I will present the consolidated financial results for the third quarter of fiscal 2026 ended December 31, 2025. The summary: sales and operating profit decreased year-on-year. Sales decreased overall due to lower sales in lifestyle and the deconsolidation of automotive, despite higher sales in Connect, Industry, and Energy. By business, sales of generative AI-related businesses in Industry Energy increased, in addition to higher sales of process automation in Connect. Sales decreased in In-Vehicle, in Energy, Consumer Electronics, and air conditioners in Lifestyle, and various other businesses. Adjusted operating profit increased overall due to increased profit in Lifestyle, Connect, and Industry, despite deconsolidation of Automotive. Operating profit and net profit decreased due to recording of restructuring expenses for ongoing group management reform.
Operating cash flows for the nine months decreased year-on-year due to the absence of monetization of IRA tax credit through transferable method in FY March 2025 and restructuring expenses. As for the full year forecast, overall sales and adjusted OP remain unchanged, but by segment, adjusted OP is revised downward in Lifestyle and upward in Connect and Industry. Overall, adjusted OP forecast for Energy remains unchanged, while adjusted OP for In-Vehicle is revised downward and that for Industrial Consumer is revised upward. The downward revision of the forecast for OP is due to increased restructuring expenses. Sales decreased year-on-year by 4% to JPY 2,063.3 billion. However, sales excluding Automotive increased by 5% year-on-year. Adjusted OP increased to JPY 159.1 billion.
Due to the recording of restructuring expenses, Operating Profit decreased to a loss of JPY 7.2 billion. Net Profit also decreased to a loss of JPY 17.1 billion. Results by segment based on the current reportable segments. Following the launch of the new organizational structure in January 2026, we have begun disclosing our financial results based on new reportable segments, effective after the third quarter announcements. Please refer to the reference materials for the results based on new reportable segments. First, sales by segment. Lifestyle saw overall sales decrease due to lower sales in such businesses as consumer electronics and HVAC, both affected by weaker overseas demand, despite higher sales of electrical construction materials, supported by favorable sales, mainly in Japan.
Connect saw sales increase due to higher sales of process automation, capturing demand for ICT, including generative AI servers, avionics with continuous strong orders, and Blue Yonder. In Industry, sales increased, driven by continued demand growth for information and communication applications, such as generative AI servers. In Energy, sales of In-Vehicle decreased due mainly to lower sales at North America factory with deteriorated EV market conditions. Sales of Industrial Consumer largely increased due to continued favorable sales of energy storage systems for data sensors. Within Other, elimination and adjustment, sales in entertainment and communication decreased due to deteriorated market, while sales in housing increased. As for adjusted OP by segment, increase in Lifestyle, Connect, and Industry.
In Energy, adjusted OP of In-Vehicle decreased due mainly to lower sales in North America and the impact of U.S. tariffs, while adjusted OP of Industrial Consumer increased due mainly to higher sales. As for, As a result, overall adjusted OP increased despite the deconsolidation of Automotive. As for the results of Lifestyle segment by divisional company and Living Appliances and Solutions Company, sales and adjusted OP decreased due mainly to sluggish overseas sales. Heating and Ventilation AC Company saw adjusted OP remained at the same level year-on-year. In Coaching Solutions, sales and adjusted OP decreased due mainly to temporary lower sales caused by manufacturing issues in North America. Electric Works Company saw OP increase on higher sales of electrical consumption - electrical construction materials in Japan year-on-year. Operating profit variance analysis.
From left, increased sales in real terms had a positive impact of JPY 10 billion. Increase in fixed costs had a negative effect of JPY 8.4 billion. Please note that positive effect of JPY 5 billion was recorded due to restructuring. The net impact of raw materials and logistics prices was -JPY 4.3 billion. Net impact of price revisions, rationalization, and other factors was +JPY 27 billion. Blue Yonder, -JPY 4.8 billion yen, excluding foreign exchange. Effective exchange rate was +JPY 1.9 billion, mainly in Industry and Energy. Deconsolidation of Automotive was -JPY 18.2 billion. Impact of US tariffs was -JPY 4.3 billion. Adjusted OP increased by JPY 8.9 billion year-on-year. Operating profit was down JPY 139.5 billion.
