Hello, everyone. I am Masahiko Mori, President of DMG Mori Company Limited. I'd like to report the financial results of the first half of 2021. Here's today's contents. First, I will talk about the financial summary of the first half of 2021. First half order intake was JPY 218.4 billion, increased by 61% year-on-year. The quarterly order intake was JPY 117 billion, doubled from the Q2 in 2020.
It was also significantly higher than the original plan of about JPY 100 billion. Machine order backlog remarkably increased, too. Accordingly, we revised the full year forecast upwards. I will explain the detail later. Although it is still not sufficient, we plan annual dividend of JPY 30 per share, increased from the original plan of JPY 20. JPY 10 for interim and JPY 20 for year-end dividend. We issued convertible bonds of JPY 40 billion.
With new capital, we are accelerating carbon neutral solutions and growth in China, U.S.A., and other emerging markets so we can meet the demands in a timely manner. Concerning our climate change actions, we declared adherence to TCFD. We will proactively disclose relevant information in the future in accordance with the TCFD proposal. First half's consolidated order intake was JPY 218.4 billion.
Sales revenue, JPY 178.2 billion. Operating profit, JPY 10.2 billion. Earnings after tax, JPY 6.1 billion. Although we have not reached the level of 2019, we have seen a rapid recovery. In addition to the upward trend of order intake, there was a positive impact from the weaker yen against euro. We will utilize this opportunity to further reinforce our financial structure. Operating profit bridge.
The positive factors were JPY 5.1 billion by higher business volume, JPY 2.5 billion by foreign exchange gain, JPY 1 billion by gross margin improvement, driven by high value-added solution with higher sales price per unit. The marine freight has spiked and led to increased cost of JPY 800 million. The first half operating profit was JPY 10.2 billion. Quarterly results. The sales revenue in the Q2 was JPY 97.1 billion, a little less than the same quarters in 2018 and 2019.
You can see a significant improvement in operating profit. Stringent management in SG&A and continued efforts to improve productivity since last year have borne fruit. We plan to increase personnel costs to reward our employees' hard work, but I'm confident that we can minimize the impact of cost increase with our reinforced financial structure. Cash flows.
Due to the increased order intake, we have received more down payment, especially in Europe, Asia, China, and the U.S. In China and Asia, we only count order intake after receiving down payment. It is one of the reasons for better cash flows. In the Q2 , the free cash flow was JPY 10 billion. With CapEx proceeding as scheduled, we expect the full year cash flow to be JPY 15 billion, although it is rather conservative forecast.
Balance sheet summary. Inventory increased a little bit in preparation for expected sales growth in the remaining year. We should be able to reduce the amount soon, and I will explain how shortly. Stronger financial basis. In addition to the convertible bonds, we will raise JPY 30 billion at maximum through hybrid capital.
We have issued JPY 40 billion of convertible bonds on July 16th and will issue JPY 30 billion of perpetual subordinate bonds by September 2nd, which will be used for loan payment. In addition to the investment in carbon neutral manufacturing, we are now building product development center. It is located in front of JR Nara Station and is only 30-40 minutes away from Kyoto and Osaka.
The exterior was designed by Mr. Kengo Kuma. The grand opening is planned in June 2022. We are also building a new factory for manufacturing green casting in the beautiful historic city of Izumo, Shimane Prefecture. The new facility will produce recyclable casting components with its cutting-edge electric furnaces. It uses carbon-free energy, too.
We are aiming for smaller carbon footprint throughout the supply chain of our machine tools. As for the investment in growing markets, we are building a new factory for five axis machines in a city near Shanghai, China, under the permission of BAFA. BAFA is the export control authority in Germany. We are also spending JPY 4 billion to expand the Tianjin plant, which is operated under the approval of Japanese government.
We implement 1.5 shifts a day and produce 500 units per year, but we will raise the production capacity to 1,000 units. For the first time as DMG Mori and a machine tool maker, we will build a factory in Africa. The new plant in Egypt will be mainly built on government funds, and DMG Mori will share the knowhow. We plan to produce vertical machining centers and horizontal turning centers there.
