Kuwahara, President. Thank you very much for participating in the financial results meeting for the second quarter of FY 2024. Now, I'd like to present the Q2 results. First, we changed the company name. As you are aware of, as of October the 1st, we changed the company name to Kanadevia. This is a combination of Japanese word "Kanaderu" and Latin word "Via." With the company name change, we have been intensifying branding activity. TV commercial is shown on the left top, and left bottom is a banner at the Koshien Stadium. We are intensifying these external public relations activities. Right bottom is a photo at the pre-launch event, a company activity 100 days before October the 1st, and right top is a photo of the company event on October the 1st.
Not only expanding the external recognition, but we also take this as a good opportunity to change the mindset of employees and the corporate culture reform, and intensify the branding activities. Let us move to financial information. Q2 results are shown on this slide. Q2 results are shown in column A. Order intake was JPY 284.8 billion, net sales were JPY 269.9 billion, operating income was JPY 3.1 billion, ordinary income was JPY 0.6 billion, and net income was minus JPY 1.1 billion. Year-on-year comparison is shown here. Orders and net sales were almost in line with the plan. Operating income was also in line after absorbing the deterioration of precision machinery and infrastructure, which was already reported in Q1. But we posted minus JPY 2.5 billion in non-operating income, and it was down by JPY 3.3 billion year on year.
Most of the non-operating income was a loss on investment by equity method. I refrain from disclosing the specific project name, but it is related to the power generation business of offshore wind power. We have been promoting a business development of offshore wind power, but considering the increase in project cost, we discontinued the project. For this, we incurred impairment loss on investment for the special purpose company and posted a loss of JPY 1.5 billion on investment by equity method. This affected heavily on ordinary income, with a decrease of JPY 1.3 billion year on year to JPY 0.6 billion, and partially due to a decrease in ordinary income, net profit decreased JPY 1.4 billion to minus JPY 1.1 billion.
Next, for the full year forecast in column B, order intake was revised upward from JPY 620 billion to JPY 680 billion, up by JPY 60 billion, considering the current progress of order intake and the probability of the pipeline. Net sales were also revised upward from JPY 570 billion to JPY 590 billion, considering the progress of project. Forecast of operating income and ordinary income remain unchanged. We plan to post an extraordinary income of JPY 2.9 billion in this fiscal year, as shown here. As disclosed on October 23rd, we had an insurance claim lawsuit over a shield machine project in the United States. Due to the settlement this time, we post JPY 2.9 billion of insurance income in extraordinary income. With this, net income is revised upward by JPY 2 billion, from JPY 16 billion to JPY 18 billion. This slide shows a breakdown of non-operating income.
Gain and loss on investment by equity method is shown as minus JPY 0.8 billion here, and it includes the impairment loss on offshore wind power, JPY 1.5 billion, as mentioned. Next, consolidated balance sheet. From the end of the previous fiscal year, total liabilities and net assets decreased by approximately JPY 50 billion to JPY 483.2 billion. A pattern of the last few years, the increase of accounts receivable at the end of the fiscal year and the recovery in Q1 and Q2 in the following year continues in this fiscal year as well. This is reflected in the decrease in operating assets. What is prominent in this fiscal year is an increase in tangible and intangible fixed assets and others. They are affected by M&A that was implemented in this June.
Shareholders' equity ratio was 33.3%, improved by 2.8 percentage points from the end of the previous fiscal year. Consolidated cash flow statement. Operating cash flow in the previous year, JPY 8.2 billion, had a special reason behind it. Last year, we abolished the notes payable, and that led to the low operating cash flow. Investing cash flow includes M&A that I mentioned before, and that resulted in an increase of approximately JPY 10 billion year on year. Financing cash flow reflects the progress of repayment of bank borrowings and bonds payable, with cash generated in operating cash flow. I'll explain segment information from this slide. Order intake in Q2 decreased JPY 61.9 billion year on year, and net sales increased JPY 37.8 billion. In the breakdown, there were both increase and decrease, but basically, the progress was in line.
