Investor Update

Jun 20, 2019

Slides

Good afternoon, ladies and gentlemen. I am Michihiro Kitazawa, President. Thank you very much for coming to our briefing for medium term management plan despite your busy schedule. I truly appreciate it. It took about 1 year to formulate the medium term management plan that I will present. The new era labor started. I am happy myself to be able to make a fresh start in the beginning of the new era, although it is a coincidence. Before walking you through the plan, let me do a brief review. This slide shows business performance trends from fiscal year 2009 to fiscal year 2018. As you know, Lehman Brothers collapsed and the global financial crisis happened in 2,008. Fuji Electric experienced the rock bottom in 2008, 2009. I was appointed as President in April 2010. Frankly speaking, there were times when I had difficulty. Nevertheless, fortunately, net sales recovered from below 700,000,000,000 yen and exceeded 910,000,000,000 yen in the last fiscal year. Operating income increased for 9 years in a row and reached a record high of 60,000,000,000 yen in the last fiscal year. Compared to near term target of 7%, operating margin increased to 6.6%. As I discussed in April, we formulated 3 medium term management plans during this period. Finally, we were able to achieve all the targets in fiscal year 2018. This slide shows a different perspective. Dividends, Fuji Electric, paid to shareholders. The blue bars show annual dividends. Dividend for fiscal year 2009 was per share, which is the amount adjusted to reflect the reverse stock split. Actual dividend paid at that time was 1.5 yen. Instream dividend was 0, and we only paid year end dividend of 1.5 yen Starting from that level, we paid 80 yen in fiscal year 2018. If profit is returned only to shareholders, companies cannot keep going. Companies cannot exist without employees. As President, I think it is also important to consider how much profit we can return to employees. The red line indicates how many months' worth of bonuses paid to employees. Fortunately, it increased for 10 years in a row. It reached 5.55 months and is getting closer to my own goal of 6 months. In this way, we've been returning profit to employees. I think we became able to reward shareholders reasonably. I feel 9 years have passed so quickly. Now let me pick up what we have mainly done. The biggest difference was that pure holding company system was still maintained when I became President. Under the umbrella, there were 4 operating companies. There was also a R and D company. Right after collapse of Lehman Brothers, business performance of each operating company was very different. As you know, we are involved in fields from heavy electric machinery to semiconductors. At that time, what was most shocked or impacted heavily was semiconductor business. Food and beverage distribution business also had a hard time. I felt something at that time. That is to say, employees of poorly performing companies looked pale and worked desperately. However, their bonus dropped to a half of that of other operating companies as each operating company worked separately. Besides, their wages were cut. On the other hand, employees in heavy electric machinery business were working in a relaxed manner as they had a relatively plenty of time frame. I wondered if such a situation would be acceptable, although we all worked for Fuji Electric. After spending 1 year for preparation, we reestablished 1 Fuji Electric once again in April 2011. At the same time, for bonus as well as salary, we decided not to factor in business to business evaluation, but evaluate on the company wide performance and processes and achievements of individuals. As a result, team strength was developed. That means when there is a struggling business, employees of good performing businesses tried to help suffering employees. I feel that was a big starting point of our constant growth. There were 5 companies at that time. We considered what to do about officers after establishment of 1 Fuji Electric. We thought about it a lot. As a result of full consideration, we decided to keep 18 as executive officers and let the remaining belong to other groups under the name of operating officer for expedition of management decision making. The number of executive officers decreased further, and we have 15 executive officers currently. As a result, we enhanced speed and cooperation between business groups. In addition, we decided to focus on smaller number of businesses. Although we were involved in various businesses, we decided to focus on power electronics systems operations. We integrated and reorganized industrial infrastructure, social engineering systems and power electronics operations. There was a company called Japan AE Power Systems we jointly established with Hitachi and Maiden Shop in transformer related business field. We made a request of dissolution of the company, and we brought this business to our Chiba factory. I made this decision as I thought myself it would be impossible to grow energy related business of Fuji Electric without this business. This business is also contributing to our current growth. As we are a manufacturer, manufacturing is the most important point. So far, we tended to outsource production. We brought what was produced by subcontractors and assembled and tested them. Finished products were considered as products made by Fuji Electric. That was a time when we used outsourcing a lot. But after careful consideration, I thought what a manufacturer should buy are only raw materials. And then internally, we should process materials, add value and generate profit. We changed our policy dramatically to that direction. Along with the change, firstly, we needed to work on cost tracking and in house production, as I just mentioned. The next point was globalization. We decided to ensure local production and consumption. Incidentally, trade friction is happening between the U. S. And China. We built a large factory in Thailand about 4 years ago. Exports of inverters to the U. S. And Europe are all from Thailand. Products we produce in China are all sold and consumed in China. So very few products are exported from China to the U. S. In our case. Also through overseas M and A, we established a foundation to expand overseas businesses. As I said earlier, team strength is necessary in work, in particular when we have a hard time. We started Pro 7 activities in November 2012. Pro 7 activities are finally transforming into businesses themselves. All the businesses are becoming Pro 7 activities. As I mentioned earlier, we revised benefit system to reward employees who work hard. We also conducted employee awareness surveys. In a survey, about 100 questions are asked to find out what employees have in their mind and what they think about top management and their supervisors. As I mentioned later, it became clear that there is shortage of communication with direct supervisors. We will change the situation going forward. So far, I picked up important points. 9 years have passed quickly. From this year, we will start medium term management plan towards fiscal year 2023. Subtitle of the plan is Leiva Prosperity 2023. As I said earlier, the 1st year of labor started. We will move towards 2023 in search of prosperity. We put our thought into the subtitle. Although I repeat myself, when we look back for 3 years from fiscal year 2010 to 2012, as I mentioned earlier, we worked on drastic business structure reforms. For the next 3 years after fiscal year 2015, we clarified and promoted growth strategies. From fiscal year 2016 to 2018, we worked on further renovation to grow further and achieved certain level of results. For the next 5 years, towards centennial anniversary, we will establish foundation as a company, which can achieve sustainable growth in search of prosperity. As the title indicates, we would like to be a company which can contribute to the creation of responsible and sustainable societies through energy and environment businesses. Although we are making a fresh start, we don't change corporate philosophy and management policies at all. Fuji Electric focuses on contributing to prosperity, encouraging creativity and seeking harmony with the environment. As I discussed at the end, we don't change slogan to be enthusiastic, ambitious and sensitive either. We also intend to keep management policies, which include 3 keywords: Energy and Environment, Global and Team. To establish foundation for sustainable growth, we will promote growth strategies further. That means we will concentrate resources on growth fields, which I think are power electronic systems and power semiconductors. I