Hello, I am Shimomura, President and CEO. Thank you for taking time out of your busy schedules today to attend this earnings presentation. Today, at 3:00 P.M. at the Tokyo Stock Exchange, we announced our financial results and revised dividend forecast for fiscal year 2021, and projections for fiscal year 2022. I will now explain each of these items. This is the content of today's explanation. In the first half, I explain the financial summary for fiscal year 2021, and the projections for fiscal year 2022. In the second half, I explain the progress of the Medium-Term Management Plan 2023. Please turn to page 4. First is the financial summary for fiscal year 2021. The economic environment was generally on a recovery trend, and capital investment and demand for machinery exceeded expectations. Year-on-year, both sales and profits increased significantly.
We had revised our initial forecast upward at the time of the announcement of the second quarter results. As it turned out, we were able to end the year with even better results. Orders exceeded JPY 1 trillion for the first time, reaching JPY 1,075.3 billion. Net sales were almost in line with the forecast, reaching a record high of JPY 944 billion. Operating profit was JPY 65.7 billion, up from both the forecast and the previous year in all segments. As a result, profit attributable to owners of parent also exceeded the forecast by a wide margin, amounting to JPY 44.1 billion. Accordingly, the dividend was revised upward from JPY 90 per share to JPY 115 per share. This page shows the earnings results by segment.
All segments performed well in terms of orders and net sales. As shown here, profits increased in all segments compared to the previous year. You can see that in the change column. The details of each segment will be explained later. Next is a waterfall chart comparing operating profit with the previous year. Effect of operating profit increases are indicated in the lower left, with the largest being the effect of sales increases. In particular, Mechatronics and Logistics & Construction contributed significantly. The next biggest factor was the effect of exchange rates due to the depreciation of the yen. On the other hand, there was a negative factor of increase in selling and administrative expenses as a result of increased sales. Next, I will explain the balance sheet. The changes in each item are indicated.
Inventories, in particular, have increased significantly, partly due to an increase in orders, supply chain issues of delays in supply of parts, and insufficient production capacity. As a result, total assets amounted to JPY 1,094.9 billion. Next is the liabilities and net assets section of the balance sheet. As noted in the comments on net assets, retained earnings increased by JPY 32.8 billion. In addition, a little unexpectedly, foreign currency translation adjustments increased by JPY 22.6 billion due to the weaker yen, resulting in an increase in net assets. Shareholders' equity ratio was 50.4%. Next is the cash flows statement. Cash flows from operating activities decreased only slightly as the increased working capital was offset by increased profit. Cash flows from investing activities deteriorated from the previous year due to continued investment.
As a result, free cash flows were a positive JPY 12 billion. Next, I will explain our projections for fiscal year 2022. We will change our fiscal year end starting in fiscal year 2022. Since the end of the fiscal year will be changed to December 31st, fiscal year 2022, which is a transition period, will consist of nine months from April to December with regard to Sumitomo Heavy Industries and its subsidiaries in Japan. Overseas subsidiaries will continue to have a 12-month fiscal year as before. Since the accounting period will now be different for comparison's sake, 12 months forecast that includes three months forecast for January to March 2023 for domestic business is included in the next pages. Since the periods covered is different for domestic and overseas, please refer to this table. Next, I will explain the performance forecast for fiscal year 2022.
The forecast for fiscal year 2022 includes both a nine-month and a 12-month forecast for domestic business. For the nine-month period, we forecast orders to be JPY 880 billion, net sales to be JPY 850 billion, and operating profit to be JPY 51 billion. As for the 12-month forecast, we assume that the demand environment for orders will basically remain firm in fiscal year 2022. However, due to some uncertain factors, we have assumed that orders will remain almost unchanged from the previous fiscal year at JPY 1,030 billion. We project net sales to be JPY 1,010 billion, following the strong orders in fiscal year 2021. Operating profit is forecast to decrease slightly to JPY 64 billion. We forecast dividends at JPY 90 per share for the nine-month period for the payout ratio of 36.8%.
