We will now begin the briefing on the financial results for the second quarter of the fiscal year ending March 31st, 2022 of Hitachi, Ltd. Thank you very much for joining us today despite your busy schedules. Today's presentation materials are available on the Hitachi, Ltd. IR w ebsite and the news release website. I would now like to introduce the speakers to you. Yoshihiko Kawamura, Senior Vice President and Executive Officer, CFO. Tomomi Kato, General Manager of the Financial Strategy Division. Masao Yoshikawa, Executive General Manager of the Investor Relations Division. The outline of the results will be given by Mr. Kawamura. We will now switch over the screen. Kawamura-san, please go ahead.
Thank you very much for attending this briefing today. We will be giving you the first half results for fiscal year 2021 for the second quarter, as well as the full-term forecast. This is the table of contents that I wish to cover. Give the major highlights, the first half and second quarter results, as well as the forecast for fiscal year 2021. I would like to give you a detailed explanation today. Please refer to page three. Here, the key messages are presented. There are three characteristics I would like to share with you. The first is the core business, environment and digital. In these businesses, we had a steady performance in terms of revenues as well as orders received. As I mentioned here, in the environment-related area, Hitachi Energy business was very strong.
Hitachi Energy in October has changed from HAPG into Hitachi Energy. Therefore, we will now be referring to this business as Hitachi Energy going forward. Orders intake was very strong, as mentioned here. For the second quarter, revenues was JPY 253.6 billion, year-on-year or 109%. In terms of the orders, it was very strong as well. The Q2 orders was $2.5 billion, and the backlog has increased to $12 billion. In terms of the digital, in July, we have acquired GlobalLogic, showing strong growth for the second quarter Y oY, was growing very strongly at 152%. EBITDA ratio was very strong as well.
In the next area for DX, demand was very strong. IT segment remained very strong as a result of the strong demand, showing a record high operating income. The operating profit was JPY 112.3 billion, which is the highest ever. For Lumada on the other hand, it performed very well. The first half the revenues was YoY 138%. Furthermore, there were major contracts received as well. Two representative examples are shown here. For Hitachi Energy, the HVDC interconnection in the Middle East and North Africa to the tune of JPY 60 billion was received.
ILSA in Spain maintenance plan has been received for Hitachi Rail to the tune of EUR 736 million. Now, in terms of the business risk, it has come to the fore. There are three that should be mentioned here. The first is the impact of the semiconductor shortage. As I will explain later, it has had a significant impact on the automotive-related business. Furthermore, in several segments, the soaring material prices is having an impact as well. Steel as well as copper have had an impact. Cost is soaring, and the impact has been reflected. Regarding COVID-19, on the other hand, in the Asian region, in the supply chain, the impact has been very strong.
In particular, in Thailand as well as in Vietnam, for automobile as well as consumer electronics, the supply chain has been disrupted because of the stoppage of the factories and parts are in shortage. These business risks are becoming larger. This is likely to continue in the third quarter as well as the fourth quarter. These are major risks, but we will absorb these risks even in this challenging business environment. Therefore, the net income forecast will be maintained. For the five sectors, we are seeing a steady performance as well. I would like to give you a further detailed explanation later. This is the current situation.
Now please refer to page four. I would like to give you specific information regarding the growth of GlobalLogic, which has been acquired in July. Please look at the table above. Having entered July for the three months the second quarter, as well as to the fourth quarter, the numbers are shown here. Revenues on YoY basis in the second quarter show 152%, and Q2 to Q4 is 134%, as shown on the right-hand side. The DX market growth has been exceeded by GlobalLogic growth.
Adjusted operating income is shown on the next line, JPY 7.6 billion for the second quarter, and JPY 21.6 billion for the second quarter to the fourth quarter. The operating income ratio was 22%-21%, very high. EBITDA was JPY 8.1 billion and JPY 23.3 billion, showing strong growth. In terms of details, we are able to unleash synergies. Vantara in the United States have been collaborating strongly with GlobalLogic. More specifically, to the GlobalLogic customers, Vantara's cloud services are being promoted, and for GlobalLogic's customers, for the Vantara customers, we are also able to propose GlobalLogic business as well.
As synergies is leading to strong growth, we believe that this will be reflected in the results going forward. Now, GlobalLogic is growing significantly. Security service company in the United States is also an area that we have seen new business emerge. Please look at page five. Let me give you further details regarding the Lumada business. From the past, as we have been emphasizing for this fiscal year, forecast is shown on the right-hand side, that we have remained at JPY 1.58 trillion. It's around JPY 1.6 trillion overall. Compared to previous year, growth of 38% has been shown in the first half.
On a full- year basis comparison, growth is expected to be 42%. Please look at the right-hand side for the details. Gray are the related business. In this area, power grid acquisition, as well as Hitachi High-Tech integration, have made a significant contribution inorganically. The industrial products business and Smart Life & Ecofriendly Systems has led the organic growth. GlobalLogic has now been acquired, and integration with the High-Tech has made a significant strong contribution. The breakdown is shown below. 37% is accounted for by IT, and next is mobility is 16%. Overseas ratio is now 49%. This is impact of the GlobalLogic, but half of Lumada business is now generated overseas. Please look at page six.
Here, I would like to give you the impact of the factors in the market. The factors having impact is semiconductor shortage and soaring material prices such as steel and copper, lockdown in Asia region due to pandemic, disruption and logistics and others. The impact is shown for each of the businesses. In terms of the semicon shortage, Hitachi Astemo has been affected the most. Obviously, it has been impacted by the parts shortage. About OEM orders is likely to decline. Therefore, the most significant impact is felt in Hitachi Astemo. In terms of material prices, please look at Energy. There is a strong impact in terms of electrical steel sheet leading to cost increases for Smart Life.
In terms of the impact has been felt because of material prices. In terms of copper is having an impact on wire harness for Hitachi Astemo. Regarding the pandemic and disruption to the supply chain, Astemo is being impacted because of decrease in parts supply in India. Furthermore, in terms of the logistics and others, energy is being impacted because of the large equipment. The gray area are the areas that have been impacted significantly. The actual amount in terms of the impact will be shared later. This has continued in the first half and is likely to continue in the second half. Based on that, we have concluded the results. That is the basic result.