will show you numbers later. Besides, whether we can expand overseas businesses or not will be the biggest point. We will also improve profitability. We would like to generate income of 80,000,000,000 yen at minimum. Operating income was 60,000,000,000 yen in fiscal year 2018. So we have to increase operating income by at least 20,000,000,000 yen If that is the case, we need to improve profitability further. For that purpose, augmentation of global manufacturing capabilities is necessary. After all, management is equal to human resources. For ongoing reinforcement of operating foundations, we will promote initiatives on environment, human resources and governance, which has been talked about recently. We will also evolve company wide Pro 7 activities. Numbers are shown on this slide. We target net sales of 1,000,000,000,000 yen and operating margin of 8% or more. With emphasis on balance between growth potential, profitability, efficiency and financial health, we aim at net sales of 1,000,000,000,000 yen operating income of 80,000,000,000 yen and net income attributable to owners of parent of 55,000,000,000 yen As for other financial indicators, we target net DE ratio of 0.1 times, partly because debt will decrease gradually. Target equity ratio is 50%. We aim at ROA of 5%, ROE of 11% and payout ratio of at least 30%. It is my dream as President to achieve these targets. As you can see, big numbers are not necessarily good. When equity ratio reaches as high as 50%, I think various problems will arise. Although this number was set as a target, we will consider how to increase capital efficiency with growth potential and growth investment in mind and make adjustments in the course of business operations. This slide shows net sales and operating income by segment. I ask you to look at only columns in yellow, which shows operating margin. In total, we aim at operating income of 80,000,000,000 yen and operating margin of 8%. By segment, operating margin of electronic devices will be by far the highest at 11%. For the rest, it is only operating margin in Power, Electronic Systems Energy that will reach 8%. Operating margin of all other segments will be below 8%. That means we can also say that the medium term management plan we formulated this time does not reflect our real ability. Total operating margin will be 8%. Speaking as President, I hope 8% will be targeted on implementation basis in all the segments. With that in mind, we set this numerical target. As for breakdown of net sales of 1,000,000,000,000 yen in absolute amount, net sales of Power Electronics Systems Energy and power electronic systems industry combined will be 600,000,000,000 yen up 53,400,000,000 yen Net sales of electronic devices will be 200,000,000,000 yen a significant increase of 62,700,000,000 yen Combined net sales of power electronic systems and electronic devices will account for 75% of the total, which indicates concentration and selection. In this way, I intend to qualify business policy. Net sales of food and beverage distribution will increase slightly. Contrary to that, net sales of power generation will be 80,000,000,000 yen down 27,000,000,000 yen year on year. This decrease is intentional. In Japan, coal fired thermal demand is very few. So the point in Japan is how much renewable energy demand we can capture. It is also important to receive orders of our business, replacement and service business for equipment our predecessors provided. How we can expand new businesses in Asia and overseas is another important point. I think details will be given later. But as you know, GE and Siemens are downsizing power generation business drastically. They are cutting more than 10,000 jobs. Going forward, I think they will come into the field of small size plants with approximately 300 to 600 kilowatt Fujii Electric is best at. If that happens, Fuji Electric may have a harder time. There are customers who value relationship with us, but we intend to establish a structure to generate a certain level of profit with net sales of JPY 80,000,000,000. So we lowered sales target intentionally. In operating income, our intention is clearer. Power electronic systems and electronic devices combined will account for 80% to 80,000,000,000 yen Operating income of our electronic systems will be up 11,800,000,000 yen and electronic devices up 6,400,000,000 yen Operating income of food and beverage distribution and power generation will also increase. But basically, the 2 segments, power electronic systems and electronic devices, will be the main profit earners. I talked about expansion of overseas business earlier. Ratio of overseas sales was 25% in the last fiscal year. We want to increase our ratio to 35% in fiscal year 2023. In absolute amount, we aim at 350,000,000,000 yen That means we need to increase overseas sales by 117,600,000,000 yen Out of that, about half or 56,600,000,000 yen will be from China and about 36,000,000,000 yen from Asia and others. In absolute amount, we aim at approximately 160,000,000,000 yen in Asia and others and 135,000,000,000 yen in China. Net sales in Asia and others will be significant. In any case, we will grow sales mainly in Asia and China. As you can see, growth of electronic devices will be by far the highest in China. The main factor is EV in China. Power semiconductors for electric vehicles will grow at once. Net sales will increase 13,500,000,000 yen in Europe. The growth will be all from sales of power semiconductors for electric vehicles to automotive manufacturers in Europe. It is very different from the situation in Asia. I think it is characteristic of this plan. Growth investment is also important. Firstly, capital investment we made from fiscal year 2014 to 2018 was about 150,000,000,000 yen We plan to increase capital investment by about 70,000,000,000 yen to 220,000,000,000 yen for the next 5 years. Power electronic systems and Electronic Devices will account for 90% of the total. We will concentrate investment in these segments. For research and development, 200,000,000,000 yen is planned for 5 years. 80% of research and development will be allocated to power electronic systems and electronic devices. As you can see, we made investment plan from the viewpoint of concentration and selection. Then what matters is to reinforce global manufacturing capabilities to improve profitability further, as I mentioned earlier. This consists of 3 major factors. 1st is extensive local production and consumption. We have executed this rigorously so far, but we need to accelerate it further, and we expect increased production volume will be covered by manufacturing overseas. 2nd is manufacturing reforms powered by IoT, which is a buzzword. 3rd is cultivation of overseas human resources, which is a critical point as we have more overseas production bases with increased scale of factories. These are the points we must execute in manufacturing. Next is about operating foundations. Considering the recent situations, we assume following issues are important for management. First is environment. We need to take responsible act as a company for environment. 2nd is human resources. A company cannot exist without human resources. 3rd is governance. Regardless of domestic or overseas operations, environment is expected to be tougher. 4th is to reactivate PROS-seven activities. Now let me explain more details of each of these points. First one is environment. We developed and announced Fuji Electric's Environmental Vision 2,050. This vision includes realizing low carbon society, recycling oriented society and society that is in harmony with nature, and we set targets for each of them. The closest targets we face now are for fiscal year 2030, that is to reduce greenhouse gas emissions during production by 31% in our operations. Also, most technologies and products we offer are used in components or systems for energy saving or efficiency. We believe we can contribute to the society through sales of such products. And for this part, we set another target to reduce CO2 emissions by 50,000,000 tons per year. This is in line with the policy of the government. 