Hello, this is Yamanishi speaking. First of all, I'd like to thank you for your precious time despite your busy schedule. We're here to explain to you our consolidated results for the first quarter ended March 2018. Happy to have so many of you. Allow me to explain our earnings at the high level. First, I'd like to share some of the key points for the first quarter. We transferred the high-frequency components business in the fourth quarter, and it had a major impact on the corporate profit structure on this first quarter. Net sales was up 3.8%. Operating income was down to 5%, including one-time cost of JPY 3.5 billion for InvenSense acquisition. TDK was able to absorb the impact coming from this business transfer because we are able to expand our growth in the existing lines of business.
In the automotive segment, though the North American market slowed down a little bit, besides the China market and the European market, the Japan market particularly grew firmly, particularly in passive components sales grew. Furthermore, we had the increased demands in the semiconductor facilities and industrial robots, and we observed the recovery in the demands in the renewable energy as well as the white goods such as air conditioners. TDK was able to secure an overall growth of sales in the entire business centering around power products. The total demand for HDD turned out to be the way we had forecasted in the beginning of this fiscal year. The so-called non-captive HDD heads had a firm health sales performance. On top of that, due to the acquisition of Hutchinson, suspension volume increased, which helped us to absorb the decline in the captive HDD assemblies.
We had that, the numbers, in the previous fiscal year. However, this fiscal year, we are not having that. As for the rechargeable batteries, sales to our customers in North America grew nicely, and we sold more in the Chinese market due to the strong adoption of our solutions in a wide variety of customers. Sales in new applications such as drones and in gaming consoles continued to grow, resulting in an increase both in revenue and profit. In light of the transfer of high-frequency components business, in order to develop a new business portfolio, since the last fiscal year, TDK executed our M&A activities based upon the company growth strategy. In order to strengthen the sensor business, which is the major pillar for the growth strategy, we had worked on the acquisition of InvenSense. The acquisition was completed in May in the first quarter.
We launched a Sensor Systems Business Company, it gives me a great pleasure to report to you that we almost completed building the business platform for mid to long-term growth for the sensor business. Going forward, we will further work on the integration of sensor operations and will promote a speedy ramp-up. Sensing core technologies and materials technologies will be integrated with IC and package technologies. By doing so, TDK will try to establish a solid business foundation. Next, I will go through the highlights of the Q1 results. Net sales was JPY 289.5 billion, down JPY 10.7 billion or 3.8% year-on-year. Operating income was JPY 15.6 billion, including M&A one-time cost of JPY 3.5 billion, down JPY 900 million or 5.5% year-on-year. OP margin was down 0.5 points, becoming 5.4%. Income before income tax was JPY 16.9 billion, up JPY 500 million.
Net income for the quarter was JPY 11 billion, down JPY 1.4 billion or 11.3%. With these numbers, EPS became JPY 86.80. The average FX rate was JPY 111.16 to the U.S. dollar. The Japanese yen became cheaper by 2.6%, and JPY 122.02 to EUR, pushing up the yen by 0.3%. All in all, the FX impact was a positive JPY 4 billion in net sales, and operating income was up about JPY 1.1 billion. As for the FX sensitivity for operating income between the dollar and the yen, JPY 1 change had about JPY 1.2 billion impact on the annual basis. Between the JPY and EUR, due to the share change in the foreign currencies and profit caused by the transferred High Frequency Components business, its impact became JPY 200 million from the previous JPY 700 million. I'd like to now cover the segments and situations.
Starting from this fiscal year, we added a new reporting segment, Sensor Application Products. We have restructured the last year's actuals based upon this new segmentation. Passive Components net sales was JPY 103.5 billion, down 22.0% year-on-year. Operating income was JPY 10.2 billion, down 31.1% year-on-year. Again, on the JPY 103.5 billion, down 22%, operating income was JPY 10.2 billion, down 31.1%. Our OP margin became 9.9%. As for Ceramic Capacitors, with its share of more than 50% in the automotive industry, turned out to be in a rather strong position. The sales volume in white goods, such as in air conditioners, grew, giving us an increase both in revenue and profit. As for the Inductive Devices, due to the inventory and adjustments among the major smartphone manufacturers in China, went down in ICT business on a year-on-year basis.
