We are grateful for the continued support of institutional investors and analysts. I would like to take this opportunity to thank you. I will now explain GS Yuasa Corporation's financial results for the fiscal year ended March 31st, 2024, and its forecast and initiatives for the fiscal year ending March 31st, 2025. First, I would like to explain the status of our financial results for the fiscal year ended March 31st, 2024. This is the key point for the fiscal year ended March 31st, 2024. Net sales and operating income increased mainly due to higher sales volumes of lithium-ion batteries for hybrid vehicles and batteries for ESS, as well as efforts to correct selling prices. Ordinary income and profit increased due to an improvement in equity in earnings of affiliates, an increase in gain on net monetary assets, and a decrease in income taxes.
We will discuss the details on the following pages and beyond. Consolidated net sales for the fiscal year ended March 31st, 2024, are JPY 562.9 billion, an increase of JPY 45.2 billion over the previous year. Operating income was JPY 41.6 billion, and operating income before amortization of goodwill and other items was JPY 42.2 billion, an increase of JPY 10.1 billion. As we will discuss in detail later, the impact of the change in accounting treatment of hyperinflationary accounting at the Turkish site is more than JPY 2 billion, and operating income before the amortization of goodwill is slightly lower than the February forecast. This will not affect net income for the period. Ordinary income was JPY 44.0 billion, a significant increase of JPY 19.8 billion, mainly due to improved equity in earnings of affiliates.
Profit was JPY 32.1 billion due to the realization of tax effect accounting from the reorganization, and net income before the amortization of goodwill was JPY 32.6 billion, a significant increase of JPY 18.2 billion. Net sales, operating income, ordinary income, and profit are at record highs. This is the factor of change in operating income before amortization of goodwill and other items. Although affected by soaring raw material prices, the steady progress in reviewing selling prices resulted in a positive factor of JPY 17.6 billion in terms of raw material prices and selling prices. On the other hand, expenses and other costs were JPY -13.3 billion. This is due to increased sales of lithium-ion batteries for hybrid vehicles and higher expenses associated with inflation. In addition, the profit increase compared to the initial forecast is JPY 8.2 billion.
Although there was a negative impact on volume, mainly overseas, the company secured an increase in profit due to progress in passing on selling prices. Next is a breakdown of non-operating income and loss and extraordinary income and loss. Due to a significant increase in operating income and a JPY 6.1 billion improvement in equity in earnings of affiliates in non-operating income and expenses, ordinary income was JPY 44.0 billion, an increase of JPY 19.8 billion over the previous year. Extraordinary income decreased by JPY 2.5 billion, and extraordinary loss increased by JPY 1.5 billion compared to the previous year. Extraordinary income and loss deteriorated by JPY 4.0 billion. As a result, net income before income taxes was JPY 42.9 billion, an increase of JPY 15.8 billion from the previous year, smaller than the increase in ordinary income.
On the other hand, profit attributable to the parent was JPY 32.1 billion, an increase of JPY 18.2 billion from the previous year, as a result of a decrease in income taxes due to the application of tax effect accounting resulting from the reorganization of the China business and LEJ. As explained in more detail on the next page, sales and income increased in all segments. All segments are moving forward with the shift of selling prices, and both net sales and operating income are increasing. As for the lead price, the main raw material, the LME has remained stable, but the domestic lead quotation price has remained high due to the weak yen. Net sales of Automotive Batteries in Japan were JPY 94.0 billion, an increase of JPY 6.2 billion from the previous year.
Net sales increased due to a significant increase in sales volume for new vehicles as a result of a recovery in new vehicle sales volume due to the resolution of the semiconductor shortage. Sales volume for replacement decreased due to the impact of recovery in new vehicle sales, but sales increased as a result of the review of selling prices and other efforts. Operating income was JPY 8.1 billion, an increase of JPY 1.6 billion from the previous year. Although there was a negative impact from the change in product mix, the increase in profit was due to a review of selling prices following the sharp rise in raw material prices. This is the percentage of shipments and share in new automobiles and replacement in Japan.
