Earnings Call: Q4 2026

May 13, 2026

Good afternoon, ladies and gentlemen. I am the Group President and CEO. Today, I will explain our FY 2025 financial results summary, FY 2026 forecasts, and our current progress following the completion of the first year of our value creation plan. I'll present the executive summary. Our CFO Yamaguchi will explain the financial results and performance forecasts. These are the financial highlights of the year ending March 2026. Revenue was JPY 364.4 billion. BGM did exceptionally well, maintaining solid results, particularly in Europe and the U.S., despite market contraction. This offset the revenue decline in the Diagnostics and Life Sciences segment, which continued to be affected by stagnant demand for instruments in the United States. Operating profit was JPY 22.7 billion. Profit was up significantly, driven by the strong performance of BGM in developed markets with high profit margins, as well as the effects of cost improvements. Diabetes Management profit was up by 45% due to improved profitability from CGM business transfer in Q4. Although Healthcare Solutions and Diagnostics and Life Sciences profit declined due to weaker demand for electronic prescriptions and the impact of stagnant U.S. market, consolidated profit grew Y-o-Y, and we landed higher than our upward revised forecast by JPY 2.7 billion. With FX in our favor, both revenue and operating profit reached record highs, continuing the trend from the prior year. However, due to weaker JPY against the EUR, we recorded an unrealized FX loss of JPY 10.5 billion, resulting in profit attributable to owners parent of JPY 500 million. Although profits were JPY 1.5 billion lower than the forecast due to higher income tax, our performance exceeded expectations. Therefore, we will maintain the dividend at JPY 21 at year-end and JPY 42 for the full year. This is a review of FY 2025, which was the first year of phase 1 of our Value Creation Plan. Taking into account structural reform costs and the impact of the U.S. tariffs, we had anticipated a year-on-year decline in profit at the start of the period. Progress exceeded our plans from the first quarter. We revised our full year operating profit forecast upwards in the second quarter and ultimately exceeded the revised plan, which was 30% higher by 30% than initial forecast, and also 13% higher than the revised forecast. The primary factor was stabilization of BGM, which is key to achieving Value Creation Program progressed as planned. Market contraction in developed countries continues, although at a slower pace. Overall market continues to contract by over 4%, but in our VCP assumption is our revenue CAGR contraction of -2.4%, but the actual was -1.3%. In line with the VCP policy of strengthening portfolio management, we have carefully assessed the balance between investment and returns and decided to divest CGM. Consequently, JPY 64 billion negative factor in profit recorded in FY 2025 will disappear, and a significant increase in profit is expected for FY 2026. LSI Medience has regained its ISO certification. Positioned as a structural initiative within VCP, the company is implementing cost reductions and price revisions to improve profitability. Healthcare IT Solutions has completed its M&A with WHS. In addition to driving operational efficiency, the company is strengthening its competitiveness by launching a cloud-based EHR system in line with the government's healthcare DX initiatives. The pathology business has improved profitability through the optimization of production systems in addition to the strong consumables business. New products in the digital pathology are also driving growth. BioMérieux was affected by stagnant demand for equipment in the U.S., but recovery in demand led by pharmaceutical companies began to emerge in the second half. Furthermore, in the growing field of cell and gene therapy, we launched the LiCellGrow, which is our second new product, an automated cell culture system. Although there were some shortfalls, as the first year of our VCP, the financial year saw us achieve the expected results. Moving on to the earnings forecast for FY 2026. We forecast revenue of JPY 359.7 billion. Our current FX assumption is conservative, assuming a stronger yen. We have factored a negative impact of JPY 9 billion in revenue due to FX and JPY 3.5 billion from transfer of CGM. BGM will continue to see market contraction, particularly in developed countries, the rate of contraction will be limited. In Diagnostics and Life Sciences, our view is conservative regarding demand recovery for instruments in the U.S. Group revenue is forecast to go down by 1.3%, excluding FX, we expect a 1.2% increase in the revenue. Operating profit target is JPY 27 