Before we begin, I would like to express my deepest condolences to those who lost their lives in the 2026 Kumamoto earthquake on July 28th, and I offer my heartfelt sympathies to all those affected by the disaster. I sincerely pray for the safety of everyone in the affected areas, and for their rapid recovery and reconstruction. I am Nakane, CFO. I would like to explain the summary of our financial results for the first half of fiscal 2026. Following the transfer of the automotive and transportation business, consolidated revenue and consolidated operating income will be explained as the continuing industrial machinery business. Revenue was JPY 151 billion, up by 32.4% year-on-year. Orders remained strong and revenue increased due to the expanded capital investment, primarily in the semiconductor industry, driven by demand for AI. Operating income was JPY 22.4 billion, up by 268.9% year-on-year.
Negative factors such as inflation, rising U.S. import tariffs, and one-time expenses of JPY 700 million associated with the implementation of the Next Career Support Program were offset by the volume effect of the increased revenue and the benefits of structural reforms, resulting in higher operating income. As a result, revenue and operating income exceeded the revised plan set in May 2026 by JPY 13 billion and JPY 7 billion respectively. Furthermore, we recorded a gain on transfer of business of JPY 16.4 billion, which is mainly attributable to a reversal of the foreign currency translation adjustment, resulting from the transfer of the automotive and transportation business. Regional sales increased in all regions year-on-year, thanks to the factors mentioned earlier. Next is change factors in operating income for the industrial machinery business compared to FY 2025.
Starting with negative factor, fixed cost increased by JPY 2.5 billion, mainly due to increased labor cost and personnel expenses resulting from the increase in revenue. On the positive side, the volume effect due to increased sales totaled JPY 14 billion. Variable cost ratio improved by JPY 700 million, as negative factors such as U.S. import tariffs and rising inflation were offset by effects of structural reforms. In addition to these factors, the impact of yen depreciation was JPY 4.2 billion.
Next is our financial position. Total assets were JPY 480.5 billion, up by JPY 7.6 billion year-on-year, which is basically flat from the end of FY 2025. In the interest of time, I will skip the details. Please refer to the figures in the document for further details. That concludes my explanation. Next, I will explain the status of our initiatives toward achieving our management policy, early realization of ROE of over 10%.
As we promote structural reforms, we are fostering a new corporate culture based on PMVV, purpose, mission, vision, value, and working together as one team to achieve sustainable growth. 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% between FY 2027 and 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. Regarding the selection and concentration in automotive and transportation business, the business transfer was completed on June 1st, 2026. 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. For FY 2026, the measures are producing results as planned, and together with the volume effect, the overall impact is now expected to exceed our initial projections. The total number of measures was 78 at the end of FY 2025, but increased by 10 in the first half of FY 2026, reaching 88 as we continue to advance them while implementing the PDCA cycle. We will continue to accelerate structural reforms by diligently implementing the PDCA cycle, including adding new measures if the effects prove insufficient in order to achieve our goals. Next is on profit increase in growth area.
As physical AI expands globally across manufacturing, we will continue to hone 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 machine component parts business, we 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. As a result, the number of needs identified in the first half of FY 2026 was approximately 2.6x the cumulative total for the five years from FY 2020 to 2024. Furthermore, the introduction of new products and services that meet customer needs is accelerating, which is expected to increase to approximately 2.7 x the previous year.
By fully leveraging our global brand strength, we are accelerating the cycle of what we call sell, create, and manufacture, while pursuing distinctiveness to drive top-line growth and improve profitability, thereby maximizing profit. In our FA solutions business, in addition to machine builders, we have identified mechatronics modules and IoT AI as growth areas to cater to the needs of wider range of machine users and have been developing products and services as shown here. Here, I've summarized our vision for the future and what is expected of us on a single slide. As physical AI advances, we believe that the era of software-defined factories will arrive, where AI will control both simulations and real hardware across the entire facility, learn from data, and ultimately take charge of manufacturing operations 24/7.
In an era where digital twin factories are fully controlled by AI, we need machine component parts with precise operation as directed by the AI, minimal quality variation, and high durability. Furthermore, AI simulation and learning in the virtual space at the heart of the digital twin requires all kinds of data to correct the physical gap between the real world and virtual spaces. And we expect demand for the sensing technology cultivated through our IoT services to grow as well, especially those that transform invisible physical phenomena into meaningful data. Against such backdrop, 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.
The example shown at the lower left is our case study, where we supplied a high-speed, high-precision Linear Motor XY Axis Unit for Sony Group's research project to enable robots to play table tennis at a level on par with humans. You can watch this on YouTube and other platforms, so please take a look to get a feel for the world of physical AI. This is how we will continue to actively invest in areas of future growth, and we decided on new plant extension at THK DALIAN to capture the growing customer demand for our products anticipated in the medium to long term. As explained earlier, we will continue pursuing the company-wide structural reform while carrying out necessary investments with discipline. We are also promoting a wide range of initiatives to drive sustainable improvement in corporate value.
We have implemented various improvements, such as reviewing the composition of board of directors, continuing the board effectiveness evaluation by third-party organization, reviewing the skills matrix, improving the director compensation system aimed for the enhancement of corporate value, reviewing the personnel evaluation system, and formulating a succession plan. Last month, a revised version of the Corporate Governance Code was published. THK will continue and strengthen various initiatives to address this matter and strive for sustainable improvement of corporate value. Next is our financial forecast for fiscal 2026. Regarding current order trends, we are enjoying very strong orders in all regions, driven by increased capital investment, mainly in semiconductor-related fields due to the growing demand for AI.
Based on the information we have provided so far and our outlook, we revised our consolidated revenue forecast for FY 2026 to JPY 310 billion, up by 28.9% year on year. As for operating income, while we expect the positive impact of higher revenue in the second half, we revised the forecast to JPY 48 billion, making prudent assumptions regarding restructuring effects and various expenses. Pre-tax profit is revised to JPY 47.1 billion. In addition, taking into account the gain on transfer of business, including the reversal of the foreign currency translation adjustment resulting from the transfer of automobile and transportation business, we revised net income to JPY 54.8 billion. This concludes our financial briefing. We will steadily capture strong demand and accelerate the various initiatives in our management policy to enhance corporate value over the medium to long term.
We appreciate your continued support. These are the revised figures on an unconsolidated basis, so please also refer to the materials you have on hand. That concludes my explanation.