Hello, this is Teiji Koge, President of Sekisui Chemical. Thank you for coming despite your busy schedules. I will explain the results for the first half of fiscal year 2018. Foreign exchange rate assumptions and results for the yen against the dollar and euro are as shown here. Here is the overview of first-half results. Net sales increased by JPY 20.8 billion. Sales was driven mainly by the automobile and transportation field and the HPP, High Performance Plastics Company, together with increased sales of high-performance products and positive impact from newly consolidated companies. Moreover, the UIEP, Urban Infrastructure and Environmental Products Company, expanded prioritized product sales, and the Housing Company increased sales volume of detached housing units. However, due to the impact from a series of natural disasters, net sales were under expectations that were announced in July.
Operating income decreased due to higher fixed cost related to investments for growth, higher raw material cost, and housing installation and construction delays caused by natural disasters. Operating income ended up JPY 2.3 billion lower than the forecast announced in July due to the impact from natural disasters. Ordinary income was JPY 900 million higher than planned due to foreign exchange gains, and net income overachieved plan by JPY 3.1 billion. The next page shows the results by divisional company for the first half. All three divisional companies were affected by the series of natural disasters and high raw material costs. However, the profit decline was contained to a small degree.
The July forecast was underachieved, as you can see on the right end of the chart, and the factors behind it are, for the HPP Company, the market that the building and infrastructure field is in experienced a slight deterioration. For the Housing and UIEP Companies, installation and construction work were delayed due to the impact of natural disasters. On this page, I will explain the results by divisional company on a quarterly basis. In the first quarter, we were in a phase when fixed costs and raw material costs were high due to advanced investments, which led to a JPY 3.2 billion decline in operating income on a year-on-year basis. Before the second quarter, despite the impact from natural disasters and high raw material prices, all three divisional companies were able to recover profit back up to about the same level as the previous fiscal year.
The HPP Company profit level bounced back to approximately the same level on a year-over-year basis in Q2 due to an increase in sales volume and improvement in product mix in the automobiles and transportation field, as well as life science field. The Housing Company was affected by natural disasters. Performance rebounded in the second quarter with both net sales and operating profit increasing, although it was affected by natural disasters and a big typhoon at the end of September, which was a period when new housing deliveries were concentrated. As orders progressed in line with plan, we have entered the second half with the balance of orders up by 3% year-on-year as of the end of Q2. The UIEP Company was affected by natural disasters too, both in Japan and abroad, especially in the overseas sheet business.
Despite these factors, Q2 performance has recovered steadily, mainly around the overseas FFU and sheet businesses. Under others, R&D investments were made in line with plan, and we have decided to make investments for stationary film type lithium-ion battery production capacity expansion. Here's the analysis of net sales and operating income for the first half. New consolidations, as I mentioned earlier, contributed to net sales by JPY 14.6 billion, but underlying sales grew by JPY 6.2 billion as well. Operating income was down by JPY 3.8 billion, reaching JPY 42.2 billion due to higher raw material costs and fixed expenses that could not be covered completely by sales quantity and composition and cost reduction. Compared again to the July forecast, sales quantity and composition was below plan substantially by JPY 3.3 billion. JPY 1.8 billion out of this amount is attributed to the impact from natural disasters.
From here on, I will explain the second half forecast and the revised annual plan. The FX assumptions are JPY 111 against the USD and JPY 127 against the EUR. Here, I will explain the outlook for market conditions, which are the assumptions applied to the second half plan. The dotted lines in each graph are what we projected at the beginning of the year, and the bold line represents the current outlook. In the electronics field, the smartphone market bottomed out in Q4 last fiscal year, which is the January-March period this year, and is gradually recovering. However, the first half fell short against beginning of year projections, with new smartphone launch delays being one reason. The second half is expected to recover. Automobile productions are expected to increase by 2% globally as projected at the beginning of the year.
For housing, we recognize more activity in the market heading towards the consumption tax hike. Little by little, we are already seeing pre-buying activity occur. Overall, although high raw material costs and trade friction are likely to have an impact, business conditions are expected to be in line with the first half. This page shows the second half revised plan for the divisional companies. We will strive for all three divisional companies to shift to higher sales and profits and aim for record high profits for the second half. We will work quickly to turn around and recover from the impact of natural disasters in the first half in the Housing and UIEP Companies and aim for sales growth. A further pickup in recovery will be our focus for the HPP Company, mainly by expanding sales volume and composition of the four strategic fields.