I'll explain the changes in operating income and the full year forecast on the following slides. Operating income for the second quarter improved by JPY 2 billion from JPY 1.1 billion in the previous year to JPY 3.1 billion this year. The blue boxes on the right show the improvement in the environmental business, which totals JPY 5 billion. The pink boxes on the right show the JPY 2 billion deterioration in the machinery and infrastructure, and the JPY 1 billion deterioration in carbon neutral solutions. The JPY 5 billion improvement in the environmental segment is broken down into three areas. The first is a JPY 3 billion improvement in the environmental EPC. The main reason for this is that the cost increase related to biomass power generation that occurred in the previous fiscal year was eliminated in this current year.
The 1.7 billion JPY improvement in the Inova Group includes a revenue increase effect from the smooth progress of projects. The deterioration in machinery and infrastructure includes the precision machinery and infrastructure that I mentioned earlier in the first quarter report. I'll explain further about the carbon neutral solution in the slides that follows. This slide shows the overall environmental business segment. I'll explain the breakdown of this segment by separating the Inova Group from the rest of the segment. First, let's look at the groups centered on the main body of Kanadevia, excluding Inova. The key point to highlight here are the order intake and the sales. Those are progressing as expected. The situation is almost the same as we had expecting the second quarter and the full year forecast.
On the other hand, the change in biomass, which I mentioned earlier, is reflected here in terms of operating income. The minus JPY 800 million for the second quarter, an improvement of JPY 3.3 billion from the previous term. This is because the impact of biomass has been eliminated. I think you can see the same trend in the full year forecast, the effect of biomass. In addition, we have factored in continuous improvements to our business, and we have raised our forecast from the initial JPY 9.2 billion to JPY 10 billion. This slide shows the details I've just mentioned, so please refer to it later. Next, the situation with Inova Group. First of all, with regard to the amount of order intake, we have increased the forecast for the current period from JPY 279 billion to JPY 349 billion, an increase of JPY 70 billion.
Looking at the current status of the pipeline, the probability has increased significantly. We have also raised our forecast due to the effect of foreign exchange rates. With regard to net sales and operating income, we have revised our forecast based on the fact that the project is generally progressing smoothly. In addition, the effects of the M&A we carried out this fiscal year are also included in the net sales and operating income. I'd like you to refer to this slide later for breakdown information. Machinery and infrastructure. What I wanted to highlight here is the deterioration in infrastructure that I mentioned earlier. The deterioration in operating income in the second quarter was JPY two billion. With regard to deterioration in the precision machinery and infrastructure business, we believe that we will have measures to respond to the situation by the end of the second quarter.
We expect to be able to recover from the impact of this, and our full-year forecast is JPY 900 million compared to our initial forecast. This is a decrease of JPY 1.5 billion, and we are forecasting a decrease in profits. Another point to consider in the machinery and infrastructure segment is the precision machinery business's order intake. The second bar from the top in the bar graph of order intake from the previous fiscal year shows the precision machinery business, and the fact that the orders were sluggish in the previous fiscal year is linked to the deterioration in sales in this current fiscal year. Therefore, I think the major issue for the current year and the next year is whether we can secure orders for the precision machinery segment in this current period. I'd like you to refer to this slide for your reference later.
Next, carbon neutral solution. Once again, the key point in this segment is engines. Order intake and the full year forecast for the segment as a whole. We had initially forecasted order intake of JPY 63.5 billion, but this has now been reduced by JPY 10 billion to JPY 53.5 billion. This JPY 10 billion is all due to engines. In the wake of recent inappropriate conduct, we are currently limiting our order-taking activities for engine units to a very limited extent. This is one of the reasons why we have reduced our order intake forecast by JPY 10 billion. Also, in terms of operating income, we have revised our forecast down from JPY 1.3 billion to JPY 0.8 billion for the segment. This is also basically due to the impact of engine business.
In light of the recent inappropriate conduct, inspections are taking longer than before. Furthermore, we are also reviewing our process at the same time. We have factored in such items in the deterioration of the engine business in our current forecast. Please do refer to the breakdown of carbon neutral solutions later on too. Now, the status of our order backlogs. The order backlogs at the end of September this year was JPY 1.61 trillion. I think you can see that it is steadily expanding. The lower chart shows a breakdown of this JPY 1.61 trillion by sales recognition year. In the second half of the current fiscal year, we expect to generate about JPY 300 billion, to be exact, JPY 297.9 billion out of this order backlog. The next slide shows our key financial figures. I'd like you to refer to that later on.
