Good afternoon, everyone. I am Junichi Arai, Corporate General Manager, Corporate Management Planning Headquarters. The fiscal year 2020 started in April in a tough market environment due to COVID-19. In particular, food and beverage distribution, including vending machine and store distribution, and ED&C components were impacted significantly. On the other hand, semiconductors performed very well due to EVs. We also reduced expenses actively in the first half. Now, I will explain financial results for the first half of the fiscal year 2020. This page shows year-on-year comparison. Net sales decreased JPY 49.7 billion to JPY 357 billion. Excluding gain on translation of earnings of overseas subsidiaries, net sales decreased JPY 50.2 billion in real terms. Operating income decreased JPY 5.8 billion to JPY 5.3 billion. I will talk about breakdown of changes on the next page. Non-operating income, net of non-operating expenses, increased JPY 100 million.
Ordinary income was JPY 5.2 billion. Extraordinary income net of extraordinary loss improved by JPY 800 million to zero due to reduction of extraordinary loss. Net income attributable to owners of parent decreased JPY 3.9 billion to JPY 2.1 billion. I will explain changes in operating income with a step chart on the next page. Operating income decreased JPY 5.8 billion. The major factor is a decrease in sales and production volumes. Sales and production volumes increased in semiconductors, decreased in store distribution, vending machine, ED&C Components, and others. A decrease in sales and production volumes pushed down operating income by JPY 11.4 billion. In fixed cost, we reduced expenses, mainly controllable expenses. Due to aggressive investment in electronic devices, depreciation and leases paid increased JPY 2 billion. Labor cost decreased JPY 800 million. R&D decreased JPY 700 million.
Other expenses or controllable expenses decreased JPY 4.3 billion. A decrease in fixed cost pushed up operating income by JPY 3.8 billion. Exchange rate effect was negative JPY 300 million. Others boosted operating income by JPY 2 billion year-on-year. Others mainly include difference of plant-related project profitability. Difference of project profitability in IT solutions, ED&C Components, power supply and facility systems, and others boosted operating income by JPY 2 billion. Due to significant impacts of the decrease in sales and production volumes, operating income decreased JPY 5.8 billion year-on-year. Let me move on to net sales and operating income by segment for the first half. Net sales of electronic devices increased. Unfortunately, net sales of all other segments decreased. Operating income increased in Power Electronics Systems industry, electronic devices, and Power Generation year-on-year.
In Power Electronics, operating income decreased JPY 2 billion, mainly due to loss in ED&C Components. In food and beverage distribution, including vending machine and store distribution, operating income decreased significantly. Net sales were down JPY 49.7 billion, and operating income was down JPY 5.8 billion. I will talk about business results by segment. In Power Electronics, net sales were JPY 81.8 billion, down JPY 16.3 billion. Operating income was JPY 1.6 billion, down JPY 2 billion. There are three businesses in this segment. In energy management, net sales and operating results decreased as a result of a decline in demand for smart meters and industrial power supply equipment. For smart meters, the market decreased.
In power supply and facility systems, net sales and operating results decreased as a result of the rebound from large scale projects recorded in electrical facility and switchgear and controlgear operations at the company in Singapore, we acquired. In ED&C Components, net sales and operating results decreased due to sluggish market conditions and a reduced demand from Japanese machine manufacturers and switchboard manufacturers. In Power Electronics Systems industry, net sales were JPY 128.2 billion, down JPY 10.5 billion. Operating income was JPY 200 million, an improvement of JPY 900 million. In automation systems, net sales and operating results decreased despite the rise in demand for SOx scrubbers, as well as the higher demand for low voltage inverters and factory automation components seen in China as a result of sluggish demand in other fields in Japan.
In Social Solutions, net sales and operating results increased, thanks to increases in large scale projects for electrical equipment for rail cars. In equipment construction, net sales decreased due to delays in capital investment plans of customers caused by the impacts of COVID-19 and rebound from large scale electrical equipment construction projects recorded in the previous equivalent period. Operating results increased slightly due to the benefits of cost reduction efforts. In IT solutions, net sales decreased due to the rebound from large scale projects recorded in the previous equivalent period. Operating results were relatively unchanged. In electronic devices, net sales were JPY 72.4 billion, up JPY 6.7 billion. Operating income was JPY 6.3 billion, up JPY 300 million. For semiconductors, net sales and operating results increased, thanks to the increased demand for power semiconductors, for electrified vehicles, and for the new energy market.
