Hello everyone, I am Shinji Shimomura, President of the company. Thank you very much for participating in today's financial results briefing. The company announced its financial results for the second quarter of fiscal year 2025 today on the Tokyo Stock Exchange. The following is a description of its contents. Here is an outline of today's explanation. I'll explain the financial summary for the second quarter of fiscal year 2025 and our forecast for fiscal year 2025. Next, I'll discuss the progress of the Medium-Term Management Plan 2026. First, let's take a look at the overview of the second quarter of the fiscal year 2025 financial results. In terms of the market environment, Japanese capital investment and exports are showing a moderate recovery trend. However, the rebound in the semiconductor market continues to remain stagnant. In overseas markets, the U.S.
has been performing steadily in the short term, and a recovery trend has been observed in Europe, but economic stagnation persists in China. Under these circumstances, during the second quarter of fiscal year 2025, the company received orders totaling JPY 535.5 billion, achieved net sales of JPY 494.6 billion, and generated operating profit of JPY 21.7 billion. Compared to the same period of the previous year, orders increased across all segments, which can be attributed to a general recovery in demand. While orders for semiconductor-related products decreased, net sales increased in Mechatronics but decreased in Industrial Machinery and Logistics and Construction segments due to a smaller old backlog. Operating profit decreased due to a decline in sales. Here is an outline of our results. With operating profit decreasing from the previous year, the resulting current profit was JPY 12.4 billion. Next, we have a comparison of operating profit with the previous fiscal year.
While other items were positive, the decrease in sales, foreign exchange difference, and sales in general administrative expenses were negative factors, resulting in a profit decline of JPY 11.7 billion. Here are the results by segment. Details of each segment will be explained later. Next is the balance sheet. Total assets are JPY 1,237.0 billion. Next is the cash flow statement. Although net profit decreased compared to the previous fiscal year, free cash flow amounted to JPY 15.8 billion due to a decrease in working capital. Next, I will explain the earnings forecast for fiscal year 2025. The forecast for fiscal year 2025 has been revised to orders of JPY 1.1 trillion, net sales of JPY 1.05 trillion, and an operating profit of JPY 50 billion. Compared to the figures announced in February, orders will decrease by JPY 30 billion, net sales by JPY 40 billion, and operating profit by JPY 10 billion.
Orders will decrease mainly in Industrial Machinery and Logistics and Construction due to the slow recovery of the semiconductor-related and hydraulic excavator markets. As a result of the decrease in orders, sales and operating profit will also decline, mainly in Industrial Machinery and Logistics and Construction. An ROIC for fiscal year 2025 is assumed to be 4.1%, and the forecast for dividends is unchanged from JPY 125 per share. This is a comparison of operating profit with the previous fiscal year. Compared to the previous forecast, the decrease in sales is a negative factor. The U.S. tariffs are expected to mainly impact the Logistics and Construction and Mechatronics segments. Although we will implement measures such as price pass-through, we have factored in an impact of approximately JPY 2 billion. Next, we have our performance forecast by segment. Each segment will be explained in detail starting on the next page.
I will now explain by segment. First, Mechatronics. Orders in the first half of fiscal year 2025 increased for gear reducers due to a recovery in demand in Japan and overseas, and for motors inverters following the completion of inventory adjustments by European customers. Both sales and operating profit increased due to an increase in orders. In fiscal year 2025, while demand for gear reducers is expected to remain steady, continued delays in customer investment in semiconductor components will lead to a decline in orders and sales, compared to the previous forecast made in February. Operating profit will increase mainly due to lower expenses from structural reorganization, etc. Now, let's turn to Industrial Machinery.
In the first half of fiscal year 2025, orders and sales of plastics machinery increased due to a recovery in demand, particularly in the electrical and electronics sector in China, but operating profit decreased due to a downturn in Europe. In other businesses, demand for semiconductor manufacturing equipment declined, while orders for other models, including those in the advanced medical devices field, increased. Sales and operating profit declined due to a smaller old backlog for semiconductor manufacturing equipment. In fiscal year 2025, orders, sales, and operating profit will all decline due to the slow recovery of the semiconductor manufacturing equipment market. Next is Logistics and Construction. In the first half of fiscal year 2025, there was a recovery in demand for hydraulic excavators in both Japan and North America, which had previously been stagnant, and orders increased.
Sales and operating profit decreased in both Japan and North America due to the lower number of orders in the previous fiscal year. In other businesses, orders for mobile cranes were comparable with the same period of the previous year, but sales and operating profit increased due to the old backlog. For industrial cranes, while the market remained firm and both orders and sales increased, operating profit declined due to a decrease in high-margin projects. In fiscal year 2025, while demand for industrial cranes remains firm, orders, sales, and operating profit are projected to decrease due to the slow recovery of the market for hydraulic excavators. Finally, let's look at Energy and Lifelines. In the energy plant business, in the first half of fiscal year 2025, orders increased due to a biomass power generation project received in Europe.
Although sales decreased due to a smaller old backlog, operating profit increased thanks to improved profitability. In other businesses, orders increased for water treatment equipment and offshore structures. Sales and operating profit also rose due to a healthy old backlog. In FY 2025, orders and sales are expected to increase due to strong demand in general, especially for energy plants, and operating profit is also expected to increase due to higher sales and improved profitability. Next, we will discuss the progress of the Medium-Term Management Plan 2026. Our basic policy in the Medium-Term Management Plan 2026 is to develop a robust entity. We are also implementing basic strategies from both corporate and segment perspectives for the following three priorities: improve profitability, enhance capital efficiency, and strengthen new business exploration.
