Hello, everyone. I am Shinji Shimomura, the President and CEO. Thank you for participating in the earnings briefing. At 3:00 A.M. today, we announced our financial results for FY 2022 and forecast for FY 2023 at the Tokyo Stock Exchange. Let me go over the announcement. This is what I will cover. In the first half, I will give the financial summary for FY 2022 and performance forecast for FY 2023. In the second half, I will explain the progress of the current Medium-Term Management Plan 2023 and initiatives to promote sustainability. Before going into the financial results, I would like to remind you again about the change in the accounting period.
Please be advised that FY 2022, which is a transition period, consists of nine months from April to December, regarding Sumitomo Heavy Industries and its subsidiaries in Japan, and 12 months regarding overseas subsidiaries as indicated in the red frame in this table. In this document, adjustments have been made to the previous fiscal year to allow year-on-year comparison. Now, the financial summary for FY 2022. Orders totaled JPY 984.7 billion. Net sales were JPY 854.1 billion, and operating profit was JPY 44.8 billion. Let me elaborate on the results in comparison with the same period of the previous year. Orders increased due to strong capital investment and strong demand for machinery. Net sales increased in all segments except Energy & Lifelines, despite production constraints due to parts procurement difficulties.
Net sales for Energy & Lifelines declined due to differences in construction progress. Operating profit decreased due to such factors as price increases of raw materials and procured products, and declining profit margins in Energy & Lifelines projects in Europe. Current profit decreased significantly due to recognition of extraordinary losses of JPY 26.4 billion. This is the financial summary. Although current profit decreased significantly year-on-year, we forecast the dividend payment of JPY 90 per share unchanged from the initial forecast. ROIC was 6.2%. This is the performance by segment. Details of each segment will be explained later. This is the analysis of year-on-year changes in operating profit. Positive factors are the effect of increased sales in Mechatronics and Industrial Machinery, and the effect of exchange rates due to the weaker yen.
Negative factors include an increase in selling and administrative expenses due to increased sales, and price increases of raw materials and procured products. Next, some details of the extraordinary losses recorded in FY 2022. The main items are impairment losses on non-current assets, including goodwill of companies acquired in the past, namely SFW and LMS, and valuation losses on investment securities related to past investment made to Highview. These losses were recorded due to divergence from the originally envisioned business plans. The purpose of the acquisitions and investment remains valid and relevant, and we will work on translating the acquired technologies to future growth to make them the pillars of our business. Next, the balance sheet. Total assets were JPY 1,148.9 billion. Changes in each item are as described here. Turning to liabilities and net assets.
Net assets increased due to an increase in foreign currency translation adjustments. As total assets also increased, equity ratio was 49.5%. Next, consolidated cash flows statement. Cash flows from operating activities were JPY 21.4 billion between a decrease in notes and accounts receivable and an increase in inventories. Cash flows from investing activities were a negative as high levels of investments continued. Free cash flows as a result were JPY -15.9 billion. Moving on to performance forecast for FY 2023. This is the performance forecast for FY 2023. Market conditions are expected to be strong in general, but there are uncertainties about the future. We also recognize regional differences. Profitability is expected to improve to some extent through price pass-on measures to cover increases in procurement costs, but with differences in degrees.
Supply chain disruptions are expected to affect some models, including hydraulic excavators. All in all, we forecast orders of JPY 1,080 billion, net sales of JPY 1,050 billion, and operating profit of JPY 64 billion. Orders are expected to be strong in line with projected market conditions, but projected to decline due to the rebound from the previous year. Net sales are expected to increase due to many backlogs of orders, mainly for mass-produced machinery. Improvement in operating profit is expected to be limited despite increased sales due to the appreciation of the yen and the lingering impact of price increases of raw materials and procured products on some models. Dividend for FY 2023 is forecasted to be JPY 120, which brings the payout ratio to 39%. ROIC is assumed to be 6.1%.
This is analysis of year-on-year changes in operating profit. Exchange rates will have a negative impact in FY 2023. We expect difference between the effect of price increases of raw materials and procured products and the effect of improvement by price transfer to progress further than in FY 2022, albeit with variances by segment. Forecast for orders, net sales, and operating profit by segment. Orders are expected to decline in all segments. Sales are expected to increase except for Energy & Lifelines. Details of each segment are explained on the following pages. Mechatronics. In FY 2022, orders and net sales increased due to strong demand for gear reducers and inverters in Japan, Europe, and the U.S. Operating profit also increased due to growth in sales.