Now let me give you further details regarding the numbers from page seven, which is for the first half. Please refer to page eight. Left-hand side are the revenues, and the middle is adjusted operating income. In terms of revenues, YoY basis, a 29% increase has been recorded. This is because of a market recovery as well as power grid business and GlobalLogic, and Hitachi Astemo increased by 29% in terms of revenues, reaching JPY 4.8326 trillion. Adjusted operating income on the right-hand side is a 1.6 point increase on a YoY basis, increase of 72% from the previous year has been recorded at JPY 310 billion in terms of adjusted operating income.
We have had increase in revenues as well as increase in operating income. Major items are listed on the right-hand side. Overseas revenues was JPY 2.92 trillion YoY, +52%. Lumada business JPY 676 billion, YoY increased by 38%. EBIT JPY 425.4 billion YoY, 39.2 billion JPY. Net income was JPY 322.4 billion, increased by 71.6%. EBITDA JPY 689.2 billion increased by JPY 76.6 billion . Cash flow, there is a decline by JPY 53 billion at JPY 161.4 billion. This is because of a tax increase.
Last year, the chemicals as well as diagnostic business was sold, therefore a profit that was posted last year. Taxes will have to be paid this fiscal year. The tax increase is reflected here. In terms of interim dividend, it will be JPY 60 per share. This is an increase in dividend payment. Last year was JPY 50 for the first half, therefore, compared to that, year-on-year basis, it is a JPY 10 increase. Page nine, please. Results by five sectors, Astemo , and listed as three subsidiaries, are shown here. As shown above, the five sectors revenues and profit increased due to market recovery and the acquisition of the power grids business and GlobalLogic.
First, though, Honda's three parts companies have been integrated, therefore increasing revenues as well as profit. For the listed subsidiaries, Hitachi Construction Machinery and Hitachi Metals had increase in revenues and profit. The results are very strong. As you can see in the middle, you can see the adjusted operating income for the five sectors was increased by, well, the ratio was 7.5%, 3%, 5.7% respectively for five sectors, Astemo, and this is subsidiaries. They were all positive for total 6.4%. As you can see here, for EBIT, which is the third line from the bottom here, on a YoY basis, -JPY 101.5 billion is shown here.
Last year, Hitachi Chemicals was sold, therefore, this is backlash from the previous year. At the very bottom, net income and the right-hand side, the total was JPY 322.4 billion, compared to last year, increased by 29%. Page ten, please. Here, over the next three pages, I would like to give you the results by the business segments in detail. Page ten at the very top is IT. At the very top, revenues was JPY 976.6 billion and this is a record high in terms of JPY 112.3 billion for the AOI as well.
Please look at Energy next, JPY 675 billion and adjusted operating income was -JPY 0.8 billion . On YoY basis, increased by 169% and JPY 6.2 billion increase, respectively. Increase in revenues as well as operating income. Hitachi Energy is shown below. The revenues was JPY 518.3 billion. The adjusted operating income, JPY 27.2 billion. Operating ratio is 5.2%. As mentioned, on the right-hand side, the materials cost increase is having an impact.
On a full- year basis, this 5.2% will be increased, recovering to around 6.6%. YoY numbers should be 222% for revenues and JPY 12.5 billion for adjusted operating income, which means that increase in revenues as well as profit have been recorded. Industry is also very strong. JPY 393 billion in terms of revenues, adjusted operating income JPY 25.5 billion. YoY basis, revenues 108%, AOI is increased by JPY 11.5 billion. So increase in revenues as well as profit. As you can see on right-hand side, JR Automation in the United States have contributed significantly to this business.
Furthermore, in terms of mobility, increase in revenues and profit has been recorded. JPY 709.4 billion in terms of revenues, adjusted operating income JPY 44.9 billion. The Yo Y basis, 132% in terms of revenues, and AOI was JPY 5.1 billion. Increase in revenues as well as profit was recorded. What is noteworthy is Railway Systems. For the Railway System, it was JPY 287.9 billion and JPY 6.7 billion in terms of AOI, which may look small, but on a full- year basis, it will recover to around 6%. Smart Life. This is the only area that was a decline in revenues as well as profit.
In terms of numbers, the revenues was JPY 511 billion, and adjusted operating income JPY 36.2 billion. Revenues YoY basis is 84%, AOI -JPY 9.8 billion. There are special factors underlying these numbers for the segment. As you can see on the right-hand side, the diagnostics have been sold to Fujifilm, that is leading to a decrease in revenue. In terms of the High-Tech 60% for the consumer electronics business, it has led to a decline. Therefore in terms of Smart Life, we have recorded a decrease in revenues as well as profit. Page 12. Hitachi Astemo business is shown here. It has been impacted by the semiconductor shortage.
To compare to the previous year, overwhelming recovery has been made. In terms of revenues, JPY 755.9 billion, adjusted operating income 22.3%, revenues 234%, AOI JPY 41 billion. Therefore, with the Honda parts integration has had a significant impact, leading to increase in revenues as well as profit. Hitachi Construction Machinery is recovering strongly as well on a YoY basis. 131%, adjusted operating income JPY 27.1 billion, recovery has been made. Hitachi Metals has also made a significant recovery, YoY basis, 134% or +JPY 27.6 billion. Significant recovery has been recorded, as you can see.
In the first half, as I mentioned, Smart Life, the divestiture has had negative impact about. Otherwise, in all the businesses, we have recorded increase in revenues as well as profit. Please look at page 13. This is a comparison of the first halves of last year and this year, in terms of revenues as well as adjusted operating income. The items are the same. Please refer to the revenues. Last year was JPY 3.76 trillion. Power grid business acquisition has added JPY 264.6 billion. Hitachi Astemo integration increased by JPY 418 billion. GlobalLogic acquisition JPY 34.4 billion.
Foreign exchange impact will be JPY 133.5 billion because of the strong yen above the movement in yen. Leading to net revenues of JPY 4.832 trillion. Operating income has also followed suit, leading to JPY 310 billion. Page 14. Revenues by market is shown here. Starting with North America, Europe, China, and Japan, Asia and India, other areas, and other areas are shown here. What is noteworthy here is the number in the second, which is showing the growth year-on-year. For North America, 54%, Europe, 53%, China 47%. For Japan is slow at 4%, almost flat.