billion. Diabetes Management is expected to maintain a profit margin of over 25%. At the consolidated level, despite impact of inflation and an increase in SG&A due to higher revenue, we expect a 1.3% improvement in the profit margin and a plan for year-over-year profit growth of JPY 4.3 billion driven by CGM transfer and company-wide cost improvements. FX gains and losses are not factored in. Profit attributable to owners of the parent is forecast to increase by JPY 14.9 billion to JPY 15.4 billion. The dividend is expected to remain at the same level at JPY 42 per share for the full year. This shows the FY 2026 strategic initiatives of each business. From the last fiscal year, we started restructuring portfolio management, and based on the expected effects of these initiatives, we plan to significantly increase the profitability. In Diabetes Management, organization is streamlined as BGM market shrinks and it is stable in the developed countries and cost reduction by efficient operation will continue so that we can maintain the stable cash generation capability. LSI Medience with higher prices and the gene-related area will be strengthened because this is the growth area. We would try to improve the profitability through those measures. As for Wemex, we will steadily capture the healthcare DX related demand, including expansion of the cloud-based product sales. In pathology, reorganize sales and marketing, grow consumables, and accelerate growth by introducing new products in digital pathology. We continue to promote the production optimization measures to accelerate the growth area expansion and profitability improvement. Biomedical is integrated with IVD and became the life sciences business unit. We will accelerate the improvement of the profitability in growing area. We will closely watch the demand recovery in the United States. In addition to LiCellMo, we launched LiCellGrow, which is the automated culture equipment launched at the end of the previous term, and we try to grow the cells. In IVD, we would expand the reagents and equipment sales to maximize the integration effect. In order to achieve the VCP targets in 2027, we make sure that we make progress in those measures. Next, let me talk about the progress on management targets of our VCP. The first year of VCP in fiscal 2025, we included the structural reform expenses, and we expected a lower profitability. However, with the FX evaluation loss, EPS and ROE worsened. However, with the restructuring and portfolio management, the profit improvement occurred earlier than expected. From the capital efficiency perspective, we worked on the working capital management at corporate-wide level to build the foundation to strengthen the cash generation. FY 2026 expected revenue growth rate, excluding FX, is 1.2%. Operating profit margin for FY 2027, the target is 8%-10%. For this fiscal year, we have reached 7.5%. We are making progress. To have a stable financial foundation, we would focus on the improvement of the profitability during the VCP. As FY 2025 initiatives start to bear fruits, we expect a steady progress in this fiscal year. On the next page, we will talk about the details of the structural reform. The key initiative number 1 is the structural reform. We expect 8 to 12 JPY billion improvement during 3 years up to FY 2027. The measures include a cost optimization such as process improvement, the supply chain improvement, optimization of the locations and organizations to optimize the number of the personnels. In fiscal 2025, it resulted in 3.1 JPY billion. In the key initiative in Diabetes Management include insourcing, logistics cost reduction, lowering production cost. In Healthcare Solutions, procurement condition improvement and site consolidation. In Diagnostics and Life Sciences, production structure optimization is the major initiative. For FY 2026, we expect 3.6 JPY billion after the restructuring costs. Those are the numbers that we expect. The expenses is 1 JPY billion for fiscal 2025, 400 JPY million for 2026. Cost efficiency is expected to gradually improve. Next is key initiative number 2, improvement of portfolio management. During the VCP, we have looked into the ROIC or ROIC or growth potential, we divided those businesses into quadrants. In fiscal 2025, in the growth business or PHCbi, we continue to invest in cell and gene therapy as well as life science areas to build the foundation for medium to long-term growth. The CGM is in the nurture business. We divested this. In Epredia, the profitability improvement, we made investment in growing digital pathology. IVD, we have decided to integrate this with PHCbi. The integration of the domestic sales organization is already showing the results in effective resource utilization. Foundational