In terms of the percentage of new automotive batteries shipped, the volume has decreased compared to fiscal year 2020, but the percentage of European Norm-compliant EN batteries has steadily increased. In the replacement battery market, the percentage of batteries for high value-added vehicles with start-stop systems is steadily increasing, while replacement demand for EN batteries is also gradually increasing. Net sales of Automotive Batteries overseas were JPY 252.9 billion, an increase of JPY 5.6 billion. In Southeast Asia, sales volumes for automobiles and motorcycles declined slightly. In Europe and Australia, net sales increased due to steady sales volume and a review of selling prices. As for China, we transferred our equity interests in two major sites in October last year, and they are no longer consolidated from the second half of the fiscal year.
Overall, net sales increased due to a review of selling prices following a sharp rise in raw material prices and the impact of the yen's depreciation. Operating income was JPY 15.1 billion, an increase of JPY 1.8 billion. Although there were negative impacts, such as a decrease in volume, mainly in Indonesia, and the application of hyperinflation accounting in Turkey, the increase in profit was due to progress in reflecting cost increases, such as inflation and raw material price hikes in selling prices. The following table shows the global net sales ratio of Automotive Batteries overseas by region and the share of ASEAN, where we have a strong presence. In terms of net sales by region, the ratio of net sales in the ASEAN region has been increasing year by year.
While maintaining a high market share in the ASEAN region, we are working to improve profitability by introducing new products and establishing an optimal production system. The company is also expanding in Europe through the consolidation of its Turkish site. The ratio of China decreased significantly, partly due to its exclusion from the scope of consolidation. Industrial Batteries and Power Supplies posted net sales of JPY 109.7 billion, an increase of JPY 12.1 billion. Sales of ESS continue to increase, due in part to growing carbon-neutral demand. Net sales of backup batteries and power supplies remained steady due to a review of selling prices and other factors. Net sales for forklifts also increased due to a review of selling prices. Operating income was JPY 13.2 billion, an increase of JPY 4.7 billion.
The increase in volume, backed by strong demand in the regular field, and the correction of selling prices in response to the sharp rise in raw material prices, were also factors contributing to the increase in profit. Here are net sales of Industrial Batteries and Power Supplies by model and customer. With regard to the domestic regular field, net sales increased mainly to private sector demand and government agencies. With the integration of GS Yuasa Infrastructure Systems into the Industrial Batteries and Power Supplies division from the fiscal year ended March 31, 2024, the company will be managed as a single unit as the emergency field. In addition, the regular field has grown to a level that accounts for approximately 10% of net sales in this segment. Net sales of Automotive Lithium-ion Batteries were JPY 84.8 billion, an increase of JPY 19.4 billion.
Net sales increased due to an increase in sales volume of lithium-ion batteries for hybrid vehicles and a revision of selling prices following a sharp rise in raw material prices. Blue Energy's second plant has begun full-scale operations, contributing to an increase in product volume. On the other hand, sales volume of lithium-ion batteries for plug-in hybrid vehicles declined for models equipped with these batteries. Sales of 12-volt lithium-ion batteries are growing steadily in terms of volume due to an increase in sales of models delivered to Europe. Operating income was JPY 2.6 billion, an increase of JPY 0.6 billion. The increase in sales of lithium-ion batteries for hybrid vehicles, ESS, and 12-volt lithium-ion batteries led to a significant increase of JPY 4.8 billion in profit due to changes in volume and composition. Next is the segment of Specialized Batteries and Others.