2nd point is human resources. Retirement age has become 65 years old in reality. After official retirement at the age of 60, employees are guaranteed to continue working for 5 more years if they want to do so. However, under the current system, their salary is reduced after the retirement at 60. This has become a major issue for us, especially for highly skilled technicians in the field. There are over 100 technicians aged 65 to 70 years old, and it is necessary to pass down their high skills to young workers. If we ask them to do it, we need to offer better compensation, and we started to review the current system. Another point is compensation for employees over 60 years old, including people in managerial positions. In the current system, their payment is reduced to 70% or 80% of the amount they receive until 60%. We reviewed this system as well, and a new compensation system was approved recently. With this new system, employees over 60 can demonstrate their strengths as long as they want. But this is not just determined by intention of individuals. Rather, the compensation will be decided by the factor that if they are needed by the company, and the company guarantees proper compensation for those who are necessary to the company. Also, we take on initiative for better opportunities for female employees. We are trying to increase the ratio of female employees to 20% in annual hiring of new graduates. Another initiative is to increase female managers. Female sometimes face difficulties in continuing their career, for instance, pregnancy. But we are asking them to come back to work as much as they can. And now many of them are back after childcare leave. Including these female workers, our plan is to increase the number of female managers to 400 in 2023. We already have identified candidates and decided to start manager trainings as it takes time before they bring results. Another point is cultivation of human resources in general. Earlier, I mentioned the employee survey, and the findings told us that it is critical to have excellent managers or middle management who can successfully communicate the management policy of the company to their subordinates and unlock their potential. We believe developing such capable managers more will strengthen the power of the company. So we will review and enhance our training system for them. Next point is human resource development at overseas bases mentioned earlier. We should identify core human resources as soon as possible and start education immediately as it takes time to bring on results. Another issue is optimal allocation of human resources. For instance, if a person with 5 year overseas working experience is assigned to a totally domestic job, It is just a waste of the experience. As such, now we are reviewing potentiality of human resources so that we can assign them to positions in which they can utilize their experiences so far during this 5 year plan. 3rd point is governance. This includes various items, but here, we show you only 3 of them. It was decided to set up nomination and remuneration committee in July. We already appointed members, and we are ready to start. An outside director serves as a Chairman, and the majority of the members is taken by outside directors as well. This is for better visibility in the governance. Another point is about compliance. Fuji Electric already has a global compliance program, but we consider reorganizing this program and enhancing global compliance control. We also have business ethics whistle blowing systems. This system allows anyone to blow the whistle anonymously on wrongdoings through the following 3 channels: directly to President, to attorneys or to legal office, and we will review and reorganize this system as well. The third item is reinforcement of risk management. We often experience natural disasters, including earthquakes, and we are aware that enhancement of business continuity and strengthening information security measures are urgent issues. That is another task we are determined to complete. The last point is evolution of Pro 7 activities. We started Pro 7 activities to improve profitability. However, as I mentioned earlier, Pro 7 activities are now incorporated in our work, and our work itself is considered as Pro 7 activities. We are working on enhancement of work quality, improvement of work efficiency and work style reforms as 3 pillars. For instance, to improve work quality and efficiency means outside work rate for sales reps as it shows ratio of their time spent at customers' locations. We are surprised to know that it was about 35% and remaining time is spent mostly at office for preparing estimates, etcetera. What we always tell them is salespeople must have the ratio around 50%. To achieve that level, we must change current working style, including segregation of duties with people working at office. This is implemented at any divisions. We believe the results we achieved in the previous year was due to accumulation of these efforts. And in next 5 years, we want to lead the company to the prosperity of Fuji Electric, which will lead to employees' happiness and shareholder return. I am determined to lead the way to become a company with sustainable growth. Lastly, let me touch on the vision of Fuji Electric. This page is a summary of our vision. Our corporate philosophy is described here as contribute to prosperity, encourage creativity and seek harmony with the environment. These points are relevant to environment and our lives. Our vision is to grow by energy and environment businesses, and Fuji Electric is going to contribute to the creation of responsible and sustainable societies through these businesses. By doing so, we solve social and environmental issues and create customer value. Recently, you hear about SDGs a lot. They were adopted in the United Nations. Each country is working on them in different ways and trying to relay their actions to SDGs. We set the goals associated with SDGs to address them through company wide activities. SDGs has 17 goals, and we prioritize 5 goals, which are relevant to us to make contributions in Energy and Environment Businesses. They are: Goal 7, affordable and clean energy Goal 9, Industry, Innovation and Infrastructure Goal 11, Sustainable Cities and Communities goal 12, responsible consumption and production and goal 13, climate action. They are totally in line with our basic vision for our businesses, and there are 4 other goals also relevant to us. I talked about various topics so far, and I'd like to conclude my presentation with our management slogan of the management philosophy, that is to be enthusiastic, ambitious and sensitive. Every year, I visit all the branch offices and the factories. And every time I go, I always repeat the same thing. To be enthusiastic is to contribute to the society by creating new technologies and products. As I explained in the presentation, I'm encouraging employees to be enthusiastic in this way. To be ambitious means to set ambitious goals for the business. Net sales of 1,000,000,000,000 yen may be one of such ambitious goals. Anyway, this is the idea that everyone should set ambitious goals, share the goals and move forward. Lastly, to be sensitive. I think this is the DNA of Fuji Electric, and the word sensitive can be replaced with grateful. Our predecessors established relationships with customers in the past decades. We take over the relationship to operate businesses. We are grateful to these customers and having them feel like using our products requires certain sensitivity. 2nd point is gratitude for colleagues. I earlier talked about the team, and I believe companies which can finally win have power of teamwork. No matter how many excellent human resources they have, they probably cannot make a major success if those people are working out of sync. Therefore, it is essential to be grateful for colleagues you work with to improve teamwork. 3rd point is gratitude to families. Even if you are so enthusiastic and ambitious, you cannot put yourself into your work without support by your family. I want to tell employees to remember it by this slogan. We will continue using this slogan in next 5 years, and we appreciate your understanding. Now 4 speakers are going to explain more specific business strategy of demand, respectively. This concludes my part, and I appreciate your participation today and your continuous support in the next 5 years. Thank you. Hello. I'm Masatsugu Tomotaka. Let me start the presentation of the Power Electronics Systems business. Power Electronics Systems will contribute to the society through energy and environmental fields. We have been operating as one business, but from this year, we have been divided into 2: Power Electronics Systems Energy Business and Power Electronics Systems Industry Business. Each business has a corporate general manager at the top and leads business speedily. The basic policy is unchanged. We will produce strong power electronics devices through power semiconductors. Furthermore, through unique sensors, we will support measurement equipment. We will connect these components with control equipment and by utilizing networks, we will provide our systems to our customers. We have a great amount