business, BGM, we have been enhancing the sales in Europe and U.S. and improving the operation. Wemex, launching of the cloud products and capturing the healthcare DX demand. Through the integration with the WHS, and through the structural reform, we improved the cost generation capability. The restructuring business, LSIM regained ISO certification and improved the profitability. Mediford is trying to build the business foundation. Further initiatives for ROIC introduction. The FY 2025, we worked on the internal infrastructure, such as calculation methodologies and enhanced working capital management. From FY 2026, we start operations to align the management metrics to each business unit and monitor periodically. Key initiative 3, focus on Diagnostics and Life Sciences. Upper chart here shows the vision we have in VCP, and the 3 approaches are shown. Lower part is the progress of FY 2025. We focus on the strengthening of the business foundations, optimizing production sites, rationalizing sales organization in Japan and abroad. Through the reorganization of the business units, we are working on the enhancement of operational efficiency and competitiveness. Example, a part of the production site optimization is the shift of the production from U.S. to Indonesia of Epredia. The China's local production preference policy, in relation to that, we shifted the CO2 incubator production from Indonesia to China. These are the efforts to realize both cost competitiveness and supply stability and to expand the sales in China. We have also started to strengthen R&D for the next growth phase. We have established a core technology laboratories for the R&D of next generation new technologies. The new products, the new cell expansion system in the CGT was developed and launched. We are building the technological base to generate future domain solution and expand new businesses. In FY 2026 and onwards, we would start to implement the full-fledged initiatives. Lastly, about the sustainability. During the VCP, in addition to financial targets, we are also focused on the non-financial targets. Fiscal 2025, we made a major progress. External recognition, we obtained the SBT certification as planned and achieved FY 2027 targets of EcoVadis and CDP two years ahead of schedule. This is a result of the accelerated development of the ESG structure. We are contributing to strengthen the management as a foundation for the sustainable growth. That concludes my part. Over to Yamaguchi-san, CFO. I will now explain the results of FY 2025, followed by the forecast for FY 2026. I will start with overview the result for FY 2025. Both revenue and OP increased year-over-year. Although the initial plan had assumed decline in profit, we revised our OP forecast upwards in Q2 and ultimately exceeded even that target. This was achieved despite a challenging environment, including U.S. market conditions, the impact of tariffs, and weakening demand for healthcare DX. It is the result of our efforts to strengthen our earnings structure through various initiatives, such as stabilizing BGM in the U.S. and company-wide cost optimizations. Pre-tax profit decreased by JPY 12.4 billion year-over-year due to FX valuation loss of JPY 10.5 billion. The main factor is the unrealized valuation loss, as previously explained. Further details are provided on page 37, which we'll cover shortly. Profit attributable to the owners of the parent was JPY 500 million. Basic earnings per share was 4 JPY. EBITDA was down JPY 600 million year-over-year. The gap from the increase from OP is attributable to the decrease in depreciation amortization expenses. Adjusted EBITDA increased by JPY 1.9 billion. ROIC was at 3.9%, similar to the prior year. Exchange rate used for PL was ¥175 to the euro and ¥151 to the US dollar. Although the yen appreciated against the dollar compared with the previous year, the depreciation of the yen against the euro was more significant, which was positive impact on revenue. I would like to provide some explanation about FX gains and losses. Valuation losses arising from internal borrowings fluctuate with FX. They remain unrealized until settlement, and even upon settlement, no cash outflow to external parties occur, excluding taxes and related expenses. As we have previously explained, impairment loss in the PL will result in a positive adjustment to the subsidiary's translation reserves, thereby increasing equity on the balance sheet. We do recognize that FX valuation loss during this period has had a certain impact on the share price. To mitigate volatility, we carried out a capital repayment from the subsidiary at the end of the period, reducing the loan balance from the subsidiary by EUR 19 million, which increased related tax liabilities