Thank you very much. Let me now start the presentation on the business results as well as forecast. First, this is the summary slide. In FY 'twenty one, the results exceeded the revised forecast The deconsolidation impact in Business Portfolio Reform, adjusted operating profit increased with steady progress in enhancement of the management structure and contributions from increased sales of businesses capturing opportunities of changes in society. In Q1, both sales and profit were down.
Q2 turned to an increase in profit, and second half achieved increases in both sales and profit. Operating profit and net profit decreased due mainly to impact of onetime gains in other income and loss in FY 'twenty. Free cash flow significantly improved due mainly to business transfer and sales of assets along with operating cash flow. Net cash turned positive even when including lease liabilities. As for the consolidated financial forecast for FY 'twenty two, Both sales and profit are expected to increase with economic recovery in various countries and continuous initiatives in management structure enhancement.
Profit is expected to increase in all segments. In the final year of the midterm strategy, Panasonic will steadily promote initiatives to overcome the low profitability structure and strengthened efforts to capture business opportunities from mid- to long term perspective based on our capital allocation policy. Next, let me explain the details. This shows consolidated financial results. Overall sales decreased to 6,000,000,006 198,800,000,000 yen due to COVID-nineteen impact along with the consolidation impact in business portfolio Adjusted operating profit increased due to enhancement of management structure and contributions from increased sales of businesses, capturing opportunities of changing in priority.
Operating profit and net profit decreased due mainly to impact of onetime gains in other income and loss in FY 'twenty. This is the sales analysis. Overall sales decreased by 791,800,000,000 yen down 11%. Sales in real terms, excluding such impacts as the consolidation, decreased by 390,200,000,000 yen 5% due to COVID-nineteen, mainly in Connected Solutions, while sales increased in such businesses as Home Appliances. Next is the operating profit analysis.
Regarding management structure enhancements set in the medium term strategy, we made profit contributions of 60,000,000,000 yen with fixed cost reduction and 30,000,000,000 yen with measures to businesses with loss making structures. In addition, the effect from businesses with higher sales such as home appliances contributed to overall profit growth of by 49,200,000,000 yen On the other hand, negative COVID-nineteen impact was 135,000,000,000 yen in FY 'twenty one. Adjusted operating profit increased by 20,500,000,000 yen Overall operating profit decreased by 35,200,000,000 yen due mainly to lower other income and loss impacted by gains from business transfer in FY 'twenty. This shows adjusted operating profit analysis by Full year profit increased by JPY 98,400,000,000 with businesses capturing opportunities changes in society from mid- to long term perspective. These positive factors contributed to higher company wide profit offsetting the decrease in avionics business, which was largely impacted by COVID-nineteen.
In particular, profit increased in air conditioning, indoor air quality, home appliances and automotive batteries. Also profit increased in Systems, Devices of Industrial Solutions and Process Automation. Next is the trends in our sales. Upper graph Sales in real terms compared to FY 'twenty. The lower graph shows adjusted operating profit.
In Q1, sales and profit decreased significantly, mainly in Automotive and Connected Solutions due to COVID-nineteen. In Q2, company wide profit turned to an increase due to a We covered sales mainly in Automotive and Appliances. In the second half, increases in both sales and profit were achieved company wide with Appliances, Industrial Solutions and Automotive exceeding the level of FY 2020. In FY 2021, sales decreased in the first half due to COVID-nineteen, but in the second half, it exceeded the level of FY 2020 and continued on the recovery trend. Next is our results by segment.
Adjusted operating profit achieved profitability in all segments for the full year after turning profitable in all segments in Q3. I will explain the details in the next slide. We show sales and profit analysis by segment. In appliances, sales decreased overall, significantly affected by Lower sales of Smart Life Network due to the impact of streamlined product lines, while stable sales continued for home appliances. Profit increased due to higher sales of home appliances along with cost control efforts in each business.