Asia and India, other areas, +61% and other areas, 42%. Therefore, there is delay in Japan, but the overseas market has been recovering very strongly. Below, the overseas revenues was JPY 2.92 trillion, accounting for 60% of our business today. Please look onto page 15. Financial position and the cash flows are shown here. As you can see in the gray area, the balance sheet is as of September 30th, 2021. It is not much yet. It is interim result that I would like to emphasize. Total assets should be referred to. As of the end of September, JPY 12.879 trillion has been recorded.
This is an increase of JPY 1 trillion. This is because of the acquisition of GlobalLogic. The increase is financed by the interest bearing debt, which is around JPY 3.3 trillion on a net basis, increased by JPY 916.2 billion, which was funding for the acquisition of GlobalLogic. As a result, the total assets has increased to JPY 12.9 trillion. D/E ratio was 0.54x , increased to 0.7x now. With the cash flow from operations will lead to decline to around 0.5 by the end of this fiscal year. Cash flow is shown below. Cash flow from operating activities decreased by JPY 53 billion.
This is because of the tax payment. That is all for the first half. Next, I'd like to talk about the second quarter. Next, I have two slides just on quarter two. Page 17, please. This is the slide for second quarter only for five sectors, Astemo and listed subsidiaries. As you can see in the top, the content is similar to the first half. Five sectors revenue profits increased due to market recovery and the acquisition of power grid business and GlobalLogic. Astemo also increased both in sales and profit, and listed subsidiaries increased in both revenues and profits.
Now the adjusted operating income ratio 8.5% for five sectors, 2.7% for Astemo, and 6.9% for listed subsidiaries, total 7.3%. Below that, EBIT is JPY 206 billion, which is +JPY 132.3 billion on a YoY basis. This is because the overseas home appliances is sold to Arçelik. At the bottom, you can see the net income, far right, please, JPY 200.2 billion. On year-on-year basis, it's +JPY 172 billion. Page 18, this shows the second quarter highlights of the numbers that I just explained. Vertical axis, IT, Hitachi Energy, Buildings, Railway, Hitachi High-Tech, and Hitachi Astemo. They have large portfolio, so only the large asset businesses, we extracted the large asset businesses.
One characteristic point is, on the far right, adjusted operating income. You can see 3 in parenthesis, which is IT, Hitachi Energy, and Buildings, so -J PY 1 billion, - JPY 4 billion, and - JPY 500 million. The raw material procurement is the big factor. On the full-year basis, as mentioned earlier, IT and Hitachi Energy and Building Systems, they've all increased in revenue and profit. This is only for the second quarter, and the reason is on the right side. IT, lockdowns, mainly in India, and investment restraint of customers in transportation field and other factors. For adjusted operating income, there's GlobalLogic acquisition-related amortization. Excluding that, but including that, we will look at like this in the second quarter. Hitachi Energy, - JPY 4 billion for second quarter.
This is because of the soaring raw material prices. That is a big factor. Building Systems also impacted by the raw material cost increase. This cost increase impacted the second quarter heavily. Next, page 19, we will talk about the highlights of full- year, fiscal year 2021. Page 20, revenues on year-on-year basis, 11% increase. Compared to the previous forecast is 2% up. That is about JPY 200 billion. JPY 8.7 trillion is now forecasted at JPY 9.7 trillion. Adjusted operating income also increased on a year-on-year basis, +JPY 227.8 billion. However, Astemo profit will decline somewhat, and compared to the previous forecast, it is down by JPY 17 billion. I will talk about Astemo in the following slides.
The sales, both revenue and income is up, but JPY 17 billion decline in the adjusted operating income. Compared to the previous forecast, now JPY 820 billion, no change from the previous forecast. Net income, JPY 550 billion, no change from previous forecast. EBITDA. Amortization, I had some adjustment, so, down by JPY 18 billion compared to the previous forecast, JPY 1.352 trillion. The cash flow from operating activities, no change. Core cash flow, free cash flow, no change. ROIC, 8.1%, up to 8.1% now. In addition, there's the FX rate in the first half.
We used the actual rate, but for the second half, as you can see here, dollar assumption is JPY 105 to the dollar, JPY 125 to the euro. This is budgeted. Yen will continue being weak. For JPY 1 depreciation, the FX sensitivity is listed here. This is the sensitivity only for the second half. For dollars, if yen depreciates by one yen, revenue goes up by JPY 10.5 billion, adjusted operating income up JPY 1.5 billion, and euro revenue and operating income will be up by JPY 4 billion and JPY 0.5 billion respectively. JPY 10 billion impact in the second half is anticipated. Next, page 21. The three categories, five sectors, Astemo, and listed subsidiaries. The text at the top is the same as the second quarter.
Five sectors with the acquisition of power grid business and GlobalLogic, so revenue profit increased. Astemo, both revenue and profit increased. Listed subsidiaries, same, revenue and profit increased. Now, adjusted operating income ratio, five sectors is up to 8.7% now, Astemo 4.4%, listed subsidiaries 5.8% YoY, improvement of 4.1 percentage points, and total 7.5%. At the far bottom, net income. This is JPY 550 billion, +J PY 48.3 billion. Next page, three slides from here, shows the business segment's full- year forecast. IT. I explained the first half on page 10 and the second quarter on page 18, so there are some differences, but please refer to 10, page 10 and page 18 and compare as we go. First, IT.
Fiscal 2021 forecast, our revenues are JPY 2.2 trillion and adjusted operating income JPY 263 billion, 12%. Revenues year-on-year is 107%, but -JPY 6.4 billion in adjusted operating income. On the right side, you can see the dynamics. There's no change from the previous segment forecast, but this -JPY 6.4 billion is due to the GlobalLogic amortization PPA and the integration. Including that, the adjusted operating income is -JPY 6.4 billion. Core and excluding PPA and integration, we have both increases in revenue and operating income. Next is Energy. JPY 1.32 trillion revenue and JPY 30 billion AOI and YoY is 119% and +JPY 77 billion respectively. No change from the previous segment forecast.
You can see that Hitachi Energy revenue JPY 1 trillion. Adjusted operating income JPY 66.7 billion. So 6.6%. This, we are up to 6.6% now. Right side, revenues year-on-year 100% and adjusted operating income +JPY 34.5 billion. Below that, you can see related costs. This is the PPA, the amortization, and the structural reform cost. Total JPY 71.7 billion. So we carry this large amount and still generate this much profit. Next page, 23. Industry. So adjusted operating income JPY 69 billion and on a year-on-year basis 102% and JPY 23.4 billion. So both revenue and operating income increased. No change from the previous segment forecast. JR Automation is the positive factor here. Mobility.