Net sales and operating income for lithium-ion batteries for aircraft increased due to higher sales of replacement batteries to airlines and lower expenses in administrative overhead at the head office. This is the summary description of the balance sheet as of March 31st, 2024. Total assets amounted to JPY 656.7 billion, up JPY 115.8 billion from the end of the previous period. The balance sheet at the end of the current period has the following three key points. The first was a public offering of approximately JPY 40 billion to fund investments primarily for the production of lithium-ion batteries for BEVs. As a result, cash and deposits, as well as capital stock and capital surplus, increased significantly. Second, tangible fixed assets increased due to the construction of a new factory building for the production of traction batteries and the securing of a factory site for the production of BEV batteries.
Finally, the rise in the stock market has led to a large increase in the market value of securities holdings. This is due to the increase in the number of shares held by the company. Both policy investment shares and retirement benefit trust contribution shares increased significantly. In addition, net income reached a record-high level, and retained earnings increased significantly. As a result, the shareholders' equity ratio improved by 7.7 percentage points from the end of the previous fiscal year to 50.3%, and we were able to strengthen our financial position. ROE also increased to 11.6% from the previous year due to the increase in profit. This was a significant improvement. Here is the statement of cash flows for the year ended March 31st, 2024. Cash and cash equivalents at the end of March 2024 were JPY 60.3 billion, a significant increase of JPY 24.3 billion from the previous year.
Operating cash flow was JPY 63.2 billion, a significant improvement from JPY 28.3 billion in the previous year, due to income before income taxes of JPY 42.9 billion. Investing cash flow was JPY 46.2 billion due to the Blue Energy No. 2 plant, land acquisition, and the establishment of an R&D joint venture company with Honda, resulting in a positive free cash flow of JPY 17.0 billion. Capital investment totaled JPY 49.4 billion, a JPY 16.6 billion increase from the previous year. Major investment projects include investments to expand production capacity at Blue Energy's No. 2 plant, land acquisition for a battery plant for BEVs, and construction of a new industrial plant at the Kyoto office. Depreciation expenses increased with the start of operations at Blue Energy's No. 2 plant. R&D expenses increased due to the impact of intensified R&D efforts related to lithium-ion batteries, including research on all-solid-state batteries.
Next, I will explain our business forecast and initiatives for the fiscal year ending March 31st, 2025. The outlook for the fiscal year ending March 31st, 2025, is as follows. In projections for the global economy for the next fiscal year, we expect the situation of uncertainty regarding the future to continue due to continuing inflation and monetary tightening, and heightened vigilance regarding geopolitical risks, despite expectations of a gradual recovery. However, we perceive ongoing expansion for the business domains contributing to the shift toward carbon neutrality, such as lithium-ion batteries for hybrid vehicles and electric vehicles, and the regular field, including ESS and others. We will securely capture these expanding market demands, while in our existing business of Automotive Batteries and the emergency field of Industrial Batteries, we will aim to secure revenues by absorbing various cost rises through the promotion of thorough added value creation and profitability improvement.
Details will be explained later. For the fiscal year ending March 31, 2025, we are targeting net sales of JPY 590 billion, operating income of JPY 44 billion, and operating income before amortization of goodwill of JPY 44.5 billion. With regard to the Sixth Mid-Term Management Plan, we have already achieved the target of JPY 41 billion in operating income for the final year ending March 31st, 2026, in the fiscal year ended March 31st, 2024, and we are currently reviewing the mid-term plan internally. We will explain this separately at a briefing around July, and we will proceed so that we can present to you values that exceed the current target. Operating income before amortization of goodwill and other items is projected to be JPY 44.5 billion, an increase of JPY 2.3 billion over the fiscal year 2023 result.
The increase is mainly due to higher volumes of automotive lithium-ion batteries, ESS batteries, and automotive batteries overseas, which are expected to increase by JPY 9.7 billion in quantity and composition change. In addition, we expect an increase of JPY 2.8 billion due to the continued progress of price shifting and price review. We expect an increase of JPY 8.6 billion in expenses and other costs. In addition to the increase in expenses, mainly due to the increase in volume, we expect an increase in energy costs, logistics costs, and personnel costs. Regarding foreign exchange, the continued depreciation of the yen will have a negative impact of JPY 1.4 billion. I will explain the details by segment on the next page and beyond. Assumptions for the fiscal year 2025 forecast are as follows.