We are aiming for a dividend payout ratio of 40% in fiscal year 2023. Next is the performance forecast by segment. Again, we show the forecast for the nine months that make up the accounting term and also the 12-month forecast for reference. I will explain the details of each segment on the next pages. This is the Mechatronics segment. As you can see, the upper part shows an overview of market conditions, and the table below shows results for fiscal year 2020 and 2021, as well as fiscal year 2022 forecast. In fiscal year 2021, in addition to small to medium-sized gear reducers in Japan, demand increased for electric control models, especially in Europe and the U.S. We assume that the market condition will be strong, but because of a reduction in advanced orders in the previous fiscal year, orders will decrease slightly.
Due to backlog of orders, net sales and consequently, profits are expected to increase. For the nine months of fiscal year 2022, we project orders of JPY 174 billion, sales of JPY 176 billion, and operating profit of JPY 9.5 billion. Please move on to the next material. From the presentation, we have increased the information for each segment. Trends in orders, net sales, and operating profit are presented to show how they have evolved over time. Also, we hope the reference information is useful. Next is the Industrial Machinery segment. The table is structured in the same way. First of all, in Plastics Machinery, demand increased in China and Europe in fiscal year 2021. In fiscal year 2022, we expect this to calm down.
We expect net sales to be roughly on par with the previous fiscal year, but we anticipate a decrease in profits due to soaring material costs. In the other segment, demand for semiconductor-related products was particularly stronger than expected, and we expect orders, net sales, and profits to all continue to increase from 2021 to 2022. For the nine-month period, we expect orders to be JPY 238 billion, net sales to be JPY 222 billion, and operating profit to be JPY 17 billion. The next page is for your reference. Next is Logistics & Construction. Regarding hydraulic excavators, orders were robust in Japan and North America in fiscal year 2021. Unfortunately, we expect demand in China and North America to decline in fiscal year 2022. Net sales are expected to increase in fiscal year 2022 due to the backlog of orders.
We expect profit to increase accordingly. In the other segment, the mobile crane sales and profits increased, while material handling system sales and profits decreased. In fiscal year 2022, orders are expected to decline for both, but net sales are expected to increase due to the backlog of orders. However, we expect a decrease in profits due to higher costs. For the segment as a whole, we expect orders of JPY 301 billion, net sales of JPY 308 billion, and profits of JPY 14.5 billion for the nine-month period. I skip the second page. Finally, Energy & Lifeline. Orders in fiscal year 2021 increased year-on-year for the segment due to increases in other product areas, despite a decrease in large projects in energy plant business. Orders in fiscal year 2021 are expected to be firm in many businesses.
Net sales are expected to be impacted by reduction in energy plants, and for the segment as a whole, both sales and profits are expected to decrease. For the nine months period, we expect orders to be JPY 163 billion, sales to be JPY 139 billion, and operating profit to be JPY 7.5 billion. Next two pages are for reference only. I will skip these pages. I will now explain the progress of the Medium-Term Management Plan 2023. As described in the topics section, in fiscal year 2021, a series of events occurred one after another that could not have been anticipated when the Medium-Term Management Plan was first formulated, resulting in a major change in the business environment.
In particular, the slowdown of the Chinese economy, partly due to the zero-COVID policy and the economic impact of Russia's invasion of Ukraine seem to be significant factors. There are many uncertainties that make it difficult to make assumptions. We also expect that the global expansion of value chains will become more difficult and that supply chain problems will be prolonged, partly complicated by transportation issues. There is also the issue of the shift from deflation to inflation. These factors have significant impact on our product development progression and sales strategies, and we plan to expand our corporate and social value by responding to these changes while aiming for sustainable growth under the Medium-Term Management Plan 2023. I will now explain the financial targets under the Medium-Term Management Plan 2023.