Although our basic policy remains unchanged, we revised our plan in February 2025 due to the current downward swing in our current performance caused by changes in the business environment and delayed improvement in the profitability of our core businesses. To begin with, here are the changes in the business environment and the outlook for the Medium-Term Management Plan 2026. In fiscal year 2025, operating profit is expected to decline approximately JPY 10 billion from the revised plan due to a marked decline in the semiconductor field. Although the situation remains challenging, we aim to achieve our FY 2026 targets by steadily implementing key initiatives to strengthen the earning capacity of core businesses, business portfolio reformation, and enhancing our semiconductor-related business, in addition to anticipating an increase in demand driven by a recovery in the semiconductor market. Next, I will discuss key initiatives.
To bridge the gap between our ideal state in 2030 and the current situation, we aim to accelerate the implementation of the key initiatives shown on this slide to restore our profitability. To enhance the earning capacity of our core businesses, we will improve operating profit in the gear business, expand orders in the electric control business segment, improve operating profit in the plastics machinery business, increase orders in the hydraulic excavator business, and implement structural reorganization in our European operations. In promoting business portfolio reformation, we will accelerate portfolio management. To strengthen our semiconductor-related business, we will reinforce synergies between our Ion Implanters and Laser Annealing Equipment, while expanding business in Europe and the U.S. by leveraging Lassie's customer channels , which is a French company engaged in the semiconductor manufacturing equipment business that we acquired in 2025.
With respect to strengthening the earning capacity of our core businesses, we are focusing on the gear business, electrical control segment, plastics machinery, and hydraulic excavator business. Each business segment is promoting improvement initiatives with operating margins or order volume as a key KPI, and all are generally progressing as planned thanks to steady structural reorganization. In European business, Lafert and Demag were affected by the prolonged economic downturn, and SFW was impacted by tighter environmental regulations. Each are currently undergoing structural reorganization. Lafert is generally progressing as planned, and its performance is on track to recovery. As the market conditions for Demag have fallen far below expectations, it has begun to consider additional measures. SFW plans to accelerate additional reductions to personnel alongside reshuffling to strengthen its after-sales service. Next is our progress on business portfolio reformation.
We are proceeding with business portfolio reformation by positioning businesses outside of our key investment area into three types: businesses that will serve as a stable revenue base, underperforming businesses, and businesses whose strategies are being rebuilt. This is a measure to strengthen our semiconductor-related business. In the semiconductor manufacturing equipment business, we will expand our business scale by integrating and strengthening the collaboration between Ion Implanters and Laser Annealing Equipment. Laser Annealing Equipment is primarily used for power semiconductors, but in response to growing demand, not only for power devices but also for advanced devices, we will increase production capacity at both our Japan and France facilities. For Ion Implanters, we will expand our business in Europe and the U.S. by leveraging Lassie's customer channels and broaden our sales channels to include logic, memory, and power devices.
This section discusses the status and future directional property of each of the semiconductor-related markets. From here on, we plan to expand our business through synergy between Ion Implanters and Laser Annealing Equipment. For logic and memory, we will promote medium to long-term development of devices based on trends found among existing customers. For memory, we aim to adopt Laser Annealing Equipment and plan to bring new Ion Implanters to market launch for advanced devices. The CIS market is expected to recover in the second half of fiscal year 2026 and beyond. We will also bolster relationships with existing customers. For power devices, we will bring new Ion Implanters to market launch and set our sights on customer adoption of our Laser Annealing Equipment. Now, let's look at our segment initiatives and how their implementation is progressing. First, Mechatronics.
In the field of electric control and robotics, a key investment area, we are proactively developing and expanding sales of new products, particularly to meet the demand for energy savings and higher efficiency in the transportation and logistics market. In the semiconductor components field, we expect to open an evaluation and development center as planned for joint development with a major U.S. customer. In our core business range, we are making steady progress in improving profitability as we continue to transform our operations. Now, let's turn to Industrial Machinery. In the semiconductor field, a key investment area, we expect sales to decline due to a slow recovery in demand. However, we will work to strengthen our business by launching new equipment on the market through the coordination of Ion Implanters and Laser Annealing Equipment.
In the advanced medical devices field, we plan to build a framework for multiple orders centered on proton and BNCT cancer treatment devices. The plastics machinery business, a core business range, is experiencing a slow recovery of demand in Europe, but we have begun to consider additional measures. Next is Logistics and Construction. In the robotics automation field, a key investment area, we developed a 13.5-ton electric-powered hydraulic excavator prototype, which was presented at an exhibition in June. In the construction machinery business, one part of our core business range, we are working to increase our market share by sequentially introducing new models of hydraulic excavators. The new construction machinery plant under construction at Yokosuka Works has been delayed due to soaring building expenses and other factors, but is expected to begin production in fiscal year 2027.
Logistics machinery plans to complete and validate an automatic rubber-tired gantry for FC displacement hybrids. In terms of utilizing digital transformation, the large crane productivity improvement support tool, CERMS, is now in operation at ports, and we are promoting high added value to our services. Finally, let's look at Energy and Lifelines. In key investment areas, we will steadily advance efforts toward commercializing carbon neutrality businesses and promoting renewable energy initiatives. The LAES demonstration facility is scheduled to commence commercial demonstration operations in November of this year. In the core business range, structural reorganization will be implemented in the boiler business, while we strengthen our after-sales service through enhanced collaboration within the segment. The following pages are for reference only and will not be explained. This concludes my explanation. Thank you for your attention and dedication and loyalty to our company.