On the left, operating cash flow decreased of JPY 412.4 billion year-on-year due to non-recurrence of IRA tax credit. On the right, net cash was negative JPY 945 billion. As for the consolidated full year forecast-
... for sales and adjusted OP remains unchanged from forecast announced in October. The forecast for OP and profit before income tax is revised downward by JPY 30 billion due to deterioration in other income loss of JPY 30 billion. Full year forecast by segment. Please note that the figures are presented based on the current reportable segments. The forecast is revised upward for Connect and Industry, downward for Lifestyle. This shows the forecast of the Lifestyle segment by individual divisional company. Sales and AOP forecast is revised downward in LAS and HVAC and Co- CCS, while the AOP profit forecast in Electric Works Company is revised upward. It shows our analysis of the forecast by segment. The Lifestyle overall sales and AOP forecast is revised downward by business. Living Appliances and Solutions Company and HVAC is revised downward due to a weaker overseas demand.
CCS revised downward due to the temporary reduction in production in Q3. On the other hand, AOP forecast in Electric Works Company is revised upward due to continued favorable sales in Japan. In Connect, the forecast is revised upward with higher sales of avionics, supported by continued strong orders, as well as higher sales of the process automation. In Industry, the forecast is revised upward with higher sales of products in electronic, devices and materials, and driven by the continued demand growth of Gen AI servers. In Energy, overall AOP forecast remains unchanged from the previous forecast. AOP in vehicle is revised downward due to the slowdown in EV market condition in North America, while upward that, for the industrial and the consumer, with higher sales of energy storage systems. This shows our analysis of AOP forecast by factor in comparison to the previous, forecast.
The upper graph is the previous forecast. The lower one is the revised forecast. Middle row is the revised amount. As shown, the middle section, operating profit forecast revised downward by JPY 30 billion, from JPY 320 billion to JPY 290 billion. An increase of the JPY 30 billion in restructuring expenses currently underway, which is recorded in other income and loss, although the forecast of AOP remains unchanged. This shows the update on the structural reforms currently underway, including restructuring expenses and expected effect. Restructuring expenses are now expected to increase by JPY 30 billion to JPY 180 billion due to the expansion of the restructuring. Accordingly, the group-wide effect of restructuring is expected to increase by JPY 5 billion to JPY 42 billion.
The group-wide effect is now expected to increase to JPY 145 billion. From this slide onward, I will discuss the outlook of by each individual business. First is the in-vehicle in energy. On the left, the line graph shows the trend in sales volume of automotive batteries in the North American factories. The bar graph shows EV sales in units in the U.S. Related to the termination of the IRA Section 30D tax credit for EV purchases at the end of September 2025, there was a last-minute demand in Q2. As a result, greater than expected impact, the full year forecast for battery sales volume is revised downward to 39 GWh from 40.
In our outlook on the EV market, we expect the market to bottom out in Q3, and then overall full year, recovery is roughly to the same level as FY 2026. The uncertainty continues, however, we will continue to expand our business in line with the market trends and the customer demand. Next is our outlook for the energy storage system for the data centers in industrial and consumer. Graph on the left shows the sales outlook for the energy storage system for the data centers. In pursuing our sales target of JPY 800 billion in FY 2029, the possibility of securing nearly JPY 500 billion over the current level has increased significantly. And, we have also recently seen the rise in customer inquiries.
In response to the surge in demand, we are moving quickly to make decisions on expanding capacity, including repurposing the existing automotive battery assets. For cell production, we have already begun converting the production lines at automotive battery factories in Japan and plan to begin production for the data center applications sequentially from the Q1. Looking ahead, we'll also consider further utilization capacity at our Kansas factory. For module production, we have decided to construct a new factory in Mexico and already launched this project. In addition, to address the increasing complex customer challenges in absorbing power load fluctuation, our energy and industrial businesses are collaborating to accelerate the development of the new solutions. We also plan to launch the capacitor backups units, which use our newly developed modularized super capacitors in FY 2027.
Leveraging our unique expertise in, from the capacitors to batteries, within the company, we are delivering the solutions that only we can provide. By doing this, we maintain our leading market position to drive further business, growth. Next is outlook for the Gen AI-related businesses. We set the target of JPY 100 billion in FY 2031, for existing two, core products: conductive polymer capacitors and multilayer circuit board materials with, various new devices. As demand related to Gen AI continuing to expand at the pace far exceeding our initial expectations, we now see the possibility of reaching JPY 100 billion with these two existing products alone.
