The time has come to start Hitachi Limited web conference for institutional investors and financial analysts on fiscal year 2021 Q1 earnings. Thank you very much for participating despite your busy schedules today. Let me first of all talk about the materials for today's explanation. Please refer to the materials on the IR site of Hitachi Limited and news release site. I would now like to introduce the speakers to you.
Yoshihiko Kawamura, Senior Vice President and Executive Officer, CFO. Tomomi Kato, General Manager, Financial Strategy Division Masao Yoshikawa, Executive General Manager of the Investor Relations Division. And the outline of the results will be presented by Mr. Gamora. We will be switching over the screen.
Mr. Kamura, please. Hello, everyone. Thank you very much for the introduction. My name is Kawamura.
Thank you very much for participating in this web conference despite your busy schedules. The pandemic is still running rampant. It is having a significant impact on health care services as well as society. We appreciate the fact that we can still pursue our business in this environment. I would like to give you the outline result of Q1 first and then the full year forecast will be presented later.
Now let me, first of all, talk about the 2 major themes the lining of this presentation. JX, Digital Transformation and JX, Green Transformation the major strategies pursued by our company. The major characteristic is that for DX, GlobalLogic, which is Silicon Valley, a company of DX deal has been completed. Now they have joined us. As for green transmission, last year, exactly 1 year ago, ABB, Power Grid Business, has been included into Hitachi.
It is called HAPG. It is going to be changing to its name to Hitachi Energy going forward. We have strengthening this business. And with green, we will be able to provide this stable business in the DX and DS. We now have strategic tools to enable this process.
Furthermore. I would like to mention that the pandemic recovery in Japan is somewhat delayed, instance, there are markets overseas that are already recovering, namely North America, Europe as well as China. In terms of corporate strategy, we have allocated significant resources to the overseas market. This is being reflected in the performance. Overseas business is increasing and increasing revenues as well.
These are the 2 major factors driving the performance. Please refer to Page 3. Key messages are outlined here. First is the result remain firm led by reforms of the business and cost structure. As a result, 1st quarter performance has been very strong.
The first bullet point says that 5 sectors Hitachi TEMA and listed subsidiaries Hitachi Construction Machinery and also Metals have increased revenues and profits year on year. We have secured out council of the reforms of low profit Business and Cost Structure Bearing Fruit.
We are
I am going to be mentioning record highs on 2 occasions today. And the first record high is in the IT segment. It has remained firm, posting record high adjusted operating income and ratio of 9.8%. This is the 1st record high that I would like to emphasize. The next record high is the overseas business.
Building system systems business in China, railway system business in Europe and industry business in North America expanded successfully, achieved record high overseas revenues of 1,400,000,000,000 yen and JPY 59,800,000,000 and overseas revenue ratio of 62%. This is also a record high. These record highs are the a major characteristic of this performance. 2nd area is related to pandemic. Bant.
We are seeing solid order intakes, mainly in markets recovering from COVID-nineteen pandemic. This is very important for us that business remains strong. As mentioned here in the bullet point, we have accumulated orders surpassing the year on year, mainly North America, Europe and China, supported by market recovery. The next bullet point is HAPG, the driver of the green transformation. Steady order intakes have been recorded, and the trend of carbon neutral is driving this business.
So Q1 orders is JPY 2,700,000,000 or the backlog approximately JPY 12,000,000,000 has been recorded. Transforming the business portfolio has been continuing. We have established a joint venture in global home appliances with Ultralex of Turkey. You might know about Ultralex, it is based on Istanbul. It is of the largest conglomerate, accounting for 10% of our Turkey's GDP, Petrochemical, Automobiles, ID.
It is a major company group, corporate group. And with this company, we have established a joint venture. This will allow us to accelerate the business services going forward. Another important tool for the digital transformation's Global Logic. On the 13th July.
This deal has been closed. These are the major points in terms of portfolio reform. Please refer Page 4. I would like to talk about the Q1 results. 3 graphs are shown.