The next page shows the analysis of net sales and operating income in the revised second half plan. We hope to continue substantial net sales growth in the second half as we did in the first half. We will also strive to increase operating income substantially by minimizing the effects of higher fixed cost, mainly labor cost, and increasingly higher raw material costs through cost reductions and an increase in sales quantity and composition. Regarding sales quantity and composition, including the JPY 1.8 billion deferred portion from the first half, attributable to the impact of natural disasters, as well as an increased number of houses sold, and the realization of effects coming from the strategic investments in the HPP and UIEP Companies, we hope to achieve JPY 16.5 billion with the breakdown shown in the bubble, and ultimately reach the second half operating income plan of JPY 59.9 billion.
The respective divisional company presidents will share the details of the sales quantity and composition expansion measures in order to reach JPY 16.5 billion later. Here is the full year revised plan by divisional company. We will strive to increase sales and profits in all three divisional companies and achieve the beginning of year operating income plan of JPY 102 billion. Group-wide research and development investments for new businesses in other areas will be conducted aggressively in line with plan. Finally, under the full year revised plan for fiscal 2018, net sales is expected to go up by JPY 55.6 billion, reaching JPY 1,163 billion, and operating income is projected to reach JPY 102 billion. If achieved, this will be an increase of operating income for the tenth consecutive fiscal year, and we will also reach record high profit levels for both operating and net income.
Dividends are projected to increase for the ninth consecutive fiscal year at JPY 42 a share. I will skip the details regarding the progress under the medium-term management plan. This concludes my presentation. Thank you for your attention.
Hello, I am Keita Kato, President of the HPP High Performance Plastics Company. First, I'd like to talk about the first half fiscal year 2018 overview for the HPP company on page 17. For the first half of fiscal year 2018, due to higher fixed cost associated with new consolidations and the impact from raw material prices and foreign exchange rates, we were anticipating that the operating income ratio would decline by a percentage point. The results are within our expectations.
For the second half of the year, even after accounting for the aforementioned factors, with the recovery in sales quantity and composition in high performance products, we will strive for JPY 32 billion operating profit with the operating income ratio at 15%. The next page shows the analysis of net sales and operating income for the first half. Despite high raw material costs and fixed expenses that were recognized upfront during this period, sales quantity and composition generally increased steadily. We were able to reduce cost more than planned as well. However, in the building and infrastructure field, CPVC, chlorinated polyvinyl chloride, in particular, suffered in markets such as the Middle East and India, which led to an underachievement of the operating income plan. However, like mentioned earlier, for the second quarter, we have achieved operating income that is about the same as the previous year.
Net sales on the left-hand side graph grew by JPY 20 billion year-on-year. New consolidations accounted for JPY 14.6 billion, and the underlying business grew by JPY 5.4 billion. Looking at the analysis of operating income on the right, sales quantity and composition came in JPY 1.3 billion lower than the July outlook. The impact from natural disasters accounted for JPY 400 million out of this amount. This, combined with other market factors such as CPVC and others, added up to JPY 1.3 billion. Part of the JPY 1.3 billion is expected to shift to the second half of the fiscal year. Selling price was short of the July plan by JPY 500 million due to some products that are priced depending on the competitive environment, as well as delays in recognizing the positive impact from price increases. We view that this shortfall was hedged through cost reduction.
Fixed costs, such as labor cost due to strategic investments, were smaller than the July outlook by JPY 300 million. Ultimately, operating income was -JPY 1.3 billion year-on-year. At the bottom, second quarter results are shown on a standalone basis. Q2 operating income ultimately was about the same as the previous year. Next, regarding the plan for the second half, looking at the overall situation first, we will have the third line at the interlayer film factory in Mexico fully contribute. As mentioned earlier, in the electronics field, the smartphone market had some delays from Q2 pushed out to Q3. Hence, we expect the electronics field to contribute during the second half. We are also expecting a substantial increase in sales quantity and composition due to strategic investments around production capacity and M&As.
We are expecting raw material costs to increase further, impacting us by JPY 1 billion. We plan to hedge this through cost reduction as much as possible. Out of the net sales increase of JPY 12.9 billion, new consolidations include SoflanWiz and Veredus. Polymatech is not considered new any longer as full consolidation started in the second half last year. Looking at the analysis of operating income on the right, with the full contribution of the new interlayer film line in Mexico, the improvement in the electronics field compared to the first half and last fiscal year, as well as the diagnostics business being firm, we believe that sales quantity and composition can grow by JPY 8.8 billion year-on-year. As of April, we were expecting JPY 7.3 billion, but due to the recent market conditions, we have revised the outlook up to JPY 8.8 billion.