Here, we made an upward revision from the previous forecast, an about JPY 70 billion upward revision in the revenues for fiscal year 2021. In operating income, JPY 102 billion, 7.7%. Year-on-year, 110% and +JPY 27.2 billion. Compared to the previous forecast, we revised our revenues upward. Next is Railway Systems. Adjusted operating income JPY 34.2 billion. This is 6%. We're up to 6% operating income ratio now. Smart Life. For the entire segment, as you see on the far right, no change from the previous segment forecast. Adjusted operating income JPY 97 billion. And right side, YoY, revenue 80% and adjusted operating income +JPY 27.6 billion. As I said earlier, this is because of the diagnostic imaging related business sales.
That is about why we have 80%. But that was already incorporated in the plan, so no change from the previous segment forecast. Next page, 24. Hitachi Astemo. Adjusted operating income JPY 68 billion. YoY 156% revenue. AOI +JPY 33.2 billion . Both sales and revenue and operating income increased. This increased from the previous year , but a downward revision from the segment forecast. JPY 60 billion in revenue and JPY 29 billion in adjusted operating income. We will talk about the full- year numbers again later, so I will talk about that later. Next, Hitachi Construction Machinery is recovering. On a year-on-year basis, revenue's 113% and adjusted operating income JPY 41.3 billion.
This is a big upward revision from the last previous forecast. Hitachi Metals, YoY 121% in revenue and adjusted operating income, JPY 38.9 billion. Upward revision. A big upward revision from the last forecast. Next page 25, please. This is the full- year forecast in the same way, compared to FY 2020. You can see the step chart. Revenues and adjusted operating income. The items are the same, so I will only talk about revenues. Last year was JPY 8.729 trillion. Power grid is added. Hitachi Astemo is added. GlobalLogic is added. Foreign exchange factor and other adjustments. For example, diagnostic imaging related business sales and other negative factors were adjusted and total JPY 9.7 trillion. Next, page 26, please.
Now, net income attributable to Hitachi trend. Far left is the adjusted operating income, JPY 723 billion. This is the starting point. Net gain on selling Hitachi Metals shares and structural reform expenses is negative. Other adjustments, EBITDA, EBIT is JPY 820 billion. Interest and income taxes, JPY 180 billion. This may seem smaller than normal, but as you see, we utilized the tax benefits to sales of Hitachi Metals shares. It is a deemed dividend, so we were able to take steps that is not the normal taxation. Non-controlling interest and net income is JPY 550 billion. The appendix for each sector. Page 28, IT. On the far right, you can see the FY 2021 forecast.
On the far right, you can see previous forecast comparison, how the full- year forecast looks like compared to the forecast. As you can see, IT full- year forecast is JPY 2.2 trillion revenue, and adjusted operating income is JPY 263 billion. In the far right, you can see the comparison to the previous forecast. It is in line with the plan, in line with the forecast. If in the same way, please look at the Energy, next page, 29. The full- year forecast revenue is JPY 1.32 trillion. 100% compared to the previous forecast, no change. Adjusted operating income, no change. This is also going in line with the forecast. Hitachi Energy is second from the bottom.
No change here, but the key point is, compared to the previous forecast, JPY 1 billion increase, but basically no change. Next is page 30, industry. Here again, both revenue and income are increasing, but on the far right, previous forecast comparison, 100%, so no change. Adjusted operating income, ±0 , so no change here. We are in line with the plan. Mobility, page 31. Basically no change, but the increase in revenue. Revenue YoY 110%. Previous forecast comparison, 106%, so it is slightly above of the plan. Adjusted operating income is no change. In line with the plan. Next, please. Smart Life. Revenues f ull- year forecast, JPY 1 trillion and YoY 80%, so this revenue is a decline.
However, compared to the previous forecast, it was already incorporated in the forecast, so 100%, no change. Adjusted operating income, no change from the previous forecast. Page 33, Astemo, Hitachi Astemo. As I mentioned, adjusted operating income, second from the top, JPY 68 billion in fiscal 2021 forecast. On YoY, it is JPY 33 billion up. Compared to the previous forecast, it is down by JPY 29 billion yen. Hitachi Construction Machinery, FY 2021, is JPY 920 billion, 113%. On that JPY 73 billion, +J PY 41.3 billion, and +J PY 12 billion. Hitachi Metals, JPY 34 billion, + JPY 38.9 billion. No change from the plan. Thank you very much. That concludes my presentation.
Thank you very much, Mr. Kawamura. We will now like to take questions. Those of you with questions please use the raise your hand button displayed on the web conference system. When your name is called, please unmute and state your name and affiliation and ask your question. Now, during the process, if you no longer need to ask the question, please release your raise your hand button. Please note that the video of the person asking the question will not be shown. We will first of all take questions from the media on the Japanese channel. The questions from institutional investors, as well as analysts on the Japanese channel, and then English channel. The floor is now open for the media on the Japanese channel.
Hiroi-san, please, unmute and ask your question.
Question. I have two questions. First question is regarding page six, the impact of the business in the matrix. In terms of semiconductor as well as the material and prices and logistics and lockdown, what is the actual amount of the impact for each of the different areas?
Please ask the second question as well.
Now, you said that our environment and digital business is really very strong. Digital is probably growing in terms of the other business. But what about the environment business? Do you have numbers to illustrate this? For your environment business overall, what is the profitability in the recent past?
Now, regarding your first question regarding the impact of the various factors such as semiconductor will be responded by Mr. Kato.
Now, regarding the business environment on page six, the most significant impact is semiconductor shortage as well as material prices. Overall, the pandemic lockdown as well as logistics impact was relatively small. Therefore, in terms of the semiconductor shortage as well as the soaring material prices. The rough numbers will be presented. For the semiconductor shortage, the most significant impact was felt in Hitachi Astemo. For automobile OEMs, semiconductor procurement is in shortage.
On our part, we are also purchasing semiconductors, in terms of scale for the annual amount, as well into JPY 180 billion in terms of revenues. In terms of profit, JPY 7 billion is the impact. Obviously, we are trying to make improvement of the situation. The plant numbers are not being impacted significantly. Those are the numbers impacting this area. Next, material prices for steel as well as copper. For the annual amount is the following, inclusive of the improvement measures. On a net basis, the impact will be JPY 80 billion. For the first half, JPY 45 billion is the impact.