Left hand side shows the gray black gray is revenues and dark gray is adjusted operating income. And the curve in red shows the adjusted operating income ratio. From left to right is fiscal year 2019, 2020 and fiscal 2021, respectively. So for fiscal 2021 Q1 compared to fiscal year 2019 2020, we have increased revenues as well as earnings. And the JPY 2,300,000,000,000 has been achieved JPY 130,000,000,000 for revenues and earnings have been achieved.
For fiscal year 2020, it was impacted by COVID-nineteen. BUNT even compared to fiscal year 2019 before the pandemic we have exceeded in terms of performance. Brian in charge shows the 5 sectors as well as the listed subsidiaries Hitachi Construction Machinery and Hitachi Metals. Now we can compare against fiscal 2019 2020, we have seen increase in revenues and earnings. But if we look at the curve, 7.3% was the level for fiscal year 2020, but it has declined to 6.4% for this quarter.
Because of HAPG, BPA amortization has had an impact to the tune of 40,000,000,000 yen that is the reason why it has declined. But in the absence of this, 7.3% should be achievable. Below is the performance of the listed subsidiaries. You can see a V shaped recovery last year for construction machinery as well as for metals having impacted by the market, but thereafter, it is on the course of the recovery. Please refer to the next page, Page 5.
I'd like to talk about the strategic business of Lumada. Left hand side bar graph and shows the comparison of Q1 on year on year basis. You can see the increase. Red is the core business of Nomada. You can see the significant increase.
JPY 100,000,000,000 has increased. It is an increase of 38%. In terms of the fiscal year, it is likely to increase by 42%. And right hand side, JPY 1,600,000,000,000 is the fiscal year 2021 forecast. There is no change in terms of forecast.
We will remain with this number in terms of fiscal year 2021 forecast. Right hand side shows the composition of the segments. Left hand side is the Q1 for fiscal 2021 and right hand side is the focus for the full year. It is a busy charter, but the outer ring shows the ratio between overseas and Japan. For the Q1.
53% is Japan, 47% is overseas. And the sector breakdown is also shown. IT is 33%. And for the full year, Japan, 55% overseas, 45% IT will increase to 40%. Half of the Romada businesses overseas is the major message here.
Topics are shown here for the Q1. Below, there are 3 to be shared in the area of IT. The Electricity Generating authority of Thailand Demand Response Demonstration Project has been won, inclusive of renewable energy, energy allocation optimization utilization simulation can be done instantaneously using this. We will be providing system in this project. Industry.
In this area, the for tenancy product, the IoT factory will be established for production order as well as procurement will be optimized. And this this will also include the management of HR as well. Its state of the art IoT application will be used for the optimization of this water plant. Last, Hitachi Hi Tech. In the stream of semiconductors on the West Coast of the United States.
Semiconductor Engineering Basel will be established, will be close to our customers to deal with the shortage of semiconductors. IoT will also be a driver here. These are the 3 topics to be shared in the area of Lumada Business. Please refer to Page 7. Once again, let me emphasize the results.
Left hand side shows revenues comparing Q1 year on year basis. Increase of 48% has been achieved in terms of revenues. And for Q1, we have achieved JPY 2,400,000,000,000. Adjusted operating income increased in profit and in terms of ratio increased by 3.7 to 5.5. 130,400,000,000 has been achieved in terms of adjusted operating income.
Right hand side shows the specific items of profits. Overseas revenues, JPY 1,500,000,000,000 is a record high number. The mother business is JPY 303,000,000,000. And for the cash items below, for EBIT as well as net income attributable to Hitachi and EBITDA and cash flows. You can see that on Y o Y basis, it is negative year on year basis.
This is because the Hitachi GE Chemicals and Cash Inflow, and there is backlash that is reflected here. Page 8. The 5 sectors, SMO and list of series numbers are presented here. What is different this time is that in the us. As semi was included in 5 sectors and the other category was listed subsidiaries.
Advanced from this time onward, we will have a demo being independent outside of the 5 sectors because this year from January, we have established joint venture with Honda. It isn't 100% subsidiary of Hitachi Limited. Therefore, we have separated SIMO. Some of the classifications. So it will be 5 Sectors and T.MO and this is the series now.