and has reduced our exposure to future FX valuation gains. Consequently, based on the balance at the end of March, FX sensitivity of this internal loan would result in a loss approximately ¥400 million if the euro were to depreciate by 1 yen against the yen at the end of the term. The valuation gains and losses arising from internal loans are the primary factors driving fluctuations, but the FX gains and losses are also influenced by other foreign currency denominated receivables and payables, including intragroup loans denominated in US dollars. Therefore, the overall sensitivity fluctuate dynamically depending on the group's financial position. Let us now return to the main presentation. This page shows the difference between the February forecast and FY 2025 results. Operating profit, JPY 2.7 billion higher than the forecast. Diabetes Management, the forecast was conservative, and the strength of the BGM in Europe continued pushing up the profit, offsetting the profit decline of Healthcare Solutions, decline of the e-prescription and CRO business revenue decline. In Diagnostics and Life Sciences, we are starting to see the signs of recovery in the U.S. In comparison to the forecast, the profit is up, and the profit of HQ and others is also up with controlled expenses. Profit attributable to owners of the parent was down with the higher operating profit. The tax increase led to the lower profit. Subsidiary return of the capital impact existed, and the tax expenses increased by JPY 3.1 billion due to the deferred tax liabilities associated with subsidiaries' dividend payment to consolidate a group-wide capital. As a result, the profit attributable to the owners of the parent was JPY 500 million. Dividend forecast remains at JPY 42 as the business results exceeded expectations. As usual, the second half was higher than the first half. The Q3 BGM was strong. With the transfer of CGM, Q4 as a whole is slightly down, but Diagnostics and Life Sciences profit increased. The U.S. are starting to show the recovery, so it's a good sign, we believe. Operating profit with the provision at the end of the term, the Q4 is declining. This fiscal year, one-time expenses increased. Quarter-on-quarter it is down, but year-on-year, both the sales and OP increased. This is revenue by segment and business. Diabetes Management revenue was up 2.9%. Even excluding FX, the decline was limited to 0.9%, which we consider significant progress towards stabilizing BGM. Healthcare IT Solutions were Decline in e-prescription revenue was offset by revenue from electronic medical records and claims processing. The SIM offset the decline of revenue from the CRO business. Diagnostics and Life Sciences was down by 2%. Revenue in pathology and Biomedical declined due to stagnant demand, mainly in the United States. Whilst the diagnostics business revenue declined due to lower sales of reagents and digital pumps, as well as absence of one-off gains recorded in the previous year. This is the bridge breakdown year-over-year. Top graph is revenue impact of the weak yen against the euro, positive JPY 5.3 billion. In addition to sales growth in LSIM and Healthcare IT Solutions, sales related to contract manufacturing Indonesia continue to grow, resulting in increased revenue in the other segment. Due to a decline in revenue in the BGM and CRO business, as well as Diagnostics and Life Sciences, the growth rate excluding FX was minus 0.7%. Graph below shows operating profit. Diabetes Management OP increased significantly due to strong BGM performance in the high-margin European and U.S. markets, cost-saving measures and reduction of losses following CGM transfer. This offset lower profit in Healthcare Solutions and Diagnostics and Life Sciences, resulting in a slight year-on-year increase overall. Diagnostics and Life Sciences recorded a loss of JPY 3.5 billion, which includes JPY 1 billion tariff impact and JPY 1.2 billion from the review of head office functions. Head office and others segment includes positive impact of JPY 1.6 billion from the review of the head office functions. Difference of JPY 400 million. This is mainly due to the fact that the previous fiscal year included one-off gain of JPY 600 million from the sales of idle assets, and the current fiscal year included one-off pension reserve expense of JPY 400 million. Explanation by segment. Starting with Diabetes Management segment, revenue was up by 2.9%. Operating profit was up by 44.6%. Margin was 19.8%, 5.7% improvement year-on-year. We continue to have a good share, an increase in Europe and the U.S. is also achieving the full year growth. From Q4 in Algeria, we started to ship the locally manufactured products. From FY 2026, we expect that contribution in full year. CGM