Hello. I am Teiji Koge, President of Sekisui Chemical. I'll go through our financial results for the first half of fiscal 2019, and the outlook for the second half of the year. Foreign exchange rates in the first half are shown on this slide. Here are the results for the first half of fiscal 2019. The global economic stagnation was prolonged, exceeding beginning-of-year expectations, especially regarding the smartphone and automobile markets. Against that backdrop, the HPP, High Performance Plastics Company struggled quite a lot, but the domestic businesses such as housing with its new detached houses and renovation business, as well as construction piping material in the UIEP, Urban Infrastructure and Environmental Products Company, performed well and was able to make up for the decline. As a result, we were able to achieve net sales and operating income that was broadly flat year-on-year.
Ordinary income and net income decreased mainly due to FX impact. Net income exceeded the plan that was announced in July. Here are the results by divisional company. First, for the HPP Company, sales expansion of non-LCD materials in the electronics field and high-performance interlayer film in the automobiles and transportation field progressed. The worse-than-expected market deterioration, as well as particularly the negative FX impact, led to a decline in both sales and operating income. For the Housing Company, despite the consumption tax hikes and delays in construction work due to the series of severe natural disasters, we were able to offset the decline and achieve sales and operating income growth. Sales and profits increased in the UIEP Company due to brisk domestic demand capturing business opportunities related to national resilience policies to update the country's infrastructure.
Record-high profits were recorded for the first half on a divisional company basis. All in all, you can say that we were affected by the market conditions globally, but domestic demand was firm. This page shows divisional company results on a quarterly basis. The HPP Company suffered heavily in the first quarter. However, going into Q2, one-off factors such as customer inventory adjustments ran its course, and due to sales quantity and composition and low raw material cost impact, we were able to return back to profit levels that were about the same as the previous year. The company president will explain the details later. The Housing Company was affected by a long spell of rain, as well as the recent severe natural disasters during Q2.
Due to our efforts to level out sales, first-half results did not deviate as much from plan, and we were able to achieve higher sales and profit. The UIEP Company continued to increase sales and profits during Q2 as the degree of the increase in profits expanded. Under the Others segment, we promoted the selection and concentration of R&D themes and also strengthened our organization for efficient business operation. Here is the performance analysis for the first half. Net sales increased by JPY 1.6 billion. The details of foreign exchange impact are shown in the red box. In terms of operating profit, the graph on the right shows that despite the harsh business environment with weak global market conditions and the strong yen, we were able to increase sales quantity and composition.
Combined with effects of lower raw materials cost and fixed cost control, profits reached ¥41.5 billion, which was almost the same as last year levels. Compared to the forecast in July, the Housing Company and UIEP Company did not achieve plan due to the impact from natural disasters, and the High Performance Plastics Company was slightly below plan, but we recognize that it returned to a recovery trend in the second quarter. Now, let me explain our plans for the second half and the full year. The exchange rate assumption is ¥106 to the US dollar and ¥118 to the euro. We are anticipating a stronger yen compared to the beginning-of-year plan. I'd like to explain a little about the outlook for market conditions, which is the premise of the second half plan. Each of the graphs represents markets such as smartphones, automobiles, and housing.
The dotted line in the top left graph represents the beginning-of-year forecast, and the solid line is the current outlook. For both smartphones and automobile production, at the beginning of the fiscal year, we anticipated severe market conditions that were below market consensus. The results were further below expectations. This trend implies that we cannot anticipate a major recovery from the current situation. As for housing orders on the top right, the market has softened due to the impact of the consumption tax hike, but our company was able to secure orders at 98% compared to the first half in the previous year.
In the second half, with our three measures in place, comprised of sales force, land strategy, and product strategy, our order plan is to secure orders that are the same level as the same period in the previous year. The situation is particularly severe due to the impact of disasters in October, we hope to secure flat orders year-on-year for the entire second half. The divisional president will provide details later. Regarding raw materials, due to the trends below the initial forecast, second half domestic naphtha price assumptions are set at JPY 41,000. Here are the revised plans by divisional company. We will aim for a shift to profit growth in all the three divisional companies and the medical business, and strive for record high profits in the second half. We'll continue to increase sales and profits for the Housing Company and the UIEP Company.