We plan to invest in several of our plants, including the construction of the new facility at Ayutthaya plant in Thailand for electronic materials, to ensure that we do not fall behind the rising demand. Furthermore...
... Business opportunities are rapidly expanding in areas where our industry segment's expertise can be fully leveraged, such as super capacitors for CBU, high voltage devices for supply, and other peripheral application. We also actively pursue growth by capturing those opportunities. This is the share transfer of the Panasonic Housing Solutions that we announced on the 17th of November. We are proceeding smoothly with the necessary procedures to close on March 31st, 2026. Portfolio management review is currently underway. This shows the segment changes to lifestyle segment resulting from the transition to the new organizational structure starting in January this year. The current segments are shown on the left, and the new ones are on the right. In addition, we are making some changes to the voluntary disclosed businesses.
From the next results briefing, we will be explaining based on the new reportable segments, and thank you very much for your understanding. That concludes my presentation.
Thank you. Misumi from Nikkei. I hope you can hear me.
Yes, we can.
I have two questions. First, I'm looking at slide 18, energy. The new plant to be constructed in Mexico, what is the size? When do you start construction, and specifically, where in Mexico, and why Mexico? That's my first question. My second question, about the new HR system. Solution Revenue Officer and Chief Revenue Officer are newly established. Could you be more specific in what their respective roles are, and what led to this change in the HR system?
Thank you for your questions. First, for module plant to be constructed in Mexico, you asked about the location and the backdrop. First, in Mexico, we already have a plant, so we wanted to consolidate, expand in the vicinity, and that's why Mexico. We are to expand in two ways. At the existing plant, we do have some idle space and capacity, so that will be the priority in our expansion. And in order to achieve the target that we have for FY 2029, we need further expansion. As for the timing, JPY 800 billion in FY 2029, and we back cast from there for the construction plan. And for the second question, our CHRO, Kinoshita, would respond.
About the personnel change announcement, especially Solution Revenue Officer and Chief AI Officer. About Solution Officer, we have three business areas focusing on solutions, as you're aware. In the solutions area, establish the system for go-to-market and have the marketing strategy on BTB-- B2B as a group. So Solution Revenue Officer was established to address that specific mission. And Suzuki-san of SAP is to join us, given his expertise, key account management expertise in particular. We will refer to his expertise so as to revisit our B2B strategy. And Chief AI Officer, in the AI area, Matsuoka-san has been leading this effort at Panasonic WELL Head-- Panasonic WELL Headquarters to promote the shift to AI in our core businesses, so as to establish the platform as the solution company.
This reform was in the innovation and incubation phase so far, and we are going to go into the next phase of AI transformation, revolution. Especially in solutions area, which is our focal business area, we are to leverage AI and to provide value-added offering to our customers. And along this line of thought, so far, we had AI strategy, development, and research capabilities in different regions, different organizations, but we want to consolidate this to AI data platform. And so, Panasonic WELL Headquarters will be dissolved as of the end of March for further development. And, Sakakibara-san, who is the CTO at Connect, will be assuming this new responsibility, so as to provide solutions to the customers.
Sakakibara-san will be the CTO at Connect and also CAIO of the Panasonic Group, so that we will have the maximum application of AI expertise under single leadership. I hope that answers your questions. Yes, thank you.
Next, from Toyo Keizai, Umegaki-san. Thank you.
Umegaki speaking from Toyo Keizai. I also have two questions. First is about the headcount reduction. The restructuring cost, I think you changed that upward twice, so maybe more people applied for this plan. So how many people applied, or how many people have left? And how do you think of this? Based upon the capital market theory, maybe this will lead to the lower head, the personnel cost, and it's positive. But also, on the other hand, it means that the more people wanted to leave Panasonic. So, is it possible for the employees to have a more pessimistic view about the Panasonic future? And the second point is about the direction of the AI. The consumer electronics, especially the B2C business, how do you plan to utilize AI?