As mentioned here in the caption, 5 Sectors has been driven by market recovery and acquisition of the Falcon business leading to an increase in revenues and profit. The SIMO's business has increased revenues and profits because of the market recovery. Business Subsidiaries last it was a very difficult year. But having entered this year, Hitachi Construction Machinery and Hitachi Metals have recorded increase in revenues and profits due to market recovery. Adjusted operating income should be referred.
That is JPY 98,200,000,000 for 5 sectors, JPY 12,100,000,000 for a stimulus and this is JPY 20,100,000,000 and total is JPY 130,400,000,000. Out of it is JPY98,200,000,000 or almost all of the total is generated by 5 sectors. Below that, adjusted operating income ratio is shown, 6.4% for the 5 sectors, similar 3.2% business series 4.4 percent, travelers 5.5%. Once again, you can see that the 5 sectors are the drivers of profit. Page 9.
Factors affecting changes in revenue and adjusted operating income is shown here. A wonderful chat. Tracking is made here. Revenues is at the top left hand side. Last quarter was JPY 1,594,200,000,000.
Now on the right hand side, acquisition of the power grid business is plus JPY 260 400,000 yen Honda's CIMO joint venture with Honda has had a positive impact of £275,000,000,000 foreign exchange impact and others. The Hitachi Metals as well as Construction Machinery has recovered, therefore, leading to JPY 2,367,000,000,000 for this quarter. Global Logics is not included in the Q1. Adjusted operating income. Similar trend can be seen here.
Power grid has been acquired, Hitachi's similar foreign exchange and other impact, leading to JPY 130,400,000,000 for the Q1. Page 10. This is showing the financial position and cash flows, the balance sheet as well as the cash flow. Left hand side is as of March 31, 2021. GREY is as of June 30.
It's only 3 months. Therefore, there is no significant change here. Advance over the full year, it will look different. What is characteristic Seko for the Q1 is the interest bearing debt. You can see JPY 2,513,000,000,000,000.
That has increased by JPY 134,600,000. This is because of the global Logic acquisition funding was necessary having an impact here. Below. Cash conversion cycle should be referred to. You can see significant improvement to 68 days.
That is improvement of 12.9 days. DE ratio. Because of the funding of the Logomodgic acquisition. Currently, it is at the level of 0.56x. For our company, we are typically strong.
It has been prevailing around 0.3 to 0.4 in the past. So we would like to improve the day ratio to 0.3 or 0.4. Operating cash flow will increase and asset disposition will be effective measures to improve the DE ratio. We believe that at the same time next year, there will be a significant improvement. Cash flow shown here.
Cash flow from operating activities, JPY 137,000,000 and free cash flow of JPY 130,000,000,000. Next page is the revenues by market. I mentioned that overseas business is improving. Let's go clockwise, starting with North America, Europe and China, Japan, ASEAN, India. Other areas are shown here.
What is noteworthy here are the percentages in the circle. This is the increase in revenues year on year. If you look at North America, 1 97%, that's almost 2 times Europe, 2.7%, again almost 2x China, 1.5x Japan is somewhat behind. It is growing, but it is limited to 1.1x. ASEAN, India, 2x.
Other areas, 2x. Therefore, you can see that frequency segment are recovering significantly. In North America, Energy power grid acquisition is having a significant impact similar for Europe. Power grid is having a positive impact. Below.
In India, ASEAN Energy is having a positive impact. Hitachi Asamo is very is having impact as well. North America and China, where ASEMO is having an impact. ASEMO is also making contribution to Japan as well. Therefore, Energy and ASEMO are the major drivers increasing revenues.
For the now the ratio of our sales, this is now 62% used to be 57% or 58%. Therefore, in the past 3 months, significant improvement of ratio has been achieved. This is because of the strategies that we have implemented.
So, so far, we have our results for Q1. And the latter part, I would like to talk about the full year forecast. Please turn to Page 13. Here shows the forecast for the full year. Left hand side is revenues and the middle adjusted operating income.
The left hand side revenues year on year basis. This is up by 9%. And the forecast for the full year is increased to JPY 9,500,000,000 and adjusted operating income increase of JPY 244,000,000,000 on year. As you can see, it is increasing from 5.7% to 7.8% JPY 2,740,000,000,000. The right hand side shows actual figures, starting from Lumada and also there are cash items.