The HPP Company is expected to see a decrease in sales due to the impact from FX, but profits are expected to increase as a result of restraining fixed costs and increasing the share of high-performance products. This page shows the factor analysis for the second half revised plan. Sales, on the top left, is expected to increase by JPY 5.7 billion, but is negatively impacted by approximately JPY 8 billion due to FX. In terms of operating income, the HPP Company will strive to increase market share in high-performance products and realize the effects of strategic investments. The Housing Company will strive to continue to increase the number of new houses sold. We will ensure that we recognize sales for nearly 100 units, which has been pushed back to the third quarter due to the impact of the disasters.
The UIEP Company will focus on continuing to expand sales of disaster-resilient, high-performance prioritized products. As a result, we will strive to increase sales quantity and composition substantially on a company-wide basis. In anticipation of a harsh, prolonged business environment, we've been working on cost innovation for the entire supply chain. By thoroughly cutting fixed cost and by benefiting from lower raw material prices, we will strive to offset the negative FX impact so as to achieve a JPY 5 billion profit increase in the second half, reaching JPY 58.5 billion. Each of the company presidents will go through the details of how they will strive to increase sales quantity and composition later. Here are the revised plans by divisional company for the fiscal 2019 full year. Even for the full year, we will aim to grow profits in all three companies and the medical business.
The UIEP and the medical businesses are expected to record high profits on a full year basis. We will also continue to select and concentrate on certain R&D themes, as well as thoroughly control head office costs. Under the influence of the global economic slowdown and the appreciation of the yen, the HPP Company operating income forecast has been revised down by JPY 5 billion to JPY 45 billion, although we have kept a profit growth outlook on a year-on-year basis. On the other hand, because the head office cost has been controlled, total company operating income has been revised down by only JPY 3 billion, as we plan to achieve JPY 100 billion for the year. The revised plan for fiscal year 2019 on a full year basis is shown here.
We will strive for operating income of ¥100 billion or less, with record high profits at each profit line by increasing both sales and profits. Net income is expected to reach record highs for the seventh consecutive year. Dividends will be increased for the tenth consecutive year. This concludes my part. Thank you for your attention.
Hello, I am Ikusuke Shimizu, Divisional Company President of the HPP Company. Let me explain about the High Performance Plastics Company. First of all, to summarize the first half, the significant impact of first quarter profit decline led to lower profits for the first half. Q2 recovered back to about the same level as last year. In the second half of the year, we plan to return back to profit growth due to increased market share, lower raw material cost, and fixed cost improvements. M&As and strategic investments are progressing steadily.
The graph at the bottom shows performance trends. In the first half of fiscal 2019, net sales and operating income were down, reaching JPY 160.4 billion and JPY 19.7 billion respectively. For the second half, we are projecting a decline in net sales, an increase of profits at JPY 167.6 billion and JPY 25.3 billion respectively. Adding the two halves of the year together, operating income is expected to reach JPY 45 billion. Last year it was JPY 44.9 billion, I'd like to somehow manage to increase profits. The next page shows the analysis of net sales and operating income. As you can see in the graph which shows net sales were JPY 160.4 billion, a decrease of JPY 10.8 billion from the previous year. However, FX had a negative impact of JPY 3.8 billion, and net sales decreased by JPY 7 billion on an actual basis. We struggled mainly in the electronics, automobiles, and transportation fields.
On the other hand, operating profits shown on the lower right were JPY 19.7 billion, a decrease of JPY 3.3 billion year-on-year. The breakdown is shown at the top of the chart. Please refer to the line that says first half year-on-year plan. Sales quantity and composition, foreign exchange, and one-time expenses related to the acquisition of AIM in the U.S. and other factors led to the decrease of profits. In particular, sales quantity and composition decreased by JPY 400 million against July projections, but this is mainly due to the drop-off in domestic general purpose products. For products in the three strategic fields, profits came in broadly in line with expectations. At the bottom, the first and second quarters are broken down. Looking only at Q2, the sales quantity and composition has turned positive due to the increase in sales of interlayer films for head-up displays and electronics-related products.
