Thank you for your kind introduction, and good afternoon, ladies and gentlemen. This is Wakatsuki Ku, President of Nippon Paint Holdings. Thank you for joining us today. I would like to explain the outline of financial results for Q2 FY2021. I would like to ask for your kind understanding once again that this call is being livecast on our website with simultaneous interpretation into English.
So I would like to explain following the material. 1st, Q2 summary. We achieved record high revenue and operating profit on a tonshein basis in Q2 against the backdrop of raw material cost increase and continued impact of COVID-nineteen. The differences between Tianxin and non GAAP are mainly attributable to newly consolidated businesses and the ForEx impact. Asia and JV related expenses include one off expenses of PPA as part of impact of newly consolidated businesses.
Though non GAAP revenues significantly increased, Q2 and Q3 face difficulties in terms of profitability as raw material cost increases while low priced inventory decreases and the impact of price hike is not fully contributing yet. However, we nevertheless achieved increased profit. China seems to have continuously expanded market share for both DIY and project and did extremely well. However, because of the huge impact of soaring raw material cost, profit decreased year on year. As competition is becoming more fierce in projects, I should not be optimistic.
But on the other hand, DIY is making strong growth and increasing its market share just like projects. Turning to Asia, excluding China, although Malaysia and Singapore saw resurgence of COVID-nineteen in June, revenue in these countries grew significantly as the same period last year was the toughest. The same applies to Japan, though the impact of COVID continues. Japan recorded increased revenue and increased profit compared with the same period last year. Newly consolidated Indonesia continues to have excellent performance despite the impact of COVID-nineteen and based on reference numbers, has achieved increased revenue and profit and continues to achieve extremely high profit margin.
Having said that, however, we need to keep paying close attention to COVID-nineteen. The impact of material cost increase is strong across the board. And as I said in Q1, low cost material inventory procured in last year are running low and price hikes and cost reduction efforts take time to have effect. Therefore, Q2 and Q3 are tough in terms of profitability. But on the other hand, we will be able to implement a price increase in regions where we enjoy a big market share and in second half with an assumption that material costs will not increase that much anymore, decline in margin will be limited.
Then increase in revenue will start contributing in flow. Page 4, please. In Q1, as I said in Q1, I would revise the guidance, if necessary, taking into account the raw material cost situation and revenue trend. There are still many uncertainties such as the pandemic and material cost based on a set of assumptions. We revised both revenue and operating profit guidance.
We are expecting to exceed JPY 1,000,000,000,000 revenue and JPY 100 billion operating profit, renewing the record. Factors for revision are as shown here. And we believe we will be able to steadily expand market share, though the impacts of material cost increase will remain. We are renewing our confidence about our capability to grow. We are also drastically reviewing head office expenses as stated in our medium term plan to become fully prepared to achieve the targets set out in our medium term plan.
And that is what we promised when myself and our Co President, Tavi, took the office. So we are making efforts in order to be fully prepared to achieve that goal. Page 5, please. So this explains about raw material cost situation. No surprise that China was the first to be affected, and its Q2 margin was very impacted.
Overall, gross profit declined vis a vis last year and Q1, and such countermeasures as price increase and SG and A cost reduction have been implemented. So full year gross profit shall not decline this much. But we cannot be complacent in Q3 either, but there is a possibility that material prices will peak out and our price increase will start to work in favor in full. So things will be manageable and our full year forecast is based upon that assumption. As for the topics, launch of film business, as announced in July, had many positive reactions, and this will provide new functions and additional value based on technology, plus it will contribute to solving such social issues as CO2 reduction.
So we are determined to continue to work hard for such products and areas. Regarding prime market, it is as announced previously.
Page 7 shows that we proved that our Protectant brand product are effective in suppressing the novel coronavirus through our joint research with the University of Tokyo. We will continue with the joint researches like this targeting practical application. Page 8. We have resolved and announced the dissolution and liquidation of our former European headquarters, Nippon Paints Europe. This is a part of a business restructuring we had announced on April 1 and has nothing to do with the transfer of the European business, which will be explained on the next page.
NPAE in EPOG Paint Automotive Europe, Boling and Kemper's former German entity on the diagram is already operating as a de facto European headquarters. And the purpose of the liquidation is to reduce the number of layers, and we decided to liquidate NPE. With the liquidation, we will recognize deferred tax assets after application of deferred tax accounting, which results in a decrease of income taxes of JPY 3,600,000,000. Now NPTR, Nippontein Turkey, EPOIA, is not under NPAE or NPE. And through this restructuring, they'll go directly under NPAE and will be operating directly under NPHD.
