Yes, this is Nishida. Thank you for taking the time out of your busy schedule to join us today. Before I begin the presentation, I would like to first provide an update on the impact of the earthquake that hit Kumamoto Prefecture on July 28th. No injuries or casualties have been reported within our group, and damage to our facilities for production and sales has been minor. At present, no material impact on our business activities or financial performance has been identified. I will now present our results for the first quarter of FY 2026 and our outlook for the first half. Page one shows your FX assumptions and the actual results. The yen is currently trading at a weaker level than assumed at the outset of the fiscal year.
The OP sensitivity to FX is also indicated here. One yen depreciation against the U.S. dollar would uplift the OP by approximately JPY 500 million. Page two provides an overview of our Q1 results. In the first quarter, net sales increased by JPY 27.8 billion year-on-year to JPY 333 billion. Operating profit grew by JPY 4.3 billion year-on-year to JPY 25.5 billion. As indicated by the blue stars, net sales, OP, and ordinary profit all reached record highs. Profit attributable to owners of the parent decreased slightly due to the recognition of extraordinary losses. Page three shows first quarter net sales and OP by segment. In the first quarter, three segments recorded increases in both net sales and operating profit, with HPP and UIEP reaching record highs. For Housing, net sales and OP were down in Q1, which was broadly in line with our plan.
We began the fiscal year with a policy of, in principle, passing through the higher raw material costs stemming from the deteriorating situation in the Middle East. The effort is making good progress. We also believe that customers and distributors try to secure inventory, resulting in some sales being brought forward from Q2 and beyond. Although we do not disclose quarterly profit plans, group-wide net sales and OP both exceeded our business plan for the first quarter. The perovskite solar cell product shipments commenced as planned. The two projects indicated represent our track record to date. The breakdown of the other segment is as shown. I will explain the performance of each segment in more details later. Page four illustrates market trends and our second quarter outlook. Global auto production was down year-on-year as we had expected in Q1.
In the second quarter, it is expected to fall below both our assumption and the prior year level. Smartphone shipments fell below our assumption in Q1. They are expected to decline further in Q2 and to be significantly below both our assumption and the prior year level. The upper right chart shows customer traffic in the Housing business. Although inquires increased, overall customer traffic has remained below the prior year level. We expect this trend to continue in the second quarter and beyond. Despite some signs of recovery in new housing starts from the dip in FY 2025, we expect the gradual downward trend to continue. Domestic naphtha prices rose sharply in Q1. Are expected to moderate somewhat in the second quarter. Page five presents our outlook for the first half.
Group-wide net sales are projected to reach a record high of JPY 690.5 billion, up by JPY 60.7 billion year-on-year. OP is projected to grow by JPY 2.6 billion year-on-year to JPY 48 billion. Reflecting the Q1 results, we are revising up our initial forecast for net sales and OP in UIEP and for the whole group. Regarding constraints on the procurement of raw materials and components resulting from the Middle East conflict, we do not anticipate any material issue during the first half. Page six shows our first half outlook by quarter and segment. In Q1, we observed efforts to secure inventory by the customers and distributors, bringing forward some future sales, particularly in HPP and UIEP. We were able to meet this demand despite constraints on the procurement of raw materials and components.
In Q2, we expect a certain degree of demand adjustment and a pullback following the first quarter increase. Accordingly, group-wide OP was up by JPY 4.3 billion year-on-year in Q1, while it is projected to decrease by JPY 1.7 billion year-on-year in Q2. Page seven provides an analysis of the factors underlying our first half outlook. As shown on the left, we project net sales to grow by JPY 60.7 billion year-on-year. On the right is a waterfall chart for OP. In April, we estimated that the surge in raw material prices resulting from the Middle East conflict would have an impact of roughly JPY 14 billion. The actual impact was broadly in line with our estimate, but we were able to maintain the spread by promptly passing on the cost increases through higher prices.
The volume and product mix is expected to have a positive impact of JPY 7.2 billion year-on-year. Despite some adjustment expected in Q2, the first half assumption. Sorry, the first half performance would be broadly in line with our plan. Overall, reflecting the FX impact and fixed costs being kept below plan, OP is projected to go up by JPY 2.6 billion year-on-year to JPY 48 billion, an upward revision of JPY 1.6 billion from our initial plan. Page eight illustrates our first half forecast and shareholder returns. As explained, we project net sales of JPY 690.5 billion and operating profit of JPY 48 billion. Ordinary profit is projected to increase by JPY 0.3 billion year-on-year to JPY 49.3 billion, and we are revising up our guidance accordingly.