Excluding the foreign exchange impact and the one-time acquisition cost, my view is that Q2 underlying profits grew, with the first quarter being the bottom. On this slide, the cause analysis of net sales and operating income are shown for the second half. Due to factors such as the slow market recovery, the impact of foreign exchange rates and consolidation changes, the second half operating income plan has been revised downwards. Looking at the net sales graph in the second half of 2019, sales is expected to decrease by JPY 2.4 billion year-over-year to JPY 167.6 billion. On an actual basis, excluding FX impact, sales is expected to increase by JPY 3.6 billion. It's due to the growth of the building and infrastructure field. We're not anticipating substantial sales growth in the electronics field, nor the automobiles and transportation fields.
As for operating income, as you can see in the lower right graph, we are expecting an increase of JPY 3.5 billion reaching JPY 25.3 billion. The revised breakdown is shown at the top of the graph. Consolidated basis changes and foreign exchange are expected to have a -JPY 2.8 billion impact. However, lower raw materials cost will be a positive and better sales quantity and composition is expected to reach +JPY 4.5 billion due to increased sales of interlayer film for head-up displays and non-LCD products. In addition, fixed costs decreased by JPY 1.6 billion compared to the initial plan. As you can see in the box, we were intending on increasing fixed costs by JPY 1.4 billion at the beginning of the year, but decided to cut it by JPY 200 million more in our revised plan.
Furthermore, by innovating cost in the entire supply chain, we will strive to make up for negative factors in order to achieve JPY 3.5 billion profit growth. Next, I'll explain the situation in the three strategic fields and cost innovation. We will aim to achieve plan for all three strategic fields, envisioning that Q2 will be the bottom and that we will increase market share as well as realize effects of strategic investments in Q3 and beyond. The electronics field bottomed out in Q2. Although not stated here, we were able to secure an increase in profits. From Q3 onwards, we will not expect LCD-related demand to recover, but focus on growing non-LCD product sales instead. In the automobiles and transportation field, the effects of customer inventory adjustments gradually disappeared from Q2, and sales of high-performance films are also on a recovery trend.
In particular, head-up display interlayer film sales volume was 136% in the first half and more than 145% in the second half compared to the previous year. As growth rates were typically around 120% before, I believe that high growth rates have been achieved. Global market conditions continue to be severe, but since Q3, we've been able to expand sales of high-performance films, and we are planning to start operations of a new line in Europe from Q4. As for the building and infrastructure field, market share for CPVC increased in India. Share has increased rapidly since August. Sales of thermal insulation and non-combustible materials are also robust, resulting in a brisk performance in the building and infrastructure field. As for cost innovation, in light of the recent demand trends, we are thinking about rebuilding the profit structure and making this our utmost priority for the second half.
As you can see on the slide, we will focus on controlling and reducing fixed cost through better operating efficiency and reviewing overhead expenses. At some of our sites overseas, we've already been working on withdrawing or downsizing products with low profitability and accordingly cutting cost. We have also been reviewing R&D themes. Regarding supply chain reform, the focus is on reforming purchasing and distribution, as well as improving productivity. As for business structure reform, we will thoroughly review underperforming businesses and reorganize an optimized basis. A timeline is provided beneath initiatives showing when the effects are likely to materialize, but we hope to accelerate efforts where possible, especially regarding initiatives related to structural reform.
Last slide from me is on the growth drivers, which are making relatively steady progress. For the electronics business, we are expanding sales in the non-LCD field with the aim of diversifying revenue sources. The line graph shows the ratio of the non-LCD field sales. The semiconductor sales are struggling slightly. Heat-release materials for 5G and adhesive materials are driving the growth. In the second half, non-LCD field will account for more than half of electronic sales. In automobiles and transportation, we focus on growing the sales of high-performance interlayer films. The line graph shows a year-on-year increase in the sales volume of high-performance interlayer films. Q1 was the bottom. We are now observing solid signs of recovery. Head-up display application is driving the growth.