Although net sales are expected to increase due to the rising cost of raw materials and the impact of inflation, we expect that the transfer to selling prices will be limited and not as large as in fiscal year 2023. In addition, automobile production is expected to remain strong, as in fiscal year 2023, and demand for hybrid vehicles is expected to grow. As for lead price trends, although the LME is expected to remain stable, lead prices are expected to remain high due to the weak yen. We also expect the yen's depreciation trend to continue as it did last year. Next is the segment of Automotive Batteries in Japan. Net sales are expected to be JPY 100 billion, an increase of JPY 6 billion over the previous year, and operating income JPY 8 billion, a decrease of JPY 100 million.
In addition to an increase in the volume of products for new vehicles, we will promote the transfer of selling prices to further improve profitability. We expect an increase in the sales volume of products for replacement, mainly to mass sellers. We expect a slight decrease in profit as we see an increase in expenses due to higher raw material prices and inflation. Next is the segment of Automotive Batteries Overseas. Net sales of JPY 259.0 billion, up JPY 6.1 billion from the previous year, and operating income of JPY 16.5 billion, up JPY 1.4 billion from the previous year, are projected. In Southeast Asia, our main market, we expect an increase in the production volume of four-wheeled vehicles, mainly in Thailand, toward a production system of 6 million units. As for motorcycles, we expect a recovery in Indonesia, where sales were sluggish in fiscal year 2023.
In Europe, we expect an increase in sales volume through exports on the back of the weak Turkish lira, and in Australia, we expect an increase in sales through Made in Australia. In addition to these factors, we expect an increase in profit due to the absence of the impact of China, where the business was transferred last year. In the Industrial Batteries and Power Supplies segment, net sales were JPY 120.0 billion, up JPY 10.3 billion, and operating income was JPY 13.0 billion. We expect a decrease of JPY 200 million in profit, although it is almost the same level as the previous year. In the emergency field in Japan, batteries and power supplies are expected to perform well due to nuclear power projects and data center demand. In the regular field in Japan, we aim to increase sales volume and improve profitability on the back of carbon neutrality.
By increasing production capacity, we will increase sales volume from 1 million cells last year to 1.3 million cells. Forklifts globally will also support the shift to lithium-ion batteries for forklift trucks while utilizing lithium-ion batteries, et cetera, manufactured by other companies. This segment made significant progress in selling price shifts in fiscal year 2023. We expect this to be limited in fiscal year 2024, with a slight but expected decrease in profit. In the Automotive Lithium-ion Batteries segment, we forecast net sales of JPY 90 billion, an increase of JPY 5.2 billion, and operating income of JPY 4 billion, an increase of JPY 1.4 billion. For hybrid vehicles, we plan to start deliveries to new manufacturers, driven by increasing demand for hybrid vehicles from Japanese automakers.
For plug-in hybrid vehicles, we expect an increase in the number of models to be delivered and will expand production capacity from 6 million cells to 8 million cells in fiscal year 2024. As for BEVs, Honda・GS Yuasa EV Battery R&D will continue to develop batteries for BEVs. We are proceeding with a price correction for 12-volt lithium-ion batteries for the European market and expect to return to profitability. For ESS, we expect an increase in volume on the back of carbon neutrality. Next is the Specialized Batteries and Others segment. Net sales are projected at JPY 21 billion, down JPY 500 million, and operating income at JPY 3 billion, down JPY 200 million. In addition to continued stable orders for lithium-ion batteries for submarines, we intend to pass on the selling price of raw material price hikes.