Such structure will continue and therefore is outside the scope of NPAE transfer to Woodland. Now Page 9 and Page 10. This again was resolved and announced today. Let me explain in details. NPAE and BNPA in India, the Nippon Paint Automotive Coatings and NPE, which operate the automotive coating business and recorded impairment losses in the fiscal year that ended in December 2019.
This is the Berger Vipo Paint Automotive Coatings is a joint venture with Berger. And in addition to these 2 automotive coating businesses, we have NPI, Nippon Paint India that runs construction paint business or decorative paint business. These three companies will be transferred to Wubham. These 3 companies are suffering from impacts of the pandemic, increasing raw material costs and there's been changes in the market and the competitive landscape. So some of these issues are specific to each company and others are common.
And to realize sustainable growth and profitability, since there are not issues related to just this fiscal year's performance, we believe that there is a need for fundamental business restructuring and investment. And for us, our for Nippon Paint Holdings to make significant investment will place short term financial burden, while future uncertainties would remain. So we have considered if the restructuring is to be done within our group, which is a listed company. In the process of consideration, we had discussions with Whitlam Group, who is a major shareholder of the company, and the idea of transferring the 3 companies to the group came up. We thought about 4 points, which are first point is additional investments and expenses incurred will be borne by Putnam Group.
And secondly, once there is a visibility in the rebuilding of the businesses, we will have an option to buy back these companies. However, we will not be obligated to do so. And thirdly, Urem Group will not transfer the businesses to third parties. And fourthly, a transfer will be in fair value. Once these four conditions were met, Nippon Ping Group will be able to maintain its presence in the global automotive market as well as presence in the Indian automotive market while keeping strategic options for our future.
At the same time, since these three companies are expected to make losses, So therefore, with the transfer, we will be able to make contributions to the increase in net income as well as EPS. So we decided that the transfer is reasonable from the perspective of the protection of minority shareholders and maximization of shareholder value, which is our mission. There will be a change to the capital relationship. However, importance of European and Indian region for our group will remain unchanged. And we will hold the core option, right, to buy back the 3 companies in the future.
And in addition, the management and business operations of the 3 companies will be entrusted by the Woodland Group to us, and we will continue to manage and operate the 3 companies, and the companies' names will also remain unchanged. So therefore, we can minimize the impact to our customers. In terms of buying back, we have decided that will be done in fair value. And in the discussions that we had with Woodland Group, through this deal, they are not expecting to make any profit. And even if we were to exercise our option, they are not expecting to make any profit through the transfer, which has already been confirmed.
The impact on consolidated earnings is a rough estimate based on the estimate values of the 3 companies. These numbers may change such as ForEx assumptions. However, consolidated forecast of the revenue of JPY 1,000,000,000,000 is after deduction of the revenue of over JPY 10,000,000,000 in revenue as shown here on the slide. The transaction will be with a major shareholder of the company. Therefore, we have formulated a special committee that consists of 3 independent directors and had deliberations and resolved without Chairman Gou.
It's been confirmed that this transaction is reasonable and sufficiently protects the benefits of the minority shareholders. The confirmation was made by the special committee and was approved. For this page and the pages that follow, I will lead them to QA. Let me just give you a supplementary explanation on Page 16. On non GAAP basis in Q2, as I said earlier, our operating profit increased by JPY 1,000,000,000 a bit over JPY 1,000,000,000, which was a big adjustment on Tianxin's number.
The main reasons for the difference are explained in details in the appendix, but let me briefly explain. First of all, there was the newly consolidation of our Indonesian business, positive impact of JPY 3,200,000,000. And for onetime impact, PPA expenses in Indonesia, negative JPY 1,500,000,000 and ForEx JPY 1,800,000,000 is expected. And Chinese subsidy, about JPY 400,000,000. And for business restructuring in Japan, a little over JPY 1,000,000,000 having negative impact.
As a result, we have made the adjustment to the expense of JPY 5,000,000,000 that I explained in the beginning of the fiscal year was recorded in the first half together with expense, mainly M and A related expenses of JPY 2,600,000,000, which was recorded in Q1. So all of these onetime expenses have already been recorded. So we are talking about JPY 1,102,000,000,000. And as you can see, the total amount of onetime expense is shown on the slide. This concludes my presentation, and I would now like to entertain your questions.
Thank you very much for your kind attention.