By winning new businesses and expanding the market share, we believe that the growth in Q4 will normalize back to the previous level, which was about 10% growth. In building an infrastructure, we are expanding the sales of thermal insulation and non-combustible materials. The year-on-year growth is indicated by the line graph, showing an extremely brisk progress. For the non-combustible materials business in particular, we have been able to generate synergy with SoflanWiz , a business that we had acquired. In my view, our measures for stepping up the growth prospects have proven to be effective, achieving the intended progress. This will be the end of my presentation. Thank you for your attention.
I am Toshiyuki Kamiyoshi, company President for the Housing Company. Let me brief you on the performance of the Housing Company. First, I'd like to summarize the first half of fiscal 2019.
In the first half, we achieved net sales of JPY 256.9 billion, with an operating income of JPY 18.6 billion. Both revenue and profit increased, thanks to the effort made in the first quarter to smooth out the quarterly performance fluctuation. Having said that, we were slightly short of the revised July guidance, which raised the original profit outlook to JPY 19 billion. The graphs on the right show the trend over order. For new housing, the July outlook was projecting a flat year-on-year growth, due to some repercussion from the natural disasters in some areas, Q2 was down 3% year-on-year. In total, the first half was a year-on-year dip of 2%, slightly falling short of the target. However, we were able to mitigate the impact of the tax hike compared to the drops seen in the market.
As for the renovation orders, we projected a 2% year-on-year growth, against which Q2 was down by 5% due to the impact of the tax hike and the natural disasters. Subsequently, the first half was down by 2% year-on-year. That said, for the second half, we have secured a backlog growth of 2% year-on-year. Despite adversities, including the impact of the consumption tax hike and the series of natural catastrophes, we continue to enjoy sales and profit growth. For the full year of fiscal 2019, we intend to achieve the operating income target of JPY 40.5 billion. Next slide covers the analysis of net sales and operating income by businesses in the first half. As shown on the left, net sales was JPY 256.9 billion, an increase of 4% from the previous year. Sales increased in all businesses.
The waterfall chart on the right explains the main factors behind the change in operating profits. The Housing business was impacted by the natural disasters in some parts of Japan, and the number of houses sold was held back to 89 units, 111 less than the original sales target of 200 units. As a result, the profit growth was muted to JPY 100 million compared to last year, despite improvements in fixed costs and product mix. On the other hand, the renovation business outperformed the plan by growing the profit by JPY 1.1 billion year-on-year, thanks to the sales growth driven by capturing the last-minute demand right before the tax hike, an improvement in fixed cost. With all of these combined, the operating income grew by JPY 1.4 billion year-on-year.
As indicated at bottom right, by promoting to level out seasonal sales fluctuation, we were able to bring forward some businesses into the first quarter and were able to minimize the impact of the natural disasters in Q2. Next, let me walk you through the plan for the second half of fiscal 2019. In the second half, we plan to achieve sales and profit growth by mainly growing the number of new houses sold. We will aim for JPY 21.9 billion, which will be a record high profit for the second half when achieved. For new housing business, we plan to make upfront investment for growth, including investment for township and community development project, which will be hedged by increasing the number of houses sold. For the renovation business, we will focus to achieve a quick recovery from the reactionary drop in demand after the tax hike.
As the graph at bottom left indicates, the sales target for the Housing Company is JPY 265.1 billion, up 2% year-on-year, or by JPY 5.2 billion. On the right is the analysis of the changes in operating income. In housing, we are projecting for a profit growth of JPY 100 million by achieving the sales target of 220 houses, which include the shortfall against the first-half target of more than 100 units. We will work hard again to even out the sales seasonality in the third quarter, just as we did in the first half, while taking necessary measures against natural disasters. For the renovation business, we are expecting a profit decline of JPY 500 million stemming from the reactionary drop in demand after the tax hike. For the frontier business in Japan, we are expecting a profit increase of JPY 400 million, mainly driven by the real estate business.