Although we expect an increase in sales of lithium-ion batteries for aircraft for new installations, we anticipate a slight decrease in sales for replacement airlines. Capital investment for fiscal year 2024 is expected to be JPY 80 billion. Capital investment in Automotive Lithium-ion Batteries continues to exceed JPY 10 billion, with investments to increase production at Blue Energy's No. 2 plant and to increase capacity at the former Lithium Energy Japan. Specialized Batteries and Others includes headquarters administration, which continues to increase significantly in preparation for the production of batteries for BEVs. Depreciation expenses totaled JPY 23.0 billion, with a slight increase in the Automotive Lithium-ion Battery segment. Research and development expenses are expected to be JPY 16 billion. We will continue to promote research and development of lithium-ion batteries for BEVs and next-generation batteries. I would like to explain the targets for financial indicators for fiscal year 2024.
In fiscal year 2023, we raised funds for investment in the production of batteries for BEVs through a capital increase. Furthermore, due in part to the increase in profit, the shareholders' equity ratio exceeded 50%. However, from this fiscal year onward, the shareholders' equity ratio will decline as investments for the production of batteries for BEVs will begin to be made on a full scale. Despite this situation, we will maintain a shareholders' equity ratio of 40% or more. In addition, we expect a slight decline in ROE and ROIC. We will continue our efforts to strengthen our financial position. This concludes our explanation of the financial results for the fiscal year ended March 31st, 2024, and the forecast for the fiscal year ending March 31st, 2025.
Now, Mr. Naruse of Okasan Securities will be posing the first question.
My name is Naruse, Okasan Securities. Since this is my first question, let me start with a look back regarding the fiscal year 2023. How much impact did inflation accounting have on your most recent plan? I assume that it has nothing to do with ordinary income since it comes back non-operating, but please tell me more about it, including the amount. It seems that the performance was considerably better than expected, even taking into account the impact of inflation accounting. What was the impact of the lower tax rate, including the actual results? One more question. Please tell us about the Automotive Lithium-ion Batteries business. I think the overall performance was better than expected, but the Automotive Lithium-ion Batteries business has not been very profitable. Why is the forecast for fiscal year 2024 not very profitable as well?
There were certification irregularities by the Toyota Group at the end of the previous fiscal year, but even if the business was affected by irregularities, we believe that compensation has been paid and that there will be some recovery production in the fiscal year 2024. Also, I think this forecast is not very strong given the strong performance of HEVs for North America, mainly Honda, and the fact that BEC's previous operating income margin was about 10%. What are the reasons for this?
Inflation accounting affects about JPY 2.6 billion. CFO Matsushima will provide more details.
My name is Matsushima from GS Yuasa. As Murao told you, the mandatory application of IFRS accounting standards became obligatory for İnci GS Yuasa in Turkey. Although we did not incorporate it into our financial forecast from the December financial results, we decided that we should adjust to the local IFRS basis as we approach this financial year, and we incorporated it into the fiscal year ending March. As Murao mentioned earlier, the impact on operating income will be about JPY 2.6 billion.
As Mr. Naruse pointed out, there will be no impact on net income since it will be returned to the net monetary balance in the non-operating account. Although the company landed on an operating income of JPY 41.6 billion, please understand that the company actually performed a little better.
Regarding the question about whether the profit of the Automotive Lithium-ion Batteries business was less than expected, BEC's inventory valuation forecast was a little underestimated, and the accounting for the valuation review was conducted, which had an impact of about JPY 2 billion.
In addition, BEC has been expanding its facilities in line with the expansion of production capacity to 50 million cells per year. There was a temporary deterioration in yield, which also had an impact on the company's performance. However, we believe that we will be able to increase profits in fiscal year 2024 compared to the previous fiscal year.
What is the impact at the end of the period with respect to taxes?
Is your question related to tax effect accounting for reorganizations?
Maybe so, but what was the factor in the seemingly lower taxes? Does the fact that the float can be used for shareholders' returns have an impact on the dividend increase?