Just like Ceramic Capacitors, thanks to the strong sales in automotive business, which was on high share in the net sales, and industrial robots and instrumentation devices, and the healthcare and the renewable energy cells overall grew, enabling us to maintain a high profit level. I'm so happy being able to report this to you. High Frequency Components had a major decline, both in revenue and profit, due to the business transfer. The existing businesses, our Wi-Fi and our module business are gone in this current year. In the current year, though we had it in the previous year, pushing down the net sales drastically, TDK was able to maintain its high profitability, centered around the ceramic filters. Piezoelectric Material Products grew its revenue and profit, thanks to the strong VCM business for the camera modules.
High Frequency Components business transfer impacts were not observed as much as JPY 30 billion in the Q1 sales, and about 20% decline in RP margin. We will continue to make our efforts to improve existing business profits. This is somewhat good news for us to be able to report to you. Sensor Application Products. This consists of temperature and pressure sensors, magnetic sensors, and MEMS sensors for information. Due to the change in the segmentation, actual sales was JPY 10.4 billion, and the operating income was negative JPY 1 billion. As for details, net sales was JPY 16.4 billion, up 57.7% year-on-year, and operating income was negative JPY 4.6 billion. Due to the completion of the InvenSense acquisition, the overall revenue was up JPY 6 billion. We are now calculating the goodwill for the deal.
In the first quarter, we allocated a depreciation on the inventories and assets, we paid the employees a compensation, also the retention cost. Putting them together, JPY 3.5 billion as the one-time expense. That is included in the P&L for the first quarter. Automotive share is high in the temperature and pressure sensors, magnetic sensors. Actually, this grew mainly in the Japanese market European market by as much as 13%. We started shipping TMR sensors for ICT market. With InvenSense being consolidated, MEMS sensors sales now accounts for 30% within the entire Sensor Application Products segmentation. ICT market accounts for 70% plus. Drones other industrial equipment now account for 30%, or a little bit less than 30%. OP margin was flat, if M&A cost JPY 3.5 billion is excluded.
Magnetic Application Products. The net sales over last year was revised up by JPY 5.1 billion, operating income was JPY 5.4 billion, operating income was down by JPY 2.4 billion due to the change of the segment mix the portfolio. Net sales in Q1 was JPY 80 billion, up by JPY 3.5 billion year-on-year, with operating incomes up by JPY 4.8 billion 17.7% from the year earlier. Operating income margin was 6.0%. The sales volumes of HDD have been almost flat year-on-year, although there was no assembly sales of HDD for the captive this year. The segment has turned more profitable due to consolidation of wafer-related facilities the cost reduction efforts, including HDD full-turnkey products. Suspension business increased net sales with sales volume growth due to the acquisition of Hutchinson.
Magnet business has steadily recovered with favorable businesses in the areas of wind power generation industrial robotics, as well as air conditioners. The net sales has been boosted, although still recognizing losses. That's now, the business has been reconstructed and recovered. Power supply business has been going very well with positive growth in both sales profits, as well as profit margins, because of favorable operating performance in the markets related to semiconductor manufacturing devices measurement equipment robotics. Film Application Products. Net sales was JPY 79.7 billion with operating income of JPY 12.7 billion. The net sales was up by 53.9% operating income was up 15.9%. It's a substantial growth for both year-on-year. Operating income margin has been maintained as high as 15.9%.
For silicon-on-sapphire business, for the North American customer, has been better than expected, including in the tablet products the business for the customer in China also expanded on the device products. Breaking into new markets such as drones the gaming industry have also contributed a dramatic increase of both revenues profits. Let me talk about the Q-on-Q basis the changes from the last Q4 this Q1, both the net sales operating income changes. As I explained earlier, by setting up the new business segments, so that's why for that all of this, the Q4, the sales net sales operating incomes had to recombine based on the new segment compositions. The Passive Components segments, their sales have declined by JPY 9.8 billion, 8.6% net decline.
