Good morning. It's on time, we'd like to start the performance briefing, the first half of fiscal year March 2021 sessions. Today's speaker is [Non-English content] Mr. Shigenao Ishiguro, the President and CEO, Executive Vice President Mr. Tetsuji Yamanishi. These two are the speakers today. Thank you very much. [Non-English content] First of all, I'll present the results for the first half of fiscal year March 2021, represented by Mr. Yamanishi.
I'm Yamanishi. Thank you very much for joining us today for the performance briefing of the first half of fiscal year March 2021. Thank you very much. First of all, I'm going to explain the business performance of the first half of this fiscal year. The points to highlight, that's getting into the Q2, the lockdown has been lifted on a global basis, now gradually, the social and economic activity has reopened.
Also for the major customers have restarted the production activity, then we can take advantage of the clear rebound of the demand in the electronics market. First, in the Q1, due to the negative impacts of the suspension of the products and automotive markets, also the demand of HDD have dramatically declined. Getting into the second quarter, that demand have significantly rebounded. When you look at ICT markets into Q1, the remote working and remote learning have made progress for leading the digital transformation, DX. It have been accelerated, and as well as the mobile devices and the 5G-related demand have extended over our forecast. Now this momentum is still maintained in the Q2, and very steady. The first half as a whole, now we could achieve that and the significant expansion of both the sales and operating income.
As a result, when I look at that on the first half, although in the first half, due to the negative impact of lockdown, it have declined by 2.2% in sales on a year-on-year basis, and 9.3% decline in operating income. In particular for the Q2, now we could have the record high and then the sales on a quarterly basis, and we could, as a whole, secure both the sales and income. Getting into the Q2, the demand in the automotive market rapidly rebounded, and so the Passive Components like MLCCs and the inductor and the sensor have expanded the sales. Also in Q2, the acceleration of the Digital Transformations is still going on.
All these related products demand is steady, just the Passive Components like secondary battery and the high-frequency components have pushed up and make big contributions to the favorable business performance. When it comes to hard disk drive head, in Q1, that was adversely affected by the suspension of the factory operations. Now that the production of the customer have gradually rebounded, and it will lead to the improvements. Now, in order to deal with the deceleration of business due to the COVID-19, we have started our rationalization efforts. We're making the business efficient, and we will continue to make exactly the same efforts, although now that we're observing the recovery of the demand, and it have lead to the synergy of over and exceeding the forecast and have made big contributions to the further improvement of business.
Let me talk about the business overviews, including that negative impacts of the appreciation of the yen and JPY 13.9 billion, the net impact on the sales and JPY 300 million of the minus impacts on operating income. The sales was JPY 691.1 billion, minus JPY 15.9 billion, 2.2% decline year-on-year. The operating income was JPY 62.4 billion, minus JPY 6.4 billion, 9.3% decline year-on-year. Income before tax was JPY 63.2 billion. Net income was JPY 42.2 billion. Earnings per share was JPY 334.27. When it comes to the currency sensitivity, there's not any change so far. Let me talk about the segment-wise business overviews of first half, not only talking about that year-on-year, since then we have the major change in the demand from the Q1 to Q2 this year.
That's why not only talking about the first half year-over-year performance, but also would like to talk about the Q2 performance on, that's the quarter-over-quarter basis from the Q1 this year, and also as well as the Q2 performance year-over-year. We'd like to use these three measurements. First of all, the Passive Components sales was JPY 138.3 billion, -8.1% in year-over-year, and the operating income was JPY 17.4 billion, -20.2% decline, and also the income margin was 9.5%. The sales of Q2 was -2.5% year-over-year and 14.9% of decline in operating incomes and the profit margin was 9.8%. The demand of automotive markets have rapidly recovered in Q2, and then also for the ICT market, we could observe that the 5G-related demands have been very steady in Q2.