I want you to note here that we have not changed the target. The figure in the premises is compared to the previous forecast. Everything is plus or minus 0. There are no changes in our forecast also. Right, 8.3% remains unchanged.
At the foreign exchange rate, we assume JPY 105 per US dollars. Next page, Page 14. For the full year. As I have said earlier, the disclosure categories is 5 categories of steam and missile subsidiaries. For the full year.
As you can see on the caption, for 5 sectors, there is increase in revenue and profits and a stable increase in revenue and profit. And with the subsidiaries, increase in revenues and profits. So recovery is seen. And the figures I want you to note is the second one from the top, adjusted operating income. For 5 sectors JPY 548,000,000,000 Astemo JPY 97,000,000,000 listed subsidiaries, JPY JPY 95,000,000,000 in total JPY 740,000,000,000.
So JPY 740,000,000,000 and our 5 sectors JPY 548,000,000,000. When you see both of these, you can see that about 75% of the total comes from the 5 sectors. And going down, adjusted operating income ratio 5 sectors, 8.9%. Going to the right, Asteymo, 6.1%, Listed Sub Zero is 5.5%, in total, 7.8%. The 8.9% figure in the medium term plan, we are targeting for 2031, 10% year over year original plan.
But because of impact of the pandemic, there is a delay of 1 year we are saying we are going to achieve in 2031. But for our 5 sectors, I believe we will exceed it 0.9% by the end
of the
year. So it will get quite close to the 10% for the 5 sectors. Now please turn to Page 15. Just like for Q1, starting from left hand side, full year to last year until this year, this is a tracking chart. If you take a look at the revenues at the top, the Power Grid acquisition has affected increasing revenues and also stable.
This is where the power grid comes to play at JPY 90,000,000,000. And as for exchange of a negative figure is that the overseas home appliance business, which is Going to the right, the total is 9,500,000,000,000. Below is adjusted operating income. Power grid is included as Enkitachi Asdemo and Global Logic. And going to the right, we'll go to JPY740,000,000,000.
Page 16 is bottom line net income, starting from the left to right. JPY 740,000,000,000 this fiscal year as of end of March figures. And how this is going to go to the JPY 550,000,000,000? First, by November, we believe there will be a TOB Hitachi metal, this is included in the schedule. So this metal game will come here and structural reform expenses.
In the middle, EBIT, JPY 820,000,000,000 and interest, income taxes and others, non controlling interests and going to the right, JPY 550,000,000,000. Next are detailed figures by sector. For your information, we have prepared this information. Please turn to Page 18. For IT, on the left hand side is revenue middle adjusted operating income and then right hand side is EBIT.
So the left hand side for revenues. The left hand side table compares Q1 of 2020, 2021 and one in the right is a full year comparison. So comparing Q1 and comparing full year, just increase in revenues. And in The context is shown, the front business and services and platforms is a breakdown. In the middle is adjusted operating income.
Similarly, the left hand side compares to Q1 and right hand side compares to full year. And For the full year, operating income we achieved 12% and right hand side EBIT cash item for both shows an increasing trend. Page 19 is Energy. Similarly, Life and Design is revenues. In Q1 and full year, both shows increase and operating income also is increasing and the cash items is also increasing.
For industry also, similar trend is seen. And in particular here, I want you to note the adjusted operating income in the middle. Q1, 5.2 percent. For full year, we'll go back to 8.1%. So there will be a great recovery.
EBIT, cash items are also showing increase. Next page, mobility. There will be increase in revenues and income. The right hand side for EBIT. For full year, there's a slight drop.
The forecast is shown for 2021. The Agility Trains' stocks were sold last year, and there's a backlash for that showing this decline. Next page, Page 22 is Smart Life.
Here,
overseas business, Hitachi Limited joint venture, home appliance business and diagnostic imaging related business. So as representative of revenues, there is a drop in revenues because of the divestiture of these two businesses. But in the middle, adjusted operating income, as you can see for a full year, there will be an increase to 9.7 percent or JPY 97,000,000,000. In Page 23, Hitachiya STIMO. As I have been saying already, market is recovering.
