Good morning, ladies and gentlemen. I am Michihiro Kitazawa, President. Thank you very much for coming to our results briefing despite your busy schedule. I truly appreciate it. We announced results for the first half yesterday. Fortunately, we achieved record high income in the first half. We were able to finish the first half with better numerical results than our expectation. We made full year forecast based on the results for the first half. I think full year income will also reach record high. However, as you know, in a so-called trade war between the U.S. and China, the two countries imposed more tariffs on each other's goods. The biggest point now is when this situation will come to an end. As a direct impact in China, capital investment is slightly slowing down. Besides, performance of Japanese and Korean machine tool manufacturers, which sell products to China, is declining significantly.
I think our performance may be impacted both directly and indirectly. We forecast the impact with a certain range. Based on the assumption that momentum in the second half is not as strong as in the first half, we made a full year forecast. The forecast of the fiscal year ending March 2019 we announced this time is a must-achieve target. We intend to make a company-wide effort to achieve the target. There are only five months left before the end of this fiscal year. For the five months, we will of course make efforts to achieve forecast for this fiscal year. More than that, what we have to work on is the next five-year medium-term management plan, which will start in the next fiscal year and end in fiscal year 2023. As I said before, Fuji Electric will celebrate 100th anniversary of founding in 2023.
As you are aware, we hope to achieve Dream 1, which is our dream. In addition, we would like to achieve operating margin of at least 8%. With that in mind, we are currently making a plan. I think we can talk about the plan in front of you in the spring next year. Over the next five months, while making efforts to achieve the target for this fiscal year, we will establish the foundations of Fuji Electric for the future. I will be happy if you could keep a strict but gentle eye on us and be with us. I hope we will have a long-standing relationship with you. I really appreciate your continued support for Fuji Electric. We will do our best. Thank you very much for today.
I am Junichi Arai, Corporate General Manager, Corporate Management Planning Headquarters.
I will talk about financial results for the first half of fiscal year 2018 and forecast for fiscal year 2018. This page shows year-on-year comparison of consolidated financial results for the first half. Both sales and income increased largely. As President mentioned, fortunately, we achieved record high income in the first half. Net sales were JPY 419.4 billion, up JPY 24.4 billion. As impact of exchange rate was negative JPY 600 million, net sales were up JPY 25 billion in real terms. Operating income was JPY 18.5 billion, up JPY 5.8 billion. Negative factors include JPY 1.5 billion increase in fixed cost, such as personnel cost, investment, depreciation, and R&D. Exchange rate effect was negative JPY 500 million. Negative JPY 1.7 billion was from others, including cost reduction in selling prices, and price fluctuations. Those negative factors were more than offset by JPY 9.5 billion from increase in sales volume.
Due to increase in sales and production, operating income increased JPY 5.8 billion to JPY 18.5 billion. As for non-operating income and expenses, JPY 1 billion was from impact of foreign exchange gains. Improvement in net interest expense was JPY 400 million. Improvement in equity in losses of affiliates was JPY 400 million. In total, non-operating items improved JPY 1.9 billion. As a result, ordinary income was JPY 19.4 billion, up JPY 7.7 billion. As for extraordinary income and loss, on the balance sheet, we booked foreign exchange gain associated with liquidation as a result of consolidation of a subsidiary of semiconductors and magnetic disks in Malaysia. As liquidation was completed in April, we booked JPY 1.3 billion of gain on reversal of foreign currency translation adjustments. Besides, we sold investment securities and booked JPY 700 million of gain on sales of investment securities. As a result, extraordinary income net of extraordinary loss increased to JPY 1.9 billion.
Net income attributable to owners of parent was JPY 12.5 billion, up JPY 6.3 billion. In the first half of fiscal year 2017, operating income, ordinary income, and net income attributable to owners of parent reached record highs. In the first half of fiscal year 2018, operating income increased about 50% year-on-year. Net income attributable to owners of parent doubled. We were able to mark record highs, fortunately. Let me move on to net sales and operating income by segment. Higher sales and income were recorded in five principal segments: Power Electronics Systems-Energy Solutions, Power Electronics Systems-Industry Solutions, Power and New Energy, Electronic Devices, and Food and Beverage Distribution. In particular, net sales of Power and New Energy increased JPY 11.3 billion, and net sales of Electronic Devices increased JPY 7.1 billion.