The Ceramic Capacitors markets have been steady and the market of automotive applications. Also, the renewable energy markets and the industrial robotics sales have been increased, mainly for the aluminum electrolytic capacitors. The sales of Inductive Devices have been flat on a quarter-over-quarter basis from Q4, but excluding the impact of the currency, it has increased by 3%. Just like the Ceramic Capacitors, the business where the automotive market had been steady and the sales of industrial equipment had a dramatic increase. On the other hand, for the ICT, due to the inventory adjustments of a customer in China, sales have negatively affected them. All in all, it had been flat. Next, the sales of the other passive components declined by JPY 11.1 billion quarter-over-quarter, 27.3%. It is a dramatic decrease.
This in the last Q4, we have JPY 14 billion of the gains by the transfer of the high-frequency business, so excluding this one-time factor. The revenues have increased by 11% quarter-over-quarter. The camera module VCM has been favorable, particularly for the customer in China. Operating income of the passive components declined from Q4 by JPY 136.5 billion, a 93% quarter-over-quarter decline. Also, we have the gains of the business transfers recognized in Q4, and in total, we have JPY 134.6 billion. This gain was recognized in Q4 for the one-time profits. Excluding all these factors, actually on an output to output basis, it was a JPY 1.9 billion decline from JPY 12.1 billion in Q4.
The high frequency, we have JPY 2 billion of the high-frequency business segments recognized. Excluding this and also excluding the impact of currency, it was about a 12% increase of the profits. Next, the Sensor Application Products net sales have increased by JPY 4.9 billion and a 42.2% increase quarter-over-quarter. This is mainly due to the consolidation of InvenSense. The operating income declined by JPY 2.4 billion. Again, this is due to the JPY 3.5 billion one-time M&A cost due to the acquisition of InvenSense. Next, Magnetic Application Products segments, the sales have declined by JPY 5.9 billion from Q4, and this is a 9.6% decline of the net sales.
The sales of the recording devices was adversely affected. A slight decline of the HDD heads shipments and also the full-turnkey HDD shipments have declined, so that it would push down by JPY 6.3 billion, 10%. The other Magnetic Application Products have increased by JPY 400 million, a 1.7% increase. The industrial robots, measurement devices, and photo components have been favorable as well as the products of the other magnetic products and their power supplies. The operating income of the Magnetic Application Products has increased by JPY 12.1 billion from Q4. About JPY 10 billion of the cost for the restructuring of the business was included in Q4. Excluding this impact, it was about JPY 2 billion, the actual margin of increase of net sales and 1.7 times of the operating income.
The HDD head for the nearline, the head have increased a little bit, and also on the favorable change of the product mix and also the addition of that goodwill due to the Hutchinson acquisitions and also the improvements of the ferrite magnets and the power supplies all pushed up that profits. For the Film Application Products, the sales have increased by JPY 25.3 billion, 46.5% Q&Q. In business in North America, including the sales of the tablets, have pushed up more than we had expected, and at the same time, and we have the diversified expansion of business in China.
When it comes to operating income, the Film Application Products, it has increased by JPY 7.7 billion and from JPY 245 billion and JPY 12.7 billion due to the incremental top line, we could increase that marginal profits, and also we can have the dramatic increase due to the cost-reduction efforts. Next, let me talk about the breakdown of operating income changes. In total, all in all, now operating income pushed down by JPY 900 million and all in all. I'd like to talk about breakdown of this.