We would like to ensure that we achieve these numbers so that operating income can grow by JPY 3 billion year-on-year to JPY 32 billion. Next, I'd like to talk about the four strategic fields. The auto transportation field and life science field is progressing in line with plan. The building and infrastructure field is struggling somewhat due to deterioration in business conditions. Incidentally, the contribution coming from acquisition made in the past year or two, including Polymatech, are shown in the lighter color with red numbers. Polymatech in the electronics field, as well as the automobile and transportation field, and SoflanWiz in the building and infrastructure field, helped each of the fields manage to grow sales. Both companies were acquired at a very good timing. If I may add some details for each field. In the electronics field, smartphone-related demand was lower than beginning of year expectations in Q2.
It seems that Q3 and 4 are better than last year. We are also seeing firm demand for TV-related products. Hence, the electronics field overall is expected to improve in the second half compared to the first half. Semiconductor packaging-related products are expanding steadily too, a business area where we reinforced the portfolio. In the automobiles and transportation field, global demand is firm. Recently in September, demand declined in China, that is already factored into the second half plan in a relatively conservative manner. High-performance product sales quantity continues to increase, with growth outstripping that of the automobile market due to increased adoptions in different parts of the vehicle. In building and infrastructure, CPVC demand slowed down in the Middle East and Korea, and also faced fierce price competition in India.
However, for the second half, as we have been able to obtain UL standard certification for our products, which has a high added value, we will strive to make up for the decline in business by increasing market share in Central and North America. The integration with SoflanWiz is proceeding steadily regarding fire-resistant materials. In life science, diagnostic reagents are growing in international markets, namely the U.S. and China. As for Veredus, a project expected to materialize during the second quarter was deferred into the second half of the year, and the contribution from Veredus in Q2 turned out to be zero, but will be recognized instead in the second half. This page is about enhancement areas. The top part of this page with the bars shows enhancement areas where portfolio reinforcement measures are being taken under the current medium-term plan.
In electronics in particular, it used to be just about LCDs for smartphones, but we have now added Polymatech, which covers both the electronics field and automobiles and transportation field. Portfolio transformation and reinforcement has been progressing steadily ever since. For the building and infrastructure field, CPVC may be struggling, but synergies with SoflanWiz regarding non-combustible urethane and other products have been accelerating. For life science, if you compare the half-year performances with the same period in the previous fiscal year, it is evident that the expansion of enhanced areas is proceeding. The bottom half of this slide are measures in preparation for the next midterm plan. These are areas where we strive to enhance cooperation. Especially in car electronics, as part of synergies with Polymatech, we have decided to start production in Europe for heat release materials, namely thermal grease for European vehicle lithium-ion batteries.
In building an infrastructure, synergies are proceeding steadily with SoflanWiz. In life science, following our investment into PeptiStar, we are steadily preparing for the future with investments into Veredus in Singapore and SciFuze. Strengthening developments was a theme raised under the previous midterm management plan, and regarding new products and businesses on the right-hand side, we have been able to accelerate new product developments. With the second half of last fiscal year being the bottom, new product sales are steadily expanding, and we are now in a position to be able to expect linear growth in 2019 onwards. This concludes my presentation. Thank you for your attention.
Hello, I am Shunichi Sekiguchi, President of the Housing Company. I will explain the business conditions for the Housing Company. The first part is the overview of fiscal 2018 first-half results.
There are two bullet points in small letters, and the first point is what was mentioned earlier. Due to the earthquake in Osaka, as well as typhoon number 24 at the end of September, we failed to achieve the plan for numbers of houses sold. The other point is, despite the situation, if you refer to the graph at the bottom right, new housing orders in the first half came in line with the plan I discussed in July, which was a 3% increase year-on-year. Renovation orders were projected to decrease by 1% year-on-year as of July, but ended up being flat, which was better than expected. As a result, the order backlog going into the second half is +3% year-on-year. You could see on the last page that on a value basis, we started the second half with orders up by JPY 7 billion.
Profits declined in the first half as a result, we hope to achieve full-year profit plans with this order backlog in the second half. Here's the analysis of net sales and operating income for the first half. Net sales are shown on the left. Next, please refer to the right, where the analysis of operating income is shown. Operating income decreased by JPY 600 million from JPY 17.8 billion to JPY 17.2 billion. The plan did not work out. It is largely due to sales factors in the Housing Company. Against the plan of JPY 1.8 billion for the interim period, we only achieved JPY 400 million. Sales unit growth was only 32 units, short of 119 units or close to 120 units compared to plan. This was mainly due to natural disasters, as mentioned earlier.