of know how from the market and our customers. And by embedding these know hows into software, we will support the systems of our customers. Another important side of our business is the aftermarket services of the systems. This is the overall business plan of the power electronics systems, which is basically unchanged from before. Our priority measures are the following: create competitive components, expanding operation in China and other parts of Asia, expand information system business using IoT and expand new businesses through differentiated products such as vessel systems, railcars and railway substations. Results of 2018 was sales of 546,600,000,000 yen from both energy and industry businesses. We will aim to bring this to 600,000,000,000 yen towards 2023. Operating profit was 36,200,000,000 yen in 2018 and OP margin was 6.6%. Our target is to achieve 48,000,000,000 and OP margin of 8%. As to the growth of sales, we want to grow our overseas businesses by RMB38 1,000,000,000. The target of domestic sales growth is RMB15 1,000,000,000. Overall, we will be targeting sales growth of 53,000,000,000. We want to increase overseas sales ratio from 20% to 25%. The major focus of Power Electronics Systems business is how to grow our overseas business. Let me explain about business expansion in overseas by region. First, China. We are collaborating with various Chinese companies such as Fuji Shanghai Electric and Dalian Fuji Bingshan. Current sales are 28,900,000,000 yen We are aiming to bring this to 41,900,000,000, a 13,000,000,000 yen increase by 2023. The region that is going to grow most is Asia and India. The current sales level of this business overall is 63,500,000,000 yen. We are targeting to bring this to 84,500,000,000 yen by 20 20 3, a 21,000,000,000 yen increase in Asia. This is our major focus. We will expand global products, and we are also seeing expansion of local design, local production and local consumption. We will expand system business by utilizing sales channels that we have acquired through M and A. We have already explained about F. Jimco and FCAC, but today, I would like to talk about CN, Console Nowat Power Solutions for the first time in more details afterwards. In North America, there is a lot of demand for commutetraying railcars. Fuji Electric has a company in New York called Fcemic, and we will aim a sales growth of 4,000,000,000 yen in this region through Fcemic. I will explain the growth plan by region in more detail. First, China. As the President explained previously, we have established a local production and local consumption base in China. There are factories in Ussi, Dalian and Zhuhai, etcetera. We have been able to develop components for inverters, measurement equipment and induction furnaces for the Chinese market. We have also set up engineering functions in Wuxi. We are able to conduct development for China and design systems here. It means we are able to make proposals for systems for Chinese clients. We also have collaboration partners in China, such as Shanghai Electric and Dalian Bingshan. By having partners that have an extensive sales network in China, we are planning to increase our business in plant systems. I would like to explain about our initiatives in Shanghai Electric and Dalian Bishang. This is about expanding our business with our partner Shanghai Electric in China. Shanghai Electric is a top manufacturer of middle and high voltage motors in China. We are now selling an high voltage drive system with unprecedented efficiency, which combines the high voltage motor developed by this top manufacturer in China and high voltage inverters that was developed by our Wuxi plant and provided to Wuxi City. Shanghai Electric is now going into new business domains such as power generation, steel, cement, chemicals and new energy. In these areas, we are collaborating with the JV, especially in the new energy business. We are now providing solar power PCS developed in Wuxi for solar power plants. We are expanding sales of social infrastructure related products through this JV with Shanghai Electric. Next, I would like to explain about our new JV with Dalian Binshan. Dalian Binshan is the top manufacturer in China of AC cold heat technology products such as refrigerators and air conditioners. Fuji Electric is providing energy efficient technologies such as inverters, power distribution and transmission equipment and various measurement equipment. By providing these technologies, we offer solutions to optimize the heat and electric usage in plants, thus offering energy efficient solutions. For these type of energy saving systems for large factories, customers will strongly request for the utilization of IoT, such as visualization, analytics and various countermeasures. With Dalian Bingshan, we have set out Dalian Fuji Bingshan Smart Control System Company Limited and we are now providing these equipment as systems and software packages. We are now conducting marketing activities to industries that have the highest needs for energy saving, such as the beer industry and dairy industry with Dalian Binxiang. China is investing heavily in environment related technologies, such as CO2 reduction and countermeasures for PM2.5. We think there is a huge business opportunity in this area. Next, going to expanding our business with our Asian partners. As President Kitazawa has explained, we have established a manufacturing site in Thailand, which can cover Asia as a whole, such as Thailand, Malaysia, Singapore and India. Some products are exported from this factory to Europe and the Americas. We are setting up a new factory in Thailand, where these products can be made into systems. At FMT, a 15,000 square meter factory that consolidates plant systems is being built. This factory is scheduled to be completed in November this year. The local engineers that will be working for FMT is now receiving training for system building at our Tokyo, Suzuka and Kobe plants. They will be able to conduct plant system design at this new plant in Thailand in November. The construction of this plant will be conducted with collaboration with Fuji Furukawa E and C. At this plant, we will offer a competitive proposition to our customers through our collaboration with our partners. We will collaborate with a new partner, Consol Niewat of India, which I will explain later. F. CHEMCO of India and FCAC of Vietnam, targeting industries such as vessels, chemicals and food and beverage, steel and cement and expand our plant systems business. Let me explain about Efthymco and Kansoul Nelwatt in India. We acquired Efthymco 2 years ago. F. TEMCO is an engineering company that delivers plants to large and medium sized steelmakers in India. Fuji Electric has components with steel manufacturing and package proposals for plants, such as block mill bundles, high speed share bundles and standard mill bundles. Steel production is still growing in India. And as social infrastructure is still underdeveloped, CapEx in the steel industry is increasing. However, F. JEMKO was a latecomer in this area with only a direct current drive technology. But now they are trying to make inroads by providing alternative current technologies and cutting edge energy saving systems that are optimization systems of Fuji Electric to steel manufacturers in India and in Asia. Are very keen about low cost and short lead time. So for plant systems know how, we have developed software packages that combine various plant related services that we are proposing to our customers. We are planning to expand sales by 2.5 times from 2018 to 2023. We are also expanding this business in Asia. This is a new company that I would like to introduce, Kansoul Nowat of India. We have disclosed information about console inverters and power sources. If you look at the demographics of India, there are a lot of young people, so we can take advantage of this growing population. ConsoleNowat comes in number 4 in India in the power source business, mainly in UPS. We want to grow business by collaborating with them. As for the outline of consoleNowat, they have 8 10 employees and have a strong end user base. There are 2 large factories in Pune and Chennai. Out of the 8 10 employees, 50 are engaged in development, 200 in manufacturing. Others are in the sales and aftermarket service area. They have 30 sales offices in all the states of India. Their major strength is their after service sites, which are located not only in India, but in neighboring countries. There are 80 after service bases in total. Fuji Electric was a bit weak in development, manufacturing and aftermarket service, but with this partnership with console NeoWatt, we'll be able to have a