one-time effect, but we have to make investments in growth for the future. On the other hand, the structural reform expenses will be also positive in this fiscal year. There are some valuation type of expenses, but there will also be cash outflow. There will be some profitability improvement for the time being, but there will not be such a dynamic change in the balance sheet. Thank you.
Thank you. Let me introduce the next questioner from Nomura Securities. Okasaki-san, please unmute yourself.
This is Okasaki speaking. Two years on specialty materials, core products, sales volume. What is the plan for growth in also the semiconductor materials as well as the carbon fibers and also the electromagnetic materials? What is your thought on that? Thank you for your question. It has been a while since I heard your voice last time.
I'm good to hear from you. For example, for the next year, it is not going to be expected to grow so much for this year because of the subsidy policies being giving an impact, but I'm sure that at some point it will be smaller. The OPL for sure will grow in the future, but we do not expect a significant jump in the growth of the OPL this fiscal year. What was another question?
Yeah. The semiconductor materials, carbon fibers, and electromagnetic materials.
For carbon fibers, one of the other questions, capability or capacity optimization is ongoing for carbon fiber. We are not going to stretch ourselves to sell things at the lower price point. The volume is expected to go down for this year, but instead, the quality product should be sold to other customers to enable us to secure profit. thats the basic point here.
That's for the semiconductor. That's actually as the overall trend is the same. It is expected to recover at not a moderate pace further with this is one thing, and also the synthetic silica is another thing. I'm expecting for the volume growth.
Second question is share buyback. Thank you very much for doing that. The direction of this JPY 510 billion of Mitsubishi Tanabe, but you are going to do the share buyback, and that's pretty much it out of the JPY 510 billion. As for the dividend payout ratio at 35% as a policy. We actually explained once again your policy on the return to the shareholder. Let me start with a long-term perspective. The dividend payout policy remained the same. Mainly we return to the shareholders with dividend at 35%, and at least we should maintain the current level. I appreciate your understanding.
As for the share buyback, we had numerous discussions internally in the Mitsubishi Tanabe sales team. Looking into the future growth investment as well as the restructuring, maybe we may need more cash while improving our financial status. We need to keep a close eye on the fine balance, and if there is an opportunity, we may use more on top of what we have done. The share buyback is the usage of the Mitsubishi Tanabe's farmers' gain for sale.
Thank you very much. Understood very well.
We are still slightly ahead of the time, but we would like to close the Q&A session at this time. Last but not least, I would like to ask Kida, CFO, to give us closing remarks.
Thank you very much for joining us.
Despite your busy schedule today for earnings presentation, the chemicals business, our core business, has recovered from a very challenging situation. The net income is still very low. I do not want you to even calculate the ROE, but for this fiscal year, cooperative income, we will make further improvements. Also, as for major structural reforms, we would like to complete that this year. That is the challenge for us, or our team, or task for our team f or this fiscal year, we get together and united to work on that for this fiscal year. I would like to ask for your continued support. Thank you very much for today.
Thank you. There will be on-demand webcasting in an archive so you can listen in any time you like. Thank you very much for your time.