We made efforts to mitigate the impact by making efforts to reduce sales promotion expenses under fixed costs, this helped operating income for the Housing Company that was down JPY 1 billion year-on-year. Order backlog for renovation was low at the beginning of the year, sales recognition from some contracts from July and August materialized during the first half. We also did structural reform on a large scale in July. We transferred about 200 employees in the renovation business to new housing and real estate, this fixed cost reduction enabled the renovation business to achieve its targets. The frontier business is trending in line with plan, both in Japan and overseas. As you can see at the bottom of the graph, first quarter operating income decreased by JPY 1.2 billion year-on-year, the second quarter earnings turned positive, improving by JPY 600 million.
Here's the plan for the second half of FY 2018. There are two main points. The first point, as shown at the top of the slide, is that we are projecting a substantial increase in profits in the Housing Company, owing mainly to an increase in the number of houses sold, this is how we will strive to achieve the JPY 39.5 billion operating income plan. Moreover, there will be a consumption tax hike next year, the deadline to conclude the purchase contract under the current 8% tax regime is April 1st, 2019. We are anticipating some pre-buy demand to occur. The second point is that we would like to ensure that the additional demand is captured and the order backlog increases to support us beyond FY 2019.
Based on what I said, whether it is net sales shown on the left or operating income, new housing is expected to grow substantially, contribute at both levels. Sales of housing is projected to increase by 270 units, we hope to work hard because there are deliveries that have been pushed back to the second half due to natural disasters in the first half, the order backlog is higher on the back of better sales. Fixed costs are expected to slightly increase, however, as we suppressed sales promotion expenses during the first half as we would like to be a little bit more aggressive in the second half. Furthermore, I will talk about this in detail later, we will be increasing the number of our salespeople for the first time in 10 years.
As for the renovation business, we will continue to promote efforts aimed at strengthening earnings power by reducing fixed cost. The plan for the frontier business is shown here as well. The main driver will be higher new housing sales as we strive to achieve the second half operating income targets. This page shows new housing orders, which is a leading indicator in considering how we will achieve the second half profit plan. In summarizing the first half and looking into the market for the second half, please first look at the chart on the right-hand side. By housing type, orders increased in a well-balanced manner with steel frame housing increasing 5% year-on-year and wood frame housing by 6%. We were able to grow total housing orders by 3%, despite orders for housing complexes decreasing by 16%, thanks to detached housing order growth.
Going back to the left-hand side, we successfully secured visitors by reinforcing our sales capabilities. Second quarter visitors were up by 13%. Considering that visitors were up by 3% in the first quarter, the improvement has been quite substantial. Looking at these trends, we are anticipating some pre-buy demand to occur in the second half, although the surge may not be as significant as the period before the previous consumption tax hike. Third quarter and fourth quarter orders are projected to grow by 5% and 7% respectively, adding up to 5% growth for the second half. There are three key measures in order to achieve order growth. The first is product strategies, namely products with high cost performance in smart houses. The second measure is land strategies, and the third is about the sales force.
For product, we will launch three new products in the second half like we did in the first half. As for land, at the end of the first half, we had plenty of inventories that are 8% higher than the previous fiscal year. We need to ensure that we secure sales and move stock. The sales force grew by 6% year-on-year. As shown on the final slide, the sales force increased by about 150 people. We will leverage the sales force so that orders grow. Finally, here are the renovation and frontier businesses. As the renovation business went through structural reform efforts, we would like to go back to basics and sell basic products. Orders increased by JPY 1.5 billion from JPY 46.2 billion to JPY 47.7 billion. As mentioned earlier, sales is expected to stay flat.
We would like to ensure that we can balance orders going into next fiscal year. In the frontier business on the right, which is mainly a real estate business, we integrated the Tokyo, Nagoya, and Osaka real estate companies last fiscal year. We have already seen effect of the integration materialize, so we will continue to focus on the core business, which is growing rental units under management as well as operating income per rental unit under management. Finally, for the overseas business in Thailand, as the impact from the death of the king has now dropped off, we are seeing orders grow steadily. Like last fiscal year, we expect presumably that the business will perform in the black this fiscal year once again, which will allow us to generate profits two fiscal years in a row. This concludes my presentation. Thank you for your attention.