Fiscal year 2021, the first year of the medium-term plan, was a strong year with orders exceeding JPY 1 trillion. In response to this, we revised upward our targets for the final year of the medium-term plan. In making the revision, we took into account changes in the business environment with COVID, strong capital investment conditions in the semiconductor field, the ongoing depreciation of the yen, and the shift to inflation from deflation. However, the Ukraine issue caused by Russia is still in flux and has not been fully factored in. I have already explained about fiscal year 2022 in the earnings forecast sector. For fiscal year 2023, the final year of the plan, we have revised our assumptions as follows.
Although the environment for orders is undergoing various changes, we have assumed that orders will remain firm and have set out our target at JPY 1,070 billion. We target sales to be JPY 1,050 billion, reflecting strong orders and assuming that the supply chain problem will be resolved. In other words, we revised our targets for both orders and sales to exceed JPY 1 trillion. Operating profit is still in the process of recovery, but we have set the operating profit target at JPY 76 billion to give us a profit margin of 7.2%. Capital investment will be higher than the original plan and also front-loaded due to further growth in focus areas, longer delivery times for equipment, and higher equipment costs. As a result, the projection is to be JPY 117 billion.
The cumulative estimate for R&D expenses has been reduced due to fiscal year 2022 being a nine-month term. The next page shows the changes of consolidated financial figures. I will omit the explanation. Next, let me explain the implementation status of the basic policy of the Medium-Term Management Plan 2023. In the current fiscal year, the first year of the plan, we have actively made capital investments in growth areas and conducted R&D activities to develop a robust entity. We are also working to expand our after-sales service business. By continuously reviewing our business continuity plan, BCP, we have been able to minimize the impact of COVID and supply chain disruptions, ensuring adequate business performance.
In terms of reforms to improve corporate value, we have achieved orders in excess of JPY 1 trillion in the first year, and we are working to expand sales of SCE related products and electric control models. I will explain more about this later. In addition, as part of our shift to a company with a comfortable work environment, we are promoting gender diversity and a remote working system to realize a stably conducted business. We are focusing on human resource development. In development, we are concentrating on environment, energy, and automation digitalization fields that can contribute to the SDGs. I will explain more about this later. Regarding the reduction of environmental burdens, we have endorsed the TCFD, set a CO2 reduction target for 2030, and aiming to achieve carbon neutrality by 2050. I will elaborate on these points later as well.
First, let me briefly explain our focus on the semiconductor production related business. As shown on the left, we supply equipment for the certain part of the semiconductor manufacturing process. Due to the strong appetite for capital investment in the semiconductor market, as shown in the lower right-hand corner, we expect our sales to reach JPY 95 billion in the final year. We intend to continue to focus on this area. Next, I explain our key development areas. As shown here, our group is concentrating on the environment and energy, automation, and digitalization. In environment and energy, we are promoting the development of decarbonization and energy technologies with the aim of becoming carbon neutral. In the area of automation and digitalization, we are promoting development to expand the scope of automation for construction machinery and material handling machines.
In the area of failure diagnosis technology, we have started trial operations on construction machinery. Next, I'd like to talk about our efforts to promote sustainability. Our sustainability activities aim to enhance both corporate value and social value by solving social issues that enhance the sustainability of the company and society. In terms of the environment, we have endorsed the TCFD, set a CO2 reduction target, and announced our aim to be carbon neutral by the year 2050. We are promoting activities to protect the health and safety of everyone associated with our company. We are also working to improve our governance system to further accelerate our sustainability activities. Last but not least, I'd like to explain how we are responding to the challenge of realizing decarbonized society.
As a countermeasure against increasingly serious climate change, we have set goals to reduce CO2 emissions during our productions by 50% by 2030 from the 2019 level, and to reduce CO2 emissions during use of our products by our customers by 30%. We also aim to achieve carbon neutrality by 2050. Our business foundation is to provide Industrial Machinery that supports our customers' production activities, and we believe that reducing CO2 emissions through the manufacture, sale, and service of our products, and contributing to society's overall efforts to combat climate change, will accelerate our sustainability activities and eventually lead to a story of value creation in the environmental field. This concludes my explanation.