So there's increase in revenue and also increase in income in the middle and also EBIT is going up. And other 2 subsidiaries, they are showing recovery. 1st, Hitachi Construction Machinery. If you look at operating income, we'll go back to 61,000,000,000 to a rate of 6.9% and cash flow is also increasing. And for Hitachi Metals, last year was negative.
But compared to that, there is a great recovery. In the middle, adjusted operating income, JPY 34,000,000,000 or 4% recovery. And as you can see below, there is no change in the from our previous forecast for Page 2425. And Page 2627 shows the figures by sector compared. In the middle, there is FY 2020 and the grade portion of the forecast for 2021.
It is good to compare these 2 in case of IT. The second line is from the top. Adjust operating income, 269 in 2020, 263 this year, 13.2% last year, this year 12%. So for IT, this includes amortization of global logic leading to these figures. But for the rest, the figures show increase compared to previous year.
The last one on Page 27 under total revenues is the figure I mentioned of 9,500,000,000,000 and operating income 740,000,000,000 and margin 7.8%. So this is a forecast that we have. So I have rushed through my presentation, but these are the results of Q1 and the forecast for the full year. Thank you very much.
Thank you very much. We would now like to proceed to Q and A. Thank you. Our first question comes from the line of conference system screen. When your name is called, please unmute, state your name and affiliation and ask your question.
Please note that video of the first and last name question will not be shown today. We will field questions from the Japanese channel first and then proceed to the English channel. So we will take questions from the Japanese channel Thank you for this opportunity. I have 2 questions. First question is regarding hard grid business.
So there has been a downward provision for the year. Please elaborate further. For the Q1 related cost. JPY 23,200,000,000 is mentioned here in the presentation material. It seems that this number is very significant.
Is it a one off and amortization? What is the breakdown? For the downward revision for the full year. The adjusted operating income is where you have the downward revision. Why is this the case?
Please elaborate. And related cost is being revised upward. Inclusive of the Q1, why did you change the forecast for the full year? For energy. There are 3 sub segments.
That's JPY 30,000,000,000 that's not that up. For other than the sub segments, is there a change in plan? So it seems that there was a deviation of some JPY 5,000,000,000. Please elaborate. So that's the first question.
Now Smart Life segment is where we're going to ask the next question. Apple's JAKKS business, HITEC is down in terms of revenues and earnings, but full year forecast is increasing profit, although decreasing revenues. But the Q1 did not perform well. So there is concern for Q2 onward. How are you going to revert back to profitability?
What is the likelihood? Please elaborate. That's all. Now regarding power grid, I would like to ask Mr. Kato to respond.
Now regarding power grid. As you have rightly mentioned, Page 18, the Page 19. The related cost is shown here. Let me give you the breakdown. For the 1st quarter, JPY 23,200,000,000 is shown here.
PPA amortization, JPY 13,700,000,000 is included and others is related to cost of PMI and IT system structural reform expenses are included here. For the full year basis. JPY 72,800,000,000 out of which PPA is 43,600,000,000 is included here. And apart from this, similar to what I've mentioned earlier. So PPA amortization is accounting for more than half.
What about the JPY 5,000,000,000? The JPY 5,000,000,000 is being investigated now. Let me talk about Taiterbi first. Please refer to Page 22. Now.
As you can see, operating income, the Q1 has declined. Last Q1 was subject to special circumstances of last year. So revenues were high. But now for this fiscal year, we will reverse it back to cruising mode. So that is how it should be interpreted.
On a full year basis, as you can see on the right hand side. Now the medical is very good and the front end of SBE is also making contribution as well. So overall, a contribution is contribution is made. It is as if there is a peculiar risk to consider. Aya Yoshikawa.
I'd like to talk about Smart Life. Now let me give you further details. For the Q1, the decline in revenues is related to medical equipment. It is remaining strong. Semiconductor Nanotechnology Solutions is somewhat below, but we are receiving good orders.
There is no concern. For Industrial Solutions, on the other hand, For this area, we are revising the transaction terms, and we are also withdrawing from a low profit business. So that forward revenues has declined. In terms of profit for the Q1 as well as for the full year, the Analytical Solutions and Nanotechnology, Medical and Semiconductor. Our has is our plan to have a margin of 15% or more.