In aggregate, as a Housing Company, we are aiming for a year-on-year profit growth of JPY 100 million to JPY 21.9 billion, marking a new record high for the second half. Next, let me present our measures for capturing new housing orders. At top left is our market outlook. For the first half, the sales of steel-framed housing declined due to a greater than anticipated drop in the urban rebuilding demand. However, the demand from the first-time buyers was firm, mainly for the wood-framed housing and the company-owned land for build-for-sell housing. For the second half, we expect the drop in the urban rebuilding demand to run its course and moderate, anticipate the solid demand from the first-time buyers to continue, partially owing to the incentive policies provided by the government.
Based on that assumption, as indicated on the right, we hope to secure a flat order versus last year for the second half so that the full-year trend would be 99% vis-à-vis last year. To achieve the plan, we will execute initiatives shown at the bottom right corner. We will bolster the business with three growth initiatives, mainly augmenting the sales force, product offering, and land for subdivision housing strategies as we did in the first half. To be more specific, for the sales force strategy, we will continue as we did in the first half to actively expand the immersive experience-based showrooms to 25 in total. For the product strategy, with heightened awareness for mitigating the impact of natural disasters, we will focus on expanding the sales of new prominent products with enhanced smart resilience features, namely high capacity storage batteries and system for storing drinking water.
In the first half, we have been able to procure land for subdivision housing as planned. We expect the orders for land and subdivision housing to grow by over 10%. Let me also touch upon the renovation frontier and overseas business. As illustrated at top left, for the renovation business, we will focus on increasing the sales for the basic products. For the customers who have completed the feed-in tariff program, we will make the storage battery proposals. We will also push the Smart Heim Denki power trading service that was newly launched. In stepping up the sales structure, the strategy will be similar to the new housing business. We will roll out the immersive experience-oriented showrooms such as Famides Museum & Gallery to improve the efficiency of order taking. Top right are the details of the domestic frontier business.
We are projecting a sustained revenue and profit growth, which we enjoyed in the first half, mainly driven by the real estate business. Last part is the overseas business shown at bottom right. Due to the slow progress of order in the first half, we expect the full year order for fiscal 2019 to be flat. This will conclude my presentation on the Housing Company. Thank you very much for your attention.
I am Yoshiyuki Hirai, the Company President for Urban Infrastructure and Environmental Products Company, or UIEP. Let me update you on the business for UIEP. Looking back the first half, the prioritized products with disaster prevention, disaster mitigation, or easy-to-install features as their appeal made a significant contribution to the performance on the back of robust domestic demand. Net sales and operating income in terms of absolute value amount and profitability all renew the previous record highs.
We expect the prioritized products to continue to grow to renew the record high performance once again in the second half. Next page is the analysis of the changes in net sales and operating income. Revenue in the first half grew substantially in Japan, fending off the impact of the structural reform. Overseas, particularly in the U.S. and Asia, general purpose PVC sheets and industrial piping material struggled slightly, impacted by the cutbacks in general investments. Having said that, we have been able to significantly grow the products which we had intended to grow, such as the FFU products for railway sleeper application and PVC sheets for aircraft and medical use. As you can see from the waterfall chart on the right, we were able to grow the profit by JPY 1.7 billion, thanks to the sales quantity and composition factor.
This was mainly driven by the sales of prioritized products in Japan. The deviation from the revised outlook announced in July was caused by the overseas order trend, decelerating at a rapid pace from August, particularly in the U.S. We tried to offset that shortfall with the brisk domestic demand. The domestic demand was also impacted by the natural disasters in September. Let's also look at the second half on this page. As you can see, the projected revenue growth is a mere JPY 600 million. With some business divestments in the first half, the apple to apple sales in Japan would be JPY 114.2 billion. The overseas sales outlook is slightly lowered from the April plan due to some lingering effect on the cutback in general investments that I explained earlier.
The operating income will continue to be driven by the prioritized products in Japan, with the sales quantity and composition element contributing to a profit growth of JPY 1.6 billion. We made a minor revision from the April outlook as the anticipated recovery for the industrial piping materials for the plants looks like it will be pushed back a little bit. Let me now talk about the three strategic fields. For piping and infrastructure, the domestic piping materials for buildings in non-residential and public sector fields, such as for the renovation of the air conditioning system in school, is extremely robust and we are enjoying good sales growth. The order for rehabilitation pipes, mainly for the sewage systems, was conventionally concentrated in Tokyo, but now we are seeing the demand expand into the other major cities.