through the transfer, the sales contribution is up to Q3. By the 365-day product sales at the full year, revenue was up. Operating profit with the better profitability in U.S. of the BGM, the developed nations, strong sales pushed up the overall profit. The reduced depreciation contributed through the cost improvement that we are working on on the global scale. CGM with higher revenue, cost control and transfer, the loss was reduced by JPY 2.6 billion. Next is Healthcare Solutions. Sales were slightly up year-on-year. Operating profit is down by 32.8%. Margin remained at 4.9%. At SIM, the general testing demand is stable and, with the revenue increased JPY 800 million, driven by the growth in genetic testing. Healthcare IT Solutions, the lower e-prescription sales were offset by growth in EMR and the medical receipt system sales. Revenue was up JPY 900 million, offsetting lower CRO business. In CRO, due to the impact of the ISO certification revocation of the LSI Medience, the clinical test order was declining. After the regain of ISO, we are expanding the orders and order backlog is recovering. As for operating profit, there were revenue increase of the LSIM and Healthcare IT, but the sales mix change worsened and the CRO business revenue was down and procurement cost was up. In relation to the new product launch and depreciation increase and restructuring cost of JPY 400 billion was booked at the end of the term. Pathology business sales of consumables and equipment was strong in Europe, and sales in the Asian region were also solid, driven by expansion of local production in China. This, combined with the positive impact of FX, offset the stagnation in demand for equipment in the U.S., resulting in a slight increase in revenue. In Biomedical segment, Japanese nuclear market recovered with the second half exceeding the previous year's figures in the U.S. as well. There are signs of recovery in demand in the second half, such as acquisition of major projects, primarily from the pharmaceutical and biopharmaceutical sectors. However, stagnation in demand in instruments affected by budget cuts at government agencies and academia continues. Diagnostics revenue declined due to lower number of tests in China, a decline in reagent sales in Russia, and decrease in sales of digital pumps, which had performed well in the previous year. OP decreased by JPY 3.4 billion. However, compared with the prior year, there was a difference approximately JPY 2.2 billion, impact of tariffs around JPY 1 billion, and the impact of the review of the head office functions JPY 1.2 billion. On a like basis, the decrease in OP was approximately JPY 1.2 billion or about 16.5%. In pathology, measures such as price revisions, optimization of manufacturing sites, and cost reductions are yielding improvements in profitability. At Biomedical, signs of recovery are emerging in certain segments in the U.S. Despite image reductions, the fourth quarter saw a year-on-year increase in profit. Sales by region. In Japan, although LSIM and Healthcare Solutions grew, revenue declined slightly due to a decrease in the CRO and diagnostic reagents business. In Europe, revenue rose by 8.1% due to strong performance in BGM and Diagnostics and Life Sciences and even excluding FX impact. In North America, although Diabetes Management grew, revenue declined due to stagnant demand for Diagnostics and Life Sciences in-instruments. In other regions, although BGM and Diagnostics and Life Sciences declined, revenue increased due to the contribution of higher sales in Indonesia. On page 24, we are showing the reconciliation from adjusted EBITDA. Under depreciation in the Diabetes and Management, part of the intangible assets amortization ended and declined by JPY 1.3 billion. In Healthcare Solutions, the product launch led to the higher expenses, and the total was JPY 27.1 billion. Items between EBITDA to adjusted EBITDA as M&A related cost. We booked JPY 500 million one-time cost in relation to the CGM transfer, restructuring related cost in the Diabetes Management. There was a rationalization related cost of JPY 300 million in relation to the BGM. In Healthcare Solutions, we booked JPY 400 million provision at the end of the term. Other one-time income and expenses include JPY 400 million for pension reserve. Next is consolidated balance sheet. Let me talk about assets and liabilities. Outstanding goodwill was JPY 220 billion. There are no change based on the local currencies, but FX impact led to JPY 15 billion increase. After paying net debt of JPY 626.5 billion, gross debt was down by JPY 20.7 billion with FX impact. For borrowing, which was due for full repayment in June 26, we completed refinancing at the fiscal year-end, switching the gross debt of about JPY 