So more recently, the B2B, the batteries, the materials, for AI, they are doing well. I understand that. But, for the, when, Umi and also Panasonic WELL, will be dissolved, and, Yoky will be stepping down. So, is that-- does that mean that the new service startup didn't work very well? Anything that, you learned as a lesson? So after dissolving the Panasonic WELL, the strategic alliance with Anthropic, is that going to be maintained? Thank you. I'd like to answer to your questions. The first is about the personnel reduction. Yes, the restructuring expenses has been increased, or as you can guess, the number of people, is going to be bigger than what we expected. We mentioned that the 10,000, as our, whole number, that was the plan that, that we showed.
There will be some people who will be applying in the Q4. It's still uncertain, but it's likely to expand to the 12,000 level. So how do we intend to interpret this? You also asked about that. I think that the personnel or each employees made this decision after really thinking about this very seriously, and they decided to move forward. It was very difficult, the decision for us, but we'd like to stay closely with those employees who are starting the new path. We would like to support them. And also, whether we have a pessimistic atmosphere inside the company.
Of course, when many people leave, that's it is likely to cause some disruption or confusion, but there are people who would like to stay and persevere and work hard. So we'd like to consider this as a positive thing, so that we can create the new Panasonic group as one team. That's the first question. The second is the AI utilization in the area of the B2C. Yohana, the Yoky is stepping down, so how do we redefine this? So as we, it was explained about the changes of the personnel, I think we are moving on to the next phase. So Umi and Yohana, we need to really step, stop, pause, and think about this once again from zero.
So, from 2019, Yoky joined us, and, based upon the new hypothesis, we tried to challenge this B2C area. And every year, we had the pretty good budget and tried to verify the hypothesis, but this Yohana business and also Umi, the scaling and monetization, it was-- we did not verify the hypothesis very clearly. So we need to pause and think about this once again. It doesn't mean that we will stop the AI-related challenge in the B2C area. So in the smart life, for example, we will be inheriting this so that we can do the new monetization or a new business model will be generated, and we will continue to challenge. About the... Your question about Anthropic.
Yes, the UMI, under the framework of the UMI, we were discussing the alliance, but so this would change a little bit. But, with the AI platformers and the partners, we would like to work together, and we would like to compete against each other, and we would like to continue to do so, and that remains the same as a group. Thank you very much.
Next, Takeuchi-san from NHK, please.
Can you hear me? Yes. About the headcount reduction, I have a question on that. More people applied, understand, for the early retirement program. I think you're gonna need to improve on the productivity with a smaller headcount. Where are you in that effort?
Thank you for your question. Yes, I think this will be a good follow-up to what we were discussing earlier. Increasing the number of personnel at the workplaces where the number has been reduced would be counterproductive, so we will be working on the productivity improvement. We are having a very in-depth discussion at each workplace. Use of AI at our workplace will continue to be promoted. We'll do that as part of our efforts to improve on our productivity, and that discussion is ongoing at each entity. Selection where to focus on is another important aspect. We have to be proactive in identifying where we can reduce or terminate our businesses. Those are the things that we are working on.
I see.
I hope that answers your question, Takeuchi-san.
Yes. Thank you.
Next is Furukawa-san from Bloomberg.
This is Furukawa speaking from Bloomberg. Thank you. I have two questions. The first is on page 17, North American EV market. After the Q3, it will gradually recover. So what is the reason for this assumption? Is it based on your strategic customer, or do you see the recovery already in January and onwards, or are there any other reasons or information? And also on page 8, on the right-hand side, about the share transfer, the... There is a JPY 42.6 billion write-off. Could you explain what this is? Yes, let me answer to that question. The first, about the North American EV market.
As I mentioned, in Q3, went down because Q2 was very strong, so it would gradually recover, and it would—we expect that it will go back to the same level as before. And you asked about the reasons. There are multiple factors, and based on those, we made this judgment. Market as a whole for the full year, it's about flat, almost flat, depending on the researches, it could a little bit be a little weaker than the year before. That is for fiscal 2027. And as for the strategic partner, of course, that it is closely related to them, and we are having the conversation with them. And what they wish to achieve is a little bit higher.
So their vehicle strategy and also their market share increase, they say that they are confident in doing so. But in our case, we would like to make a judgment based on the multiple perspectives, and we believe that this type of recovery is possible. So that's my answer to your first question. On page 8, in other income and loss, JPY 42.6 billion write-off. I think that was your question. And concerning that, as we mentioned Ficosa on the PowerPoint presentation, the Ficosa deal related the write-off was JPY 42.6 billion in this quarter. So Ficosa. In last fiscal year, we carved out our automotive segment, and Ficosa was one of the business sectors. So this is for Europe.