complete sales channel starting from marketing, development, production and to aftermarket service, meaning that Fuji Electric is now prepared to expand in markets such as India, the Middle East and Africa. Next is about FCAC of Vietnam. FCAC provides plants to the cement and food industries. They are particularly strong in the cement industry and targeting cement manufacturers with the raw material, firing and finishing processes. By collaborating with FCAC, who has the sales channel, we will offer Fuji Electric's engineering packages, which combines motors, inverters and low voltage power board. We will grow our business in Vietnam Cement and Food Industries. Business is expanding smoothly, and our target is to grow this business by 1.6x by 2023 compared to 2018. Let me touch upon the expansion of domestic business. I have talked about how we are growing our overseas business, but we will grow our domestic business as well. However, sales growth will be 15,400,000,000 yen from the 436 point 6,000,000,000 yen of 20.18 to 452,000,000,000 yen in 2023. There are some negative factors for sales. The bottom of the demand for smart meters will be 2023, and another is that we are electrical equipment business, etcetera. Until last year, industrial infrastructure business, social engineering systems Business and Power Electronics Business were operating separately to get business in UPS or transformers for instance. But now, we are expanding the comprehensive electrical equipment business. We have seen orders increase by 30,000,000,000 in 2018, specifically in domestic data centers and semiconductor plants. We are taking care of all the facility construction of our customers. Compared to when we were taking orders separately for substation equipment, transformers and GIS, we are now taking orders from our customers as an all in one proposal. Through these initiatives, this means that we can conduct after sales service to these customers regularly. This is about our information system business utilization of IoT. For domestic plant manufacturers and system manufacturers, optimal operation and preventive maintenance is a major interest. Fuji Electric delivers various products and components to these centers. These are connected and data is managed through various control and can be optimally operated and to conduct preventive maintenance. We used to offer these IoT services separately to industries such as steel and chemicals. Through this initiative, the consolidation of the data will be conducted by Fuji Electric IT Solution, planning and designing of IoT systems will be done by Fuji Electric, hardware and software related manufacturing will be gathered in Fuji IT, our affiliated company. The group as a whole is now providing a plant system service that is streamlined and optimized. Through this, we can consolidate the data at our customers' plant and accumulate, visualize and analyze that data. We can make proposals to our customers and thus improve the productivity of our customers, allowing us to deploy our business so that we can assure that our customers' plans will always be running smoothly. Within this group, we are now offering an IoT product called 1 Pack Edge. This slide is about expanding our business through differentiated products. We have already explained about EGCS, a vessel system, several times. Since the launch in 2018, we have been able to receive substantial orders for scrubbers for ships ranging from 45,000 to 200,000 tons. We are now developing this ETCS, the scrubber for ships up to 300,000 tons. We will be launching this product in the near future. The characteristic of our product is that we will have developed a compact and high performance scrubber system with a laser gas analyzer. This is the only device in the world that can conduct non contact analysis of gas. We offer various combinations of inverters to save energy. We also offer a water quality meter as well. All of this is controlled through a control panel. Our strength is that we can offer all of the systems and products within EGCS. Through our EGCS business, our customers have become more aware of Fuji Electric in the vessel systems area. Many requests are coming in from our customers. Leveraging our eGCS as a foundation, the next step will to offer water quality meters, water treatment equipment and failure diagnosis. Within the vessel business, utilization of IoT is expanding. So we will grow the sales of these products. The next step will be control the overall energy efficiency of the ship and manage the environment of the ship. In the shipping industry, including ports, energy efficiency and environmental measures are strongly required. Many requests are coming from our customers and the public sector. We have been able to have solid sales in 2019. We will target sales growth of 10,000,000,000 yen in the vessel systems business towards 2023. Next under business expansion through differentiated products is the railway business. Luckily, through our SiC Semiconductors, a major opportunity has emerged for Fuji Electric's railcar business. We are planning to expand sales by 9,000,000,000 by 20 20 3 compared to 2018. Our biggest strength is SiC modules for power semiconductors. These power semiconductors can offer maximum effects in features such as low loss, smaller size and lightweight. We will offer SiC for propulsion systems for high speed railways. We are now preparing to offer SiC for railway substations as energy saving and smaller size is becoming a requirement. Fuji Electric has also received orders for door systems for commuter trains. We developed a platform for these doors, meaning that this can be used in other railway companies as well. There is a lot of demand for railway door systems. As I said before, F CEMIC, a subsidiary of Fuji based in New York, is now capable of development to manufacturing locally. Now we have a structure that we can offer an end to end solution to commuter trains in New York and Washington, D. C. And provide door systems. I have talked about collaboration with partners and expanding our business and sales, but this can only be achieved through differentiated and competitive components. As President Kitazawa mentioned, under AE Paris Systems, there were no new products in areas such as transformers and DIS. Currently, by leveraging cutting edge technologies such as heat application technology and material technology, we have completed development of transformers and GIS that is substantially lower cost, better in energy efficiency and more compact. With our Asian partners, we will incorporate these products into plant systems. For UPS, by utilizing SiC, we are now developing a product lineup so that we can cover from 200 kilowatts to over 1 megawatt. Specifically for these plant systems, IEC standard compliant boards are necessary. With SMMBE, we will jointly develop this board so that we can offer this into markets such as China, Asia and India. For China, we will continue to develop energy efficient global induction furnaces. I have said that the rail car business is going to grow significantly in areas such as all SiC inverters and electrical equipment for railcars utilizing SiC. For doors, F CIMIC in New York has developed a platform for railway door systems. We will combine these competitive components, collaborate with our partners and expand businesses in plants, systems and overseas. As you can see, we have been proactively conducting development looking at the global market. This is our CapEx and R and D expenditure. President Kitazawa mentioned that investment should be concentrated in the electronic devices and power electronics business. CapEx is going to increase from 53,700,000,000 in the last 5 years to 78,000,000,000. Investment will mainly go to the new engineering building at the plant in Thailand and our Chiba plant. At the Chiba plant, we have at last started to build a new building so that it can serve as a mother plant for the transmission and distribution systems. The new building will hold all the developers and engineers related to transformers and support our overseas business. We will start up a new facility in Fukiyage. We will also automate system tests for information control panels. Going to R and D, we will continue to develop differentiated products on a global basis. In the energy business, we will increase the capacity for transformers and GIS. Another initiative is cost reduction of large capacity converters as well as developing ground power units for railways. In the industrial business, we will develop vessel systems that can cover smaller ships. Other areas for R and D investments are railways, inverters, servo, global induction