In magnetic disks, demand for data centers increased. However, unfortunately, demand for PCs decreased due to the influx of solid-state drive, which is a type of semiconductor memory. As a result, net sales decreased and operating results decreased slightly. For reference, year-on-year comparison for the first half, a breakdown of electronic devices sales between semiconductors and magnetic disks is shown. Year-on-year comparison for the first half of distribution of semiconductor sales by field between industrial field and automobile field is also indicated. The ratio of automobiles was 36%, up two percentage points. In food and beverage distribution, net sales were JPY 37.7 billion, down JPY 17 billion. Operating income was negative JPY 2.6 billion, down JPY 5.5 billion. In this segment, both vending machine and store distribution were heavily impacted by COVID-19.
For vending machine, net sales and operating results decreased due to the self-restraint exercised in sales activities and reductions in capital investment by Japanese beverage manufacturers, as well as lower demand in the Chinese market. For store distribution, net sales and operating results decreased because of a decline in demand for store equipment for convenience stores and cancellations of and delays in renovation works. In power generation, net sales were JPY 32.7 billion, down JPY 9.2 billion. Operating income was JPY 1.1 billion, up JPY 300 million. Net sales decreased due to the rebound from large scale projects, but operating results increased slightly because of differences in profitability between projects. Next, I will explain net sales by Japan and overseas area. Net sales were JPY 357 billion, down JPY 49.7 billion in total. Overseas sales were JPY 97.6 billion, down JPY 5.9 billion.
Net sales in Japan were JPY 259.4 billion, down JPY 43.8 billion. When we look at overseas sales, including Asia and others, China, Europe, and Americas, Chinese market conditions were partially firm. In China, sales of semiconductors and automation systems increased. Unfortunately, sales of vending machines decreased. In total in China, sales increased JPY 5.5 billion. On the other hand, in Asia and others, accounting for the majority of overseas sales of automation systems increased. Sales of Power Supply and Facility Systems, Power Generation, and Energy Management decreased. In total, sales in Asia and others decreased JPY 9.9 billion year on year. Sales in Europe and Americas decreased partly due to COVID-19. Let me move on to a breakdown of changes in amount of orders received. In the first half of the fiscal year 2020, orders were JPY 429.1 billion, down JPY 37.6 billion year- on- year.
In orders, major components decreased JPY 7.7 billion and plant systems, others decreased JPY 29.9 billion. In orders of major components, semiconductors were strong and up 16% year-on-year. Vending machines were down 32%. Factory automation, including low voltage inverters, motors, factory automation components, and measuring instruments, was down 12%. ED&C components were down 7%. Next, I will talk about balance sheet. This page shows comparison of balance sheet of March 31st, 2020, the end of the fiscal year 2019, and September 30th, 2020, the end of the first half of the fiscal year 2020. Cash and time deposit stood at JPY 155.9 billion, up JPY 91.8 billion. In consideration of the impacts of COVID-19, we decided to keep cash and time deposit equivalent to two months of average monthly sales. We increased cash and time deposits intentionally for disaster response measures.
Notes and account receivables, trade receivables decreased JPY 68.3 billion due to significant progress of collection of receivables. Inventories, mainly of plant systems, increased toward the second half. As a result, total assets were JPY 1,065.1 billion, up JPY 68.3 billion. Partly due to an increase in cash, interest-bearing debts increased JPY 120.6 billion. Total net assets increased JPY 21.6 billion, partly due to gain on revaluation of securities. Consequently, net interest-bearing debt was JPY 183.3 billion, up JPY 29.6 billion. Net D/E ratio was 0.5 times. Equity ratio was 36.3%. This page shows consolidated cash flow for the first half. Net cash used in operating activities was JPY 2.1 billion. Net cash used in investing activities was JPY 10.8 billion. This was principally due to investments, mainly in semiconductors.