Turning to FY 2023, please note that from here on, year-on-year comparisons for all segments are based on reference values from January to December of 2022. Markets in FY 2023 are expected to remain generally strong and orders will remain at the same level as in the previous year. Sales will increase due to a backlog of orders, but operating profit will remain at the same level as in the previous year. On the second page of each segment, we are showing trends in orders, net sales, and operating profit over the past six years for your reference. For Mechatronics, sales contribution ratio by model for gear reducer business is shown. There are no major changes from the previous year. Next, Industrial Machinery.
The plastics machinery business saw orders decline in FY 2022 due to the cooling of demand from China and Europe, which had been strong in the previous fiscal year due to the recovery from the COVID pandemic. Sales increased due to a backlog of orders. Operating profit decreased due partly to higher prices of raw materials and procured products. In FY 2023, assuming that market conditions in Japan and other Asian regions will continue to be strong, we expect orders to remain at the same level as in the previous year and sales to increase slightly due to backlog of orders. Operating profit is projected to remain at the same level as in the previous year, despite such factors as surge in material costs.
Others saw increases in orders, sales, and operating profit in FY 2022 due to an increase in demand for semiconductor-related products and an increase in orders for medical equipment. In FY 2023, orders for semiconductor-related products are expected to decrease in reaction to the large number of advanced orders from customers in the previous year. We expect sales and operating profit to increase due to a backlog in orders. For Industrial Machinery, sales mix of injection molding machines by segment and orders and sales of ion implanters are shown as reference. In terms of sales mix of injection molding machines, sales for the medical care, foods, containers, and miscellaneous goods sectors increased slightly over the previous year. Next, Logistics & Construction.
Hydraulic excavator business saw a demand decline in China in FY 2022, but orders and sales increased due to steady growth in other regions. Operating profit decreased due partly to such factors as lower sales in China and provisions for notes and accounts receivable. In FY 2023, we expect Japan and North America to remain strong, but other regions to be sluggish and orders to decrease. Still, we forecast sales to increase, partly due to a backlog in orders. Operating profit is projected to remain at the same level as in the previous year due to the stronger yen and also because the sales will not reflect the effect of price transfer of most of the products until the next fiscal year. In others, both mobile crane and industrial crane businesses performed strongly in FY 2022, posting an increase in orders, sales, and operating profit.
In FY 2023, we expect a decline in orders, sales, and operating profit due to a rebound from the previous year. In Logistics & Construction, we are showing the actual and forecast demand for hydraulic excavators by region, as well as reference information for industrial cranes and mobile cranes. In terms of demand forecast for hydraulic excavators for FY 2023, we expect flat growth year-on-year in all regions except for China and Europe. Finally, but not the least, Energy & Lifelines. In the energy plant business, orders and sales decreased in FY 2022, partly due to a year-on-year decrease in orders for large-scale projects for biomass-fueled power generation plants. Operating profit decreased significantly due to the decline in sales and decline in profit margins of large-scale projects in Europe. Orders for FY 2023 are expected to increase, with an increase in large-scale projects over the previous year.
Although sales are expected to decrease due to a reduced backlog of orders, operating profit is expected to increase. For others, orders, sales, and operating profit all increased in FY 2022. In FY 2023, we expect orders and sales to decrease while operating income to improve. In Energy & Lifelines, we are showing main projects for which orders were received in FY 2022. We received one new order each in Japan and Sweden for a large scale project. I would like to explain the progress of the Medium-Term Management Plan 2023. In FY 2022, we continued to face major environmental changes with events that could not have been foreseen when formulating the Medium-Term Management Plan occurring one after another.
In addition to the division of the global economy into blocks, price increases and supply chain disruptions became more pronounced, which challenged procurement of parts and materials and dealt a major impact on business. In FY 2023, we will carry out business activities with a focus on achieving our goals while implementing supply chain measures. The Medium-Term Management Plan 2023 defines five basic policies. We are actively investing in growth areas to develop a robust entity. As a result, in FY 2022, both orders and sales reached JPY 1 trillion on a 12-month basis. We are promoting development activities, focusing on the areas of environment, energy, and automation, and digitalization that contribute to SDGs. In addition to steadily implementing sustainability activities and promoting diversity, in FY 2022, we set and announced long-term targets for achieving carbon neutrality by 2050.
