Since it's time, we would like to begin the Mitsubishi Electric Corporation's Financial Results briefing for the first quarter of fiscal year 2026. The speaker is Executive Officer and CFO Keni chiro Fujimoto. Fujimoto-san, please do start. This is Fujimoto from Mitsubishi Electric , and thank you for attending our financial results briefing today. Now, I will outline the consolidated financial results for the first quarter of fiscal year 2026, the year ending March 31st, 2026, for the Mitsubishi Electric Group. Please turn to page three. I will first highlight the key results. In the first quarter of fiscal year 2026, [audio distortion] to as Q1, revenue increased due to higher sales in the Infrastructure Business Area, the Life Business Area, and in the Factory Automation Systems Business, reaching a record high Q1 result of JPY 1,312.8 billion.
Operating profit increased by JPY 53.3 billion year-on-year to JPY 111.9 billion, setting a new record for the first quarter driven by volume expansion, price improvements, and gains from the transfer of subsidiary shares. The full-year earnings forecast for fiscal year 2026 reflects a volume decline in the automotive equipment business, but due to the weaker than expected yen exchange rate in the first quarter and increased AI-related demand in the Factory Automation Systems Business, both revenue and operating income are expected to remain in line with the previous announcement. Regarding the impact of U.S. tariffs, we have factored in the impact of the additional reciprocal tariffs scheduled to take effect on August 1st, that's tomorrow, and based on the feasibility of measures such as price pass-throughs at this point, we continue to maintain the same tariff impact as previously forecast. Now, please refer to page five.
I will now go through the group's first quarter results. Revenue increased by 102% year-on-year to JPY 1,312.8 billion due to revenue growth in the Infrastructure Business Area, the life segment, and the Factory Automation Systems Business. Operating income increased 191% year-on-year to JPY 111.9 billion, driven by business volume expansion, price improvements, and gains from the sale of subsidiary shares, and the operating profit margin improved by 3.9 points year-on-year to 8.5%. The operating profit margin also marked a record high for the first quarter. Net profit attributable to parent company shareholders also reached a record high for the first quarter at JPY 90.9 billion. Now, please refer to page six. This waterfall chart illustrates the year-on-year changes in first quarter revenue and operating profit. We expect the strong yen to have reduced our revenue by JPY 47 billion and our operating profit by JPY 13 billion.
Excluding the Forex impact, profit increased by JPY 66.3 billion year-on-year due to revenue gains in the Infrastructure and Life Business Areas and the Factory Automation Systems Business, continued efforts to optimize prices in the mass production businesses, and the posting of capital gains on the transfer of subsidiary shares. Now, please refer to page seven. I will now outline the consolidated statement of profit or loss. The cost of sales ratio was 68.4%, an improvement of 2.6 points year-on-year from 71.0% the previous year. This was partly due to the strong yen, as well as price optimization, improved operating rates in the air- conditioning and home products business, and the Factory Automation Systems Business, as well as the impact of a shift in project portfolio. Selling, general, and administrative expenses increased by JPY 5.4 billion year-on-year, mainly due to an increase in selling expenses.
We will continue to scrutinize the cost-effectiveness and efficiency of expenditures to optimize indirect costs. Other income and expenses increased by JPY 16.2 billion year-on-year, mainly due to the recognition of capital gains on the transfer of subsidiary shares. Please refer to page eight. This is the consolidated statement of financial position. First, assets decreased by JPY 74.5 billion compared to the end of the previous fiscal year. Inventories increased due to progress in construction projects in the made-to-order business, but the increased collection of trade receivables resulted in a decrease in total assets compared to the end of fiscal year 2025. Capital or equity increased by JPY 4.5 billion compared to the end of the previous fiscal year.
Despite a dividend payout to shareholders of JPY 62.3 billion and the repurchase of shares of JPY 29.2 billion, the posting of a net profit of JPY 90.9 billion increased the equity attributable to parent company shareholders by JPY 3.6 billion compared to the end of FY2025 to a total of JPY 3,953.3 billion. The ratio of equity attributable to parent company shareholders to total assets rose by 0.8 points from the end of the previous fiscal year to 62.7%. Now, please turn to page nine. Cash flows from operating activities increased by JPY 9.6 billion year-on-year to JPY 193.5 billion, mainly due to an increase in net profit. The outflow of cash flows from investment decreased by JPY 44.2 billion year-on-year, mainly due to an increase in proceeds from the sale of cross-held shares and the recognition of proceeds from the sale of subsidiary stocks.