Now, I'd like to move on to the management and business information section. The first slide shows a breakdown of major orders received in the current period. Inova has received orders for long-term O&M in Abu Dhabi and for a project in Schwandorf, Germany. Kanadevia has received orders for a project in Kyrgyzstan and for a project to construct hydraulic gates in the Philippines. The next slide shows the details of our main environmental projects, including the project schedule. The two biomass-related projects I mentioned earlier, Tokushima Tsuda, second from the top, and third from the top, Kamisu Biomass, were completed in the previous fiscal year, but they were cost increases, and regarding other biomass projects, we have Fukuyama Biomass in the middle of this table, and this is a biomass project that is currently under construction.
We are making use of all of the experiences and learning we gained from Tokushima and Kamisu projects in the construction of this project, and at the moment, it is progressing smoothly. From this time, we have also included the details of the retrofit work. I hope you will refer to these information as well. This is a list of the main projects of the Inova Group. Of the orders received this period, which I mentioned earlier, Abu Dhabi is at the bottom of the EPC section, and Schwandorf is at the bottom of the retrofit section.
Next, I would like to talk about the goals and the progress of the midterm management plan. The top half shows the order intake, net sales, and operating income. The target value for the final year of the midterm plan for FY 2025 are JPY 600 billion in order, JPY 560 billion in sales, and JPY 28 billion in operating income. But as you can see from FY 2023 and FY 2024, we have already reached these targets in terms of order intake and sales.
The bottom half shows the long-term trends in net sales and operating income, and at this point, I would say that we are progressing smoothly toward the Forward 25. Next, I would like to highlight the key points by business. First, let me explain the status of our business excluding the Inova Group. In this slide, I would like to highlight the status of waste-to-energy EPC market in Japan, as shown in the top left. The order volume for FY 2023 was 2,420 tons, which remained at a very low level.
Although it will recover to 2,700 tons in FY 2024, it is still at a low level. However, we expect it to recover to 4,000 tons and 4,700 tons from next fiscal year onwards. As for the Japanese market for waste-to-energy EPC market, we believe that replacement demand due to the aging will remain solid, and we expect the market to remain stable for the time being. Next, allow me to talk about the status of the Inova Group's environmental business. The top half shows information on market share and market size in the European and Middle Eastern markets. In 2020, Inova's share, shown in dark blue, was 58.1%. Since then, it has been around 50%, and we have been able to stably secure a very high share. The market volume is shown below the pie charts.
In 2023, it was 4,714 tons, which is a significant decrease compared to the previous year. However, we believe that this is a temporary phenomenon. There were no large-scale projects in 2023, the kind of large projects we had in 2020, 2021, and 2022. Considering that markets in the Middle East, Saudi Arabia, and others will be emerging from 2024 onwards, we believe that this market size will be sustainable at a high level. One more thing I would like to touch on in the service business on this slide. We have implemented this with the Denmark after-sales service company that I mentioned earlier. In addition, we also purchased shares in the French service company, SMI , in which we previously held a 40% stake. As of October the 1st, we have increased our stake to 60%, and this week, we have made it a consolidated subsidiary.
Next is the machinery and infrastructure business. First, please refer to the chart of order volume in the press machine market. In 2020, demand suddenly slumped due to the COVID-19 pandemic. But since then, the market has been stable, with orders at 140 billion JPY from 2021 onwards. As a result, our press business has also been relatively stable. The photo on the upper right is on Sanoyas Kanadevia, which we established in October last year. We are considering responding to the hydraulic gates and ODA projects, which are expected to grow in demand in the Southeast Asian market. Most recently, we have secured a project in Pasig-Marikina in the Philippines. Next is a carbon neutral solution business. First of all, engine. In this regard, we will devote all our efforts to restoring trust as a way to correct the inappropriate conduct.
The top left shows the chart of the Japanese government's offshore wind power installation targets. We are also focusing on floating offshore, and as shown in the bottom right, we applied for and were selected for the NEDO floating offshore wind power demonstration project. The photo in the upper right shows our participation in the Aichi Prefecture project. This slide is reference information for the expansion of AOM business in the Inova Group. Please refer to the information on the left for the M&A mentioned in the previous slide. The map on the right shows the service basis of Inova and its service network we have acquired this time. If you look at this, you will understand that regional complementary functions can be realized, and we can pursue such synergy effects. Also, the bottom left shows a list of M&A that has been carried out to expand AOM business.