furnaces. Spending will go up from 77,200,000,000 yen to 85,000,000,000 yen. We will offer an extensive product lineup of competitive components and strengthen our systems business. And by collaborating with strong partners, we will expand our business both at home and abroad. Thank you for your attention. I am Doru Hosen, Corporate General Manager, Electronic Devices Business Group. First of all, I will discuss business policy and business plan. Business policy is to increase sales and income through a focus on mainstay IGBTs and proactive investment in growth market. In business plan, net sales target for fiscal year 2023 is 200,000,000,000 yen. We plan to increase net sales by about 63,000,000,000 yen from 137,300,000,000 yen of fiscal year 2018. The growth will come from semiconductors. We plan to increase net sales of semiconductors to 175,000,000,000 yen in fiscal year 2023. As for net sales in Japan and overseas, net sales overseas will be 132,000,000,000 yen in fiscal year 2023. We plan to increase ratio of overseas sales to 66%. We aim at operating income of 22,000,000,000 yen and operating margin of 11% in fiscal year 2023. Next, I will talk about power semiconductors. We will mainly grow. Let me start with power semiconductor market forecast. We currently estimate that our target market will be approximately 1,000,000,000 850,000,000,000 yen in fiscal year 2023. Annual growth of approximately 7% from fiscal year 2018 is expected in overall semiconductor market. Breakdown of industrial discrete devices, industrial modules and automobiles is indicated. The growth will be driven by Automobiles. Annual growth of 12.5% is projected in Automobile market. As for semiconductors business plan, we target net sales of 175,000,000,000 yen in fiscal year 2023. We will increase ratio of sales to automotive market from 28% in fiscal year 2018 to 50% in fiscal year 2023. As for net sales in Japan and overseas, we plan to increase ratio of overseas sales from 57% in fiscal year 2018 to 61% in fiscal year 2023. Net sales by region is described on the right. As for overseas sales, we will increase ratio of China, Americas and Europe. We will mainly increase sales of IGBTs for automobiles I mentioned earlier. This slide shows semiconductor's priority measures. In automotive field, we will increase sales of products for EVs. The point is that we will bolster product competitiveness through application of RC IGBTs. With the use of RC IGBTs, we will make sure to commence mass production of 4th generation direct liquid cooling. In industrial field, we will increase sales in growth markets. We will grow sales of products for renewable energy applications and for air conditioner market. We will grow sales of large capacity and small capacity IGBTs. Going forward, we will mainly bolster sales of 7th generation IGBTs. As for enhancement of manufacturing capabilities, we will boost 8 inches wafer production capacity and promote automation and in house production. We will also expand overseas production in back end processes. To create new competitive products, as I said earlier, we will accelerate development of products utilizing RC IGBTs and shift resources to automotive field. Now I will talk about Fuji Electric's initiatives for automotive and industrial applications. As for our initiatives in EV market, ex EV production volume and ratio of EVs is shown on the left. Annual EV market growth rate of 41% is projected currently. We would like to pursue differentiation with 4th generation direct liquid cooling modules utilizing RC IGBTs. Characteristics of RC IGBT are shown on the right. 2 chips were used for IGBT and FWD in the past. RC IGBT integrates IGBT and FWD on a single chip. By utilizing RC IGBT, chip mounting area can be reduced by about 25% and chip heat generation can be reduced by about 33%. We will roll out products by utilizing the merits. We will expand sales with new IGBT products. There are customers who are currently in the process of product specification, verification and approval. So new products will be launched one after another starting from this year. Some companies are indicated on the left. We will continue to expand sales next year onwards. Ratio of sales from products for automotive applications was 28% in fiscal year 2018. We plan to increase our ratio to 40% in fiscal year 2020 50% in fiscal year 2023. Let me move on to measures for increasing sales of industrial IGBT modules. We are strong in a market of medium capacity and have been introducing products in the markets of small capacity and large capacity in recent years. By employing 7th generation IGBTs and RC IGBTs, we would like to expand these fields. By employing 7th generation IGBTs to small IPM, loss can be reduced by about 30% from that of 6th generation. By developing series of small IPM, employing 7th generation IGBTs, we intend to increase sales of small capacity products. In the field of large capacity, by employing RCIGBT, capacity can be increased from 1800 amperes to 2,400 amperes in the same package, for example. By making use of such characteristics, we would like to expand sales in the field of large capacity. We plan to increase industrial module sales by 26% from fiscal year 2018 to fiscal year 2023. Ratio of sales from small and large capacity products accounted for 17% in fiscal year 2018. We plan to increase our ratio to 40% in fiscal year 2023. We will increase ratio of sales from 7th generation IGBTs to 50% in fiscal year 2023. As for SiC, market trends are shown on the left. I talked about SiC market here last year. Progress of market for SiC modules we are trying to focus on was slightly pushed back in the course of the past year. The market is slightly shrinking. We forecast growth of products, mainly for XEV market in 20252026. On top of our unique conventional package, we will introduce additional package series matched to applications such as package for trains, package for general industrial and energy saving applications. As for chips, we currently provide samples of 1st generation all SiC. Going forward, we will focus on upgraded 2nd generation all SiC. We plan to start providing samples of the 2nd generation in the latter half of this fiscal year. Total loss can be cut by 70% from the loss of SI IGBT. Lastly, let me touch upon capital investment and research and development. 5 year capital investment from fiscal year 2019 to 2023 is expected to be 120,000,000,000 yen Through capital investment, we aim at rationalization and production capacity increases. For front end, we will expand 8 inches wafer production, and production capacity will be 3 times as high as that of 2018. For back end, we will increase production capacity of automotive IGBTs, discrete devices and industrial IGBTs for large capacity and air conditioners. We will also expand overseas production. We will spend 74,000,000,000 yen for research and development over 5 years starting from this fiscal year. We will work on development of automotive products, expansion of 7th generation IGBT series, development of the next generation, 8th generation IGBT technologies, SiC devices and modules. That concludes my presentation on Electronic Devices Business. I am Takahashi from Food and Beverage Distribution Business Group. Let me explain about business policy and business plan of our group. We aim to transform our business by combining systems business and core technologies such as heating and cooling, automation and currency detection. With that, we want to expand overseas operations mainly in China and Asia. Our priority measures are common for both domestic and overseas operations as follows: maximizing efficiency in vending machine operations and labor saving solutions to contribute to store operations. Also, in order to expand systems business, we need to enhance technologies for sensing as well as coordinating communications and information further in addition to our existing technologies. As for manufacturing, we will establish optimal global production system with 3 factories. The plan for net sales is shown at the bottom. Net sales are planned to grow to 100 and and 20,000,000,000 yen in fiscal year 2023. Current ratio of overseas sales is slightly less than 10%, and our plan is to raise this to 25%. By region, sales in China is now a little over than 9,000,000,000 yen and we plan to increase this by 15,000,000,000 yen And sales in Asia, mainly in Thailand and Indonesia as well as including Singapore and Malaysia, are planned to increase by 5,000,000,000 yen to 6,500,000,000 yen This plan includes sales of store distribution business by expected expansion of the business, mainly with counter products. Current operating margin is 5.1 