They will be simple, but precise and robust. It will hopefully contribute to the development of local operators and Africa's industrialization. The full year forecast. Given the favorable pace of orders, we should be able to achieve at least JPY 420 billion in order intake. We are expecting JPY 365 billion in sales and JPY 20 billion in operating profit, both of which are a little conservative. We strive to seek much higher figures.
The midterm profit outlook. We lowered the break-even point in 2020, and we intend to keep the cost structure to achieve the record high operating profit in 2022. However, it also depends on how fast we can turn the order intake into sales revenue in 2022. Delivery of some components, including semiconductors, is often delayed lately. Marine traffic is busy, too.
The building construction around the world is also two to three months behind the schedule, sometimes our customers fail to accept our machines on time. Either way, our plan is to achieve JPY 420 billion-JPY 430 billion in 2022 and JPY 450 billion-JPY 500 billion in 2023. As a general tendency in the machine tool industry, the next economic adjustment phase may come in 2024 or 2025, we will survive the phase by lowering the break-even point as in 2020.
We will continuously strive to pay dividends to shareholders as well as to repay debts from profits. We also work on increasing compensation for employees in proportion to profit. Financial targets. We aim for the shareholders' equity ratio of 52% by the end of 2023. The remaining question is how to deal with hybrid capital.
I will continuously discuss with internal and external parties how much hybrid capital we should keep in the future. In 2024 and 2025 and beyond, we will need to invest more in the future business growth and in M&A. We must achieve these goals and reinforce our financial structure by 2023. Business environment. The red line shows the total order intake of JMTBA members.
The black line is the sum of seven major machine tool builders, excluding DMG Mori, and the blue line is DMG Mori. Looking back the past 13 years, the blue line has been gradually keeping larger distance to the red line. After reaching a record high, our order intake declined from 2018- 2020. This time we could limit the decline compared to the industry average and our peers. Our order intake is recovering more quickly than average.
I am convinced that our business strategy to promote five axis machines, process integration, automation, and total solutions directly to the customers all over the world, not limited to major markets, will certainly bear fruits in 2022 and 2023. Order intake by region. Our Q3 forecast is rather conservative, but we will be able to receive at least the same level of order intake as Q2. Usually, our order intake in August remains low due to summer vacation.
This year, our forecast for August looks quite positive. This is because many companies are focused to adjust their investment planning as a result of worldwide spread of COVID-19 during the last year. We have a strong order intake in July. Based on these facts, I am certain that our Q3 order intake will exceed the result of Q2. Next, transition of order intake by region.
As you see, Germany and Europe are very important markets for us with a quick recovery. Order intake from Americas remain very stable. Chinese market is growing. I expect our order intake from China in 2023 or 2024 will be almost at the same level as Americas. Asia is recovering and growing steadily. Our goal is to achieve JPY 10 billion order intake by quarter and JPY 40 billion per year. I assume the market volume in Japan will trace a historical trend. Order intake composition.
First, by industry. Order intake from machinery, SMEs, and semiconductor industries have been growing continuously. Order intake from automotive decreased from 30% in 2000 to 12%. Over 50% of them are investment for producing electric or hybrid cars. The demand from die and mold is increasing. The market needs new types of die and mold to produce home appliances and automotives.
Medical has been growing continuously. Looking at the machine model, over 70% of the demand comes from the machine suitable for automation, five-axis, mill-turn, and horizontal machining centers. We will maintain our leadership in these segments, promote automation, and differentiate ourselves from peers. Looking at our customers by company size, most of our customers have less than 500 employees.
Last year, we produced only about 5,000 machines. This year, we will produce 8,000 machines, and next year, 10,000. We deliver our machines to high-end users, and our machines' average price is high.
This means we do business with customers who deal with advanced cutting-edge machining solutions. Even the world's largest manufacturers do not buy 5,000 units of machine tools per year. Thanks to our customers, we are accumulating rich know-how in machining technology, installation, and operators' training.
We will deliver this accumulated know-how and experience back to our customers together with machines, and we will grow together as reliable technology partners. This is our strategy. Average price of order intake. Due to the impact from worldwide spread of COVID-19, our order average price dropped in the Q4 of 2020. Since then, we have been recovering steadily in both Japanese yen and euro basis.