In addition, the bottom right is a chart showing the expansion of AOM business. The bar graph shows the expansion of sales from AOM businesses, and the proportion of AOM businesses in the total market has actually expanded to 29%, which shows that the business competition is actually improving. The next slide shows completed projects. On the left is Dubai. This is one of the largest projects in the world. It was completed in August this year. On the right is a photo of the completed Slough project in the U.K., which shows the construction was actually carried out in a very narrow space. Inova was able to complete the project three months ahead of the schedule. We have also received orders for long-term management of this project. Finally, I would like to introduce our initiatives to realize a circular economy.
COP29 will be held in Baku, Azerbaijan, from November 11th to 22nd this year, and we plan to participate in it. We plan to exhibit at the Japan Pavilion of the Ministry of the Environment and to take presentations at the related seminars. In addition, we declared our support for the TNFD in December last year and published our TNFD report in October this year. We consider this our engagement in pioneering initiatives in the industry. If you have the opportunity, please refer to the report. On the last page, we have provided a collection of links, so we hope you will use them as reference information. This concludes the explanation of the presentation materials.
First question is from Mr. Noguchi of SBI Securities. Over to you.
Do you hear me?
Yes.
I'm Noguchi of SBI Securities. Thank you very much. Two questions per person. First, let me ask about page 15. I'd like to ask about environment business overseas Inova Group's AOM. Environment business and Inova Group is progressing steadily, but when I refer to AOM, compared to the initial forecast, order intake and net sales increased, but operating income decreased. I'd like to know the background. Presumably, I think it was affected by expenses related to M&A or depreciation of goodwill. If that is the case, let me know the one-off cost. And for the next fiscal year, how will the profitability of AOM develop? I'd appreciate it if you can comment on this.
I may need to apologize concerning this question because we revised the allocation of G&A expenses this year. Its allocation for AOM increased this time, though previously it was allocated to EPC, and we had optimization. Therefore, though there was no impact on Inova Group as a whole, there were moves between EPC and AOM. This is also related to the M&A that you mentioned, along with a series of M&A that we conducted.
Naturally, G&A expenses expanded, but they were not properly allocated, and we revised the allocation. Given the substantial increase in sales this time, we optimized the allocation of G&A expenses, and that resulted in this number. Going forward, in the next fiscal year onward, the baseline will be the profitability of this year. Of course, we'll strive to improve profitability along with sales growth. But please understand that the baseline is at that of this fiscal year.
Understood. Thank you. Second, let me ask about the marine engine in carbon neutral solution business. Regarding that development of this incident, the penalty and expenses will be decided through the External Investigation Committee, but please tell me how I should see going forward.
There are two points of questions in the next year onward. First, it is about the order intake of marine engines. Do you project a decrease or reduction in orders? But what about the other Japanese engine makers that have been doing similar things? I do not think orders decrease is likely to happen. The second question is about the development of a next-generation marine engine for hydrogen and ammonia that you and other peers are involved in. If orders and sales are flat, then is the loss related to the next-generation engine development going to be expanded to billions, or will it remain mostly unchanged at less than one billion yen? With the incident, how will order intake develop? Though it is not related to the incident, but tell us about the cost for engine development as much as we can.
Talking about the impact on order intake, I said before that currently we are controlling order-taking activities for engine. On the other hand, Japanese shipbuilding market continues to be robust, and as shipbuilders have long-term order backlogs, demand for engines affirms. So I think that expectations for our company do not decline. That said, the investigation into the inappropriate conduct is not complete yet, so we'll control order intake and work on the order backlog firmly first. Having said that, considering the current market environment of shipbuilders, we'd like to normalize operations as soon as possible to meet the expectations.
But we'll not be able to continue the conventional ways of inspections and processing, so we may not be able to achieve the volume that was expected before. So I don't think the current conditions will continue, but I think we need to lower the level of orders from our previous expectations in a business plan. For your second question about the development of the next-generation engine, it will be the similar tone, but as our top priority is to take corrective measures against this incident, and this priority will be simply down. Therefore, I think the delay of the development schedule is, in a way, unavoidable, and we'd like to work to improve the situation first.
Understood. Follow-up question, please. When orders and sales contract, fixed cost burden will be heavier, but we'll be able to manage this with reallocation of people in the carbon neutral solution business or within the company? This year, you will incur operating loss of JPY 0.7 billion, but do you think it is unlikely to increase to, say, JPY 2 billion or JPY 3 billion next year onward? Is the color of my assumption correct?