As a result of the reorganization, taxes have been returned in deferred assets, and CFO Matsushima will explain the details.
In fiscal year 2023, we implemented two measures, restructuring in China and making LEJ a wholly owned subsidiary and liquidating it. I think you are aware that these two companies have incurred considerable losses in the past. As you can understand from the difference between tax and accounting purposes, the completion of the reorganization in fiscal year 2023 had a tax effect of nearly JPY 5 billion, especially for LEJ. The reorganization in China also had an expected tax benefit of JPY 1 billion, resulting in a significant decrease in taxes. If you look at the table here, you will see that the apparent effective tax rate has dropped significantly.
Ms. Takayama of Citigroup Global Markets Japan will be posing the next question.
My name is Takayama from Citigroup Global Markets Japan. Please allow me to ask two questions regarding the Automotive Lithium-ion Batteries business.
First, what are the assumptions for the forecast for the new fiscal year? Net sales are projected to increase 6% year-on-year, but can you also tell us whether the volume will increase by 6% or whether the assumptions for raw materials and costs are different from the previous year? Also, on the profit side, I believe that the previous year's plan included a supplemental payment from a new manufacturer. But could you also tell us whether this was already included in the previous year's results or whether it has been delayed?
We are projecting sales of JPY 90 billion in fiscal year 2024, but we expect an increase in sales volume due to increased demand for HEVs, and we plan to start supplying new manufacturers this fiscal year. Since the sales volume of PHEVs is expected to increase due to an increase in the number of models adopted, net sales are expected to increase, and profits are also expected to increase in line with the increase in the volume. No compensation for the delay of new manufacturers is recorded in fiscal year 2024.
Regarding the depreciation of the Automotive Lithium-ion Batteries business, I believe the new fiscal year is expected to be about the same as the previous year, JPY 5 billion, and the actual amount for fiscal year 2023 is JPY 4.9 billion, which is about JPY 10 billion over these two years. The Sixth Mid-Term Management Plan projects depreciation of JPY 25 billion over three years, which means that the company will spend about JPY 14 billion in the final year of the mid-term plan. Is this correct?
We had planned to depreciate JPY 25 billion over three years, so the current plan is approximately JPY 14 billion in fiscal year 2025.
This is Matsushima speaking. Allow me to make a few comments. We had assumed that a certain amount of depreciation would occur in fiscal year 2025. We had also assumed a certain amount of depreciation capital investment in R&D, and there is an impact of that portion falling to equity. There are some aspects where capital investment has been slightly delayed, so we will confirm the details and respond again.
Ms. Inomata of Daiwa Securities will be posing the next question.
Yes, I am Inomata from Daiwa Securities. I have two questions. The first is about the Automotive Lithium-ion Batteries business.
In fiscal year 2024, I think HEVs are expected to grow by about double-digit percent in the market, but I think GS Yuasa's forecast is less growth than the market. Are you making your forecasts conservatively? Am I correct that supply to the fourth company, a new manufacturer, will begin in fiscal year 2024? How much of the fourth company's sales are factored into your forecast? Furthermore, please tell us whether you have included the expansion of production capacity of lithium-ion batteries for PHEVs in your forecast for the current fiscal year.
The volume forecast for lithium-ion batteries for HEVs is based on the volume of Toyota and Honda models forecast, which are currently our main suppliers. In addition, the fourth company that was scheduled to supply in fiscal year 2023 will probably start from the second half of fiscal year 2024, so this figure is included in the forecast for fiscal year 2024. The company's also expanding its annual production capacity of lithium-ion batteries for PHEVs from 6 million cells to 8 million cells and will allocate some of this capacity to lithium-ion batteries for ESS. This too will grow from the second half of the year and has already been factored into the plan.
Thank you. One more question. Does the inflation accounting only affect fiscal year 2023 results and not fiscal year 2024, or will it continue to affect us after fiscal year 2024?