First of all, including that and for the changes in the sales due to that improvement in the utilization in the mix, it has pushed up by JPY 1.8 billion, it didn't have just absorb it and the different and missing of that and the profits due to that high frequency profits had been more than offset by this in the top-line growth. The JPY 14.9 billion is the minus, the push down effect for the sales price reductions. At the same time, and the JPY 12.5 billion is pushed up by that rationalizations and then the cost reductions and also that the restructuring efforts produce JPY 1.3 billion and also for the SG&A and JPY 800 million. There's all this pushed up and also more than offset that due to that negative impacts of the sales price reductions.
Also, before this JPY 3.5 billion, the one-time expenses and also the currency. We have an JPY 18 billion of the operating incomes, JPY 1.5 billion is better than the last year's JPY 16.5 billion. On top of that, they subtracted JPY 3.5 billion one-time expenses from M&A, also adding that exchange fluctuations in total. Minus JPY 900 million is the bottom line. When it comes to this, the one-time expenses of that M&A, this including the depreciation of the devalued inventory assets and the compensation and retention fees for, and the cost for the employees and the advisory costs. Next, let me talk about that net sales of Q2 this year.
We expect steady sales of passive components to the stable markets of automotives in Europe, China, and Japan, as well as industrial devices, therefore steady sales of capacitors, Inductive Devices and so forth. As for smartphones, the shipments of the components for the North American customer for their new devices will be on full swing in the near future. Also the inventory adjustment by the customer in China will run its course. Taking all this into consideration, we expect a 5%-7% increase of net sales. When it comes to Sensor Application Products, the segment will be supported by the steady sales of the temperature and the pressure sensors for automotive applications and the TMR sensors for ICT markets, as well as additional sales of the sensors offered by InvenSense. The growth forecast of sales is about 16%-18%.
As for Magnetic Application Products, the shipping index of HDD improved from 100 in Q1. Based on last year's Q1 100, in Q2, the index is 102. The sales volume of suspension will go up, and components for fine electron microscope will push up segment sales further, as well as magnetic products and the power supplies for industrial markets. Still, given the negative impact of the currency and a high appreciation of JPY, we expect the segment will almost be flat. For Film Application Products, we forecast a 7%-9% up for secondary battery because of the shipments for new devices of the North American customers will gain momentum and forward. Last of all, let me talk about our forecast of the full-year business performance.
Last time we announced that forecast in May, at that time, we did not include that M&A of InvenSense. This time, we have renewed and reviewed that forecast, including the acquisition of InvenSense. From the forecast we announced in May, we have revised upwardly by JPY 80 billion of net sales and JPY 80 billion operating income, and there's not any change in the JPY 80 billion operating income and the JPY 55 billion of net income. Let me talk about that incremental net sales. The last time, when we announced the forecast for a year, according to that, each of these items we announced in May.
First of all, for passive components, excluding the impact of the transfer business of high-frequency business, the last time, the forecast of 8%-11% of increase, this time, we revised it upwardly to the 12%-15% increase. When it comes to Sensor Application Products, the last time we have the increased margin will be 27%-30%, but including InvenSense, now we think that's about we will double it, 1.7 times to double. For the Magnetic Application Products, the last time we have the -6% to -9% was the forecast last time, this time we have revised it to the -3% to -6%. For the Film Application Products, the last time we had 8%-11% increase was the last forecast, this time we have revised upwardly to 25%-28% of increase.
All in all, in total now we have about JPY 80 billion of incremental and change of the forecast of the net sales. When it comes to operating income, the cost for the M&A for InvenSense, now it will be just only one time that it will be recognized as a cost. We have factored in the JPY 9 billion and the JPY 3.5 billion and included in Q1. Annually, we factored in JPY 9 billion. When it comes to that impact, but all this impact can be absorbed and offset by the favorable business. The average foreign exchange rate after Q4, and we still stayed the same as we have announced in May, JPY 100 to the dollar and JPY 118 to EUR.
For all the expenses, when it comes to R&D expenses, and this is with increase due to that consolidation of InvenSense. That's now we have increased by JPY 8 billion from the last time, and now it's JPY 94 billion. That's all my presentation. Thank you very much. Thank you.