As a result, free cash flow was negative JPY 13 billion in the first half, an improvement of JPY 9.6 billion year-on-year. In the last fiscal year, net cash used in investing activities increased partly due to JPY 10 billion level M&A in India. Mainly due to that, free cash flow improved by approximately JPY 10 billion year-on-year. Lastly, I will talk about dividends. We decided to pay interim dividend of JPY 40 per share, flat year-on-year, based on our policy of stable and continuous dividend payment. We hope we will also be able to pay year-end dividend in the same way. In the second half, we intend to create environments in which we can continue dividend payment with emphasis on income in management. That concludes my report on financial results for the first half.
Next, I'd like to explain about management plan for FY 2020. In the second half, ED&C Components market is not expected to recover and will continue to be weak as in the first half, and magnetic disks demand for PC is estimated to decline further. On the other hand, semiconductors will continue to be strong and orders and sales for IT solutions are significantly increasing due to GIGA School initiative. In food and beverage distribution, we expect market recovery in the fourth quarter, mainly in China, and recovery of investment in convenience stores.
With such expectations, we will strive for recovery in food and beverage distribution business. First, let me overview the comparison between the FY 2020 plan and the FY 2019 results. Full year net sales are estimated to decrease JPY 30.6 billion to JPY 870 billion . Operating income will be down JPY 1.5 billion to JPY 41 billion . We set the operating margin target as 4.7% with a strong intention to maintain the same level of the previous year. Net income attributable to owners of parent will be down JPY 1.3 billion to JPY 27.5 billion . Regarding the plan for financial indicators, net D/E ratio is 0.5 times. Equity ratio will increase to 38.5%. ROA is 2.7%, and ROE is decreased from the previous year to 7.1% due to increase of shareholders' equity.
Next page is about the management plan for the second half, which is the basis for the full year plan. While impact of COVID-19 pandemic will continue, we plan to increase sales and profit year-on-year by taking in demand recovery and implementing our own measures. Net sales are estimated to grow JPY 19.1 billion to JPY 513 billion. Considering the exchange rate effect of JPY 5.2 billion reflected in the previous year results, the actual demand increase will be JPY 24.3 billion. Operating income will increase JPY 4.3 billion to JPY 35.7 billion. I'll explain more about the change on the next page. Ordinary income will be JPY 37.3 billion, and net income will be up JPY 2.6 billion to JPY 25.4 billion.
As for foreign exchange rate, we set JPY 102 to the US dollar, JPY 120 for the euro, and JPY 15 for the Chinese Yuan Renminbi, as we estimate a little stronger Japanese Yen than the current rate. This page shows the breakdown of the JPY 4.3 billion increase in operating results. Increase in sales and production volume is JPY 3.1 billion. While ED&C components, power generation, and magnetic disks are declining, semiconductors are estimated to increase their sales and production volume to contribute to profits. IT solutions are projected to record significant sales increase to make a large impact on operating results. These factors total JPY 3.1 billion increase. Despite fixed cost reduction in the first half, JPY 800 million increase is expected in the second half. We will continue to decrease controllable expenses for other expenses by JPY 2.4 billion.
We plan to increase depreciation and leases paid due to investment in semiconductor business, labor cost increase of JPY 700 million, mainly in overseas, and JPY 800 million increase in R&D. In total, fixed cost is expected to increase by JPY 800 million to make a negative impact on operating results. Earlier I mentioned we set our foreign exchange rates based on the assumption of stronger Japanese Yen, and its effect is minus JPY 1.2 billion. Others are JPY 3.2 billion higher than the previous fiscal year, and this is due to the difference in project profitability for power generation and power supply and facility systems in plant projects in the previous fiscal year. In total, operating income is planned to be up JPY 4.3 billion to JPY 35.7 billion. Next, I will explain about the plan of net sales and operating income by segment for the second half.