CFO Matsushima will explain this matter in detail.
Yes, we recognize that the impact of inflation accounting is not temporary and will continue for the foreseeable future beyond fiscal year 2024. It will continue as long as the rate of inflation increase in the Turkish economy does not subside.
I understood. Does that mean that the impact in fiscal year 2024 will be about the same size as in fiscal year 2023, just under JPY 3 billion?
It depends on the inflation rate, but if the inflation rate is about the same, the profit impact will be the same size. There is no impact on net income.
Mr. Takahashi from Fidelity Investment Trust will be posing the next question.
My name is Takahashi from Fidelity Investment Trust. Thank you for your time. I have two questions for you.
You mentioned that the company expects the impact of the selling price shift to be limited this fiscal year due to continued inflation. Since you also mentioned that the company promotes the selling price shift in each business, how is this factored into the forecast? Will there be any changes depending on the results of the promotion of selling price shifting?
First of all, the effect of the price shift was very large in fiscal year 2023, mainly in the Industrial Batteries and Power Supplies business. Compared to fiscal year 2023, the impact in fiscal year 2024 is expected to be limited. Since it is difficult to pass on selling prices to the market every year, we assume that the impact will be more limited than in the previous year at the planning stage. We would like to continue our efforts to pass on selling prices in our sales activities, but we believe that the impact will be less than in FY 2023.
Thank you. I have one more question. When you were explaining about the Automotive Lithium-ion Batteries business earlier, you mentioned that JPY 2 billion was incurred due to the inventory valuation for BEC in FY 2023. Also, when planning for the current fiscal year, will the impact of the inventory valuation run its course? If so, does that mean that there will be no rebound of JPY 2 billion due to startup costs, et cetera?
Yes, the inventory valuation review is for FY 2023 and will not be carried over to FY 2024.
As for the profit forecast, there are many factors to consider, and currently, I think the operating income margin will be around 4.4% and 4.5% for the Automotive Lithium-ion Batteries business.
Mr. Hosoda of BofA Securities will be posing the next question.
Yes, I am Hosoda of BofA Securities. Thank you for your time. I would like to ask you about the Automotive Lithium-ion Batteries business. First, regarding the breakdown of expenses, I think that expenses increased more than expected in the fourth quarter. As you explained earlier, I believe that the increase is due to the reevaluation loss on inventory, the deterioration of yield, and the increase in necessary expenses associated with the start of full-scale operation of BEC's second plant. But how much of the increase can be regarded as transitory?
What is the difference between the third and fourth quarters, and is it possible that the third quarter was a one-off and too positive? The second question is about lead-acid batteries. I think you are assuming a recovery in ASEAN, especially in Indonesia, in the fiscal year ending March 2025, but when do you think the recovery will happen? Would it be around the second half of the year? At the moment, I think the Indonesian economy is not recovering very well, so please tell us the degree of recovery you expect as GS Yuasa.
I believe that as ASEAN recovers, the product mix will improve and profits will increase. So the operating income forecast of plus JPY 1.4 billion from the previous year appears to be a conservative estimate. What are your assumptions and timing for the ASEAN recovery, and how do you view profits?
Please forgive me for the details regarding the breakdown of expenses for the Automotive Lithium-ion Batteries business. Regarding the second question, market conditions in the Indonesian market for lead-acid batteries were not good in FY 2023, but we expect the market to pick up in the second half of FY 2024, and we believe it will start to recover in FY 2024.
Thank you. On the follow-up to the first question, is it your assumption that the yield deterioration will not have such a significant impact in FY 2024? Or will the deterioration in yield continue to have an ongoing impact as production capacity continues to increase?
Yes, the yield has been recovering considerably since the second half of FY 2023, and we think it will be much better in FY 2024. We believe that the yield will improve as the numbers rise a little more.
Mr. Naruse from Okasan Securities will be posing an additional question.