Thank you very much.
To your second question. Currently in terms of environment, w e don't have the profit number for this area specifically. There are three environment-related business. First is Hitachi Energy. With the power grid, the transmission network can be improved, renewable energies will be supported. Basically, all of these businesses will contribute to environment, so Hitachi Energy will have a significant impact. The second area is Hitachi Railways. Compared to airplanes, the CO2 emissions is significantly lower and electrification is also being introduced. Most of the orders received are environmental areas. Third is Astemo. The internal combustion engine is mainstream now, but EV is receiving a significant investment today.
This will have a significant impact on improving the environment. These three businesses is making a significant contribution in terms of the environment. Furthermore, within our company, by 2050, complying to Japanese objectives CO2 or carbon neutral will be achieved by 2050. In 2030, on the other hand, or in 10 years' time, in Hitachi's, inclusive of group companies, we are going to achieve carbon neutral. In 10 years' time, the CO2 gases will be reduced to zero for Hitachi and the group companies. Half will be accounted for by renewable energies.
The remaining half will be by transformers. Most regular motors and compressors will be subject to improvement, as well as pumps will be improved as well. Compressors will be increasingly introduced to achieve this objective. Lighting is also having an impact. We will have increasing use of LEDs. Therefore, inside the company, in 10 years' time, we have the objective to achieve improvements. That is all.
I would also like to give further information. Page one, the environment-related business numbers are presented here. For Hitachi Energy, in terms of orders received, is shown here. Compared to previous year at the level of 116%, HVDC as well as transformers, they are driving this improvement. Furthermore, in terms of revenues, compared to previous year at 109%. Therefore, a very strong demand is shown in this area.
A question. I have a confirmation to make. Hitachi Energy, you said that the orders are increasing, so there is room for further improvement. Is that a correct understanding? Regarding amortization, that's going to be negative. Going forward, if Hitachi Energy orders increase as well as revenues increase, do you think that the negative factors can be absorbed in one year's time?
Answer, yes, that is the correct understanding. Currently, it's only two years. In terms of amortization as well as cost is increasing. Revenues are increasing, so therefore we'll be able to absorb these costs. Orders are increasing, but this is not reflecting in P&L. This is because of the pandemic impact, especially in the European front. There is logistics delay and capacity utilization is not at peak yet. When we come out of the pandemic, orders will be reflected increasingly in the P&L. Therefore, that is the direction we are pursuing. Your understanding is correct.
A question. When will it be reflected in the P&L?
Answer. Well, it depends on the COVID-19 situation. It is likely that it will be difficult within this year. For next year, there will be some subsequent impact as well. From about this time next year, I believe that the backlog of orders will be reflected in the P&L. The external factor is very significant, therefore, I cannot give you a specific timing. I think within one year, we will revert back to that level.
Thank you.
Thank you very much. Next, Mr. Hiraoka, please. Please u nmute yourself and ask your question.
Question. The semiconductor shortage and the raw material cost increase are my questions. Starting with the chip shortage, when will this continue, and then the raw material increase? This raw material and chip shortage, please give us some examples of the countermeasure you're taking. The second question, this year, with the semiconductor shortage, the company, this will push down the company-wide profit. In the two to three-year span, with the semiconductor shortage, the semiconductor inspection machine demand will grow, or because of the shortage, the logistics and the supply chain reform, your Lumada and your GlobalLogic solution demand will rise to improve the logistics. Is that anticipated? With the raw material increase, the construction material will increase. If the shortage and the raw material cost increase continues, how will this impact in your company, in your group-wide profit? Thank you very much.
The first one, about the semiconductor shortage. It's hard to tell how long this will continue. I talked with Astemo. The third quarter is a bigger problem than the second quarter. That's their estimate. Astemo is interacting with customers, so they understand the customer situation, and that is the judgment they have. This is not just a one-off supply and demand imbalance. There's a structural problem, like U.S. and China problem. China is now reducing the inventory or restraining the new investment. All these structural problems are behind it. It's not going to recover very rapidly or resolve rapidly.
The semiconductor production is now increasing around the world, and so we will see this impact by the end of this year. From this time next year, the supply and demand will loosen, will not be as tight. Astemo has used that as a basis of their business plan. Now, raw material outside of semiconductor. Some items are more serious. For example, steel or iron ore and coal. This is abundant in earth, so the production can increase, but copper is difficult because copper mine is limited around the world, and there are no new copper mines. On the other hand, with the electrification, demand is soaring, so the supply and demand will continue being very difficult, very tight.
On an item-by-item basis, we have to look at this individually, how the impact turns out. Copper problem will take time to be resolved. How we deal with it is for semiconductor, we need to diversify the supply source. We are dealing with suppliers that we did not have business relations before. For new investments, Hitachi High-Tech and others are now trying to start new investments. Those are the measures we're taking. Raw material side, it's about how we procure. First of all, long-term stability is important. When demand increases, we will try to procure on a spot basis. If the price remains at a high level going forward, we need more fundamental measures. We are studying various aspects now.
Second point, that the semiconductor shortage and the raw material cost increase, maybe we can do more business in this circumstances. Of course, that is the case. It is difficult in the first half, cost increases, but in the second half, we do business. How much we can offset is the key. One analogy is in the second quarter, if you can see the financial performance of the second quarter, as Kato-san said, it has a great impact on us. But we absorbed it and generate profit. The supply shortage is a big negative impact, but, I think the momentum to conduct business is a stronger factor, we think. But how much impact on our business, it's hard to say. It's hard to quantify, but that is our macroeconomic view. Thank you. I hope this answers your question.
Answer. You talked about medium to long term, and I'm talking about short term. Sorry about short term, but semiconductor manufacturing equipment, Hitachi High-Tech in the Smart Life sector, the first half order is very strong. On a year-on-year basis, it is 152%, of which semiconductor-related nanotechnology solution order is 317% year-on-year. Right now, the order is extremely strong. Thank you.
Thank you very much for a very detailed explanation.
Next, Yamagata-san, please. Please unmute and ask your question.
Question. I have two questions. First question is regarding shortage of semiconductors. I have a detailed question. Regarding the IT segment, there is impact of semiconductor shortage. Specifically, what, where is the impact going to be, in what way? In September, the digital agency has been established. Centering on the IT segment, what kind of profitability increase can be expected from the digital agency establishment?