In Life Solutions, Both sales and profit decreased. This is due to the impact of market deterioration as well as deconsolidation of housing business. While sales of air quality related to businesses were favorable and thorough efforts to reduce fixed costs were made, in Connected Solutions, Sales and profit significantly decreased but achieved profitability for the full year. Strong sales of mounted machines, reflecting 5 gs related demand, could not offset the decreased sales of avionics business. In Automotive, sales decreased.
Recovered sales from Q2 onward could not offset the significant impact of reduced production of automobiles, mainly in Q1. Profit increased due mainly to reduced fixed cost and material rationalization despite the impact of decreased sales and temporary expenses in Automotive Solutions. Overall, profitability was achieved for the full year after turning profitable in Q2. In Industrial Solutions, sales decreased due mainly to the from transfer of semiconductor business, while sales of products for data centers and FA usage were favorable, along with the automotive use products showing the recovery in the second half. Profit increased due mainly to increased sales, including capacitors, power storage system and industrial use motors along with the effective structural reform of the semiconductor business and other factors.
Next is the free cash flow and cash positions. We generated over 600,000,000,000 yen free cash flow mainly through transfer of business and sale of in addition to operating cash flow. The graph on the right describes the cash positions. Gross cash and net cash largely improved through free cash flow generation. Net cash turned positive even when including lease liabilities.
Now me explain the consolidated financial forecast for FY 'twenty two.
This slide shows the Consolidated financial forecast for FY 'twenty two, both sales and profit are expected to increase due to economic recovery in various countries and increased sales of businesses opportunities reflecting changes in society and continued initiatives in management structure enhancement. Sales is expected to increase by 3 101,200,000,000 to JPY 7,000,000,000 Adjusted operating profit is expected to increase by JPY 82,800,000,000 to 390 Operating profit is expected to increase to 3 30,000,000,000 yen Net profit expected to increase to 210,000,000,000 yen ROE So this is our analysis of the FY 'twenty two operating profit forecast. Adjusted operating profit is Expected to increase by 82,800,000,000 yen of which 70,000,000,000 yen is expected from the effect of increased sales, including automotive solutions and system devices. We expect 20,000,000,000 yen of contributions to increase profit from management structure enhancement set in midterm strategy. Considering current circumstances, we anticipate various risks such as price hikes for raw materials.
We'll make efforts to offset negative effects Through management structure enhancement and rationalization, other income loss is expected to decrease by 11,400,000,000 yen. This is mainly from the impact of onetime gain in FY 'twenty one. Accordingly, operating profit is expected to increase by 71,400,000,000 yen Forecast by segments are shown on the slide. Sales of appliances is expected to remain as the previous year settled, while sales of all other segments are expected to increase. Profit is expected to increase in all segments.
Profit is expected to continue increasing in Appliances, Automotive and Industrial Solutions. Profit is expected to turn to an increase in Life Solutions and Connected Solutions in FY 'twenty two after decreased profits in FY 'twenty one. This slide shows our FY 'twenty two forecast by segment. Appliance sales is expected to remain at the previous year's year's level due to slow demand recovery in Japan related to commercial refrigeration and food equipment, while growth is expected in areas such as air conditioning. Profit is expected to increase with increased sales of stable businesses and management structure enhancement despite the impact of raw material price hike.
In Life Solutions, sales and profit are expected to increase with growth in overseas wiring devices, air quality and housing businesses along with rationalization efforts. In Connected Solutions, sales and profit are expected to increase with growth expected in businesses as Panasonic Systems Solutions Japan and thorough efforts to In avionics, decreased demand is expected to persist but with some recovery from FY 'twenty one level. In Automotive, sales and profits are expected to increase due mainly to recovery of the automobile market, starting operation of the new production life for Syllindrical Batteries in North America, management structure enhancement and material rationalization. In Industrial Solutions, sales are expected to increase with increased sales of automotive used products and multilayer circuit board materials and others as well as fixed Cost reduction measures. Now the midterm strategy.