As a result, free cash flow increased year-on-year by JPY 53.9 billion to a total inflow of JPY 174.0 billion. Now, please refer to page ten. From here, I will share the revenue and operating profit by segment. First of all, allow me to explain the changes in the naming of segments and subsegments introduced from this fiscal year. The Business Platform segment has been renamed the Digital Innovation segment, and the power systems business of the Infrastructure Business Area has been renamed the Energy Systems Business. As for results by business areas, the Infrastructure BA and Life BA saw year-on-year increases in both revenue and profit. The Industry & Mobility Business Area recorded a decrease in revenue but an increase in profit, while semiconductor devices declined in both revenue and profit.
The following pages provide details for each segment, and a summary of results for each subsegment is disclosed in the supplementary information on page 20.
Please refer to page 11. Starting with the infrastructure segment, overall demand remained strong across all subsegments, but orders in the first quarter were lower year-on-year due to the impact of large orders recorded in the public utility systems and energy systems last year. However, the defense and the space systems saw a significant increase, resulting in an overall increase for the whole segment year-on-year. Both revenue and operating profit for the infrastructure segment as a whole were higher year-on-year. Public utility systems saw steady performance in transportation in Japan, public works, and overseas UPS business, resulting in higher revenue year-on-year. Operating profit also exceeded the same period last year due to increased revenue, changes in project portfolio, and the recognition of one-time gains.
Energy systems saw both revenue and operating profit higher year-on-year due to the expansion of power distribution both in and outside of Japan. The defense and space systems revenue was higher year-on-year, and operating profit was on par with the same period of the previous year. Order backlog for the defense business exceeded JPY 1 trillion for the first time. We will continue to strive to improve profitability through the reliable execution of projects. Please refer to page 12. Industry and mobility segment. Factory Automation systems subsegments saw both order and revenue increase year-on-year, driven by demand for smartphones and machine tools in China, as well as increased capital investment in AI-related semiconductors in Japan, China, and Taiwan. Operating profit also grew year-on-year, driven by revenue growth and cost containment efforts.
Automotive equipment saw both revenue and operating profit decline year-on-year due to weaker sales of Japanese brand automobiles in China and a decrease in car multimedia systems in North America. Please refer to page 13. Life segment. Building systems subsegments saw a decrease in orders year-on-year due to the impact of large-scale new projects in East Asia recorded in the previous fiscal year. However, revenue increased due to an increase in maintenance and renewal projects in Japan. Both revenue and operating profit grew year-on-year. Air-conditioning systems and home products saw revenue increase year-on-year despite the impact of stronger yen, thanks to steady demand for air-conditioning equipment in North America and Japan, as well as signs of demand recovery in Europe. Operating profit increased year-on-year despite the impact of stronger yen, thanks to increased revenue and price improvements. Please refer to page 14.
Digital Innovation segment saw steady demand for system updates and the DX implementation-related projects, resulting in higher order and revenue compared to the same period last year, with operating profit remaining at the same level. Semiconductor devices saw stagnant demand for power modules, but the demand for optical communication devices, such as those for data centers, remained strong. Orders decreased year-on-year due to a decline in power modules, while there was an increase in optical communication devices. Revenue and operating profit both fell year-on-year due to a decrease in power modules for industrial and automotive applications. Revenue by customer location on page 15. Overseas revenue increased in North America, primarily driven by the air-conditioning and home products, but decreased in other regions due to stronger yen, resulting in a year-on-year decrease to 98%.
On the other hand, revenue from Japan increased 107% year-on-year, resulting in a year-on-year increase of 102% for the total revenue. Please refer to page 17. Four-year forecast for FY2026. Revenue projected to be JPY 5.4 trillion, operating profit JPY 430 billion, both unchanged from the previous forecast. Regarding tariff impacts, we expect approximately JPY 40 billion in cost burdens, including the addition to the reciprocal tariffs scheduled to come into effect on 1st of August . However, we have factored in absorption through price adjustments and other measures, which means that the resulting impact is expected to be JPY 30 billion, consistent with the previous forecast. The segment-specific revenue and operating profit forecasts for the current fiscal year are disclosed in the supplementary materials on page 21. Compared to the previous forecast, the difference is the automotive equipment is expected to see a decrease in revenue and operating profit due to a reduction in scale.
Factory Automation systems is projected to increase revenue and operating profit, reflecting the weaker yen in the first quarter relative to the FX assumptions and increased demand for AI-related products. The air-conditioning and home products are also expected to see an increase in revenue and operating profit due to yen's depreciation and other factors. That's all from me. Thank you.