Net sales of Power Electronics Systems-Energy Solutions and Power Electronics Systems-Industry Solutions were also strong. In total, net sales increased JPY 24.4 billion. Growth of operating income was driven by Power Electronics Systems-Energy Solutions and Electronic Devices. In total, operating income increased JPY 5.8 billion. Now I will look at business results by segment in detail. In Power Electronics Systems-Energy Solutions, there are three businesses, including Energy Management, Power Supply and Facility Systems, and ED&C components. In all of the three businesses, both net sales and operating results increased. In the Energy Management business, performance with regard to energy management systems and industrial substation equipment was solid. In a Power Supply and Facility Systems business, net sales and operating results increased, mainly due to an increase in large-scale orders for electrical facilities and other offerings.
In the ED&C components business, net sales and operating results increased because of strong demand continued to be seen from machinery manufacturers. In Power Electronics Systems-Industry Solutions, there are five businesses. In a process automation business, net sales and operating results decreased due to the absence of large-scale orders recorded in the previous equivalent period. However, net sales and operating results increased in four businesses, including factory automation, Social Solutions, Equipment Construction, and IT Solutions. In a factory automation business, demands mainly of low voltage inverters, motors, and factory automation systems increased. In a Social Solutions business, orders for radiation equipment and systems increased. In Equipment Construction business, electrical equipment construction increased. In the IT Solutions business, orders increased mainly from the public sector. In those four businesses, net sales and operating results increased.
In Power and New Energy, net sales increased significantly as a result of higher thermal power system sales and increased renewable energy system sales due to large-scale orders for solar power generation systems. Income also increased. In Electronic Devices, both semiconductors and magnetic disks were very strong. In semiconductors, net sales increased mainly in the industrial field. Demand was also strong from the automotive field. Net sales for magnetic disks increased significantly thanks to increased demand. For reference, breakdown of Electronic Devices sales is shown in a table. Sales for semiconductors were JPY 58.1 billion, and sales for magnetic disks were JPY 13.7 billion. Distribution of semiconductor sales by field is also shown. Industrial modules accounted for 50%, industrial discrete devices 23%, and automobiles 27%. As for Food and Beverage Distribution in a vending machines business, demand from domestic customers was solid. The Chinese market recovered year-on-year.
Both in Japan and China, net sales and operating results increased. In a store distribution business, net sales and operating results decreased because of a decline in demand for store equipment for convenience stores. This slide shows year-on-year comparison of net sales by Japan and overseas area for the first half. As for breakdown of JPY 24.4 billion of increase in net sales, overseas net sales increased JPY 10.9 billion, and net sales in Japan increased JPY 13.5 billion. Overseas sales ratio increased one percentage point from 26%-27% year-on-year. As for overseas sales by area, net sales in our focus area, Asia and others, were JPY 57.6 billion, up JPY 7.8 billion. Net sales in China were JPY 41.7 billion, up JPY 4.6 billion.
Major growth drivers were Electronic Devices, Power and New Energy, and Industry Solutions in Asia and others, and Food and Beverage Distribution and Electronic Devices in China. This slide shows a summary of consolidated financial results in comparison with previous forecasts. Net sales were JPY 419.4 billion, JPY 19.4 billion higher than forecast. Operating income was JPY 5.5 billion higher, ordinary income was JPY 7.2 billion higher, and net income attributable to owners of parent was JPY 5 billion higher than forecast. As for net sales, early emergence of second half demand and higher demand from customers pushed up net sales by JPY 15.6 billion. Gain on translation of earnings pushed up net sales by JPY 3.8 billion. In total, net sales were up JPY 19.4 billion. For operating income, increase of JPY 4.8 billion was from increase in sales volume, reduction in expenses, and cost reduction.
