I am Nakane, CFO. I would like to explain the financial results for fiscal 2025. Following the decision to transfer the automotive and transportation business announced on February second, revenue and operating income will be explained as the industrial machinery business, which is the continuing operations. Revenue was JPY 240.4 billion, up by 7.9% year-on-year. Revenue increased due to the recovery in demand, mainly in China and the U.S. Operating income was JPY 14.4 billion, down 9.3% year-on-year. Although revenue increased, there were various unfavorable factors, including a deterioration in the sales mix, increased U.S. import tariffs, share of loss of SAMICK THK, an equity method affiliate in South Korea, costs associated with structural reforms being implemented under the new management policy, and a hike in various costs.
As a result, both revenue and operating income exceeded the revised plan set in November 2025 before adjustment. However, we recorded loss on business liquidation of JPY 81.6 billion in relation to the transfer of shares and assignment of receivables associated with the automotive and transportation business. Net sales by region increased year-on-year, other than Japan, due to the factors mentioned earlier. Next is operating income year-on-year change factors in the industrial machinery business. First, as for negative factors in fixed costs, we made personnel investments, including granting stocks to employees as an incentive to achieve ROE of over 10%. Variable cost ratio increased due to factors including sales mix deterioration, increases in U.S. import tariffs, rising inflation, and restructuring related costs.
Other income and expense included a loss of approximately JPY 1.6 billion from equity method investments, approximately JPY 400 million due to the absence of employment adjustment subsidies in Japan that we received in the first half of FY 2024, and approximately JPY 300 million due to the revision of FY 2024 financial statements for our Indian subsidiary. As for positive factor, volume effects on increased revenue amounted to JPY 9.6 billion. Due to the transfer of automotive and transportation business, a one-off adjustment of JPY 700 million is included in operating income for FY 2025. Next is our financial position. Total assets decreased by JPY 94.4 billion from the previous period to JPY 472.9 billion. In the interest of time, I will focus on the main points.
Due to the transfer of automotive and transportation business, profit attributable to owners of the parent was JPY 69.8 billion. Meanwhile, we completed the cancellation of all treasury stocks worth JPY 40 billion, which was implemented based on our capital policy for early realization of ROE of over 10%. Furthermore, we continue to pay high dividends based on DOE. As a result, equity decreased by JPY 124 billion from the previous period. For other details, please refer to the figures in the document. That concludes my explanation. Now in part two, I would like to explain the status of various initiatives that are underway for our new management policy, early realization of ROE of over 10%. First, please take a look at this. This was announced internally on January 1st of this year.
Under our new management policy, we are united in our efforts to promote structural reform and growth strategies. Last year, we sought ideas from within the company to define the global direction we should take and the values each employee should uphold. We discussed THK's strength to date, the values we need to strengthen in the face of changing circumstances, and our optimal code of conduct. Through discussions with those volunteers and exchange of opinions with overseas colleagues, we ultimately came up with courage, communication, and integrity. Going forward, based on this purpose, mission, vision, and value, PMVV, we will foster a new corporate culture for THK Group and work collectively to achieve sustainable growth. I would appreciate it if you could keep this in mind. Once again, this is the path to ROE of over 10%.
Last year, we announced a plan to designate the two years up to FY 2026 as a structural reform period, during which we push ahead with various reforms, transform into a lean, highly profitable structure, and realize ROE of over 10% in the following three years between FY 2027 and FY 2029. To that end, we are promoting a variety of initiatives comprehensively from number one, selection and concentration in the automotive and transportation business. To number five, evolution of corporate governance. I have said that our selection and concentration in automotive and transportation business will be a reform without sanctuary and have decided to transfer the business after rigorously examining our expected capital costs and ROIC in the future. At this briefing last year, I said that we would resolve all problems within two years, and with this transaction, our selection and concentration in automotive and transportation business is completed.
Regarding the structural reform of the industrial machinery business, we formed working groups for each function and purpose and are promoting various activities with the support of outside experts. However, amid headwinds such as inflation and tariffs, we recognize the risk of falling short of our targets, including a decline in operating income for fiscal 2025. I have said previously that we will add more measures when we have shortfalls, so we will achieve our goals by introducing new recovery measures shown here starting fiscal 2026. Let me go into more detail and explain what we have done so far. First, we implemented a total of 78 measures in fiscal 2025, of which 77% are in progress and 23% are under review.
The estimated impact from fixed and variable costs is already disclosed, and on the far right, we listed the number of measures in the actual action plan for your reference. We are implementing measures for fixed and variable costs as shown here. However, as I mentioned earlier, we recognize that headwinds such as inflation and tariffs, which were not factored in, are beginning to materialize as a risk of shortage. Therefore, in addition to the personnel optimization plan announced today, we will further accelerate our structural reforms by implementing additional recovery measures toward 2029 and achieve our goals. While we implement additional personnel optimization measures, we also believe that it is important to maximize our human capital. As the saying goes, a company is its people.