During the current midterm strategy started in FY 'twenty, with the aim to overcome our low profitability structure, We have made steady progress in promoting business portfolio reform along with management structure enhancement. As in this slide, we expect to improve Profitability in FY 'twenty two following 'twenty one even with changes in the management environment. In the final year of the midterm strategy, we will continue to promote our efforts in these key initiatives aiming for further improvement of profitability. Details will be explained in the next slide. In terms of management structure enhancements set in midterm strategy, we made significant progress in Fixed cost reductions, achieving the midterm target of 100,000,000,000 yen in FY 'twenty one ahead of schedule.
In addition, we will aim for further profit contributions of JPY 20,000,000,000 in FY 'twenty two. In terms of taking measures to businesses with loss making structures, we already set the directions For semiconductor, LCD panel and solar businesses, TV business has turned profitable in FY 'twenty one. We are working on reorganization Manufacturing Science, and we are in negotiations toward comprehensive collaborations with external partners. In Business Portfolio Reform, we have We stand agreement to acquire all shares of Blue Yonder, a global leader specialized in supply chain software, As an investment for growth, in Automotive Battery Business, we are making steady progress in increasing production capacity. To improve profitability, We made decisions including share transfers of our lighting device business in Europe and North America.
We are promoting portfolio reform in individual businesses From the perspectives of region and product, in terms of profitability improvement of the Automotive business, These segments turned profitable in FY 'twenty one after a loss of 30,500,000,000 yen in FY 'twenty. In FY 'twenty €50,000,000,000 of profit is expected, profitability has been significantly improved through fixed cost reduction, improved productivity, material rationalization and other measures. Next, I will explain our midterm capital allocation policy. In the current midterm strategy, which started in FY 'twenty, we carried out capital allocation activities based on our policy to allocate With cash flow generated from business, however, to capture growth opportunities, we respond flexibly when investment opportunities arise before sufficient Cash flow is generated from business. Panasonic recently announced the acquisition of all shares of Blue Yonder.
This is indeed an example Capturing a growth opportunity, total acquisition value is expected to be approximately 750,000,000,000 of large scale investment. However, the framework of our capital allocation policy remains unchanged. The details of cash flow generation and allocation are Cash flow generation allocation for the 2 years for FY 2020 and FY 2021 are shown on the left of this slide. Cash flow generation was a total of approximately 2,200,000,000,000 yen including reduced lease liabilities from portfolio optimization. On the other hand, cash Allocation was a total of approximately 1,200,000,000,000 yen including investments, dividends, restructuring expenses and others.
As a result, we have approximately 1,000,000,000,000 yen of the excess funds after using the necessary capital for investment in others. The forecast for FY 'twenty two is shown on the right. The acquisition of Blue Yonder will be made within the framework of our Capital allocation and complementing capital with such means as hybrid financing. With regards to investment, we will execute In a well focused matter according to business conditions such as capturing growth opportunities. At the same time, we will continue to promote cash flow generation.
Finally, Panasonic's initiatives toward growth from mid- to long term perspective triggered by COVID-nineteen. Change in society are accelerating in various business areas. The resendetre for Panasonic is to offer solutions to social issues through its business activities under such circumstances. In the left hand top, the area of lifestyle and appliances and life solutions In response to increasing demand such as air conditioning and indoor air quality, we are strongly communicating the value of our Core devices, in particular, Nano E and Jia Ino. We aim for a further penetration of the related products through deeper understanding of our technological capabilities and value among consumers.
With regard to the right hand side, At our Genba process in Connected Solutions, we are facing a number of issues in the area of supply chain such as extreme fluctuation in demand caused by COVID-nineteen and greater burdens on logistics. Panasonic aims to accelerate its growth strategy together with LU Yonder and offer solutions to our customers' management issues. At the same time, we will strengthen our own operational capabilities as well as contribute toward a sustainable society through reduction of energy consumption and using resources efficiently. In the area of fine processing, to respond to expanding demand of ICT related equipment, We will continue to expand production capacity as well as introduction of new models of mounting machines. In the left In the area of automotive batteries in automotive to respond to the expanding EV demand related to climate change and to contribute to a sustainable society, We will continue to expand production capacity in North America factory and maximize use of Japan factory.