Hello, I am Hajime Kubo, President of the Urban Infrastructure and Environmental Products Company. Let me start with the recent business conditions. First half operating income declined due to the effects of factors such as natural disasters. However, for the full year, we aim to reach record high divisional company profits for the third consecutive period as we have launched new products according to plans and due to the recovery in the sheet business overseas. Looking at the details of first half results, net sales fell short of plan by JPY 1.1 billion, and operating income was JPY 500 million year-on-year. The overseas business exceeded plan by JPY 500 million, but the domestic business underperformed by JPY 1 billion. The plan for sales quantity and composition was originally JPY 600 million, but ended up at minus JPY 300 million, which created a JPY 900 million difference against plan.
This is due to challenging sales in August and September, as we were affected by natural disasters and delays in construction projects. This had an impact on sales quantity and composition. Selling price, on the other hand, was able to hedge the rise in raw materials as planned. We tried to make up for profits by reducing fixed costs, but the shortfall of sales quantity and composition was too substantial that operating income ultimately decreased year-over-year. For the overseas business marginal profit, we were projecting plus JPY 1.1 billion in July, but results were plus JPY 800 million, JPY 300 million below plan. Mr. Koge mentioned earlier, in late August, a flood disaster occurred close to SPI in the U.S., which inundated half of the factory. Shipments stopped for August and September and were postponed to October upon gaining consent from customers. This led to a JPY 300 million impact.
We are confident that we will be able to recover back the business in the second half. Next, let's look at the analysis of the second half plan. Net sales is projected to reach JPY 132.5 billion, up JPY 5.3 billion year-on-year. Operating income is expected to increase by JPY 2.2 billion, with the domestic business contributing by plus JPY 1.4 billion and the overseas business by JPY 900 million. Regarding sales quantity and composition, we will aim to increase sales by focusing on recovering back sales from shipment delays that happened in the first half and steadily increasing priority products. Raw materials are projected to be higher than our initial plans, but we aim to hedge this increase through raising prices as well as reducing fixed cost more than planned.
The same line of thought is applied to the overseas business too, but the deferred portion from the first half has been added on entirely onto plan. Based off these assumptions, we will strive to reach operating income of JPY 12.2 billion in the second half. Next, I will talk about our plans regarding the three strategic fields. For piping and infrastructure, we would like to ensure that we secure enough general products to sell and also continue to grow sales of priority products. The pipeline renewal business remains robust in both Japan and overseas, and we feel that it has changed to a steady profit-producing business. As for overseas, the investment in Vietnam has already started to contribute from the first half. We will aim to grow sales throughout the year on a year-on-year basis. The aircraft market is recovering steadily.
The sales forecast for the second half is quite high as it includes the shipment delays from the first half, but we believe it is an achievable target. We have also made capacity expansion investments that are expected to start contributing from around the fourth quarter. We would like to grow sales by leveraging the investment impact. FFU railway sleepers are progressing steadily as we have penetrated the U.S. after Europe. We are also currently investing in our factory, the Ritto factory in Japan, and expect effects to start showing from Q4. With these measures in place, we hope to expand sales for this business as well. Regarding building and living environment on the bottom left, the decline in housing complexes is expected to hit us hard. Therefore, we've decided not to expect sales growth in our profit plan.
Specifically, we will aim to be more profitable by engaging in structural reform in order to achieve the profit plan. We will strive to grow sales in the overseas business overall, on the other hand. It was mentioned earlier that a JPY 5.3 billion sales increase is anticipated for the entire second half, but the overseas business, as you can see on this slide, is projected to contribute by more than JYP 4 billion of that growth. The U.S. is expected to grow the most as the sheet business, which was down last year, will recover, and the deferrals from the first half have been accounted for. Stable sales quantity growth is expected for the other regions. Here is the final slide about prioritized products. Growing the sales ratio of prioritized products will serve as a profit driver in our divisional company.
We will aim to exceed 18% in the second half of this year. We will also aim to steadily introduce about 30 products every year. In the first half, we were able to introduce 15 products as planned and revised up the plan for the second half to 20 new products. Strategies for the overseas business are shown here. For the pipeline renewal business, we now feel that improvements have come to a point where all of our overseas companies can turn positive, and we look forward to the future growth potential. We have also made progress on the FFU strategy by generating results in the U.S. Finally, strategic investments in platform efficiency is progressing in line with plan. This concludes my presentation. Thank you for your attention.