The latest average price is coming back close to record high. Transition of order intake and backlog. Our order backlog is increasing again. Ideally, our order backlog should be maintained between JPY 150 billion-JPY 200 billion in order to keep the delivery time at about 10 months. The delivery time should not exceed 12 months. We will produce efficiently and keep our stock machines at minimum.
We will shorten the time for machine production, but invest more time for adjustment of automation and peripheral equipment. We will fully utilize our system solution plant and facilities to capture a growing demand for turnkey projects. Focus topics.
First, process integration. It is a single machine, NTX 1000. Combined with iMTR, in-machine traveling robot, it can replace three units, two turning machines and one vertical machining center, and automatize the machining process.
Previously, we needed three operators for three units, and parts in progress, fixtures, chucks were waiting to be set up between the three machines. Such production line is expensive, too. Approximately JPY 70 million in total. NTX 1000 and iMTR are not cheap either. They can reduce the footprint and finish all the processes in one machine.
Previously, we tried to improve dimensional accuracy of each process, but by completing all processes into one, we can minimize the volumetric distortion and eventually improve the volumetric accuracy. Please see this video. IMTR can be customized. Fanuc and Nachi-Fujikoshi are standard, but we can offer Yaskawa, KUKA, and ABB if requested.
As shown in the video, it can machine a gear-shaped part. This system can eliminate the parts-in-progress stuck between machines. We learned one thing during the 15 months of COVID-19 pandemic. We used to participate in major trade shows in Tokyo, Chicago, Hanover, and Milan. In such events, we exhibited dozens of machines, each of which cost several million JPY.
Including the exhibit fee and machine transportation and setup cost, we spent around JPY 10 billion annually. Since COVID-19, we have switched to weekly private shows. We used the machines in each showroom, so the cost was minimal.
We invite several customers at a time, 20 to 30 customers at maximum, to the weekly shows. We have held such events in Iga and Tokyo in Japan, Davis in the U.S., Tianjin in China, Pfronten and Seebach in Germany, and Bergamo in Italy. It has been very effective from the customer's viewpoint, and also motivated our sales and factory staff and encouraged discussion between different parties.
This experience once again made us realize the importance of having a direct, close communication with each customer. We don't have to invest too much on major shows. Instead, we can share our products' basic information on digital twin showroom and hundreds of our YouTube clips. Basic technical trends and machining conditions can be checked through these digital contents. If customers are willing to see test cuts or demonstrations, they can come to our showrooms.
We will continue to combine these two approaches in the future. With our factories around the world, we are confident that we can meet each customer's requirements. Next, digital contents. Together with Mr. Saito from Iriso Seimitsu, a leading company in ultra-precision five axis machining, we created this digital textbook called "100 Examples of Five Axis Indexed Machining."
It gives a sense of how the five axis index and simultaneous machining work and helps the beginners introduce five axis machining without hesitation. my DMG MORI, our portal website with 40,000 members, started to give online courses, too. Digital Twin Test Cut is one of our new innovations. Taking the dynamic and static characteristics of machines and workpieces into account, it can almost perfectly simulate a real-life machining. Of course, the final acceptance should be done with actual machines.
With this new technology, we can complete test cuts in two to three days instead of the previous one week or sometimes even one month before inviting the customers to showrooms for final acceptance. Next, recent trend of EV markets. Please see this video. EVs require less parts, but their manufacturing methods are totally different from conventional parts. EVs need a very robust battery case combined with a floor.
They have a motor case very similar to a machine tool spindle. To reduce weight, press and plastic dies are often used, too. Large-sized five-axis machines are suitable for such applications and are becoming popular among EV makers. We have mostly completed the renovation of Iga campus, and now we are moving standalone machines assembly area from Nara campus to Iga. We will start such relocation this autumn.
This will make Iga campus the biggest machine tool assembly and core components plant in the world. Spindles, ball screws, Magnescale products will be continuously produced in Iga. On the other hand, Nara will be fully renovated to system solution plant. We will expand the current system solution plant, and it will be 4x bigger than the current floor space by the end of 2023. The current facility sells system solutions worth JPY 10 billion per year, excluding the machine body sales.