The net profit guidance remains unchanged from the plan announced in April. As planned, we will pay an interim dividend of JPY 40 per share. Now, Page nine. From here onward, I will explain the result by segment. First, the first half forecast and analysis for the HPP Company. On the left, the bar graph, net sales are projected at JPY 255.2 billion, up JPY 31.7 billion year-on-year. On the right is the analysis of year-on-year change for OP. Covering greater than anticipated raw material price surges with improved selling prices and cost reductions, we project OP of JPY 30.2 billion, up JPY 1.8 billion, in line with plans. Moving to page 10, overview of the three strategic fields. First, electronics. In the LCD field, smartphone demand fell below expectations, but large display demand remained firm.
In the non-LCD field, driven by robust demand centered on semiconductors, binder resins for MLCCs and sulfur process materials grew steadily. In the middle, the mobility field. Impacted by the automotive market stagnation, NHPP, including design interlayer films, was slightly sluggish. Interlayer films for head-up displays remained firm, projected to exceed 100% year-on-year in the first half on a sales volume basis. Meanwhile, for aeronautical components, aircraft demand is recovering, and growth in new fields like drones and air mobility remains steady. On the right, in industrial, we continue focusing on acquiring new orders like sensors and care materials and expanding sales of labor-saving and environmentally friendly products. Note that we believe a certain portion of demand in this field was brought forward. Page 11. First half forecast and analysis for the Housing Company.
On the left, net sales are forecast at JPY 276.7 billion , up JPY 18.1 billion year-on-year. On the right is OP. Although OP drops in the Housing Company, mainly due to fewer houses sold, growth in renovation and residential will drive overall first half sales, and the profit increases to JPY 16.5 billion , in line with plans. Moving on to page 12. Top left shows new housing orders. In the first quarter, both the number and value of orders progressed largely in line with plans. We'll work to increase housing units through expanding sales of new products, expecting to achieve first half plans. For orders by construction type, as shown in the middle, we expect increases in both order value and units for both detached housing and apartment buildings.
Top right details the consolidation of construction management functions of three group companies in Hokkaido into a new company released early this month. This aims to label construction workload fluctuations, share know-how, and train technicians. Bottom left, renovation orders grew steadily, mainly on the back of periodic diagnosis. In the middle, for the real estate, Ben House, which has been consolidated from FY 2025 fourth quarter, contributed to sales and profit. Bottom right, town and community development sales progressed steadily, mainly in the Tokyo area. Page 13. First-half forecast and analysis for the UIEP Company. On the left, net sales are forecast at JPY 121.5 billion , up JPY 9.4 billion year-on-year. On the right is OP analysis. In the first quarter, sales were brought forward mainly for piping materials, significantly boosting sales volumes and mix. We firmly secured the margins against the raw material price surges.
We revised the forecast upward, projecting first half OP of JPY 10 billion , up JPY 1.9 billion . Moving to page 14, the three strategic fields. Top left, in the pipe systems, as mentioned, we brought forward first quarter sales and anticipate demand adjustment from second quarter. Plant piping demand remains strong in South Korea and China. Top right, in building and infrastructures composite materials, FFU railroad sleepers are progressing smoothly, expanding adoption in Europe. Bottom left, in infrastructure renovation, domestic pipeline renewal steadily captured renewal demand from nationwide surveys. Bottom right shows KPIs for priority measures. Prioritized products grew steadily. Overseas sales also expanded. Growth of growth driving business is as shown. Page 15. Finally, the medical business. Net sales are forecast at JPY 45.7 billion , up JPY 1.4 billion year-on-year. On the right is OP.
Thanks to ongoing profitability improvement measures since last year, fixed cost control is progressing. Despite sluggishness in some markets, supported by forex gains, we expect OP of JPY 4.8 billion, up JPY 300 million, in line with plans. Page 16, overview by business. Top left, in the diagnostics Japan, despite weak market conditions overall, we focus on expanding market share by promoting sales.
Top right, diagnostics overseas expect sales growth through expanding sales via stronger alliances in Europe and the U.S. and launching new products. In China, the diabetes segment grew, contributing to sales expansion. Bottom left, despite timing differences in order receipt for pharmaceuticals and fine chemicals and the drug development solutions, sales are expected to stay on par with last year. Bottom right shows net sales of infectious disease testing kits. Trends in both first quarter and the first half are largely in line with expectation. This concludes my explanation. Thank you very much.