They manufacture automotive components. So for that, last fiscal year, maybe you remember that at the time of the carve-out of the automotive, we could not carve out everything. So a partner, of course, based upon the shareholder contract with the partner, there was not possible to transfer that part. So, the partner wanted to proceed. It's not... So therefore, it was not a total carve out. And, about this business, this continues to be a non-core business in Ficosa. So, about the carve-out deals, we try to pursue the different deals, and as a result, this write-off occurs. About the write-off of Ficosa.
We acquired this Ficosa, the majority shareholder, more than 10 years ago, and the related business have been damaged to some extent. So, as a result of that, there was a write-off.
I see. Just a follow-up question, just one question. Strategic client, their level of, the level that they want to achieve, it's high in Q4, and also you said that the high level is for fiscal 2027. Is that correct?
Yes, your understanding, it is correct.
Thank you. We're getting close to the end of the session for journalists, so we ask you to keep your questions to one per person. Once again, we only take questions on the Japanese line. Terada-san from Yomiuri?
Thank you. This is Terada from Yomiuri. About restructuring, I have a follow-up question. 12,000 people altogether, you said. I understand this is already exceeding the number you had originally had in mind. Ultimately, what do you think would be the total number, or do you think that the headcount optimization has all but been completed? And also, regarding restructuring, are there anything additional that you can share with us with regards to the progress made so far? About the personnel optimization restructuring, 12,000 currently, is it gonna be any larger, was your question. 12,000 is the forecast on the full year basis, so we're not anticipating any further increase, a big increase from there. And, for restructuring, this is not specific to personnel, but other aspects of restructuring. Any progress during this quarter?
Well, housing and automotive related Ficosa deals, these are the new developments that we saw as was included in my presentation earlier.
Question for clarification: so 12,000 people, you don't expect any further increase, meaning that you think that personnel optimization has all but been completed? Am I correct?
Yes, that is correct.
As for businesses, the businesses with issues, I think you had a list on that. How about sales, divestiture of those, any specific progresses made so far?
Specifics have already been mentioned.
I see. Thank you. Thank you. So due to the shortage of time, we would like to take one more question. So from Nikkei Business, Iwato-san.
Iwato speaking, Nikkei Business. So personnel related, Matsuoka-san is stepping down. Yohana was not so successful, and Umi was not made into the services. I think, when Nico-san said that there were a good level of the budgets, I think it's been seven years. So what did Matsuoka-san bring to Panasonic? And also, Kinoshita-san is joining as an external personnel to Panasonic. So what are the important things for the external personnel to be contributing to Panasonic? Okay, I'd like to make a comment, and I would. You asked a question to Kinoshita-san, so I would ask Kinoshita-san to make a follow-up comment. So what remains after challenging this? As a business, yes, we did have continued budgets, but it was difficult to monetize or scale up the monetization.
There were some hypotheses, and we needed to pause. As we face the fiscal year of the restructuring, we made this decision. But it doesn't mean that there is no legacy. So AI-based business, how do you create the platform or architecture, design, and also the personnel? Through the various challenges, there are achievements or the things that remain in the company. So, we'd like to make sure that we keep the AI as an important initiative. So what she left as a legacy for the future, we would like to make sure that we would succeed that to the R&D of Panasonic so that we can take advantage of them.
Thank you. I would hand the microphone to Kinoshita-san.
So as Waniko-san said... Yes, Matsuoka-san's office in Silicon Valley and also her team, I met them in Silicon Valley, and Matsuoka-san is really the talent magnet... and great AI talents were attracted in Silicon Valley. So those people were attracted to us. So building the AI data platform was what they did. So unfortunately, we suspended the Umi, but about the AI and data business, what kind of personnel do we need? I think that we have made the progress in building the foundation. And we talked about the personnel development. So I think that we have to make sure that we do both. So that is the innovation personnel. We still need more innovation personnel. And Matsuoka-san started so-called Dojo.