On the right hand side bottom, In the area of Devices and Industrial Solutions, we will particularly focus on 3 core businesses which we regard as High growth areas such as case in the automotive industry, information and communication infrastructure and labor saving at factories, We will make preparations for the future and expand our investment. With the initiatives mentioned, we will continue to strengthen our businesses by thoroughly enhancing competitiveness and concentrate management resources on areas where we should focus on. This slide shows our planned schedule for IR activities in FY 'twenty two and FY 'twenty three. On May 27, we will host a CEO briefing. In October 2021, our current company system will transition to a virtual structure based on the new organization.
Therefore, we plan to disclose financial results based on the new reportable segments from the FY 'twenty two Q3 announcement. As for other IR events, we will host briefings on individual businesses and ESG related topics. In April 2022, We will transition to the holding company system. Following this, around May 2022, we plan to announce our medium- to long term strategy under the new structure. Then we plan to host an IR day and present detailed strategies on how each operating company will strive to become specialized and sharpened.
Thank you very much for your kind attention.
Thank you, Mr. Umeda. Now we take questions. Mr. Katsura from SMBC Nikko Securities.
Can you hear me? This is Katsura speaking. Yes. Thank you. Two questions, please.
First, On Slide 18, cash allocation is explained. For the fiscal 'twenty one, in Q4, I think the Appendix 5 of your presentation, JPY 194,800,000,000, That is quite big positive. And the sale of the assets, what were the major ones? Also on Page 18, on the right hand side, cash flow generation from the business and the asset sales. In terms of the size, What are the expected cash flow generation?
If you can share with us some details. My second question is on Slide 13. There is a profit operating profit analysis. The rationalization and raw material price hikes The offsetting the raw material price hikes with the rationalization, I think this is a net number. So what were the gross forecast or expectation?
The background of the question is that 2016 or 'seventeen, the raw material price hikes, 100 of 1,000,000,000 or incurred. So could you tell us what is the current status? Thank you for your questions. First, about the free cash flow. The investment Cash flow is usually negative, but here, this is the major positive figure.
There are 2 major types. 1 is the portfolio replacement. And because of this, The cash in was recorded. And also for The cross holding of the shares for the policy purposes, we always review this. So that was also reviewed.
So as for the individual names, I cannot disclose this at this moment, but that's the breakdown of the cash flow allocation. On 'twenty two, fiscal 'twenty two, the operating cash flow and the basis of the free cash flow, The fiscal 'twenty one, that is the double of the net income or more is the level of the free cash flow. So exceeding that level, that comes from the replacement and so forth. As for 'twenty two, the free cash flow, Now the double of the net income or net profit, we're exceeding that level. That is the free cash flow level that we Asset replacement and so forth, I cannot make any additional comments.
But usually, And that is the situation that we have. So that's my answer to your first question. And FY 'twenty two operating profit analysis, it is true that the rationalization in raw materials minus 1.2 is shown here. As you know, the raw material prices are at a very high level. We use a lot of copper, the copper price in futures, dollars 10,000 per tonne, that at this recurrent level.
And the impact from that is actually more than 50,000,000,000 yen that is that we incorporated. And through the rationalization and also other management efforts, Well, we can almost offset that, and that is included here. That's all. Thank you very much for your answers. Thank you very much.
Let's go to our next question. From Citigroup Securities, Eizawa san, please. This is Eizawa from Citigroup Securities. We hear you very clear. I have two questions.
I am referring to Page 14 for the slide. This is the by Segment forecast, and it is about CNS, And it is related to the financial result. In Q4, for financial result, the other income and losses, it was around minus 22,400,000,000 yen. I would like to know the contents of these negatives. And in Q4, of the 22,400,000,000 is already there, there is 1,200,000,000 yen of negatives is a further the minus for the other income and losses.