By the end of 2023, the sales value will rise to JPY 40 billion. We will invite potential turnkey customers from all over the world, give them factory tour during the weekdays, and Nara and Kyoto tour over the weekend in their mother language, and offer operator training in this facility. Less complicated, standardized automation system can be manufactured in Davis or Tianjin, too.
We have another high-end system solution factory for German-made machines in Pfronten. Other neighboring plants can also offer simple automation systems of several JPY million. Our German factories will share technical knowhow with a new factory in Cairo, Egypt, which will be built by the autumn of 2023, mostly on our partner AOI's fund. This plant will produce relatively simple vertical machining center and turning centers. It will be our gateway to Africa.
By developing operators and producing basic machines there, we would like to contribute to the industrialization of Africa in the mid to long term. Now, let's talk about our new innovation, large capacity tool magazine. Such product is very popular in Americas and Northern Europe, where the productivity is higher than other regions. Our tool management and scheduling software can handle up to 4,000 tools.
This product is already up and running in Germany, Sweden, and some other countries. The list price is around JPY 1 billion. We deliver around two to three sets every month. This slide shows the hardware only. The software has great features, too. It can be connected to the customer's ERP system, for example.
It is a highly sophisticated system that enables both hardware and software alignment with the existing production system. More and more customers proceed with automation. We developed a new product, built-in mist collector, zeroFOG, to eliminate fog or mist during the automated machining process.
Customers no longer have to purchase a separate mist collector. The compact device is integrated in the machine, saves energy, and creates a safe and comfortable working environment. I wondered why it took me so long to identify the need for this solution.
This solution is very effective and supports customers to reach their goals for sustainable development and CO2-free production. We will deliver this solution as standard to our machines. We are ready to deliver this even to users of other manufacturers' machines. DED stands for direct energy deposition. DMG Mori offers two types of additive manufacturing machines, SLM or powder bed-type machine, and DED.
We developed them in both Japan and Germany. Our Japanese engineers are specialized in DED machines based on mil machines. All the emerging companies in space travel industry are our customers. Our DED machines are indispensable for production of rocket motor and nozzle. This is Ms. Hirono. She's in charge of the development of this machine and gives you a brief introduction.
This is the brand-new AM machine, LASERTEC 3000 DED hybrid. We just finished our assembly. I believe this would be the world's standard turn-mill AM machine. We will have a live Q&A session. Don't hesitate to ask anything about additive manufacturing. Please continue to enjoy. Thank you.
We showed this video at an academic convention. U.S. customers use this machine for production of rocket parts. Currently, many Japanese customers use DED technology for repairing existing parts. However, we see a growing demand for applying DED for die roller production.
Electric vehicle and battery production or semiconductor industry require thin parts sliced by die rollers. Here, Japanese companies with accumulated know-how in dealing with films and textiles have an advantage. With a DED machine, you can build solid and durable knives on a die roller by combining additive and precision cutting technologies. This is a very promising market.
Next topic, sustainability. First, we support the TCFD recommendations. We have already been doing our efforts before, but now we declare our joint commitment as Co. and AG . We will further enhance the disclosure of information on climate change in accordance with TCFD recommendations.
Carbon neutrality is another major topic. The idea is that 50% of our currently consumed power will be provided by solar energy, and this does not mean purchasing such energy. Iga and Nara campus are relatively vast, so that we can cover 70%-80% of our roofs with solar panels. Of course, the amount of power generated differs according to the weather condition, but the target is that we provide 50% of our used power through solar energy.
We will reduce our power consumption by 25% over the next five years. We will do so by process integration and energy-saving technology. The remaining 25% are reduced by purchasing carbon-free energy, such as solar, wind, or hydroelectric power. This will make us 100% carbon neutral. Health management. We pioneered in carrying out workplace vaccinations.
In Nara, we also offer public officials of the local government the chance to receive their shot at our facility. We are moving at a very good pace. On August 20th, 95% of all employees in Japan have received their shot. We have learned a lot from the vaccinations. We foster very good relationships with private universities in West and East Japan, that is in Nara and Nagoya as well.
We prepared the sufficient medical staff to give the vaccinations. Some tasks will remain, for example, the side effects for especially young people after the second vaccination. We want to continue to provide special leave to ensure that no one has to worry.