That's why the sales and operating income of Q2 have surged from the 17.8% to 26% for the operating income for each from the Q1. When you look at the first half basis, now high-frequency components, we sort of based on that the steady growth and the demand of 5G have grown, and also aluminum electrolytic capacitors have secured that incremental income. Now it's struggling to the declining sales and income due to the poor demand in the automotive market in Q1. Let me explain about for each product and the Q2 performance. First of all, ceramic capacitors. Now, the sales for the 5G base stations have dropped from the Q1, on the other hand, now the market, the demand for the automotive market have rebounded so that we can have that incremental sales.
Now, due to the negative impacts of the consumption of the strategically part of inventory from Q1, and now we have less operating incomes. Now, when it comes to Q2, now all these automotive markets have recovered to the level of last year's Q2. Also, from these capacitors and have increased also for the industry equipment market as well as automotive, and it recovers to the level of the last year's Q2. When it comes to inductive devices, the demand for the automotive market have rebounded, and also the start-up of the new smartphone product devices pushed up the demand in ICT market, as well as that increased the demand for the industrial equipment. We could recognize the significant increase from Q1, and we have secured that operating income growth.
When it comes to the sales for the automotive markets, now they have recovered to the last year's Q2 level. For the automotive market, when it comes to high-frequency components products, we have been very steady in the 5G-related products, and we could maintain the same level as that operating income and sales for the Q1. For the piezoelectric components and the circuit protection components, have been increased both the sales and the components in the automotive, ICT, and industrial equipment, but still are struggling in the automotive markets. Now, next, the Sensor Application Products business. The sales was JPY 34.5 billion, -11.3% in sales year-over-year basis. The operating loss have just a little bit slightly shrunk.
The sales of Q2, which is due to that recovery of the automotive markets, and also we have a very favorable business for the start-up of the new smartphone devices in North America, and as well as that incremental sales for our customer in China. It has grown by 34.7% on quarter-on-quarter from Q1. The operating income shrunk by JPY 2.2 billion and on year-on-year basis, and it have declined by JPY 4.8 billion, but now the operating income shrunk by JPY 400 million. On the first half basis, due to the still the negative impact of declining in the market and the automotive in Q1, now the temperature and pressure sensors and the Hall sensor have suffered from the declining sales and income.
For the MEMS sensors, now even under the very weak mindsets of the consumption of the COVID-19 and also microphone demand for the Android device have declined. The motion sensors, and now for the smartphone, mounted motion sensor have declined, so that's why it will lead to that half of the operating loss. On the other hand, when it comes to Time-of-Flight sensors, now sales for the smartphone and contributed to the market share expansion, it has been steady. It contributes to the significant increase in both the sales and income. This is the quarter-on-quarter basis performance for the Q2. There's temperature and pressure sensors that have a favorable in automotive markets. Still we have seen a slight operating income. We get ready for make a turnaround to making the business profitable for the Hall sensors.
Since the supply chain for the automotive market is very long, so that's why it's still in the middle of the full recovery. This have been on the par with the level of Q1. For conventional sensors, the sales for the automotive markets have not recovered to the level of the Q2 the previous year. When it comes to Time-of-Flight sensor, now since this is also the start-up of the new smartphone devices, will contribute for the significant increase of sales and also now in the operating income too. For the MEMS sensor, now the orders for the gaming console have declined from Q1, but on the other hand, it can be more than offset by the increased sales to our major customer in China, and now we have a growth in the sales and also the shrinking. We could shrink that operating loss.
Next, let me talk about Magnetic Application Products business. Sales was JPY 88.7 billion. It was -19.4% year-on-year. Operating loss, this down was JPY 2.5 billion. When it comes to the Q2 and Q1, the suspension of the production operation that negatively affected on the HDD, but they have recovered in Q2 and also for the HDD suspension, have increased for nearline HDD and for the magnets have been rebounding, and the demand and now it was favorably. On a quarter-on-quarter basis, have grown by 31.6%. Now we have turning the business into profitable in Q2. On first half basis, and because of the decline in the total demand of HDD, and related to that, the total and the declining number of shipments of the HDD head, and which also were the sales, the drop of the HDD assembly.