Why is it occurring? That is my first question. 2nd is about Automotive business. In the new fiscal year for the other 1, you said that you're going to be creating 50,000,000,000 yen for profit. However, it is utilizing half of your profit.
And [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] So why is it that it is becoming the half of what you are going to be creating? And for the joint venture for the prismatic battery, What is going to be the impact based on the consolidated profit? And how is it going to be Impacting your financial result because it is also run on equity based method. Thank you very much for your question. The Q4 for CNS and for other income and loss, it is 22,000,000,000 yen Recorded.
This is coming from the avionics businesses. The demand for avionics Beyond border is slow in resumption. Regarding avionics business itself, we have been working on various merger and acquisition to grow the business. And the goodwill impairment has happened temporarily. That is coming from C and S in Q4 and was incurred in the size of 22,000,000,000 yen for others income and loss.
That is the answer for the first question. And for second question, So you mentioned why. We have already said the direction. And regarding ITC Global, which was already announced, The actual deal is going to be finished at the end of April. Therefore, financial result is going to come in fiscal year 2023.
So I would like you to understand in So that was related to C and S. And the second issue about Automotive and for other Income and loss, you said there is still 22,000,000,000 yen. And we have been mentioning from the past that the This Magic Battery business is still under the investment phase. Because of that, the equity method portion [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Including this part, currently, we are now making investment for [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Capital production increase. Therefore, we're going to be having to wait in order to harvest the result.
And this is included now in the others and increase in loss. I would like you to understand in that way. That is all from my side.
From Nomura Securities, we have Mr. Okazaki. This is Okazaki of Nomura Securities. Can you hear me? Yes.
Thank you. First question is about your concept on cost. The SG and A trend, if you look at the quarterly trend In Q4, Q on Q and Y on Y cost is increasing. January to March, there were one off items. Is that the case?
I'd like to clarify. And also, Fiscal 2022, the SG and A and cost, what are your views? My second question is on you are enhancing the management structure, and I have a question on that. And because of the pandemic And also, there are some measures that you have taken even before the pandemic. And now that you'll be handing your responsibility to the next management team.
And for Mr. Tuga, what was the level of the achievement at the end of year term? And what are your expectations for the next CEO and the President? As for the SG and A, there is a seasonality, And we usually look at it annually. In addition, in comparison to the previous year, last year, there was Some impact from COVID-nineteen, but this year, we have done well.
So SG and A or preparing for SG and A that is on an increase. And that is how you can understand this. And there are any other onetime additional SG and A items. Thank you for your question. Let me answer your question on the enhancement of the management structure.
FY 'twenty one, if you look at the full year, we made a Progress in terms of the enhancement of management structure that is reflected in numbers, and that is a fact, especially in the first half. Under the pandemic, we needed to think about what we could do. And fixed cost reduction, the thorough The fixed cost reduction was what we did. And then after that, sales started to increase. And of course, continuing the fixed cost reduction.
And also, as the demand was expanding, we needed to deal with it. So we need to work on both. And that's how we have proceeded. So in that sense, the enhancement of the management structure, the numerical targets, we have, of course, achieved them And we have exceeded them, as Mr. Umeda said.
So can we do more? Or is this type of reduction reasonable? We have to really think about the management structure. And that is one of the challenges that we have. So FY 'twenty two, under new CEO, Mr.
Kasumi, That is something that I hope he will work on. Thank you. Thank you very much. Thank you.
Let us go to the next question from JPMorgan Securities, Ayata san, please. This is Ayata from JPMorgan Securities. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Thank you very much for taking my question up. I have two questions. One is on Page 14 on the slide regarding the Adjusted operating profit of Automotive.
And I would like to know the details compared to the previous year, [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] The automotive devices and battery, which is going to be making the bigger contribution? It is okay qualitatively. So if there should be anything that you can share, I would like to know. And on a related note, on the Page 19 of the slide, Regarding the there's a comment about 4,680. I would like To know more details within the time line, is there going to be a bigger decision made in this fiscal year?