I'd like to refrain from commenting in terms of color with specific numbers this time because we have negotiations with customers regarding future orders. So very sorry, but I'd like to give you colors in other occasions.
Understood. Sorry for asking an odd question. Thank you very much. That's all from me.
Thank you. We'd like to take questions from analysts first this time. Mr. Taninaka of SMBC Nikko Securities, over to you.
This is Taninaka of SMBC Nikko Securities. Do you hear me?
Yes.
Thank you. I'd like to ask about the prospects of the engine business. If my calculation is correct, operating income of engine business in the first half was minus JPY 0.7 billion, and the three-year forecast is also minus JPY 0.7 billion, with no loss incurred in the second half in your assumption. But listening to you now about the inspection cost and the controlled order intake, I felt loss might be posted farther. So would you tell us the background to come back to the break-even? Thank you.
Your observation for operating income is correct. Q2 results were minus JPY 0.7 billion, and the three-year forecast is also minus JPY 0.7 billion. And the full-year initial forecast of sales was JPY 27 billion this time, and it remains at JPY 27 billion with no revision. This is based on the orders already contracted, and sales for this year are based on this. Thus, basically, we think we can maintain the sales. Additionally, fortunately, after-sales service has been progressing better than the plan now, and that will be the additional boost. In the first half, there was confusion with the incident, but gradually, it has been calming down. And as of now, we have not revised the three-year forecast of JPY 0.7 billion, but we cannot deny the risk included and concerns regarding this, as you were concerned.
As a follow-up question, how should we receive your message of risk included? Do you mean that the risk is related to the prospect of inappropriate conduct, or is it the risk that profit may deteriorate with increased inspection cost despite the increased sales? How should I take it?
I said before that the inspection cost and the process was reviewed, and currently, we are in the process of normalization. It will be good if we can continue this normalization trend, but it is possible that the inspection cost may last longer than our current estimate. It may happen. That is the implication of the risk included in my comment.
Thank you. Another question is about biomass power generation trouble in Q1, and I think it was under negotiation over who will bear the cost between you or a customer. Would you update this project, please? Thank you.
This is on page 24, second from the top, a biomass project in Tokushima Tsuda. As you said, the trouble happened, and remedial construction is ongoing, and we'll be able to resume operation by the end of December.
As for the cost sharing with the customer, we are negotiating it with the customer, so let me refrain from making specific comments. Currently, we are talking with the customer.
Understood. Thank you. That's all from me.
Thank you. Now, from Mitsubishi UFJ Trust and Banking Corporation, Mr. Shitamori, please.
This is Shitamori of Mitsubishi UFJ Trust and Banking Corporation. Can you hear me? Yes, I can hear you. Thank you. I have two questions as well. First, I apologize for repeating the same topic, but I would like to confirm something about the engines. Will the cost of the inspection process review that was carried out this time be limited to this fiscal year, or will the revised approach be continuing in the new fiscal year and beyond so that the company will continue to operate in a higher cost situation? That's what I wanted to confirm. This is my first question, please.
I'm sorry to say that I will not be able to give you a definitive answer. As I mentioned, there's no doubt that the inspection and responses, the countermeasures we are currently carrying out, are bringing our businesses back to normal. However, whether this is confirmed or not, that's another matter. When we take an optimistic view, this trend will continue, and we will return to normal operations. Then we'll be able to return to normal operations from the next term onwards. But I understand that we are not able to say anything definitive about this until we see how things develop for a while longer.
I see. I understand. So this review is not of production lines, and there was a cost incurred by equipment or CapEx or something like that, but rather, you are reviewing the inspection procedures that may take a little longer. Correct?
Yes, you're absolutely right.
Thank you. My second question. You mentioned that you recorded a loss due to the abandonment of the offshore wind power project in the income from equity method affiliates. Will this affect your company's future offshore wind power or wind power initiatives as a whole, or is this loss just a one-off cause and will not affect your company's future offshore wind power businesses? Will your approach to the business remain unchanged? Could you please tell us about the approach of wind power business in the future based on this project, please? Yes. Thank you.