In Power Electronics Systems, net sales estimates JPY 300 million increase. Operating income will be down JPY 700 million. While we had negative factors for net sales, such as rebound from large-scale orders received by Fuji SMBE for overseas switchgear and control gear in the previous year, and continually weak demand for ED&C components, demand increase mainly for industrial transformers leads to a slight increase for net sales. Operating income is expected to drop, significantly affected by lower sales and production volume of ED&C Components. Power Electronics Systems industry estimates an increase of JPY 29 billion for net sales and JPY 1.1 billion for operating income. As for net sales, while demand for components and automation systems operations is decreased, we are receiving lots of orders in IT solutions for GIGA School initiative mentioned earlier.
This will help us to achieve significant sales growth of JPY 29 billion, and operating income will also increase due to this sales growth. Next is electronic devices. Net sales will be down JPY 2 billion. The number in the box indicates foreign exchange effect compared to the previous year, which is JPY -3.3 billion for net sales. Excluding this factor, net sales are estimated to have JPY 1.3 billion growth. Operating income will be up JPY 2.9 billion, including the foreign exchange effect of JPY 900 million. This means its actual growth will be JPY 3.8 billion. While demand for power semiconductors for electric vehicles and industrial modules for China increased, sales decrease of magnetic disks was larger than the growth of semiconductors. With that, the net sales decrease is estimated as JPY 2 billion year-on-year.
Operating results will secure growth significantly affected by increased sales and production volumes of semiconductors. Regarding food and beverage distribution, vending machines are expected to recover in China and Asia, and demand growth for store renovation project is expected to start in the fourth quarter. With these factors, we expect increase in both sales and profit. Regarding Power generation, net sales will decline by JPY 13.8 billion and operating income will increase by JPY 1.3 billion. Net sales will be lower due to rebound from large-scale orders recorded in the previous year. Operating results will improve because of differences in profitability between projects. In total, net sales will increase JPY 19.1 billion and operating income will grow JPY 4.3 billion.
In summary, ED&C Components and magnetic disks are estimated to decline. Positive results are expected in IT solutions and semiconductors, and vending machines and store distribution, where we will make extra efforts for growth. I'd like to explain about the management plan for FY 2020, combining first half results and second half management plan. Net sales are JPY 870 billion, down JPY 30.6 billion from the previous fiscal year. This is due to the decrease of about JPY 50 billion in the first half, despite expected increase in the second half. Operating income is projected to decrease by JPY 1.5 billion to JPY 41 billion with operating margin of 4.7%, which is unchanged from the previous year. Details about the change will be explained in the next page. Ordinary income will be JPY 42.5 billion. Net income will be down JPY 1.3 billion to JPY 27.5 billion.
This is a waterfall chart to explain breakdown of changes in the full year operating results. JPY -8.3 billion is indicated as the impact of decrease in sales and production volumes. While semiconductors and IT are expected to grow, with negative impact from ED&C components, vending machines, store distribution, and magnetic disks in both first and second halves, the total decrease in sales and production volumes will be JPY 8.3 billion. Fixed cost is planned to decrease. Although it will slightly increase in the second half, the reduction made in the first half helped us to estimate JPY 3 billion cost reduction in total, which positively affects the operation results. We will decrease other controllable expenses by JPY 6.6 billion, we will spend JPY 3.6 billion more for depreciation and leases paid than the previous year.
Exchange rate effect will decrease JPY 1.6 billion, including JPY 1.2 billion decrease for the exchange rate effect in the second half. Others are about the difference of planned project profitability, such as Power Generation and Power Supply and Facility Systems, and this item will be JPY 5.4 billion higher than the previous year. In total, the operating results will decline by JPY 1.5 billion from the previous fiscal year. Next page is about net sales and operating income by segment for FY 2020. Power Electronics Systems energy will decrease net sales by JPY 16 billion and also decrease operating income by JPY 2.7 billion. Net sales of its three subsegments will decline, and operating results will decrease by JPY 2.7 billion, mainly with ED&C Components. Power Electronics Systems industry will maintain increased sales and income for the fiscal year.
