Good afternoon, everyone. As just introduced, I am Miyoshi, Head of Corporate Management Planning Headquarters. Thank you so much for taking time out of your busy schedules to join us, our interim financial results briefing. At the outset, President Kondo gave an overall explanation. I will now explain the details based on the materials that have been distributed. Please turn to page five of the materials. This page shows an overview of our consolidated results for the first half compared with the previous year. As President Kondo mentioned at the beginning, we were able to achieve record highs in net sales and in every profit category. Net sales increased by JPY 50.2 billion- JPY 593.3 billion. This includes a currency translation of earnings of overseas subsidiaries of JPY 10.4 billion, so the real increase was approximately JPY 40 billion.
Operating profit increased by JPY 17.1 billion- JPY 59.8 billion, and operating profit ratio reached the 10% level. I will explain the factors behind year-on-year changes in operating profit on the next page. Non-operating profit, including foreign exchange losses and provisions for losses at overseas subsidiaries, deteriorated by JPY 1.2 billion year- on- year. As a result, ordinary profit increased by JPY 15.9 billion- JPY 57.6 billion. Regarding extraordinary items, as explained in the first quarter, we recorded a gain on sales of investment securities this year. Reflecting this, extraordinary profit increased by JPY 7.9 billion- JPY 6.7 billion. As a result, profit attributable to owners of parent increased by JPY 15.5 billion- JPY 42.1 billion. This page shows the analysis of factors behind year-on-year changes in operating profit.
Although there were negative factors, such as a JPY 8.9 billion increase in fixed costs and a JPY 9.2 billion impact from rising raw material costs, we had positive contributions of JPY 21.2 billion from increased sales and production volumes, and JPY 12 billion from differences in model mix, cost reductions, and other factors. As a result, as I mentioned earlier, operating profit increased by JPY 17.1 billion, or 40%. Let me briefly comment on each item. Regarding the increased sales and production volumes of JPY 21.2 billion, the underlying trend in our business has basically not changed from the first quarter. In addition to the continued strength of plant and systems, increased demand for components has been coming in steadily. Reflecting this, plant and systems projects and components each contributed a similar level of uplift.
This figure also includes the negative impact of decreased demand in the automotive electronics field of semiconductors and in the vending machine business, which I will explain later. As for fixed cost, labor costs and R&D expenses increased from the previous year. Depreciation and leases paid had a positive effect due to a decrease in the semiconductor, while other expenses increased, mainly due to higher outsourcing costs associated with the increase in volume. Under added value and others, we show a negative impact of JPY 9.2 billion from rising raw material costs. This negative impact arose in the ED&C components business in industry, in FA components, and in the semiconductor business. In particular, ED&C components was negatively affected by more than JPY 3 billion, and the semiconductors by more than JPY 2 billion. We offset this through differences in model mix and cost reductions and other measures.
Regarding model mix improvements in plant and systems projects in energy and in the automation business in industry contributed, and together with cost reductions, covered the negative impact. Now I will explain the segment results. Please turn to page seven. The structure is the same as in the first quarter, and energy and industry are strongly driving our results. Both the energy and the industry improved their operating profit ratio by nearly four percentage points year-on-year. I will explain the overview of each segment in detail from page eight onward. First, the energy. The operating profit ratio has risen to 15.2%. All sub-segments achieved increases in both sales and profit. The three areas that particularly drove results were power supply and facility systems, energy management, and power generation.
In order of sales increase, power supply and facility systems posted a net sales increase of more than JPY 10 billion, while energy management and power generation each posted increases in the high single-digit billions of JPY. Let me describe the situation in each area. Power generation posted increased sales and profit due to greater progress on ongoing projects and the differences in profitability between projects. Energy management increased sales in both storage battery systems projects and substation equipment. Power supply and facility systems achieved increased sales and profit on the back of a significant rise in demand for data centers. In addition, equipment construction remained solid, achieving a sales increase of several billions of JPY. Next, please turn to page nine for the industry. All sub-segments achieved profit increases. I wish I could say that all achieved increases in both sales and profit.