230 billion from full fixed term repayment to committed revolving facility for our required working capitals. In changing to the flexibility by separating short term and long term and stabilize the cash flow. With lower debt and higher adjusted EBITDA, net debt leverage ratio decreased to 3.7 times. Cash flow generation capability and financial foundation are strengthening. Toward the next plan, we are ready to start the proactive growth investment for next medium-term plan. By booking FX evaluation loss, profit attributable to owners of the parent was down. ROE was 0.3% in the VCP. For fiscal 2027, our target is 10% or higher. Operating cash flow stood at JPY 42.5 billion, partly due to the impact of a JPY 9.1 billion reduction in working capital. We have maintained a stable level of over JPY 40 billion for three consecutive years, and we recognize this as a result of our efforts to improve capital efficiency, streamline working capital, and strengthen cash generation as set out in our VCP. Capital expenditure focused on maintenance and renewal amounted to JPY 9.1 billion. Although there were outflows of JPY 39.8 billion in financial cash flows, including borrowings and dividend payments, the balance of cash deposit increased, partly due to FX impact. That's about the result. Moving on to the FY 2027 full year forecast. For FY 2026, revenue is forecast to decrease by 1.3% Y-o-Y due to conservative exchange rate assumptions favoring a stronger yen and the impact of disposal of the CGM business. However, excluding the FX, increase of 1.2%. OP planned to increase by JPY 4.3 billion or to JPY 27 billion. In the prior year, FX loss of JPY 10.5 billion was posted, this is not factored into the plan. Profit pre-tax is projected to increase by JPY 15.6 billion to JPY 22 billion. Profit attributable to owners of parent is projected JPY 15.4 billion, and earnings per share JPY 122. FX assumption is JPY 165 to the EUR and JPY 145 to the USD. Dividend forecast remains at JPY 42, same as previous year, maintaining the upper limit of the cash allocation range set out in the VCP. We believe that the risk of dividend cut has been reduced at this stage due to the stabilization of business performance and the implementation of refinancing. I'll explain the assumptions shortly. We have implemented some name changes and reorganizations in some business divisions, so I would like to outline the details. Please refer to page 39. As for the names of the business unit, in order to clearly state the content of the business, the Diabetes Management, BGM business unit, and Healthcare Solutions, LSIM business, and also the Diabetes Management BU, and they changed into the BU and the Clinical Testing BU. In addition, in the Diagnostics and Life Sciences, Biomedical business and IVD were included. They were integrated to become the Diagnostics and Life Sciences and including the B2B business of Indonesia. We focused on the Diagnostics and Life Sciences area, which is in the VCP, including the two business resources, the business unit resources in Indonesia. We are trying to effectively utilize the resources. Moving on to page 29. We are comparing the FY 2025 results and FY 2026 forecast. Excluding the impact of the Forex, we expect 1.2% growth. In Diabetes Management, the BGM market shrinkage is expected to continue at 4% or higher. We are seeing the stabilization in U.S. and market share increase in Europe. Excluding FX, we try to reduce the decline in revenue at around JPY 1.2 billion. Under Healthcare Solutions, there are the clinical testing business unit and there is a genetic testing growth and a price strategy. The Healthcare IT Solutions have the cloud product expansion as well the medical healthcare DX demand capturing. CRO is expected to recover. We expect JPY 3.7 billion increase. Diagnostics and Life Sciences in U.S. market, we expect a slight recovery and about we keep the conservative assumptions. In pathology, the consumable demand is expected to grow. Biomedical and IVD are integrated into the Life Sciences BU, and we expect the impact of the Indonesian B2B business transfer, which include the minus JPY 5.7 billion in HQ and others and plus JPY 4.4 billion in Diagnostics and Life Sciences. Page 30 shows the year-on-year change in operating profit broken down by factor. This year, we anticipate a 19% increase in OP, even on a basis excluding temporary income and expenses as well as FX effects. We expect a 10.9% increase. We expect an improvement of JPY 5.8 billion from transfer of the CGM, negative impact of JPY 2.6 billion from decline of BGM revenue, including impact of structural reforms and an increase of earnings of JPY 3.2 billion due to higher revenue other than Diabetes Management, including improvements in