Good afternoon. My name is Kozawa. Nice to meet you all. Let me give you the explanation on the Q2 FY 2021 financial result based upon the PowerPoint. As usual, we have already released the materials, therefore I am not going to details of the material. First of all, general overview of the financial result. Please refer to page 4 and 5 for the table of numbers. Order intake was up year-on-year by 10% becoming JPY 1,534.1 billion following Q1. Plant and infrastructure, logistics, thermal, and drive system business are growing. Sales and profits at all levels were higher than in the same period of the previous year, showing the recovery trend. Profit from business activities was positive in all four segments.
The status of the balance sheet is explained on page six and seven. Total assets have increased since the end of the previous year due to the increase in working capital. This is normal for our capital and is in line with our expectation. The level of interest-bearing debt, various indicators, stay in the range of the plan set in the beginning of the year. At page eight is cash flow. Operating cash flow is negative as it was in the previous year due to the large expenditure and advances received in the past. The effect of COVID-19 is dissipating and there has been a significant improvement year-on-year. There has also been a significant reduction in the investment cash flow from commercial aircraft, including CRJ.
In the end of the first half of the year, free cash flow is in line with the assumption in annual forecast or slight improvement in same. The cash inflow from the sale of shares contributed to the improvement. Page 9 shows order intake by segments. A table of figures is on slide 12. Please refer to those figures. Order intake rose significantly from the previous year in Plant & Infrastructure Systems and Logistics, Thermal & Drive Systems segments. The main reason includes increase in steelmaking machinery and environmental equipment in Plant & Infrastructure and logistic equipment and refrigeration equipment in Logistics, Thermal & Drive Systems. Due to the absence of launch vehicle launches this fiscal year and decline in the shipment of commercial aircraft of segment of Aero Structures Tier 1 business, revenue fell in Aircraft, Defense and Space segment.
Sales in other segments increased with the recovery from a significant drop in the same period last year. Breakdown of the business profit itself is shown on page 11. All of the business segments return to profitability and profits increase. Page 20 onwards, complementary material is mentioned. Order intake, revenue, profit from business activities are summarized on slide 12.
Slide 13 explains the factors behind the increase and decrease in business profit compared to the same period last year. The leftmost bar graph shows a loss of JPY 58.6 billion for the second quarter of fiscal year. However, if the loss related to SpaceJet is excluded, the profit was 23.6 billion yen. Profit from business activities for the second quarter of fiscal year 2021 is JPY 26.2 billion, and the reason for the difference is shown here. Subtraction of the fiscal year 2020 asset management upside refers to the deduction of about JPY 30 billion from the gain on the sale of land at the former site of the Iwatsuka plant in Nagoya in the second quarter of last year.
The -JPY 11 billion in pink to the right shows the impact of the decline in profits caused by soaring materials and transportation costs and loss of production due to semiconductor shortage and other factors since the beginning of the current fiscal year. The effect of the recovery from COVID is mainly seen in the two figures to the right, JPY 20 billion and JPY 6 billion. The impact of COVID on medium lot products and aircraft related products will be explained in the next page. The foreign exchange impact is the effect of the weaker yen against both the U.S. dollar and euro compared to the same period last year. Other factors include improved construction profitability and fixed cost reductions cost. In today's timely disclosure, we announced the sale of our land in Kawasaki City.
The gain on the sale of this land will be recorded in the third quarter and is not included in the financial results for this fiscal year. Please turn to page 14. This slide briefly summarizes the situation in the medium lot products business and the commercial aircraft related business, which are directly and significantly affected by COVID-19. The medium lot products and aero engines businesses are generally recovering as expected at the beginning of the fiscal year, but the pace of recovery seems to have slowed somewhat due to the impact of reduced production of automobiles and disruptions in the supply chain. In addition, the commercial aircraft Tier 1, which is the business of supplying airframes mainly to Boeing, was even lower than at the same period last year, when it fell significantly compared to the pre-COVID-19 period.