percent, and we intend to increase it to 7.1% in fiscal year 2023 by reinforcing business through growth of overseas business and value added products as well as quality improvement of existing business. Next page is about our vision for overseas vending machines. So far, our overseas vending machine business was to deliver vending machines and operational support was done by explaining know hows at briefing sessions and field visits in a labor intensive manner. Currently in overseas markets like China, telecommunication network is available at much lower cost. Therefore, telecommunication devices are attached on vending machines to send real time data to operation centers, and the centers can order inventory replenishment based on the data and can set up machines remotely to cover its vast land. Also, all field people have smartphones, so we can guide them for setting machines by images sent to their smartphones. That is a system we have in our vision. In China, QR codes are being replaced by facial recognition system, and we will address such changes in payment system without fail. We intend to provide a comprehensive solution to address both vending machines and operation system in the future. This slide is about market projections and priority measures for overseas vending machine business. Priority measures are expansion of sales channels and bolstering model lineup through development of models to satisfy need through selection and concentration. Further cost reduction will be achieved by accelerating local procurement, and another measure is reinforcement of service systems as a strength. Shipment volume in China had doubled every year until 2015. However, it has been stagnant in the past 3 years. Still, China is a country with a population of 1,400,000,000 and about 300,000 vending machines are in operation. There are 2,430,000 vending machines just for soft drinks in Japan. Even if we cannot expect the same volume of machine deployment in China, considering a variety of new vending machines such as showcase type for unmanned store operations. We expect to achieve CAGR 25% with such new type products. In Asia, mainly in Thailand, requirement for energy saving is growing. In addition, cashless payment is becoming popular, and this makes vending machine operation easier. With that situation, we set CAGR 25% as a target for this region as well. Domestic market hit bottom in 2016, and the current annual shipment volume in the market is around 200,000, and we estimate this trend will continue until fiscal year 2023. The most serious problem in the domestic vending machine market is labor shortage as people engaged in the operations are aging and experienced salespeople are decreasing and people replacing them are expected to be less experienced. As I said for China market earlier, we can use telecommunication network in domestic market as well to support management and change setting remotely and send images to smartphones to make operations easier even for people without experience. We will also modify the machines for easier handling. Pet bottle issue is also raised by beverage makers recently, and we expect they will design lighter bottles and paper might be used for packaging material. We will address such future changes with beverage makers and operators. This slide is about store distribution. As you know, there is a nearly oligopolistic market for convenience stores by 3 major companies, and the number of stores is expected to remain flat at about 58,000. We expect transition of demand from competition for new store openings to renovations of existing stores. This increases the demand for new products to address labor saving and energy saving requirement. We will also address another issue of maintaining 24 hour operations. As for store distribution business, we will provide comprehensive store solutions, as mentioned earlier, with sensing technologies and coordination of communications and information as well as our existing technologies. Some convenience stores are set to manage equipment manually and cannot identify equipment locations as they do not have good traceability. In addition, they are not able to find out reasons for differences in electricity bills between stores. Store controllers can address such issues and realize optimal store operation. We also plan to innovate showcases at stores. One example is non leak showcases combined with cooling unit, just like vending machines. This will eliminate plumbing work and safe labor, and this will use low GWP refrigerant for environmental purpose. This showcase was granted an award for excellence of the Ozone Layer Protection and Global Warming Protection Awards by Nikken Kogyo Shimbun. And going forward, we will actively deploy them in the market. To support 24 hour operations, we are also active in introducing dual stores two way vending machines. We are introducing the new type showcase with a camera and sensing technology, which can provide two way communication between consumers and stores. Consumers can check if products they want are on the shelf or can place an order before they go to the store. These cameras can be used for monitoring, and operation centers can implement efficient store operations and also can expect to reduce disposal loss. This gains much attention from various convenience stores. As for counter products, I should refrain from explaining details as they are already used by customers, but we are working on further innovation of the products with the customers. Probably, you have used this self-service resistor, which is an automatic change dispenser used by consumers to pay and we will expand the business for this product. This slide shows drawings for an example of unmanned stores for 24 hour operation. During daytime, stores can be operated by sales staff, and these machines can be used as showcases. At night time, they are transformed to showcase type vending machines to sell foods and drinks. Convenience stores show their interest to use them to sell products during nighttime. Here is another case I think you have experienced. When you go into a store, outside air comes into the store with you. This has negative effect on energy saving and dust and dirt get inside a store with the air. This initiative is to control stores with positive pressure by turning the air pressure from negative to positive. This prevents airflow from outside to reduce dust and dirt and contribute to energy saving. As a result, frequency of cleaning can be decreased, and this leads to labor saving. We are introducing this solution to convenience stores and drug stores and conducting field tests. This slide shows our production system. Food and Beverage Distribution Business Group positions Mie factory as its mother factory. And there is another factory in Dalian, which was set up by a joint venture with Binshan Group of China. Local planning executed in this Dalian factory for local production and consumption in China. China is quite advanced in AI technologies, including earlier mentioned facial recognition and will promote information sharing with Miya factory so that they can introduce advanced technologies in China. There is another factory in Semoran located in the central part of Java, Indonesia, and will enhance local production and consumption in Southeast Asian region by ramping up its local procurement As wages in Indonesia are about onefourteen of Japan, we will supply components to China and Japan from Indonesia for cost reduction. This is my last slide about capital investment. About 15,000,000 yen is planned to be spent for capital investment in 5 years for production efficiency in Miya factory, investment for dyes in China with consideration of selection and concentration and transfer of manufacturing technologies from Mie to FMS to improve their production efficiency. As for research and development, about JPY 15,000,000,000 will be invested mainly in sensing technologies, communications and information coordination technologies, etcetera. That is all. Thank you. I'm Tada Horie. Let me start my presentation. I will explain about the 2023 midterm plan for the power generation business. First, about our basic business policy. The market environment surrounding power generation business is changing dramatically. We will transform our business portfolio to respond to these changes. And through this, we will improve our profitability. The two priority measures are as follows: 1, focusing on distributed power sources domain, mainly in renewable energy 2nd is to strengthen our after sales business. Our business plan is shown here. Sales was 107,000,000,000 last year, and we are forecasting 116,000,000,000 this