So if you can add any information, I would love to hear. And so my second question is about what Mr. Umeda mentioned for free cash flow forecast. For net profit, Mr. Umita mentioned double the net profit.
And you he mentioned about the Cruise speed. And the significant and the meaning of cruising speed, it is going to be 100,000,000,000 size of free cash flow, or does he mean by the comparison with the previous So I would like him to be elaborating on the issue, please. Thank you for the question. First of all, with the differences for 47,800,000,000 yen increase for profit, 80% 80% comes from the automotive solutions. And for Automotive Batteries is around a profit increase of 20%.
So that is the range of the increase. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Regarding the Automotive Batteries improvement of the profit, there could be some voices that the profit increase is small. But for the cylindrical automotive batteries, right now, we are under the development for 4,680 and other development. And of course, we are going to be increasing our profit. However, this could be synchronizing with the strategic Development and the profit increase seems to be looking small.
Regarding Automotive Businesses, the profit at last For infotainment and are seeing the profit at last, therefore, we are Regarding 4,680 And the prototype line, we call this [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] So we do not have any product yet. Therefore, this is in line based on R and D. We are going to be installing this prototype line to look into the capacity increase, and we are [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Going to be making the validation and testing. During this fiscal year, whether or not we're going to be making decisions or not It is not something that we are expecting currently. We're still in the stage of the R and D level, and we are Under verification, please understand like that.
Regarding the cash flow, Maybe double the net profit is too much. So the net profit is going to be going around 210,000,000,000 yen. So it is not actually going to be double, but then it is going to be Higher than the previous fiscal year. So I would like you to understand it that way. Is that okay?
Excuse me. Confirmation. So the free cash flow of this fiscal year, [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] You say it is going to be going. And last year, it was about 6.80,000,000,000 yen but you're not talking about that. So the Free cash flow is going to be higher than what it used to be, is that?
So for this fiscal year, the double of net is the normal situation. So the remainder comes from the restructuring of the portfolio and temporary Gains for next fiscal year, it is qualitative way of saying, but The cruise speeding for the net profit, more than double is going to be our free cash flow. So that is the speed that we are expecting. Thank you very much on that. Thank you very much.
Mr. Nakane of Mizuho Securities. This is Nakane of Mizuho Securities. Can you hear me? Yes.
Two questions. One for Mr. Umeda and another for Mr. Tsuga About the business results as well as forecast, in appliance, I have a question. Last year, Due to the pandemic, the demand went down and then has strengthened, and that continues.
For this fiscal year, what are the assumptions? And that's very difficult to come up with. In Japan, in China And also home appliance, white goods, air conditioning and TVs, those major products, The environment of the demand, do you think that that's kind of a special demand? Or are you Thank you very much for your service for a long time. I think you talked about visualization quite a bit in the past.
So as a top management organization, decision making, culture, What were the biggest difficulties that you faced? And how did you resolve them to make improvements? And Are there any additional issues or challenges? The reason why I'm asking this that if you look at Panasonic from outside, I think it's more visible now. But with the case of Blue Yonder, the decision making process is not very clear to us, frankly speaking.
So as a top management, what were your views? And how did you manage to make changes? So those are the 2 questions. So to your first question, FY 22, Page 14. In terms of sales, if you look at sales numbers, appliances, the difference is about 10,000,000,000 yen, but here it says down by 11,900,000,000 yen.
So that means that there is a strong tailwind that was in FY 'twenty two 'twenty one. But In FY 'twenty two, we'd like to make sure that we will reflect them to the product development such as Nano E, and we'd like to maintain that. So that's the kind of level that we have about the sales. And the major one is Japan and China in terms of the region. As for the assumptions.
In the case of appliances, The strong demand is a tailwind, but at the same time, the raw material prices are increasing. And that is the major impact on appliances. So on Page 23, appendix, appliance related Details are explained. And the raw material price hike, We want to make sure that we can provide high value added products and sell those products to customers. And by doing so, Aside from the sales, we would like to control the cost as well as the material cost in terms of adjusted operating profit, and that is the client's assumptions for fiscal 2022.