Let me elaborate on main initiatives in the second and fourth basic policies in the following pages. After reviewing the reporting segments at the start of the current Medium-Term Management Plan, we officially established new segments in January 2023. Segment is not just a simple collection of businesses, but constitutes a larger business entity that should accelerate the exploration of new businesses and the pursuit of synergy. A Long-Term Strategy Council consisting of Directors of the Board and segment leaders has begun discussions on growth, while collaboration in focal businesses and inter-business cooperation have begun. Next is the development status. In the priority development area of environment and energy, we are aiming for carbon neutrality by utilizing SFW's gasification technology, demonstration plans of energy storage systems led by Highview, and working to commercialize CO2 recovery and utilization technology.
We're also promoting the development of new wastewater treatment and plastic recycling technologies. In automation and digitalization, we are promoting the development of operation support technology and others for the expansion of automation of construction machinery and material handling machines, and are proceeding with testing for actual application. Among them, let me describe our environmental and energy initiatives. We will build a commercial demonstration plant for liquid air energy storage. In partnership with Hiroshima Gas, we will conduct the first commercial demonstration in Japan at Hiroshima Gas' Hatsukaichi plant. By providing energy storage facilities that contribute to the effective use of resources and the reduction of environmental impact, we will contribute to the stable supply of electricity and utilities, and the realization of a decarbonized society. Next is the financial targets. In FY 2022, orders and sales exceeded JPY 1 trillion on a 12-month basis.
In FY 2023, orders and sales are expected to again exceed JPY 1 trillion, and we will work to further expand the scale after achieving the target value. Despite an increase in the top line, operating income is expected to fall short of the initial plan due to cost increases. Improving quality in line with scale expansion and restoring earning power are the main challenges under the next Medium-Term Management Plan. Regarding our capital investment, we will continue to make aggressive investments in our core businesses. R&D investment will focus on four priority areas to enhance product appeal towards growth. We will consider M&A if there are deals that match our growth direction. This slide compares the targets by segment for the final year of the current Medium-Term Management Plan announced last May with the latest forecast. Orders and net sales forecasts exceed the targets.
With the official establishment of segments, collaboration and joint development are progressing in each segment. By exploring new businesses and reviewing our portfolio to resolve social issues, we are making steady progress in developing a robust entity and making a reform to improve corporate value defined as the basic policies in our Medium-Term Management Plan. Finally, but not the least, the status of initiatives to promote sustainability. Our sustainability activities aim to expand both corporate value and social value through solutions to social issues that enhance the sustainability of the company and society. In the area of environment, we have set a CO2 reduction target for our group and decided to take on the challenge of becoming carbon neutral toward 2050.
Based on the growing awareness of human rights issues and corporate social responsibility, we have formulated a human rights policy to promote efforts to respect human rights by the group companies as a whole. We're also improving governance to further accelerate sustainability. Let me highlight topics for each area of ESG. First, regarding the environment and climate change, we have started procuring renewable energy to reduce CO2 emissions from our business activities and have set internal carbon pricing policy and started its operation from FY 2023. To reduce CO2 emissions during product use, we are working to provide products that reduce environmental impact, such as liquid air energy storage systems. As a result of these activities, in the CDP 2022 assessment, our rating was improved from B- in the previous year to B. Next is social. First is the formulation of a human rights policy.
In response to the heightened global awareness of human rights, we have declared our responsibility for human rights of not only our employees, but also personnel along the entire supply chain. As a company that operates globally, we recognize the importance of consideration for human rights throughout the value chain. The second is LGBT support, which is related to human rights. We created a system and published a guidebook to promote the understanding among employees. The third is work style reformation. We have lifted the ban on site jobs and encourage employees voluntary skill improvement and career development efforts. We will realize more diverse work styles and reform to a more rewarding and comfortable workplace. Finally, governance. Based on the results of the evaluation of the effectiveness of the Board of Directors, we plan to appoint a female director at the general meeting of shareholders in March 2023.
With a view to further enhancing governance, we will accelerate discussions on the composition of the Board of Directors and business portfolio strategy, and enhance deliberations with an awareness of capital costs in formulating the next medium-term management plan. The remaining slides are for your reference. That concludes my presentation. Thank you for your kind attention.