But industrial solutions, we are revising the transaction conditions and withdrawing from low profit business. This will continue. So the mix will differ. And as a result, we will end up with lower revenues and higher profit. That.
Regarding your question, regarding Energy, JPY 5,000,000,000. Park Grid, we will confirm later and get back to you. Sorry that you can't respond now. A question. On grade, the adjusted operating income, there is a downward revision.
Why is this the case? Kamura san, can you elaborate? The impact of COVID-nineteen is very significant in India and Indonesia. The planned utilization has declined localization has declined significantly, which has been reflected in this number. Thank you.
Thank you very much. Leito receives the next question. Can you hear me? Question. In the Q1 and the Q2, For the IT segment order situation, I have a question.
Looking at the recent results, there's a strong investment mentality, but What is the order situation order situation in your company? About IT orders? I'm sorry. Mr. Kato will answer.
About orders received for IT. Foreign exchange, well, based on some adjustments, 102% compared to previous year. And in total, it's 116% and Aviso, it's 102%. So this is increasing steadily. Thank you.
Question. So in the Q2, what are your forecast for the Q2? Do you think increasing trend will continue? For the Q2, I want to show you the results not for our company. But what is the view of our market?
I would like to introduce. IT market in Japan, outside of IT service business this year this. The forecast made by the market forecast company is 3.3% is a forecast. So compared to that, we want to achieve a similar level orders or a level higher than that. Question.
My second question, in your Q1 operating income Compared to your company plan, what is the difference? Do you have a breakdown for that? With regards to the general overall situation in the Q1, operating income compared to the budget, it has increased by about JPY 15,000,000,000 and more than half of that is the influence of foreign exchange. Compared to the operating Q1, operating income has increased by JPY 15,000,000,000. And as for the breakdown, For your information, revenues has increased by JPY 130,000,000,000.
Also, the foreign Exchange has impacted about JPY 90,000,000,000. So most of that is foreign exchange. Excluding that is a slight increase of about JPY 40,000,000,000. Almost all of that In all sections segments, revenue has increased. And as for income, as Mr.
Kawamura mentioned, is increase of JPY 15,000,000,000 out of that JPY 12,000,000,000 is foreign exchange. The majority of increase is foreign exchange. But compared to the plan, there was a slight drop for our power grid. Because of the impact of the pandemic, there was a slight decline in automobiles as demo because of shortage of semiconductors with the customers, there was a slight decline. And for Baba's income has increased compared to the plan.
That is all. Thank you.
Next question please. Please unmute and ask your question. Questions. I hope you can hear me. Yes.
Now. First of all, I have a request. Kamara san, in your presentation in 30 minutes, you talked about the Q1 performance, but you did not talk about that in detail. That was my impression. Hitachi.
I understand that full year forecast is very important, but numbers that have been disclosed as well as acquisition information was rather significant. I understand that there are many people present, but perhaps the change in the 3 months may not be significant, but I hope that you will spend more time on the Q1 results. So I hope you can bear this in mind going forward. Based on that, I have 3 questions. First question was what Kato san explained.
It seems that demand is increasing. And but there is a problem in terms of supply of pads, so revenues go down and in terms of profit, JPY 12,000,000,000. For compared to January, March, it seems that profit level has KIND. So in terms of revenues as well as profit, changes are placed elaborate further. Second question.
It's regarding mobility revenues. It seems that there is significant increase, that profit did not increase in line with the increase in revenues. In terms of revenues, buildings as well as railways, there was increase in revenues. Why did you not increase marginal profit? Now.
Now third question is regarding Global Logic acquisition. In the 3 months, there is a cash outflow. And with Global Logics, there is going to be debt as well as cash that will be brought into Hitachi. Please elaborate further in detail. First of all, regarding the Q1 explanation.
It was not sufficient according to your view. Yes, in terms of the number of slides, perhaps there was shortage. But we will bear this in mind when we give you the Q2 results. We will give you further details regarding the Q2 performance. Thank you very much for the advice.
Now Kato san. Can you talk about Assemo? Yes. Regarding Assemo, in terms of plan, increasing profit overall. But for a sumo, because of the impact of semiconductor, it is limited to the level shown here.