Now we have for the both of the sales and the operating income of the deterioration they require later. On the other hand, the HDD suspension have been favorable for that business with a customer for the nearline HDD, and have increased the shipments, and we have secured the positive growth in both sales and the income. For the magnets and the steel and the automotive market, and still in the middle of full recovery, but now we are observing improvements. Now when it comes to the quarter-on-quarter basis performance Q2, as for the HDD head volume index have improved from 55 in Q1 to the 91 in Q2 and to recognize that significant increase in the sales and income.
For the HDD suspensions, now we have more orders from the major customers on the nearline HDD as well as the dual stage actuators and the smaller type of those are the more profitable the products have been pushed up the sales. For the magnets now and incremental business when automotive markets is now we have the more sales back to steel, we have the operating income. Next, the Energy Application Products. Sales was JPY 357.5 billion, operating income was JPY 79.6 billion, and it's 12.4% an increase in growth and year-on-year for the sales and 15.4% of operating income growth. Operating profit margin was 22.3%, and we observed improvements of profitability. When it comes to specifically for the Q2.
The secondary battery, the chargeable battery is still very favorable and at the same time, as the business for the power supply, they pushed up due to that mainly business for the semiconductor manufacturing business. The quarter-on-quarter basis that sales will increase by 27.9% and the operating income was pushed up by the 54.3%. There also is now in this first half for the secondary batteries, due to the declining of the penetration of the smartphone a bit slightly drop. On the other hand, PC and tablet business have more than offset this declining of the smartphones and substantially, and the residential ESS, and this is for the storage batteries for the residence and the e-bike. This application for the power cell products. The power cell products have just fully started.
All in all, we have the significant increase of the sales and income. The power supply have suffered some a little bit decline. This is on a quarter-on-quarter basis from Q1 for the secondary batteries. Now it's the peak season of smartphone pushed up that sales significantly. For the sales of PC and tablet have further pushed up an increase from Q1. Year-on-year basis, we have the increase on this sales and income for the power supply. We have that also increase in sales and profits due to that industrial equipment business favorable.
Next is the breakdown of the operating income changes of minus JPY 6.4 billion. Although sales of secondary batteries expanded, sales volume and Passive Components and HDD heads declined, leading to a decline of JPY 4.7 billion. JPY 10.7 billion decline came from sales price reduction. On the other hand, we have focused on rationalization, including cost reduction efforts to mitigate the negative effect on our earnings coming from COVID. This translated to a JPY 12.5 billion positive impact. At the same time, we are strengthening our corporate structure through JPY 1 billion of benefits from restructuring. M&A expenses related was decreased by JPY 500 million as SG&A development costs increased due to expansion of the secondary battery business and the acceptance of filter fees ended this year. Due to this, SG&A expenses increased by JPY 4.7 billion. There was a negative impact of JPY 300 million due to exchange rate fluctuations.
All in all, operating income declined by JPY 6.4 billion. Next is the consolidated results for Q2 of fiscal year March 2021. Net sales was JPY 381.7 billion, up 3.1% year-over-year. Operating income increased 0.2% to JPY 44 billion. Income before taxes was JPY 42.5 billion. Net income was JPY 29 billion. On a quarterly basis, both net sales and operating income reached a record high level. This shows the difference of the net sales and operating income by segment comparing Q1 and Q2 of this fiscal year. I have already explained about the Passive Components, et cetera, the four segments. I will only refer to businesses included in other that saw major changes. In the other segment, net sales was JPY 11.4 billion, a 25% decline quarter-on-quarter. Operating loss was JPY 2.8 billion. The loss increased by JPY 900 million against the previous quarter.
The major reason of the decline was the deterioration of the micro actuator business, which is a component of the camera module for smartphones. We are expanding our share mainly in high-end models of a major Chinese customer with unique camera module products. Sales have dropped sharply in Q2, and profitability is worsening.
This has the first half performance, and Yamanishi has explained about that. Thank you for your attention. Next, for the full year outlook, Mr. Ishiguro will explain.
Hello, I am Ishiguro. Thank you very much for your participation. From my side, I will explain about the full year projections for fiscal year March 2021. First, I will talk about how the market environment has changed in the past six months compared to our initial forecast, and how that has impacted our performance or our demand trend.