Question regarding semiconductor in an IT segment, storage is related, so Mr. Kato will respond.
I don't have the specific numbers, but in terms of products, according to the materials, page 10 should be referred to. This is for IT segment. Service and platform should be referred to for storage products is using semiconductors. There are products that is being procured. Servers are also using semiconductors. These are the areas that will be impacted for the first half. For hardware, sales has declined year-on-year.
To your second question regarding digital agency. We are watching the situation very carefully. With the digital agency established, there is going to be significant change. As discussed in the media, My Number Card enhancement, or the function enhancement, is being contemplated. With added functions, it could be very promising. My Number Card has been promoted by Hitachi over the years.
My Number and the financial services and extension with the insurance business could be very promising for us. We hope that we can capture this business going forward. Furthermore, the IT or DX will be promoted through the digital agency. Beyond the My Number system, the horizontal connectivity as well as data sharing are areas that we could provide services. We believe that we can capture business in this area. In terms of data management, we have Lumada. Therefore, we hope that we can capture more businesses in this area going forward. Thank you.
Thank you very much.
We have many hands, but in the interest of time, we would like to move to the institutional investors and analysts for this time. Next is Japanese channel, institutional investors and analysts question. Please raise your hand if you have any questions. First, Ezawa-sama. Mr. Ezawa, please unmute and ask your question.
Question. Thank you very much. I have two questions. The first half results compared to your internal plan was it an upside or a downside? If you could break down and show us where you exceeded and fall short. There are many, but the main segments, please. The raw material cost issue and the foreign exchange were different from the original plan, I think. If you could give us the details to understand so that I can understand the real actual business. The main segments, please. That's my first question. Second question, your full- year forecast on the consolidated basis is revised downward. Profit is revised downward. What were the factors that bring the second half down? And what are the upward upsides, positive and negative factors? Thank you very much.
First, the first half, BU by sector, Mr. Kato will explain.
First half, revenue consolidated against plan was JPY 80 billion in excess. Foreign exchange was +JPY 60 billion, and other than FX, it was +JPY 20 billion. That was revenues. Of which five sectors is the majority, JPY 83 billion increase. Astemo, -JPY 33 billion. That was down. The listed subsidiaries, + JPY 30 billion. The five sectors breakdown is, of the JPY 83 billion, FX is about 1/2, and the other factors are 1/2. Now, by sector, the ones that exceeded was Energy. HAPG, the Hitachi Energy order, is very strong and revenue is growing, as I mentioned earlier.
Thanks to that, it is showing a strong growth. Industry. Here again, systems and hardware products, we do all the businesses. The market is recovering in general, and there was some front-loading from the second half. In revenues, mobility, especially Buildings, in China, the escalator, elevator business is growing in China, so that is showing a strong growth. Of the five sectors, these three, revenue grew very strongly. Now operating income. Overall, Hitachi consolidated +JPY 10 billion, of which foreign exchange is 50% and the other 50% is organic factor.
Five sectors is JPY 10.5 billion. Astemo, -JPY 13 billion, so that was a shortfall. The listed subsidiaries, +JPY 12.5 billion. Now five sectors, as I said earlier, Energy, industry, and mobility are about the same size. Total is +JPY 10 billion. Revenues grew. In buildings, the raw material cost increase was a negative factor, but profit was a positive.
Thank you very much.
On the full- year basis, macroeconomic view, if you could look at page 33, please. Astemo at the very top, on the far right you can see the previous forecast comparison, -JPY 29 billion in adjusted operating income. This is the full- year, JPY 17 billion. This is majority of the reason we will have - JPY 17 billion overall. JPY 10 billion, remaining JPY 10 billion, we will recover with the other sectors, and we will keep the negative at JPY 17 billion. The foreign exchange is another factor. The key is how much of the JPY 17 billion we can absorb. That is our challenge in the second half.
One more additional piece of information. Downside risk is the semiconductor shortage and the raw material cost increase. The plus, positive factors are the market recovery. We are anticipating market recovery. At this moment, we are seeing this recovery, so if it exceeds our estimate, it can be a positive impact, positive factor.
I see. Question. I understand. Oh, yes, I'm fine. Thank you very much.
Next. Yoshizumi-san, please. Please unmute and ask your question.
Question. Thank you very much for this opportunity today. I have two questions. Regarding the orders for the five sectors, for the second quarter, what is the growth rate year-on-year? Please elaborate. Second question is regarding material shortage. What is the actual amount? You mentioned it for semiconductor on an annual basis, profit basis is about JPY 70 billion. If you look at the second quarter only, what is the impact of semiconductor and what is the impact of the material shortage in terms of profits? You said that in the third quarter the problem will become more serious. What is going to be the impact assumed for the third quarter?
Answer. Regarding the second quarter orders.
Orders will be covered first for the second quarter. Let me explain. For the second quarter, year-on-year basis, Hitachi consolidated basis, in terms of results, in terms of orders, it's 116%, 116%. Foreign exchange as well as other M&A adjustment will be made, resulting in 106% for the second quarter, year-on-year basis. By segment, let me give you the breakdown. Increases being seen in Smart Life, 109%, 119%. As I mentioned earlier, High-Tech is having an impact, very strong at 170%. The next is mobility. 103% overall, but for Building Systems, Chinese business is remaining very strong at 119%. For industry, overall is 100%, but for hardware product is 120%, remaining very strong.
In terms of semiconductors, as Kato-san has already mentioned today, adjusted operating income basis for the first half, JPY 20 billion is the negative impact. For the second half, impact of the JPY 50 billion. So the overall impact is JPY 70 billion for the full- year. JPY 20 billion in the first half will increase to JPY 50 billion impact in the second half. Therefore, I said that 3Q and 4Q is going to be stronger in terms of impact. Overall, negative impact for the full- year is JPY 70 billion. I cannot give you a breakdown for the third quarter and fourth quarter. The third quarter is going to be having a stronger impact compared to the second quarter.
Regarding IT and Energy, please elaborate the growth rate for industry. You said it is flat, which doesn't sit well for me. I thought it was going to be stronger. Is it impacted by the material shortage? Is that the case?