In fiscal 2025, we formulated our PMVV, purpose, mission, vision, value, which I explained earlier, and in our compensation system, we revised the director compensation system, granted shares to employee stock ownership plan members, and revised the performance-linked bonus fund. In our personnel system, we enhanced performance evaluation feedback and enhanced the transparency of the evaluation process. From fiscal 2026 and beyond, we will carry out PMVV awareness and empathy campaigns across the entire group and transition to a new compensation system that emphasizes striking a balance. In terms of the personnel system, we plan to revise the personnel evaluation system, clarify career paths, implement measures to assess and improve employee satisfaction through engagement surveys, and enhance employee skills through implementation of talent management. By pushing ahead with these various reforms, we will transform into a company in which those who work hard are rewarded more.
Together with our employees, we will build a foundation for sustained improvement in corporate value. Next is on profit increase in growth area. As physical AI expands globally across manufacturing, we will further refine the three pillars of our growth strategy, full-scale globalization, development of new business areas, and change in business style to further expand our business areas. Under such circumstances, in our flagship machine component parts business, we leveraged our existing footprint and established global task forces in seven priority areas centering on semiconductors where growth is expected, enabling us to provide detailed responses tailored to the needs of each industry and region. Furthermore, we have implemented organizational reforms in our development department to identify needs in cutting-edge global fields and establish mechanisms to incorporate them.
As a result, the number of planning and development projects has increased significantly since the middle of last year and is expected to increase further from this year onwards. Furthermore, by utilizing the accumulated R&D data, we are implementing various measures to shorten development period to 1/3, and in 2026, we plan to launch more than twice as many products as the previous year.
In this way, we are making the most of our global brand power and accelerate the cycle of what we call sell, create, and manufacture to drive our top-line growth and improve profitability, thereby maximizing profits. In FA solutions business, machine components business had focused on machine builders, but we have identified mechatronics modules and IoT AI as growth areas in order to expand our business and cater to the needs of a wider range of machine users and have been developing products and services as shown here. Some of these new products are still small scale because it takes time for them to be adopted, but revenue has more than doubled from the previous year, and we want to gradually expand them, including from sales expansion to product development.
This is because as physical AI advances, we believe that within the next decade, though not necessarily next year or the year after, the era of software-defined factories will arrive. In these factories, AI will learn primarily from data, controlling both simulations and real hardware across the entire facility, ultimately taking charge of manufacturing operations 24/7. We believe that there will be a growing demand for high precision, high rigidity, compact and durable mechanical components like ours in order to ensure stable 24/7 operation. Simulations and learning require all kinds of data, and we expect demand for the sensing technology we have cultivated through our IoT services to grow as well. Furthermore, by focusing on our proprietary development of smart subsystems that combine actuator, sensing, and control technologies, we aim to achieve sustainable business growth while supporting the world of physical AI.
Furthermore, we will actively leverage alliances and M&A to fill in the missing pieces. We are also promoting various initiatives for the creation of sustainable corporate value. In fiscal 2025, we implemented various improvements such as reviewing the composition of Board of Directors, continuing the board effectiveness evaluation by a third-party organization, reviewing the skills matrix, improving the director compensation system, aiming for the enhancement of corporate value, reviewing the personnel evaluation system, and formulating a succession plan. As a result, we have steadily strengthened our corporate governance structure, as shown here. We also selected eight skills required of directors from the perspective of management policy and sustainable corporate value enhancement. We will continue to promote various initiatives and strengthen our governance while striving to achieve sustainable growth of corporate value. Next is our financial forecast for fiscal 2026.
Regarding current order trends, Japan and Europe, which had been sluggish, are now on a recovery track, and order levels are increasing overall month after month. As I have explained so far, orders for the industrial machinery business are trending favorably, and our initial forecast for fiscal 2026 is revenue of JPY 260 billion, operating income of JPY 26 billion, income before income taxes of JPY 26.5 billion, and profit attributable to owners of the parent of JPY 21.5 billion. Furthermore, taking into account downward revisions over the past few years, our revenue forecast, most likely for the first time, is lower than four times the order amount of October-December 2025 quarter.
However, with current orders improving and daily reports of expanding demand, particularly in the semiconductor sector, we will set JPY 260 billion as the minimum target and will disclose any appropriate revisions when appropriate. This concludes our financial results briefing. We will steadily capture the strong demand while further accelerating various measures and structural reforms under our new management policy, along with our streamlining efforts and growth strategy to enhance our corporate value over the medium to long term.