profit margins. In our VCP, we explained that we would stabilize BGM to cover the impact of decline, and this is making steady progress. We expect the impact of inflation amounting to JPY 3.7 billion to be offset by price increase and effects of structural reforms. We anticipate an increase in expenses of JPY 4.3 billion due to expanded investment, including increase in headcount, accompanying sales growth and higher development costs. However, should the revenue growth plan not progress as anticipated, we will consider adjusting SG&A. Compared to the prior year, structural reform costs were incurred in the first year of this plan. One-off costs for the current fiscal year are expected to decrease to JPY 400 million. Operating profit for FY 2026 is forecast at JPY 27 billion and OP margin 1.3 percentage point improvement to 7.5%. Page 31 shows the change of the segment, and I would like to briefly explain. Diabetes Management forecast increase of profit of JPY 3.9 billion and profit margin to 26%. Healthcare Solutions, whilst factoring the increased investment, the profit increase of JPY 300 million and the sale stable profit margin is expected. For Diagnostics and Life Sciences, improved profitability driven by price increase and cost improvements and impact of transfer of our B2B business Indonesia and the profit increase of JPY 1 billion and 0.6% improvement in the margin. Next is current upside and downside potential related to forecast. If the current effects continues, certain degree of upside anticipated in diabetes and Diagnostics and Life Sciences. U.S. market, if it recovers, not only the pharmaceutical sector but also government-related academic sectors, additional positive impact is anticipated in Diagnostics and Life Sciences. Potential risk factors include procurement risks and risk of price increases due to trends of crude oil and naphtha, as well as tariff trends, inflation, and digital transformation in healthcare. Given the current situation, we believe there's a reasonable possibility that we may be able to revise our full year outlook upwards depending on the situation of the first half. Next is FX sensitivity. Depreciation of 1 JPY throughout the year pushes up the revenue by JPY 380 million for EUR and JPY 470 million for USD. Operating profit is pushed up by JPY 50 million and JPY 25 million, respectively. Lastly, I'd like to give you the update on management that is conscious of the capital cost and stock price. Currently, well, in the past two years, there have been no major impairments impacting the business performance and key initiatives of the VCP progress. BGM is stabilized and revenue and operating profit are becoming more stable and business risk being reduced and improved. As for the stock price, partially reflected the perceived bottoming out in performance with PBR above 1 time during the period, but below 1 time at the end. It is no longer the loss situation, the profit attributable to owners of the parent is not stable with FX impact. In Diagnostics and Life Sciences, which is the growth driver, U.S. weak equipment demand continues, leading to the stagnant expected growth. Equity cost is about 9% based on the CAPM and WACC at around 5% based on the current leverage upward trend higher than when we explained VCP previously. Capital cost estimated from the PER and EBITDA multiples or risk factors factored into the market. Expected return continues to show gap from CAPM-based level. During the current VCP, we will continue initiatives to reduce the capital cost through profitability improvement and risk reduction and push up the EPS and lower capital cost by profitability improvement and lowering business financial risk. As mentioned, we expect to achieve the double-digit growth in our operating profit and significant increase of profit attributable to owners of the parent, try to increase EPS and improve ROE and improve PBR by achieving targets. The major initiatives executed are shown here. From fiscal 2024 to 2025, OP margin is expected to improve 1.3 points and the capital efficiency, the initiatives through the inventory reduction and earlier collection, we reduced the working capital by JPY 9.1 billion. We clarified the positioning of the portfolio and decided to transfer CGM. Through this, we improved the investment efficiency and also lowered the business risk. As for the financial risk, through the refinancing, we gained the financial flexibility and liquidity ratio improved through the partial divestment by major shareholders. By progressing initiatives of the current VCP, we solidify the growth foundation for the next medium-term plan and increase expected growth rate toward phase two and aim for the higher corporate value in the medium to long term. Thank you.