However, IT solutions saw lower sales due to the absence of large-scale projects in the academic sector that we had in the previous fiscal year, resulting in decreased sales with flat profit year-on-year. The other four sub-segments achieved increases in both sales and profit. Among them, the main drivers were the ED&C components business and the factory automation components business. As explained in the first quarter, demand from finished machinery manufacturers and machine tool manufacturers has increased. This ultimately reflects growth in ripple effect demand related to semiconductor manufacturing equipment and data centers. In addition, automation systems and social solutions each achieved sales increase of several billions of JPY. The ED&C components business achieved substantial increase in sales and profit, with its operating profit ratio rising significantly to the mid-teens.
Next, I will discuss the semiconductors segment. Please turn to page 10. Compared to the strength of the energy and industry segments, semiconductors continued to struggle. Net sales decreased by JPY 0.2 billion year-on-year. This includes a positive forex impact of JPY 4 billion, meaning that sales effectively declined by JPY 4.2 billion. Operating profit decreased by JPY 2.5 billion year-on-year. This also includes a positive foreign exchange impact of JPY 1.6 billion, meaning the effective decline was more than JPY 4 billion, which highlights the difficult conditions. In industrial semiconductors, sales increased on higher demand for semiconductor manufacturing equipment, machine tools, and other products, as mentioned in the industry segment discussion. However, sales in automotive semiconductors declined due to lower demand for xEVs.
As explained in the analysis of changes section, operating profit declined due to rising raw material prices, intensifying price competition in the industrial semiconductor business, especially in China, and a substantial decline in demand in automotive semiconductors. Capital investment and depreciation and lease expenses are as shown. Capital investment decreased significantly year- on- year in the first half, while depreciation and lease expenses also declined slightly. Next is the Food and Beverage Distribution segment. In the vending machine business, net sales and operating profit declined primarily due to lower domestic demand for vending machines as customers held back on investment. In the store distribution business, both net sales and operating profit increased. However, this could not offset the declines in the vending machine business. As a result, net sales and operating profit across the segment as a whole fell. We nevertheless maintained an operating profit ratio of 10.0%.
Next, I will discuss net sales in Japan and overseas, focusing on overseas performance. Please turn to page 12. Overseas net sales increased by JPY 28.0 billion overall. This includes a boost from foreign currency translation of JPY 10.4 billion, implying an effective increase of approximately JPY 18.0 billion. We now look at the main growth drivers. As shown in the table and call-outs on the right, the Energy segment made a major contribution. By region, sales growth was concentrated in Asia. More specifically, higher sales in the power generation, energy management, and power supply and facility systems, particularly for data centers, were the main drivers of overseas sales growth. Turning to the other regions, there are some early signs of recovery in FA components, although conditions in China remain challenging. The situation also remains difficult for semiconductors, particularly in certain regions where the automotive semiconductor business struggled.
Next, I will discuss orders. Please turn to page 13. As President Kondo mentioned in the introduction, orders increased by JPY 152.6 billion year- on- year. Of this increase, plant and systems accounted for JPY 108.1 billion, and components and others for JPY 34.5 billion. Within plant and systems, the Energy business recorded a particularly sharp increase of JPY 153.9 billion. The main drivers were energy management, power supply and facility systems, and equipment construction. Power supply and facility systems made the largest contribution at approximately two-thirds of the increase of just over JPY 150 billion. Energy management and equipment construction orders also increased by around JPY 20 billion each. Although not shown on the slide, power generation also increased by more than JPY 10 billion. Meanwhile, orders in the Industry segment decreased by JPY 36.5 billion.
This was due to the absence of large IT solutions projects in the academic sector that had contributed in the previous fiscal year, including the second GIGA School program. However, I point out that automation within the Industry segment recorded an increase in orders of around JPY 5 billion. Within components, ED&C components was particularly strong, with orders up by more than 50% year- on- year. Industrial semiconductors and factory automation components orders also grew by nearly 20% each. Finally, quarterly order trends for major components, which we have discussed over the past several years, are included in the supplementary materials this time. We have omitted them from the main presentation. Thank you for your understanding. Now, please turn to page 15. This slide compares our first half results with the forecasts announced on July 30th.