If you refer to Page 23, let me give you further details. Revenues has increased significantly compared to the previous year because we had 3 Honda Subsidies integrated to us. 3 50% increase has been achieved JPY 180,000,000,000 out of JPY 382,000,000,000 is due to that. The remaining JPY 100,000,000,000 is the growth of the conventional Astana business on an organic basis. Now apart from China, there is a significant growth in all regions.
In terms of the profit, the Honda. Some have contributed. But other than that, there was also increase year on year. But if you look into the quarter. Specifically, there has been impact of the semiconductor shortage.
Regarding mobility, for rather than elevators, impact of the railway business. In the Q1, Shinkansen related business incurred increasing costs having an impact here. Against revenues, the profit increase was lower than expected. This is because of the Shinkansen, the bullet train issue in the Q1. Regarding Global Logic, now the impact on BS will be explained.
So it was incorporated in July. So it's only 9 months that will have an impact. In terms of revenue, as I already mentioned, JPY 90,000,000,000 operating income, JPY 70,000,000 margin, 20%. That is a business that has been incorporated. Now.
Impact on the balance sheet, we'll be seeing a goodwill, JPY 650,000,000 other intangibles, JPY 330,000,000,000. That's a total of JPY 1,000,000,000,000 or so. Now the other intouchables will be monetized for by PPA. Will be monetized over 12 years. So that's about 30,000,000,000 monetization per year that has been expected.
So it's JPY 22,500,000,000 because of it's only for 9 months. Balance sheet and goodwill intangibles will be included. Therefore, it will have a significant impact on Hitachi Limited's balance sheet. That's all.
Question. What about the Q on Q question? Q on Q revenues
increased by 30,000,000,000 yen or 40,000,000,000 yen operating income, JPY 22,000,000,000. It seems that the revenue has declined, about more than that, our profit has declined. So I think better profit could have being gained. What are the factors undermining this? Please observe each other.
As I have already mentioned, their India and Indonesia plans have been partially closed. This is having an impact. Toyo's how great, but this is the same for Asimo as well, impact of India and Indonesia. Also impact of the semiconductor is being reflected in the numbers. Thank you.
Thank you.
Next,
I'd like to receive a next question. Question I have 3 questions. First, I'm sorry to insist, But about automotive, you talked about impact of India and Indonesia, which We cannot forecast and also semiconductors, but Q1 was behind the plan. And for Q2 and towards the end of the year, how do you plan to recover? That is my first question.
And number 2, having said so, industrial industry business seems to be doing well. The 102% increase in terms of revenue for the full year increase about 30% increase for Q1. So what is your forecast? Do you have to be is that something that you must be cautious about looking towards the situation going forward? And lastly, You talked about DAU ratio, 0.3%, 0.4%.
You want to drop to that level by early next year. You made that comment earlier, but until then, improved balance sheet will be done. And then after that, you will try to focus on increasing the return to our shareholders. Those are my 3 questions. First about the Semiconductor has the largest impact in the second quarter.
I think the impact of semiconductors will continue. In the current plan, from the Q3, we are thinking of measures to be taken against the situation in terms of sourcing semiconductors, which will have impact from Q3 onwards. So the reduction of the first one will be recovered, but Q3 of Q4, so the full year budget remains unchanged. To be more specific, there are many types of semiconductors, and there are various types, very light switching off semiconductors to highly advanced semiconductors. So from where are we going to procure?
We are having making very detailed plans. What businesses cannot do, can Placed by somewhere else, we are thinking of measures. And then we will start to see effects on the 3rd or Q4. Supply will recover by then, so budget remains unchanged. And about the industry, As we talk about the PlayStation orders, currently, Q1 order situation in total, I mentioned increased 16%.
In particular for industry situations are good as industry sector increase is 21%. Out of that, industry products is an increase of about 30%. So order is quite active, and we can look forward about the situation going forward. And about the ratio and return to shareholders, as you have mentioned, it's not that sequential That we will provide return to shareholders after the ratio recovers. That's not how we think.