Regarding IT, year-on-year, 94%. It has been adjusted. The full GlobalLogic is not included, and therefore, this is based on a conventional basis. For Energy, 69%. The newly included business is not included. For industry, I mentioned products earlier. On the other hand, for industry business unit or IT business, compared to previous year is at 88%. For product per se is growing by 20%. However, the other areas is declining year-on-year.
Question. IT, -6%, can you comment about that? I thought it was going to be recovering. Revenues was could be subject to backlash, but I thought that the orders would be improving.
Answer. Regarding the front side, we are seeing growth, but in the hardware, as mentioned in our explanation, in terms of storage as well as service, this has been impacted by the shortage in semiconductor, therefore declining overall deterioration. For the front side, Financial Business Unit as well as the Social Business Unit are 101% and 113% respectively growing year-on-year. Thank you.
Thank you very much.
Next. Mr. Okawa, please. Please unmute yourself and ask your question.
Thank you for today. I have two questions. First is Hitachi Astemo, some detailed questions. First quarter and second quarter, the revenue only went down by a few percentage points, so this is different from the automotive situation. For second half, only three percentage points increase. It doesn't seem like it's including the recovery production, so this seems like a different movement from the market. How should I understand this, t he automotive is the conservative part? Second question. At the beginning of the year, you said that the adjusted operating income, you will aim for 10% next year. Have you changed your objective after the second quarter results? Thank you very much.
Starting with Hitachi Astemo. As I mentioned in the presentation, the OEMs, we have close communication with OEMs when we formulate our numbers. Our main customers, Honda, Nissan, and overseas, Ford and OEMs, they are all reducing their production by 30%-40%. They've informed us. The discussion on when this will recover has not been completed. Based on that, we are formulating this number. It may seem like conservative to you, but the U.S. automotive market may recover more, faster than expected. Then they will correct, revise the production forecast, in which case, we may be able to present to you the new forecast. So far, the OEM is giving us very stringent numbers. That is the basis of our numbers. Next, what our 10% target looks like now.
To the 2021 medium-term plan, the two 10% is included. Adjusted operating income 10% and ROIC 10%. Those two numbers are included. This fiscal year is the final year of our medium-term plan, and it is as mentioned today, this fiscal year, 10% for both are difficult, but depends on the market trend. Next fiscal year, in fiscal 2022, we want to achieve the two 10% targets by next year. It will be one year later, but we want to achieve. We are now gearing up the 10% now. We are trying to achieve this one year later. Thank you. I hope this answers your question.
From IR, Yoshikawa, I would like to add some more information. Astemo is difficult to understand. There was the M&A integration, so in the first, like first quarter, this is not necessarily the official number, but the integration. Based on the integration on a pro forma basis, the second quarter year-on-year is considered. In that case, this number, we disclosed the Honda numbers last year, so this 93%, around 7% decline on a year-on-year basis in revenues. The Tier 1 in Japan and abroad, the second quarter street estimate, not everyone has done their financial results briefing. It is down by 7%-8% according to the street. This is in line with this level of slowdown. On a full- year basis, in the Investor Day, we disclosed JPY 1.48 trillion. This is the previous year pro forma revenue.
This year we made a downward revision, but the year-on-year growth is around 4%. This is still unforeseeable, but the OEM's production status, the other tier one and tier two movement is now declining. Compared to the market, we will keep a close eye on how we compare with the market. According to the market data, FY 2020 and FY 2021 are flat in terms of production unit. Growth of 4% in revenue, this may be a bit aggressive or just right. Thank you.
Thank you very much.
Thank you. Harada-san, please. Please unmute and ask your question.
Question. I hope you can hear me.
Yes, we can.
Two questions. First question is regarding the production constraint. In terms of materials as well as semiconductors, there is a constraint. In addition to that, other materials such as among semiconductors as well as resin, even normal products are difficult to procure recently. In your company, have you been impacted as well? In terms of the inventory assets, for the first quarter to the second quarter, there is an increase. It looks as if you are not having a negative impact in terms of production, but it is a mixture of different businesses. Mass production could be impacted more significantly. I want to know whether there is any production constraints. The second question is a long-term perspective question.
Renewable energies is likely to take off. In your company, grid as well as, you know, transformers, as well as, VPP and other businesses have promising opportunities for renewable energies in 2030 as well as 2040. What kind of market size can you expect, are you aiming for? Domestically, you have also ABB , therefore, overseas market as well. What kind of business vision are you aiming for in 2030 and 2040?
Answer. First of all, regarding the production constraint, there is semiconductor, steel and copper are the constraints, and resin as well as derivatives of petrochemical products is also being impacted.
The most significant impactor is the steel, copper, aluminum, as well as semiconductors. The heavy metals have been impacted significantly. Regarding the petrochemical derivatives, you know, we can manage because of the relations we have with manufacturers. Therefore, in other than hard metal, the constraint is limited. Now, regarding your second question, regarding the environmental business, this is something that we are contemplating today in terms of our long-term target. Yoshikawa-san, can you give further details?
This is under consideration today. In 2016, the environmental vision was formulated. Mid- to long-term, the three pillars were identified where we hope to provide solutions. This is still relevant. Based on that, in May of next year, in the next mid-term management plan, it will be incorporated. First is decarbonization. Carbon, power grid, railway, as well as EV. The environmental related business. Beyond that, the second area is the recycle-based society. This is elaborated in our sustainability report. The sewage as well as water supply infrastructure, as well as desalination of seawater being pursued. In these areas, we hope to make contribution to society. A third pillar is nature symbiosis promotion. Renewable plastic can be used as well as renewable energies. Our promotion system will be enhanced as a business. Fourth pillar.
This is to utilize the IT platform, the digital strengths will be leveraged for all these three areas that I have just mentioned. This is something that we have been contemplating, and this is still subject to consideration. Answer. Thank you.
Thank you very much.
Thank you very much. Next, Ayada-san. Mr. Ayada, please unmute yourself and ask your question.
Question. I have two questions. Lumada related and Hitachi Astemo. Two questions, please. First, Lumada second quarter revenues on a like-for-like basis, on the organic basis, how much growth did you see? What was the percentage of growth? And the full- year plan based on the organic basis, what does it look like? Page four, GlobalLogic second quarter and full- year forecast is presented here. The message here is that, the growth of the second quarter in revenues and profit, it seems high, higher than the full- year forecast. Your implication is that the second quarter was strong. Are you trying to say that second quarter was significantly strong? That's my first question. Second question is about Hitachi Astemo. I understand this year's situation, but the downward revision this year, how will this impact next year?