Our base policy for offshore wind power generation project is to focus on providing basic structures. In that sense, we do not currently envision to proceed with the project itself as a business developer. Therefore, I think we can say that the possibility of such investment losses occurring in the future is extremely low. As shown in the slide currently displayed, we are targeting the manufacture of floating offshore facilities, such as shown on this slide. Our target is to manufacture super-large floating structures. In addition, we also want to focus on our own technology, the suction bucket for a fixed bottom type. Therefore, our base policy for the offshore wind power business is to focus on the manufacture of basic foundation structures for both the fixed bottom type and the floating type.
I understand. So even if you do not participate in the project, there are no issues, problems with receiving orders for delivery of such equipment, right? Is it correct to understand that there is no need to consider this in conjunction with the project?
That's right. I think one of the reasons is that there are very few companies that possess the technology to manufacture these floating structures. In particular, the manufacture of floating structures requires facilities such as large-sized docks. It's quite clear that our company alone does not have the facility or capacity to achieve the government's targets shown in this chart. And on this slide, from this perspective, I think it's safe to say that if this plan itself is to be realized, the government's plan, the probability of a company receiving orders is extremely high.
I understand very well. Thank you very much. That's all from my questions.
Then, Mr. Noguchi of SBI, are you raising your hand? Please go ahead.
Hello. Hello. Can you hear me?
Yes, we can. Please go ahead.
Thank you very much for taking my second round of questions. I also have two more questions. Please forgive me for asking a few rather difficult questions, but the mainstay of your environmental business is doing so well. So I have a question about machinery and infrastructure. Hydraulic gate business. I think there was an incident in which additional costs were incurred for Japan's hydraulic gate construction project in the first quarter. It's rather bad timing. In spite of this, your company has taken on another hydraulic gate project in the Philippines in the first half of the year. In other words, while there are increases in the costs on hand from Japan, you are also increasing orders overseas, which are probably more difficult.
They don't seem to really make sense of how should we view this. Also, looking at this infrastructure business from a slightly longer-term perspective, I think it's a difficult position in terms of target management system and ROIC standards for each project, each reason. But how much leeway are you giving to this project at present? Perhaps you are taking on this project in the Philippines because if you do not take on the challenge, you will end up with no trial and no errors. So you are taking on this project with this intention of perhaps making adjustments. Please tell us more about this business.
Thank you very much for your questions. As I mentioned earlier, the cost increase in the infrastructure division that occurred in the first quarter has already been dealt with, and the work in question has already been delivered. As for the confusion that occurred this time, I understand that it was due to a number of factors, including errors in the planning process, securing the labor, and getting corporations that should have been provided at the time. Therefore, we were forced to rely on outsourcing.
Basically, the hydraulic gates business themselves are a mature business model, and we do not think there are any major technical issues. Therefore, we think it is possible to prevent similar problems from occurring in the future. In addition, we plan to move forward with this policy by utilizing facilities and capabilities of Sanoyas Kanadevia, which we introduced in the slide. Specifically, the Sakai plant, which I mentioned earlier, will be able to make the use of the capabilities of Sanoyas Kanadevia to supplement the limitations of the Sakai plant's own capabilities.
I understand that your other question is about the future potential of the infrastructure business. In the infrastructure business for hydraulic gates business, as you can see in this slide, in the bottom right, there's an increase in the replacement of dams and other hydraulic power plants in Japan, driven by the needs to increase national resilience and carbon-neutral solutions. There are very few large-scale hydraulic gate manufacturers in Japan, and given this situation, we think that the market for hydraulic gates is likely to remain strong in the future. However, regarding the other pillar of our business, bridges business, we recognize that one of the management issues that we face now is how to survive in this mature market with around 20 competitors, and we are currently in the midst of discussions internally on this topic.
I understand. Thank you very much for your detailed answer. One more question. My last question. This is a more positive question. As you mentioned at the beginning, your company changed its name in the second half of the year, and you've been running a lot of commercials on TVs and on YouTube. And this year, your core business is doing well with increased sales and profit, including operating income.
And in addition, in late October, you received a settlement payment of approximately JPY 3 billion from STP for a boring machine. What I wanted to ask is, I think it would be nice to have a commemorative dividend pay to make the at the time of a change of your company name. Is there any room for that? I'm sorry for this rather strange question. If you are considering increasing a commemorative dividend pay to coincide with the change of your company name, please let us know. Thank you.