Therefore, we now have a structure in place to enjoy stable revenue growth as the demand outside of Tokyo would offset any extension of the installation work in Tokyo. Bottom left illustrates the trend with building and living environment. Although net sales is expected to come down slightly due to the business divestiture I mentioned earlier, and some reactionary sales drop in the second half after the consumption tax hike, the profitability is improving. For advanced materials, namely the sheets business, the general purpose PVC sheet sales is expected to decline slightly, but for aircraft and medical applications, the second half will enjoy growth, as was the case in the first half. The FFU products, especially for the railway sleeper application in the overseas market, have been adopted steadily by various clients and for fiscal 2019, we are projecting the sales to grow by 28%.
We have also been competitive with new product launches, having delivered 100 new items to the market in the industry where new product launches are quite rare. Our company's level of new product launches in the last four years have been highly appreciated by our distributors and partners. Going forward, we will definitely continue to deliver new products that exploit and fit the customers' latent needs so that the new products will eventually be our prioritized products for sales expansion and contribute in solving the environmental challenges as well. Let me elaborate further on the prioritized product using this slide. The growth curve is accelerated, with last year's sales going up by JPY 2.2 billion year-on-year, and this year projected to increase by roughly JPY 5.1 billion. This is partially driven by the budget increase related to the plan for national resilience and renewal demand for urban infrastructure.
There are also some key concepts that we are incorporating into our product, such as countermeasures against natural disasters like torrential rain or fire, anti-corrosion profile, easy installation to overcome labor shortage, and building resilient infrastructure. As the challenges we face get more grave, such as natural disasters caused by climate change or shortage of labor, demand for these type of solution-based products should increase. In that context, we would like to develop new products reflecting these keywords into a product concept. Although overseas is a mixed picture, depending on the different market circumstances, railway sleeper sales is growing, as well as the PVC sheets for aerospace and medical device applications. The rehabilitation pipe business is strong in Japan, and although the scale overseas in terms of value amount is still small, we are winning an increasing number of projects.
In that sense, we believe we can replicate the successful domestic business model overseas, where the country is facing similar challenges to Japan. That will conclude my presentation. Thank you for your attention.
I am Keita Kato, Representative Director and Head of Business Strategy Department. Let me update you on the medical business for the first half and the outlook for the second half. This is a summary for the first half results. Net sales and operating income in the first half were at the same level compared to the previous year, and the results were in line with the original projections. In the second half, we will expand the sales of the diagnostic reagents to achieve a big jump in the profit, so that for the full year we can reach a new record high profit of 10.5 billion JPY.
With the next medium-term business plan on the horizon, we continue to actively launch new products for growth acceleration and made some organizational changes with an intention to speed up the decision-making process. This slide shows the factors behind the changes in net sales and operating income. The diagnostic business has grown substantially, offsetting a decline in order for the pharmaceutical science business and operating income trended sideways from last year. We were able to contain the fixed cost spending and the operating income was flat over last year, which was pretty much in line with the plan. In our second half business plan, we expect to grow the sales. We intend to sustain a substantial growth for the diagnostic business, mainly with the upbeat overseas markets in the U.S., Europe, and China.
With the pharmaceutical sciences business, we project profit growth by achieving business recovery with the increase in the new order for active pharmaceutical ingredients. Here is the overview by respective business. Diagnostic business is showing steady progress both in Japan and abroad. We will also roll out initiatives to bolster the business structures and systems overseas. In China, the operation of the new Suzhou plant, which was slightly pushed back as we have been waiting for the approval from the authority, is scheduled to commence during the second half. We will also accelerate the initiatives in capitalizing on the newly acquired Veredus Laboratories to make further penetration of the Sekisui medical products and strike synergy on sales activities in the ASEAN region.
For the pharmaceutical science business, we will augment the order taking structure for the active pharmaceutical ingredients as well as to expand the CDMO business, which integrates CMO, the contract management organization business, with development capabilities. The last page from me illustrates the main products for the medical business. Please take a look at your convenient time. This will be the end of my presentation. Thank you very much for your attention.