So the development program was something that she led with passion. So, the Japanese engineers, we spent time with her, I think, how they work and their mindset changed based upon that experience. So I think that's very important assets that Matsuoka-san have left. So we'd like to make sure that we would deploy that in the area of the AI in B2B. And also, the important thing, what she did was the network with the outside of the company. The Anthropic was mentioned, and it's not possible to do everything on our own. So, including the Silicon Valley and the tech ecosystem, how can we work with other companies in collaboration?
That was also one of the major achievements that Matsuoka-san have left with us. Thank you. I hope that answers your question. You mentioned that the Matsuoka-san is talent magnet, but after or even after she steps down, do you think that the wonderful AI personnel will remain? Yes, together with Matsuoka-san, we are making a lot of efforts to retain those people. And newly appointed the CAIO, Sakakibara-san, is also a talent magnet. So in Connect, Sakakibara-san has been leading the AI-related development and gaining the personnel from IBM and others. So in that sense, Sakakibara-san will be succeeding that. That's Chief AI Officer. Thank you.
That concludes the QA session for the journalists. We now move to the QA session for institutional investors and analysts. Again, please note that questions are not accepted on the English line. From Goldman Sachs, Harada-san, please.
Thank you. Harada from Goldman Sachs. I have two questions. First is on business risk. Earlier, you did refer to EV. Can we be assured that Q3 would be the bottom? And as for Connect process, are we assured that there will be sufficient capability in terms of procurement? Is there no risk for cost increase or margin reduction? And Anthropic AI, SaaS related, share prices are declining today. Wouldn't Blue Yonder be affected by that, especially for next fiscal year? And also on industry, for the high voltage device, I think you said that there'll be new products, capacitors. Is it 100-volt architecture? What kind of products are you talking about?
Thank you for your questions. First, about the business risk. You referred to various factors about EV, electric vehicle. "Would third quarter really be the bottom?" You asked. The slowdown or softening of the market, we need to keep eye on that, but our projection is it is going to get better. Of course, we have to rely on our communication with the strategic partner. We are receiving strong inquiry, and in the third quarter, we had a bit of a problem with ramping up our Kansas factory production, and there is a rather strong pressure coming from our customers to increase our production capacity. So there is a demand on the part of the vehicles, obviously. So there was a rebound decrease that we saw in the earlier quarters, but we think we can be positive about going forward.
... And as for the consumer electronics, DRAM, semiconductors, I think we are on top of the materials. There are some price increases in materials, especially copper. We are paying close attention to the developments in the market, but so far it is not yet a big risk. Your last point about AI-related SaaS related share prices. I think you're talking about the multiple share rating. Within the industry, there are some concerns voiced, so it is not just-- it's really a overall market situation. How do we see that? With AI, we are seeing two opposite directions: the opportunities and a threat. I think there is more attention being paid to the threat aspect, and maybe that is the reason why it is hurting the multiples of some of the shares.
But we're on top of that, especially the Cognitive series of Blue Yonder AI agent mounted product lineup ahead of our competitors, as we have been explaining. So as far as Blue Yonder is concerned, we consider this to be opportunity rather than threat, though it is really up to the market to see which is the case, but at least that is our viewpoint. Regarding the devices, especially the high voltage devices for industry, specific product information cannot be shared at this point in time. Capacitors, relay, we do have these products within our business, and as you're aware, for AI data centers, a higher voltage capabilities are being called for.
In EV goal and automotive applications, we have built our expertise, translated into business opportunities, and we feel there are further opportunities, and we will be sharing further details as they become available. I see. One question about Blue Yonder. The valuation of competitors are deteriorating. What about the impairment loss risks? In a nutshell, impairment risk is not what we have in mind, especially. Of course, within valuation, the multiples of our competitors will be part of the factor, that's for sure. So it is going to get tighter than in the past, but, overall valuation, decrease that we see today, is not going to affect us, for the time being, that is.
I see. Thank you.
Thank you. Next, BofA Securities, Hirakawa-san.
Thank you. This is Hirakawa of BofA. Two questions. First is about the EV batteries, and you mentioned the specifics, but your strategic partner, high-end model is going to be suspended, and then that Suminoe factory's utilization rate might come down. The Kansas batteries demand is strong, but the Nevada battery demand might come down. So Suminoe and Nevada and the utilization, is there anything that would fill up the decline? And so could you share with us your view on the utilization rate and the earnings? Second question is about JPY 600 billion as I said, OP, and now it's 150, so the fixed cost JPY 185 billion is now possible.