Concerning your second question. Yes, I have been working as a President for a long time, and I started with visualization. And To some extent, we have made the progress. But as you pointed out, decision making process. What is the process and what is the logic?
Maybe those are not very easy to understand from outsiders. The major decision making, which requires major investments? Or is this something that we are challenging something totally new? If the conventional business for the improvement of that or growth of the existing businesses. For that, maybe our decision making is not so difficult understand.
But in the case of, for example, Gigafactory in Nevada, what is the speed of starting up our plant? That has to do with the operational capability. And unless we have a good forecast of that, We cannot really see that clearly. But in the past, what are the areas that we can do this? And manufacturing the batteries, supplying from them is something that we have done.
But with the partners such as Tesla, We cannot just move forward with only our way of doing. We needed to make a big jump. And by doing so, of course, we face problems and difficulties. But after going through this for several years, Finally, in North America, now we are able to manufacture batteries that could give us confidence and experiences. And I think that is the fact.
And as for the Genba Process Innovation generating businesses from Genba process with the trials and errors. And we had various trials. For example, China, in Hinabe, HiTELO, working with them, we tried many things. And in Genba Process Innovation, What can we provide in that area? And in the long term, What would lead to the new business domain?
What should we be doing? And gradually, we started to see that. And that is how we encountered Blue Yonder and 20 percent investment was made. And there were things that we understood and did not So unless you make a big jump and move forward, it's difficult to gradually start to see that. That's probably one of the reasons that you have difficulty understanding our decision making process.
But There are things that are visible and not visible, but that's a very important information. So we'd like to make sure that we have a good communication And at the same time, challenge ourselves for something that are important and necessary. So with the new CEO, we would like to continue to be a challenging company or a company that would challenge new things. I hope that
And now our time is reaching to the end. So we would like to end our question with this question, and we would like to limit the question with only one. Mr. Hirakawa from BOA Securities, please. Hirakawa from BOA Securities.
Thank you very much. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] And it is just about the structural reform in FY 'twenty three March. This is going to be the last year of the enhancing management structure and the midterm strategy. And there's going to be JPY 60,000,000,000 for expenses that you forecast. And regarding avionics, there are several Businesses that are struggling.
And from the March of FY 2023, the adjusted operating profit and operating profit, [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Can we come back to the same level as previous? And we would like to increase our Thinking on the numbers, therefore, I would like to know about the effect and the Outline of the your measures, please. For other income and loss, 60,000,000,000 yen. What is included in the 60,000,000,000 yen is the expense for structural reform and the profit and loss for the Equity method included for FY 'twenty one structural reform expense It has been beyond our schedule slightly, including the avionics. Therefore, it is about 59,000,000,000 yen.
And you mentioned about the FY 'twenty two, JPY 60,000,000,000. Out of that, JPY 40,000,000,000 is the expense registered for the [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Structural Reform. In the midterm strategy for the low profitable businesses, and we're going to be remediating the businesses making low profit. And other than JPY 60,000,000,000, we have Allocations for the quality and the litigation expenses globally happening. Therefore, around 20,000,000,000 to 30,000,000,000 yen it is going to be they're going to be recognized as a loss.
That is our assumption. So businesses are always circulating. Therefore, we need to take measures Early stage. And by doing so, we would like to lead to the [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Improvement of the business with a sense of speed. And after FY 'twenty three, the business is going to be specialized and is going to be Sharpen, therefore, the adjusted operating profit and the difference with the operating profit, as you mentioned, yen 20,000,000,000 to 30,000,000,000 yen is going to be happening normally.
And for other expenses for the structural reform, we need to minimize as much as possible. And this is what we are going to be working for the 3 years. Thank you very much. Thank you very much. So now we have reached the time.
Therefore, we would like to close our presentation. You very much for your participation today.