Thank you for your question. At the moment, we are not considering increasing paying the commemorative dividend. We believe that the biggest management issue for our company now is to take measures against the compliance issues that originated in marine engines, as I mentioned in the beginning. I think what is expected of us is to show everyone a sustainable growth trajectory from the next fiscal year onwards and more specifically in the next midterm management plan. So I think we should be able to show this in our dividend policy as well. I hope you understand.
Very clear. Thank you very much. That's all from me.
Thank you very much. Now, I'd like to take the next question.
Thank you very much for waiting. From the Asahi Shimbun, Mr. Sei, please.
Hello. My name is Sei of the Asahi Shimbun. Can you hear me?
Yes, we can hear you. Please go ahead.
My first question is about the misconduct that came to light just before the company name change in October. I think the timing of this misconduct probably caused some issues, problems for the company's promotion and marketing activities under the new company name. How do you view this at present? Did you have to cancel any of your promotional activities because of that? Please tell us how much of an impact that this misconduct has had at this time.
Thank you very much for your question. The occurrence of this recent inappropriate conduct has not affected any of the branding activities we had originally planned. We are steadily carrying out all the activities we had planned from the beginning. However, the fact that this incident occurred before the company name change is truly extremely regrettable.
I fear that some of the effects that we had originally expected from our branding activities have been diminished. Again, I hope that we can all share these lessons with all of our staff and demonstrate it through our actions. By doing so, we can promote our appeal to the outside world through our branding activities.
Thank you. The second question is about how the management is going to take its responsibility. The investigation by the Special Investigation Committee is still going on. Is the company will make its decision and announcement after the investigation is done? I would like to ask about the management's responsibility in general, including the timing, the contents, and the scope. This has been going on for a long period of time. The scope of management responsibility may be broader than just the current management. So please tell me how I should look at this point.
In that case, I think it is very important whether the management knew about this kind of fraud, the fraud on the fields. I appreciate if you could respond to these points. Yes, regarding the contents of the questions, I think that your concerns are well-founded. However, the investigation by the Special Investigation Committee is going on. So regarding the contents of the questions I have received from you, I think that most of the matters that need to be judged based upon the results of the investigation. So if I may, I would like to refrain from commenting on the target, timing, and other such matters at this point of time. I thank you indeed for your kind understanding.
Well, since the investigation is still going on, you simply cannot answer, right? Then, would it be possible for you, Mr. Kuwahara, to tell us how you feel about yourself as for this fraud problem on the fields? I wonder if you could share your personal perspectives. Would that be difficult?
Well, including that the investigation by the Special Investigation Committee is still going on, so I would rather refrain from making any comments here. I would appreciate your understanding.
Understood. Thank you. That's all.
Yes, thank you.
I would like to move on to the next question. I'm sorry to have kept you waiting. Mr. Tsugane from Nikkei, please.
Yes, this is Tsugane from Nikkei. Thank you. Yes, please go ahead. I am sorry to keep asking you again the same question, but let me first ask about an engine fraud. I understand that the Special Investigation Committee is currently investigating, so I appreciate if you could share your thoughts to the extent possible. At this point of time, could you please tell us what the background was that led to this happening, and by when you would like to have your conclusion on this investigation, and also whether there are any moves to seek compensation due to the delays in delivery?
I apologize for repeating my answer to your question. I would like to refrain from commenting on the background of this incident and others as it may affect the investigation by the Special Investigation Committee. I would also like to refrain from commenting on future plans or timeline for the investigation at this time. I appreciate if you could understand this.
Is it correct to understand that there are no movements asking for compensation regarding damages at this point of time? I think it will affect your financial results.
Well, it is stated in the financial results summary and in others, but as soon as the impact on the performance is determined, we will promptly announce it. In other words, I would like you to understand that such an event has not occurred at this point of time.
Understood. In that case, there is a slight increase in expenses, as you mentioned earlier, but that is already included at this time.
Yes, what you said is correct.
Understood. Sorry, I have another question. The company name was changed to Kanadevia on October the 1st, and I believe you have been focusing on order and activities and recruitment and activities. I would like to inquire here, what kind of reactions are you receiving internally and externally? The old name, Hitachi Zosen, and its brand, which had a rather broad degree of recognition. I'd like to know what kind of impact and reaction are there from inside and outside the company. What do you yourself think as president, and what kind of aspirations do you have as president?