If you could give us some insight. I understand that it depends on the supply chain, but if the recovery production will gain momentum, then there is not much concern for next year, or the integration impact that you are planning now may delay with the various disruptions. A qualitative explanation is fine. Thank you very much.
Answer. Let me- Kato-san will explain Lumada, first question.
Lumada. My numbers here is first half, so let me answer in first half. The overall growth in the first half was 38%. Organic was 14%. It was mainly IT and industry were the drivers. Our full- year, 42% growth is our plan. 16% will be the organic growth. Mainly IT and industries will be the driver.
Your second half, GlobalLogic, as mentioned in page four, the result and the forecast, the forecast seems conservative. The second quarter result was stronger than our internal forecast. We had an upside. GlobalLogic, this is a standalone number here, but other than that, there is the PPA amortization and the related cost. If we include those costs, the first year I did not think will be profitable, but with this result from second quarter, we are profitable and contributing positively even with those costs.
Let me continue on with the Astemo. The conclusion is fiscal year 2021 numbers, this is the bottom. The reason is, this profit, downward revision of profit starting from semiconductor. We've taken various structural reform measures, so cost control, and price passing on of the prices.
JPY 40 billion-JPY 50 billion measures have been taken, and this is not a one-off cost. This will not come back. Therefore, once the semiconductor comes back, this will be positive to our profit. This operating income will be the bottom. Once semiconductor situation improves and OEM's order comes back, this will be the bottom. I don't know if we can recover to JPY 90 billion, but we will work hard to achieve that level. Thank you very much.
May I? Lumada second quarter, we disclosed first quarter, so if you can do the subtraction, you can see the numbers. As Kato-san said, IT and industry are the drivers in the organic. First quarter, organic growth on the same basis will be higher, and second quarter seems like it's slowing down. Now, standalone GlobalLogic growth. As you know, EPAM and Globant, those are the pure comps. Second quarter alone, revenue year-over-year is not that inferior, so the fifties, in the fifties, it's not inferior. Second point, EBIT. This is different from our AOP, and EBITDA margin level.
Our standalone is better than the two other companies. PPA and the one-off cost, we have a strong base on a standalone basis to be able to absorb the PPA and the other costs. Thank you very much.
Thank you for the detailed explanation.
Bolor-san, please. Bolor-san, please.
I have two questions. The first question is regarding mobility business. Revenues is upward revised. Operating profit remains the same. For Hitachi High-Tech, revenues are being upward revised and is a high margin business. Operating profit is not changing. Why is this? Is there room for upside for within IT business? Front business is very strong. Lumada and GlobalLogic have experienced upside. These are very profitable businesses. It seems that operating profit forecast is conservative. That's my first question.
Second question, mobility business is very good, 19% for buildings. Orders are increasing. What about Evergrande? Is that going to have an impact? Is real estate bubble risk? What is your take on that? And do we have to be concerned?
Answer. Regarding mobility, the first one will be answered by Kato-san, and I will address the Evergrande issue.
As you have rightly mentioned, for the building system as well as high-tech, in terms of the revenues, we have made a upward revision. Profit is flat. For buildings, demand is very strong, especially in China. That is the reason why we made the upward revision. There is material cost increase. That is the reason why we have left the profit flat. Regarding high-tech, the revenues are being revised because of semiconductor production equipment as well as diagnostics. But it's not these products, but industrial solutions is the reason. In terms of the materials and the systems are sold and revenues in this area, we thought that it is limited in terms of risk. So we will only post the margins. So it looks, it appears that the revenues is larger. It is not directly linked to profit. That is the reason why there is a disconnect here.
Now, regarding Evergrande in China, when the announcement was made, there was concern about defaults. Therefore, we had to evaluate the situation.
The elevator business in China is very large for us, and therefore, the Evergrande business is not that much. We are selling elevators, but it can be covered by the profit that we are generating and still enjoy growth. Therefore, there is no significant concern regarding Evergrande. However, it could go beyond Evergrande and have impact on the whole real estate in China. It could have impact on credit in China, which is more significant problems. That is the reason why we are watching the situation very carefully so that appropriate measures can be taken. Evergrande will not have a significant impact on our performance. Now, regarding IT and Lumada, as you have rightly mentioned, you may expect further profits.
Although numbers are not being disclosed, the core business for Lumada is very close to the IT business. Profit will converge with the IT business. For the related business where Lumada will be provided to other businesses, high profit can be expected. Even 15% or 16% can be expected for this area. Which means that the data centric or data utilization based on Lumada will become an important pillar for our business going forward. Thank you.
Thank you very much. It is past time. We see, I still see many hands. I am sorry. We will take one last question. Mr. Kitamura, please unmute yourself and ask your question.
Can you hear me?
Yes.
Thank you very much, and thank you for today. This is not related directly to the financial results today, but it's an important point. The quarterly disclosure. Prime Minister Kishida referred to the review of the quarterly disclosure. This point has been raised a few times in the past, but h ave you internally studied the pros and cons of this quarterly result and what is your stance as of now? Thank you very much.
Thank you. I am a member of the financial consultation, a member of FSA, and also the member of the financial disclosure. We discuss this on a periodic basis. I'm the representative of the business companies. From analysts, I hear that in both councils, we hear that this quarterly disclosure is too much. On the other hand, the disclosing side, our company side, today, we are announcing our second quarter results. In our department, we are discussing and working about the third quarter in the parallel. This is a lot of work. This quarterly disclosure. We are not a company that mandates this, that we must do it. I think it should be voluntary disclosure like U.S. and Europe.
That is my personal view that I expressed in the council, and we are discussing internally. For how long we can continue this quarterly disclosure is now being discussed. In a company like Hitachi, we have resources, so we can somehow manage to continue quarterly disclosure. There are companies that are facing difficulty in disclosing on a quarterly basis. It's not just about us. It's about the disclosure and the relationship with the capital markets. We need more discussion. In Europe and U.S., we are seeing some voluntary disclosure, so I think Japan will move in that direction. We don't know the conclusion yet, but that is the kind of discussion we are having with the government and internally. Thank you.
Thank you very much.
Thank you very much. With this, we would like to bring the earnings explanation for the second quarter of fiscal year 2021 to a close. Thank you very much for your attendance today.