Sorry, this is my second round, but thank you. Please tell us about your intention to change the president. Perhaps you were planning to explain this one last. Do you envision a review of the mid-term plan, and what is your thinking? I understand that you will still hold the position of chairman, and I would like to thank you very much for your past support.
Thank you. Regarding the mid-term plan, we exceeded the final year's goal in the first year, but there were many factors. We would like to take a good amount of time to carefully assess and review the mid-term goals before presenting them to you.
We have heard that you will be announcing a review of the mid-term plan in July. Is that correct?
Yes, we hope to present at the briefing in July.
Understood. What is the background on the management change?
Regarding the change of president, last spring, we announced Vision 2035 and showed you the fields we would focus on and our vision. It would have been better to change at the end of the Sixth Mid-Term Management Plan, but due to events such as the reorganization of China and LEJ in fiscal year 2023, the change was made in the first year of the midterm management plan. I decided to step down at this time, having served the same nine years as my predecessor. The biggest thing is that we were able to announce Vision 2035, and we decided to make it a management change.
Thank you very much for your great support.
Mr. Ishimoto of Nomura Securities will be posing the last question.
Thank you for your help. I am Ishimoto from Nomura Securities. I joined from the middle of the meeting, so I apologize if this is a duplicate. I would like to ask you a few questions. First, regarding the domestic automotive battery market, I believe that lead prices continue to soar. Your assumption is that the price will remain at the same level as last year, but what are your thoughts on raising the price or passing on the lead price? If possible, what is your thinking on this for new automobiles and for replacement?
First, regarding the domestic market for Automotive Batteries, a sliding scale plan has been adopted for new automobile batteries, so the price will be automatically passed on to the lead price. For replacement batteries, a price increase will be announced when the price exceeds a certain level. Past lead prices are shown in the lower right corner of this page, and the timing of price increases for replacement batteries is also important.
I would like to ask one follow-up point. Although the lead quotations are higher than assumed, is it your opinion that even if this level continues, the price will not be raised because it is still lower than the expected level?
At this point, the situation is not that far off from what we expected. There are various alloys and other factors. If prices become even higher in the future, we believe it will be necessary to raise prices even for repairs.
I understood. Thank you very much. Could you tell me about your plans for the Industrial Batteries and Power Supplies business? You are forecasting an increase in revenues and a decrease in profits for FY 2024. Why do you expect a decrease in profits even though the demand for renewable energy and related products is also strong, and the demand for forklift trucks will also increase? Thank you.
As you mentioned, orders have been very strong. We are expecting an increase in volume, but profits are expected to remain at the same level as the previous year since we do not expect to be able to pass on selling prices in FY 2024, although we made considerable progress in FY 2023. We intend to make efforts to raise prices in our sales activities.
Thank you very much. Lastly, looking back on the past, what have you accomplished? What are the challenges, and how would you like to pass the baton to the next generation?
GS Yuasa's strategy has been to earn money from its existing business of Automotive Batteries and Industrial Batteries and Power Supplies, and to allocate it to Automotive Lithium-ion Batteries. It is gradually increasing the ratio of Automotive Lithium-ion Batteries to its total sales. However, although the company's earning capacity is increasing, we believe that it can still make more money than overseas manufacturers of lead-acid batteries. We believe that the trend toward BEVs will not change in the future for Automotive Lithium-ion Batteries. Looking globally, the direction is different on both a regional and time axis, so I believe that our past efforts in HEVs and PHEVs, which we have been working on a multifaceted basis, will come to fruition.
That concludes the question- and answer- session.
As I mentioned earlier, we have achieved the goal of JPY 41 billion in operating income in the Sixth Mid-Term Management Plan for the fiscal year ended March 31st, 2024, and we are currently reviewing the mid-term plan internally and plan to explain it at a briefing around July. We will continue to contribute to society and grow with a focus on mobility and social infrastructure businesses. Thank you very much.