Net sales will increase in IT solutions and social solutions, and operating income is planned to increase as well. Electronic devices will raise net sales by JPY 4.6 billion, and operating income will be up JPY 3.2 billion for the fiscal year. The exchange rate effect is incorporated as JPY -3 billion in net sales and JPY -1 billion in operating income, respectively. This will positively affect the full year results. Semiconductor is expected to grow significantly and magnetic disks will decrease in sales and profit. We intend to increase sales and profit in food and beverage distribution by executing recovery measures in the second half. However, due to the substantial decrease in sales and profit in the first half, both vending machines and store distribution will decrease sales and profit for the fiscal year.
Power Generation will decrease net sales by JPY 22.9 billion and increase operating income by JPY 1.6 billion. The sales decrease is due to rebound from large-scale projects in the previous year, and the slight increase of operating income is due to the difference in the project profitability, as I explained earlier. In total, net sales will decrease JPY 30.6 billion and operating income will decrease JPY 1.5 billion for FY 2020. This page shows comparison of net sales in Japan and overseas. In the total net sales decrease of JPY 30.6 billion, JPY 11.4 billion is for overseas and JPY 19.2 billion is for Japan. Regarding overseas sales, China increases its sales by JPY 9.1 billion with growth in semiconductors, automation systems, and Power Supply and Facility Systems in both first and second halves. On the other hand, sales in Asia are estimated to decrease by JPY 15.8 billion.
While automation systems will increase, sales of Power Supply and Facility Systems, magnetic disks, and power generation will decrease. Regrettably, Europe and Americas are also planned to decrease their sales. Next page is about capital investment. We plan to spend JPY 38 billion in total in FY 2020. 90% of the investment will be in electronic devices and Power Electronics Systems industry and Power Electronics Systems energy. The investment in electronic devices will decrease JPY 10 billion from the previous year, active investment continues in this area as originally planned for augmentation of front-end eight-inch and back-end production capacity. We will also continue investment in Power Electronics Systems for industry and energy at the same level of the previous fiscal year. Next page describes research and development. Its investment will be JPY 34.4 billion, almost unchanged from the previous year.
Nearly 80% of the total investment will be spent for electronic devices and Power Electronics Systems for industry and energy. We will mainly invest in automotive IGBTs, eighth generation IGBTs, and SiC for electronic devices. For Power Electronics Systems industry, we will invest in component platform, system products for vessels, electrical equipment for rail cars. For Power Electronics Systems energy, we will invest in transformers, GISs, and UPSs for overseas markets as well as ED&C Components. We will promote development of renewable energy and service offerings for power generation and next generation vending machines, store labor and energy saving products, and IoT and AI-powered system business products for food and beverage distribution. Next page shows balance sheet. Cash and time deposits are planned to increase by 16.9 billion JPY from the end of the previous fiscal year.
Even though we expect the impact of COVID-19 pandemic will be weakened, we plan to secure cash equivalent to one month's sales to be ready for unexpected situations. Notes and account receivables, trade receivables will increase JPY 15.4 billion with estimated sales increase in the fourth quarter, and total assets will increase JPY 54.8 billion to JPY 1,051.6 billion. Interest-bearing debts will increase JPY 47.9 billion and total net assets will grow JPY 41.3 billion. Net interest-bearing debt will increase JPY 31.7 billion to JPY 185.3 billion as indicated at lower left. Net D/E ratio will be 0.5 times and equity ratio will be 38.5%. Cash flow was negative in the first half. However, we plan to secure positive cash flow of JPY 5 billion for FY 2020.
Free cash flow will decrease 13.5 billion JPY from the previous fiscal year, and this is due to a large-scale collection of account receivables in the previous fiscal year. That is all for the explanation of the management plan for FY 2020. In the second half, we expect substantial growth in sales and profit for semiconductors, and we assume there is still room for further growth. For food and beverage distribution, we will make extra efforts for growth. Expenses are planned to slightly increase year-on-year in the second half, but we assume there is room for reduction in corporate and controllable expenses. Also, if the current foreign exchange situation continues, we can expect about JPY 1 billion positive foreign exchange rate effect.
In the second half, the market situation continues to be unpredictable with the presidential election in the U.S., which will be held in one week from now. And impact of COVID-19 pandemic, but we will execute every possible measure to achieve the numbers in the plan for FY 2020. That is all for my explanation.