Funds are already prepared. So what is it about the dividend? In general, you're thinking of general measures to be taken. And about the dividends, last year, JPY 50 in the first half and JPY 55 in the second half. Now we are looking at the situation and we think that would be around the level.
But if a buyback We want to make our buyback more flexible. Including insider information, there is a lot of information going on. So we are looking at the timing when the window will be open. So it's not sequential. It's not going to take place in a sequential manner.
So we look at the ratio and it also concerns the shareholders' return. We are looking at overall situation. And about semiconductor issue of ASTEMO, Yoshikawa san will answer. Unless you talk about ASTEMO, I am Yoshikawa from IR. On Q on Q basis, it looks as if the situation is not good.
But looking from a different perspective, On a year on year basis, what's the situation in Q1? We are trying to verify that. And actually, There was an integration. So up to Q3, it is a single MS. And from Q4 Forward, it will be integrated.
The Q1 information of by Honda, which was listed, was more than JPY 110,000,000,000 and for AMS itself was JPY 109,300,000,000. So in total, more than JPY 200,000,000,000. And when you compare, then on year on year basis, Q1 performance shows a growth of 73%. So the Tier 1 compared to other Tier 1 in Japan, it's not bad compared to others. So from Q4 towards Q1 this year, We must verify whether a statement was only case where a decline was shown, but performance in Q1, relatively speaking, Compared to other T Mobile suppliers, was there a big loss?
No, we don't think so. So as Timo, throughout the year. Compared to the situation by this time last year, it is very difficult to make a comparison. But I think we must look from this perspective. In terms of units for Q1 on global basis, it's increasing by 50%, then Revenue has increased by 73%.
So relatively speaking, in terms of competitive advantage, it's not that we have only losers. So quarter by quarter, we have to verify the figures. Thank you. Thank you very much.
From the moderator, I would like to provide the following information regarding global impact regarding goodwill as well as intangible, JPY 650,000,000,000 and JPY 330,000,000,000 was mentioned.
That.
It is JPY710,000,000,000 and JPY 390,000,000,000 for the goodwill intangibles, respectively. The 3.90,000,000,000 yen. We would now like to take questions from the English channel now. From the English channel, are there any questions? Please indicate by the raise hand button.
Any questions? Any questions on the English channel. Please indicate if you wish to ask a question by the raise hand button on the screen. We still have some time left, so we will go back to the Japanese channel for any further questions. Please indicate by the raise hand button.
Just a moment, please. Question regarding the power grid business for domestic renewable energy related business. Government wide effort is made for investment in this area. Is there any domestic business development that you can share? For is there going to be a project emerging within this fiscal year?
Will order be received in this area? What is the outlook going forward for the domestic business. Please elaborate. Thank you for your question. Specifically, we are engaged in discussions, and we cannot provide specific information yet.
But generally speaking, regarding the grid business. We have 2 basic technologies, HPTC technology is area of strength. And the long distance transmission is overwhelmingly strong business for VAGRAND. When this is incorporated into Japan, the ACDC conversion as well as the adjustment of the supply and demand balance can be overcome. We believe that the process can be won in this area.
There is no project that has been decided yet, but these are the strong technologies of ADB that can be brought to bear in Japan as well. Renewable energy is hard to reduce, grid issues can be overcome and high utility costs can be reduced going forward. Thank you. Now. Regarding the question that we have received, Energy Sector, JPY 5,000,000,000, that was a pending question.
You asked a question about this. In this graph, it is not mentioned here. But for the sector overall, profitability improvement activities are underway. And the accumulated effort is the JPY 5,000,000,000 that you referred to. Is the question is the cost reduction?
Yes. Optimization of fixed cost is what we are implementing here. Regarding Japanese market, I would like to add the following information. After China and U. S, the number 4 in the world in Japan.
And sub HVDC Switchgear, GIS, is one of the businesses, and we have a scale of number 3 in the world. However, in terms of the growth potential, it is low. So for Africa and for Central Africa, Asia and the Europe growth profile has not been established yet. Therefore, for decarbonization to be realized, we hope that we can provide more products in the domestic market going forward.
Thank you very much. Now it is time. So with this, we would like to conclude the web conference on the Q1 FY 2021 earnings. Thank you very much for your participation.