But now that the EV automotive battery is uncertain, CFO said, so, that the uncertain condition continues. And so JPY 600 billion, the... Maybe we shouldn't focus too much on the single year number, but, in achieving JPY 600 billion, what are the initiatives that are remaining that you can work on?
Thank you. First question about the EV battery, the, our strategic partner, high-end model production suspension, the impact of it to us. That was your question? Yes, there is an impact, but concerning that, we have already factored that in. So high-end model production, when it's suspended, the impact, as you mentioned, is that the Japanese plant, the cell production will be impacted. So this quarter, for the first time, at the client side,
announced that, they would, make this suspension. But from the last fiscal year, it was already factored in, and the volume has been, reduced. So we explained that many times. So, we don't have to, worry too much about that because we already had the expectation. So, about this, we already knew that this would happen. So as for the utilization rate of our Japanese plant, Mazda and Subaru, and other car OEMs, how do we, shift to others? And, we are talking with them, and, we have been, discussing about the business. But having said that, EV market has been slowing down, and it's not just our strategy partner, but the OEM as a whole. So concerning that, as I explained, the PBU battery, demand is, very strong, and we are...
We have difficulty satisfying the demand. So we would like to take advantage of our asset and capability that we have in Japan, so that we can repurpose it for the BCBU and PBU. So from the Q1 of fiscal 2027, we would already start the production. So as a total, we would like to hedge risks that way. The second question, JPY 600 billion, is that something that we are likely to achieve? Yes, we think we can achieve that. First, the restructuring, the expenses is increasing, but the effect of the structural reform would be bigger in the next fiscal year. So this is going to be the main driver. So we are not depending only on that. We are working on the business improvements in other areas.
Through the improvements, as you commented, there are some businesses which are a little bit concerning or difficult to grow. There are some differences, but as I mentioned, EV market will be about the same as the year before. We do not expect this to go down compared with this fiscal year. Also, the PBU business growth would be much bigger than this fiscal year, and we are getting that reaction. So, when you look at the total picture, which in addition to the effect of the restructuring, we think we can expect that the increase of the base business. Thank you.
Thank you. Next, in the interest of time, we ask you to keep to just one question per person. Nakane-san of Mizuho, please.
Thank you. Nakane from Mizuho. One question. I have a related question to what Hirakawa-san asked earlier. That is, are we really okay for next fiscal year? Cold chain and life application downward revision was made. In the third quarter, what happened, and why are the figures looking that way? And I understand that there are no additional restructuring planned so far, but even with that, do you think you can achieve the figures that you envision for next fiscal year, or is there anything else that you need to implement?
Thank you for your question. For the third quarter, in the lifestyle, especially cold chain, yes, rather sizable downward downside. What happened? It was your question, and what about next fiscal year? So let me try to answer those questions.
First, in the third quarter, as was explained earlier, on the production side, we had a temporary hiccup, a setback, which limited the production and sales, negatively affecting our results. This was the production system that was related to manufacturing. There was a supply side issue, supply side issue. And so temporarily, we had to control the production volume. What about next fiscal year? These are the supply side factors. There was some inconvenience on the part of the deliveries. And it might be difficult to make up for the difference in Q4 only, and that is the reason why we made the downward revision in our full year forecast. But there is demand on the part of the customers, and we will satisfy them next fiscal year.
As for lifestyle business, last C&C on the full year basis, some softening is taking place, and maybe that's why you have a concern. But we have been implementing various measures, the global cost or what we call the China cost strategies. And with the restructuring effect in place-
... we do expect these efforts to bear fruit. So JPY 600 billion for next fiscal year, we believe is achievable.
Next, Yasui-san from UBS Securities. Yasui-san, go ahead.
Excuse me, Yasui speaking, UBS Securities. About the BBU for data centers, the beginning of the fiscal year, I think that the positive 50% and this time 70% was revised upward to 80%. So I think there could be further upside. So based on your understanding, the part that the upward revision is continuing, are there any factors that is continuing to be strong? And maybe next year you can double this. So what would be the expected revenue? So Rubin would be coming out, so maybe it's not going to be switched over within this year, but could you talk about the outlook for fiscal 2027? Thank you for your questions concerning that.