Yes, thank you. I think it is too early to evaluate the effect of the name change on orders or recruitment and activities at this point of time. Naturally, I hope that there will be no impact on order activities or that it will have a positive effect, and that as a new company, it will have a fresh image and attract many talented people. But I think it is too early for me to say anything at this point of time. On the other hand, we have collected feedback from within the company through the internal events I mentioned earlier. Looking at the comments, I am very encouraged to see there were lots of extremely positive feedbacks.
For example, we have received very positive feedback, such as strong messages from the management that the company will change in the future. Or that feelings attached to the company name have been well conveyed to the employees at the factories or the branch offices. So actually, I am very encouraged by these positive feedbacks, and we will continue to make such efforts in the future without losing this momentum. We'll further accelerate this momentum. Well, I think it is even more important for the management to send out those messages.
I understand. Thank you indeed very much.
Thank you. Yes. Are there any other questions?
There seems to be no one for questions. Yes. Nikkan Kogyo Shimbun, Ms. Ike, please.
Can you hear me?
Yes, please go ahead.
Yes, I'm Ike from Nikkan Kogyo Shimbun. My first question is about the wind power generation business. I understand that one offshore wind project has been postponed and that it has been abandoned in the non-operating income and expenses section. I believe that you previously announced that you would aim for sales of JPY 50 billion in the wind power generation business in fiscal year 2030. I'd like to know how this management target will change and what the impact will be due to the abandonment of this project. Also, I'd like to confirm that the only offshore wind power generation project that is progressing well is this one off the coast of Aichi Prefecture. This is my first question.
Yes, regarding the first question, it is true that by abandoning this project, the offshore wind power generation project that was expected in the near future has been lost, and the time for it to be realized has become further away. In that sense, I think that it has become necessary to revise the numerical target. As for your second question, as far as we are concerned, it is only this Aichi offshore project. We have been given a tentative approval to another NEDO floating offshore wind power generation demonstration project, but this is another group's team's activities. So this is a project on the Japan Sea coast. So this is the current situation.
Thank you. Is it correct that it is difficult to give specific details at this point in time about things like revisions to management goals and sales targets?
Yes, I have to say what you said is right.
Yes, understood it. Thank you. My second question is, in that, you said that you were considering strengthening your internal control system due to the data fraud in engines. More recently, you established a new quality assurance unit on October the 1st. So I understand that you are strengthening that area. That is also in marine engines and actually in IMEX, which were involved in the data fraud. So now I would like to ask you to explain in a little more detail how you plan to control quality assurance for the group companies as well as your new evaluation points.
Yes, thank you for your question. As you pointed out, we established a quality assurance unit on October the 1st. Previously, quality assurance departments were distributed to each business headquarters or the factories, but now we have a quality assurance unit directly under the president, and the quality assurance departments of each business division or the factories are linked under this unit. We have reorganized the organization to ensure independence. This is going to be the very first step, but we have also received requests from our board of directors, especially from outside directors and auditors, to strengthen our internal control system, so the company, as well as the president, actually are well aware of the need for strengthening, including those situations and requests, so we are currently considering this while reporting to the board of directors.
Regarding the measures for affiliated companies that you asked about in depth in your question, at present, the quality assurance unit only covers Kanadevia itself, but of course, we are considering deepening our cooperation with affiliated companies as well going forward. In order to turn this into more concrete actions, I think it is important to rely on the leadership of the quality assurance unit in the future. I have already stated that I will fully support this, and I am prepared to strengthen this activity group-wide. At this stage, this is all I can say, but I would like to continue to consider it so that I can show you something that is more in-depth or more concrete. So I appreciate for your kind patience.
Understood. Thank you indeed.
Yes, thank you very much. We are almost running out of time, so now I'd like to end our Q&A session. Finally, I would like to have Kuwahara to say a few words.
Yes, thank you indeed for your kind attention for our second quarter financial results briefing today. We received many opinions, questions, and comments about your concerns. We would like to thank you for all of them. Some of the questions we received, my apologies again that we are not able to respond fully and clearly, but we will continue to make our efforts so that we can provide you with a clear picture of our future course of actions or measures as soon as possible. We'd like to actually ask for your kind patience and your continued support. Thank you indeed for your time today.
This concludes the financial results briefing. Thank you for your attending.