year. The situation is that our sales are exceeding 100,000,000,000 yen due to a high level of order backlog. This will continue until next year. After that, due to the change in the market environment and our business portfolio, as our President have explained, sales are going to decrease to 80,000,000,000 in 2023. As shown in the bar graph, here is the ratio between thermal power and renewable energy. What is going to change significantly between this year and 2023 is a substantial reduction both in thermal power plants, mainly in large scale plants and domestic solar power business. In turn, we will expand our business overseas. Out of the 80,000,000,000 sales in 2023, 30,000,000,000 is going to come from overseas. As for operating margin, last year and this year has been a bit low due to the mix of projects, but this is a one off event. By 2023, we want to recover to at least more than 7%. This slide is about the market environment change in the power generation market. I think you are all aware of the situation as it has been reported in the newspapers. But this slide shows the future outlook of the power generation capacity for the entire world, Southeast Asia and Japan towards 2025. It also shows the outlook of how the composition of the power source is going to be. Although each chart has some slight differences, what we can observe as a common factor is that distributed power source, specifically renewable energy, is going to increase. This is a transformation of the business portfolio. I would like to make 2 points. One is that we are going to shift to carbon free power sources. This means our focus will be renewable energy, which is basically distributed power source. The second point is that we are going to shift our focus to after services. In terms of sales contribution of these initiatives, on the left hand side, this is by market needs category based on whether or not CO2 is emitted. Carbon free systems proportion was 62% in 2018, but we are going to grow this to 74% by 2023. On the right is a sales ratio by business between new facility construction or after service. After service was 28% in 2018, but by 2023, we want to bring it to 63%. We will change our business structure so that after services will be our focus. From this page, I would like to talk more specifically about business measures. 1st, to touch upon our focus on distributed power sources and renewable energy. In line with the growing demand for diversified power sources, we will strive to survive by introducing high value added solutions to small and middle sized plants, especially in the renewable energy area, where we have our strength. Fuji Electric originally has been strong in the small and middle sized plant business. We have accumulated know how in developing project managers and putting together requirements for plants. We also have experience. We will further leverage this strength. At the same time, we have market leading products in the distributed power source area. After the Great Eastern Japan Earthquake, our domestic share in biomass is number 1. We have delivered 1,500,000 kilowatts. For geothermal, we are vying for the number one position globally. Due to scrap and build, hydropower is booming. Our domestic share is 3 in this area, but we are targeting to increase our share. Although competition is going to become fiercer in the small and midsized plants where we have been strong originally, we will strive to survive by adding solutions such as supporting stable electricity quality through electricity storage, heat and power supply, remote monitoring and predictive maintenance. We will also provide services for plant lifecycle value maximization to survive in this market. This is a strategy in Japan by type of power sources. As for distributed power source business, namely geothermal power generation for the domestic market, the FIT scheme will still be in place. So we will target projects that will fall under the scheme. But we have been delivering flash or steam type geothermal plants all over the world. We have delivered more than 80 plants, equivalent of 3,000,000 kilowatts. Recently, we delivered 2 ORC binary cycle geothermal plants with 5,000 kilowatt capacity during the previous midterm plan period. Going forward, we will develop a package type ORC with capacity smaller than 5,000 kilowatts. We want to answer all the needs in the geothermal area and give proposals to our customers. Our strategy for wind power is to differentiate by offering stabilization of electricity quality through storing power and expand orders. We will target Hokkaido, which is required to have power storage systems. We will approach customers under this strategy. As for biomass, there are still some FIT compatible projects left. So we will target those projects and continue to capitalize on these projects. These are the strategies for our domestic business. Next is overseas business. As with the domestic business, we will continue to aggressively pursue geothermal projects. We will deepen our collaborative relationship with our local partners and further enhance our ability to carry out EPC projects. We will aggressively capitalize on EPC projects that come up just as we have been doing up to now. We will sophisticate the life cycle value that we offer to our customers by optimizing O and M and expand our business domains. Our target market will be all the countries that have geothermal resources, so that will mainly be in the Pan Pacific region. As for solar power and biomass, up to now, our market was mainly in Japan. From now on, leveraging our strength in engaging in the EPC business in Japan, we will expand sales overseas mainly in Southeast Asia. Next is about strengthening our aftersales business. First, for thermal and geothermal power plants, we will expand our proposal based upgrade service and shift provision our service onshore and on-site. In our proposal type service, we will be offering labor saving, life extension, higher efficiency and operating ratio improvement. Steam turbines and power generators will always have to conduct regular maintenance, but we will offer solutions that can minimize the time for regular maintenance. At the same time, we will assist swift recovery after incidents. We have sold more turbine power generators overseas. What we want to do is to shift that after service of these turbines onshore and on-site, meaning that we want to fix these equipment on premise of the customers or from the countries that our customers are located. So this will be a strong push for us. To offer this kind of service, we will develop talent that can take on these tasks overseas and continue to assign these human resources globally. Our strength is that we have the know how and track record as an OEM turbine manufacturer. On top of this, we have RTS of the United States. They have the capability to conduct repair on-site and are good at short lead time response. Our plan is to leverage these capabilities and strengthen the service business, mainly in Asia. Let me briefly touch upon our after service business besides thermal. As for hydropower, due to the introduction of the FIT scheme, there is a lot of scrap and build needs. There are a little under 2,000 hydraulic power plants in Japan. Fuji Electric has delivered 4 31 units, about 4.8 gigawatts. Out of the 2,000 sites, about 500 have undergone scrap and build, but we are predicting that there will still be demand in this area. We will respond to this demand through an extensive product lineup and target to continuously achieve 30% share for orders by offering efficiency for our customers. Going to nuclear power related equipment, we have strength in areas such as remote handling, transportation technologies, plant engineering technologies and waste evaluation technologies that we have developed in R and D facilities. By combining our solutions with technologies that have a track record both in Japan and overseas, such as decontamination, disconnection and solidification, we want to contribute to the safety commissioning of nuclear power plants by engaging in the back end of the process, such as waste processing, etcetera. Lastly, about CapEx and R and D expenditure. In the midterm of 5 years, CapEx is planned at 5,000,000,000 yen mainly in conventional areas such as upgrades and rationalization, plus enhancing after services, expansion of proposal based upgrade services, onshore and on-site provision of services and developing new geothermal power products. As for R and D, the plan is 11,000,000,000 yen Investments will be made in grid stabilization systems and increasing after sales offering. This ends my presentation. Thank you for your attention.