For this fiscal year, what you said is correct, so 1.8 times bigger than the year before. Well, that's what we are showing. At the beginning of the fiscal year, we said one point five times, and in the previous briefing, that it was 1.7, and this time, 1.8. So each quarter the demand is becoming stronger. And including the background, in our view, I think that the Gen AI related infrastructure investments are happening, and customers want these products. And I think we believe it's the reason. So it's not really the reason due to us. I think that because of the demand in the society requiring our products and services.
So what about the next fiscal year to getting to JPY 800 billion? I think that we already talked about how we are likely to achieve that size, and if everything goes, I think that doubling everything will be difficult. But big growth can be expected. There's no question about that. And as I mentioned, each quarter the demand is becoming stronger, so the rather than downward, it could go upward. It is possible. So concerning that, we cannot control the demand, so I'd like to make sure that we talk with our customers and lock in our customers, and that is our core.
So we'd like to take advantage of the strong relationship so that we can get the information quickly, and also how do we set up, build up our production speedily. I think that would be the key because the... About the sale, because it takes a lot of time. The automotive demand, the battery side needs or demand is slowing down a little bit, so we'd like to be able to quickly respond. And we mentioned the module plant in Mexico. Module is, in comparison to a cell, is asset light. So inventory investments in that period needed to be smaller and shorter. So we want to make sure that we would not fall behind, to catch up with this expansion.
What about the timing to switch over to Rubin? Is there any time frame that you have expectations for about the customer solution switchover or shift? We do not disclose that information, and we would just make sure to respond to the demand of the customers.
Thank you. We are already running over time, but we would like to take questions from two more persons. Ayada-san from J.P. Morgan.
Thank you. Ayada from J.P. Morgan. Blue Yonder third quarter sales on a U.S. dollar basis increased by 5%. What's your view on that? $1.47 billion is the annual prediction, no change, which means that in Q4, you may have to increase by 15%, which seems rather challenging. The Cognitive, pipeline shifting to the actual sales, is that taking place steadily? And in SaaS, area, with, heated competition over AI, maybe the customer's investment timing may be pushed back. So is that having an impact?
We are showing the results by quarter. So, when you do the subtraction from the full year basis, you think that fourth quarter is going to be challenging. Yes, we are aware of that structure. Cognitive was launched in the first half of the year, which would result in actual sales over six to nine months. That is a lead time. And Blue Yonder is running the business on a calendar year basis, which means that October-December is the peak.
... period. So we were anticipating that there will be more results, more bookings recorded in the fourth quarter. In terms of SaaS sales growth, it is growing, but booking growth was not as high as we had originally anticipated. But our business pipeline is being solid. So for the fourth quarter, we are trying to achieve the full year target one way or another.
I see. Thank you.
Thank you. From SMBC Securities, Katsura-san.
Thank you. This is Katsura. Slide 20, I have one point of clarification. So YKK, sixty billion in other income and loss in relation to this, and the, I think, hundred billion is effect. So this fiscal year, you mentioned Ficosa. That was not something that we did not expect, and its number is pretty big. And about the structural restructuring, you mentioned that YKK and others, there will be a good prospect. And for, with the increase of JPY 30 billion, that is a restructuring cost you made at the revision. Maybe that's the net basis, but everything included on that, or are there any other structural reform related or portfolio management related factors that will be impacting in the coming years?
About the PHS, the housing solutions, the impact of the impact and both profit and loss and balance sheet, this will be impacting for fiscal 2026. P&L and the BS, JPY 100 billion net cash increase, the closing is the thirty-first of March. So as of that time, there will be a positive impact in terms of the capital. As for the Ficosa and other income and loss, Ficosa was factored in to the overall forecast. So even with this Ficosa impact, we are not going to make any revision, so it's just related to the overall structural reform. We did receive some questions on this point, but we could not really mention the specific name.
This housing JPY 60 billion profit is here, so there must be the negative number, and we did have that kind of question. So our expectation was already included, but until we complete the deal, we could not really mention the name. But there are several factors, and now this has been already realized. So on the net basis, this is the number that we are sharing with you right now. So but that was already factored in. Thank you.
We apologize for running over time. With this, we conclude the online briefing on the financial results for the third quarter. Thank you very much for your participation.