Positive exchange rate effect was JPY 700 million. By segment, in Power and New Energy, net sales were JPY 2 billion lower, and operating income was JPY 300 million lower than forecast. The decreases were associated with standards for recording progress of sales for large orders and lower service sales. In Food and Beverage Distribution, net sales were lower than forecast. It was because demand for vending machines in China was slightly lower than forecast. The decrease also resulted from decline in demand in store distribution business. Net sales and operating income of both Power Electronics Systems-Energy Solutions and Power Electronics Systems-Industry Solutions exceeded forecasts. In Power Electronics Systems-Energy Solutions, demand increased, and there was early commencement of projects in the Energy Management business. Besides, demand in ED&C components business was very strong. In Power Electronics Systems-Industry Solutions, affiliate companies are mainly engaged in businesses.
Projects in the Equipment Construction business and projects in the IT Solutions business increased. In Electronic Devices, demand in the semiconductor business and demand in the magnetic disks business was higher than forecast. In total, net sales exceeded forecast by JPY 19.4 billion and operating income by JPY 5.5 billion. Next, I will talk about balance sheet. This slide shows comparison between March 31, 2018, and September 30, 2018. Notes and account receivables, trade receivables were collected in the first half and decreased JPY 16.3 billion. Inventories increased JPY 31.1 billion, mainly for plant-related sales for the second half. For investments and other assets in total long-term assets, net defined benefit asset decreased JPY 24.6 billion as we converted partial asset into cash. Interest-bearing debt decreased JPY 1.6 billion. On the other hand, cash and time deposit also decreased JPY 4.4 billion.
As a result, net interest-bearing debt was JPY 133.1 billion, up JPY 3 billion. Net D/E ratio was 0.4 times. Equity ratio was 37.2%, up one percentage point. In this way, the balance sheet was in good shape. I'll move on to consolidated cash flow. Free cash flow was negative JPY 6.2 billion in the first half of fiscal year 2017 and positive JPY 9.2 billion in the first half of fiscal year 2018. Net cash provided by operating activities was JPY 18 billion, partly due to increase in funds following partial cancellation of retirement benefit trust. However, as we repaid a significant amount of debt, cash and cash equivalents at end of period stood at JPY 28.8 billion, almost flat year-over-year. This slide shows financial results forecast for fiscal year 2018 in comparison with previous forecasts.
We revised up net sales forecast by JPY 10 billion to JPY 910 billion, operating income by JPY 2.5 billion to JPY 61 billion, ordinary income by JPY 2.5 billion to JPY 62.5 billion, and net income attributable to owners of parent by JPY 2 billion to JPY 41.5 billion. By segment, in Food and Beverage Distribution, we revised down net sales forecast by JPY 3 billion and operating income by JPY 300 million, mainly due to lower demand in a store distribution business. However, in other segments, mainly including Electronic Devices, net sales forecasts were revised up. Operating income of Power and New Energy was revised down by JPY 300 million due to partial change in content of orders. In all other segments, both net sales and operating income forecasts were revised up. This slide shows year-over-year comparison of full year forecast.
Net sales are expected to be up JPY 16.5 billion, operating income up JPY 5 billion, ordinary income up JPY 6.5 billion, and net income attributable to owners of parent up JPY 3.7 billion. Operating income and ordinary income reached record highs in fiscal year 2017. Net income reached record high of JPY 41 billion in fiscal year 2016, partly due to gain on sales of shares. We aim at record high operating income, ordinary income, and net income, which will exceed the past record. By segment, in Food and Beverage Distribution, net sales are expected to be down JPY 4.8 billion. In all other segments, mainly Electronic Devices, net sales will increase significantly. Assumed exchange rates for the second half are JPY 105 to the US dollar, JPY 125 to the euro, and JPY 16.50 to the renminbi. If the current exchange rates are maintained, I think sales will increase by slightly more than JPY 5 billion and income will increase by approximately JPY 1 billion.
If you compare full year forecast and results for the first half, you would notice forecasts for the second half are slightly lowered. It is partially due to early commencement of projects. We closely examined unprofitable projects. By taking into account stagnation of economy caused by U.S.-China trade friction, we made relatively conservative forecast for the second half. In such a situation, we made full year forecast. Let me touch upon dividends. We will pay interim dividend of JPY 8, which is record high interim dividend. Year-end dividend is undecided. Suppose year-end dividend is JPY 8 as well, annual dividend will be JPY 16, which is record high annual dividend. We hope to pay year-end dividend of at least JPY 8. We will make a final decision by being conscious of 30% payout ratio. That concludes my presentation.