Net sales were JPY 0.7 billion below forecast, while operating profit exceeded forecast by JPY 1.8 billion. Overall, results were broadly in line with the July forecasts. Looking at the individual segments, Energy net sales fell short of forecast by JPY 5.1 billion. This mainly owed to delays in plant and systems projects, including power generation projects. Meanwhile, Industry beat forecasts for both net sales and operating profit, reflecting increased demand, particularly for ED&C components, as well as growth in IT solutions. In Semiconductors, the figures reflect an increase in sales in industrial semiconductors, despite a decline in automotive semiconductors. The results for Food and Beverage Distribution reflect lower demand for vending machines. Next, I will discuss the balance sheet and cash flow statement. Please turn to page 17. Total assets decreased by JPY 8.7 billion from the end of the previous fiscal year to JPY 1,398.0 billion.
This mainly owed to a JPY 58.5 billion decrease in trade receivables, outweighing a JPY 28.9 billion increase in inventories linked to strong performance in the plant and systems business. Turning to liabilities and net assets on the right-hand side, interest-bearing debt decreased by JPY 14.9 billion, mainly on repayment of long-term borrowings. The net assets figures reflect factors, including an increase of JPY 20.5 billion in the acquisition of treasury stock, as explained in our first quarter presentation. As a result, the equity ratio was 58.1%. Net interest-bearing debt was -JPY 0.3 billion, indicating an effective net cash position. Next, please turn to page 18 for the cash flow statement. Cash flow from operating activities improved to JPY 82.8 billion.
As explained in the balance sheet section, although we invested additional funds in inventories, this was outweighed by increased collections of trade receivables and advanced payments from customers, as well as higher profits. Cash flow from investing activities also improved to negative JPY 24.7 billion, mainly on lower capital investment and increased sales of shares. As a result, free cash flow, FCF, was JPY 58.1 billion. Cash flow from financing activities was minus JPY 54.3 billion, reflecting dividend payments, share repurchases, and financing activities, including long-term debt repayments. This concludes my overview of the financial results. Please turn to page 20. We revised upward our full-year consolidated earnings forecasts to reflect first half results, as well as recent order trends and market conditions.
We raised our net sales forecast by JPY 50 billion- JPY 1,350 billion, our operating profit forecast by JPY 11.5 billion- JPY 168.0 billion, for an operating profit ratio of 12.4%, and our forecast for profit attributable to owners of the parent by JPY 5.5 billion- JPY 117.0 billion. Our exchange rate assumptions remain unchanged from July 30th at JPY 150 per US dollar, JPY 175 per euro, and JPY 21.90 per Chinese yuan. We have also revised our segment forecasts to reflect first half performance. These revisions reflect increased demand in the Energy segment for energy storage systems, data centers, and semiconductor manufacturing facilities, as well as a recovery in demand for components in the Industry segment. We expect these two segments to continue to drive our earnings growth strongly over the full year. Page 21 shows our consolidated earnings forecasts for the second half.
These figures are provided for reference and are calculated by subtracting our first half results from our full-year forecasts. I will skip a detailed explanation. Please turn to page 22. This slide compares our full-year earnings forecasts with the previous fiscal year's results. If achieved, these will mark record highs for net sales for the fifth straight fiscal year and for profit for the seventh straight fiscal year. We already have targets set out in the FY 2026 medium-term management plan announced in 2024, but we intend to set ourselves ambitious goals and work hard to achieve them. By segment, for energy, we are targeting increases of around JPY 100 billion in net sales and JPY 20 billion in operating profit compared with FY 2025. For industry, we also expect operating profit to improve by around JPY 20 billion.
We will work together as a team to ensure that we achieve these ambitious targets. Finally, I will discuss shareholder returns. President Kondo also mentioned this in the introduction, so I will keep my explanation brief. We base dividends on our target annual payout ratio of 30%. We have decided to pay an interim DPS of JPY 110, one yen above last fiscal year's year-end DPS of JPY 109. We also target a year-end DPS of JPY 130, bringing our forecast annual DPS to JPY 240, an increase of JPY 40 from the previous fiscal year. We began announcing our dividend forecasts earlier from this year and intend to continue doing so ahead. This concludes my presentation on our financial results and earnings forecasts. Thank you for your attention.