From a macroeconomic perspective on the global basis, it is trending slightly below the initially anticipated minus 4% growth. I think you are all aware of this. Going forward, we feel it necessary to closely watch the impact of the second and third wave of COVID. If we go by device, we anticipate the demand for ICT devices such as PCs, tablets, and smartphones will be slightly over our forecast. On the other hand, the automotive business is still below our initial forecast as demand recovery is slow. As for the demand for components, demand for devices is strong for the ICT market. Although we have seen some impact of the tightening of regulations against a major Chinese smartphone manufacturer, the world trend is favorable. As had been explained previously, looking at the demand for the automotive market, orders for parts have started to recover in Q2.
Demand recovery for the overall automobiles has not been strong, but demand for parts has started to recover. We will watch the trend carefully, as this may mean that the customers are replenishing their stock to prepare for the market recovery, or demand for future expectations may be included. As for the future outlook, we cannot completely dismiss the impact of the second and third wave of COVID and concerns about the inventory and demand based on expectations. However, based on the first half results, specifically the recovery in Q2 and the recent order trend, we have decided to conduct an upward revision for the full year outlook. We will continue to invest in businesses that can expect strong demand and growth, mainly in secondary batteries, we will increase our CapEx spending by 10% compared to initial plan to JPY 200 billion.
With the recovery of our performance, we are increasing our interim and year-end dividend. That will bring the dividend outlook for the year to JPY 180. Considering the demand trend for the second half based on these market predictions, I will explain the image of changes in sales for the third quarter. We anticipate the world sales to be the same level as Q2, including seasonality factors. It is at a high level. For Passive Components, we forecast a slight decline between 1%-4% compared to the second quarter. Although sales will increase for the automotive market and smartphones made in 5G, sales for 5G base stations will decline as it has peaked in the first half. In Sensor Application Products, orders for temperature and pressure sensors will continue to come for the automotive market.
In addition, we are anticipating orders to increase for Hall sensors, where recovery has been delayed. Demand is peaking for smartphone applications for TMR sensors. Sales will increase for MEMS microphone in the smartphone and IoT device applications. Despite the sales decline of MEMS motion sensor to a major Chinese client, sales will increase in other clients. Overall, we are forecasting an increase between 8%-11%. Going to Magnetic Application Products. In HDD heads business, although volume is going to grow for nearline HDD heads, HDD heads for consumer electronics, such as for PCs and game consoles, is going to decrease. For the overall head business, sales volume will go down by 4%. Sales of the HDD assembly business will go down as well. For the total Magnetic Application Products, we are forecasting a decline between 5%-8%.
As for the HDD suspension business, nearline suspensions are doing well, and we'll see a slight increase from the second quarter. We are anticipating sales to increase for magnets in line with the growth in demand for the automobiles. In the Energy Application Products, we are forecasting sales to peak in the third quarter as the demand for smartphones is going to peak and demand for PCs and tablets will be strong. Sales for high power products such as residential ESS is going well for power supply. For power supply, sales will be flat, of course, industrial machinery such as semiconductor production equipment. This will be flat for the second quarter. Overall sales change will be between 0% to +3%. Lastly, this is the forecast for this fiscal year.
Based on the demand environment and sales outlook that has been explained, we will make an upward revision of the initial forecast. Revised full year outlook will be as follows: net sales JPY 1.4 trillion, operating income JPY 110 billion, income before tax JPY 111 billion, and net income JPY 76 billion. We have initially announced that we will pay JPY 80 per dividend for both the interim and year-end, JPY 160 for the full year. However, based on the increase of earnings per share, we will increase the dividend by JPY 20 for the year, paying JPY 90 for the interim and year-end, and JPY 180 for the full year. The assumed exchange rate for the second half is JPY 105 to the dollar and JPY 154 to the euro. We will revise our CapEx upwards of JPY 20 billion- JPY 24 billion, mainly in the second where demand is growing. That is all from me. Thank you for your attention.