Due to the prolonged production adjustment at the aircraft OEM, the total for the fiscal year is also expected to be lower than the forecast at the beginning of the fiscal year. Slide 15 shows the summary of the results for the second quarter of this year. In a nutshell, although some negative factors appeared in some businesses in the second quarter, there are some businesses that are on the improving trend. As a whole, we are making progress toward achieving the fiscal year forecast. Slide 16 to 18 show the business outlook for fiscal 2021. Based on the progress made up to the second quarter and the forecast for further bookings, we have revised upward our profit from business activities and net income forecast by JPY 10 billion each for the figures announced in May.
There is no change in each business segment, and we have revised upward common and other businesses by JPY 10 billion. Looking at the results by segment, Energy's profit progress in the first half looks low, but this is due to the temporary impact of the provision of reserves for some construction projects in the second quarter. Energy's profit in the second half of the last year was JPY 140 billion, or about JPY 100 billion after excluding special factors, and we believe that we can achieve the current forecast. This concludes my presentation on the financial results for the first quarter of FY 2021. Thank you very much for your time.
Next is Misawa, CEO, will give the explanation on a 2021 business plan and the status of promotion. From my side, I would like to talk about the status of progress of business plan for fiscal year 2021. Please open to page 2. This is the overview. In 2021 business plan, with the aim of recovering and strengthening profitability and developing growth, we are working on four indicators, profitability, growth, financial soundness, and shareholders' return. Decarbonization is accelerated in the market, and we are responding to the requirement on the market. Also, in the new area of mobility, a steady progress is seen for commercialization. Next, 2024, I would like to talk about decarbonization declaration of Mitsubishi Heavy Industries. Please open to page 3.
This is the details and contents of the presentation this year. First of all, I'd like to talk about the outline of business plan for fiscal year 2021. In 2021 business plan, with the aim of recovery and strengthening of the profitability and developing growth, we are working on four indicators: profitability, growth, financial soundness, and shareholders' return. In terms of profitability, we're aiming for a business profit margin of 7% in fiscal year 2023. In terms of growth, we're targeting sales of JPY 100 billion from new business. First of all, the recovery and enhancement of the business.
As was mentioned by Kozawa, the business forecast was mentioned, and I will explain now that we're coping with the initiative to move from a business profit forecast of JPY 160 billion in fiscal year 2021 to the achievement of our target. We are expected that the business level will be back to a pre-COVID-19 level. This fiscal year onwards, we believe that it will exceed the level before COVID-19. We will make every effort so that the growth rate will be higher than the recovery rate. We do believe, and we make a forecast that the aircraft engine will come back to the pre-COVID-19 level in 2023. It may take more time for Aero Structures, a Tier 1 business, to recover from the impact of COVID-19.
We will try to enhance the profitability by having optimal size of the expense. In the initiative structural transformation to address challenges and SG&A reduction, we will review a business portfolio through reorganization of steel machinery business and business transfer of machine tools. In addition, a resource shift is being done, and we will actually get the result from such initiative. SG&A is to be reduced through achieving efficiency, such as integration with Mitsubishi Power from 8 to 10. The details are mentioned, so please read the material at your leisure. This is additional measures for the delay in the recovery of commercial aircraft. Page 11. Responding to the changes in the market through COVID-19, moves towards decarbonization.
Steel machinery system, engine, they are quite strong since the strength of those businesses is aligned with the requirement of the market.
An expansion, the sale of CO2 reduction production machinery, is observed and also, through digitalization, and we're expanding our services. Naval vessels and government vessels from October 1, Mitsubishi Heavy Industries Maritime Systems will start, which is not covered by the original business plan at fiscal year 2021. In line with the fast recovery of domestic flight in the United States, our main market, strong demand is shown in hangars expansion and also through the tight relationship with Regional One, we will aim for expansion of lineup of business.
Next, I will explain developing growth areas. First, I will explain the progress of our energy transition. Please refer to page 14. Here, I will explain the market trends by region.
In the U.S., the market is rich in both renewable energy and fossil fuel resources, allowing for a balance between the environment and sustainable economic growth. With expansion of renewables, the need for energy storage is increasing. Tax incentives are stimulating the activities of both large companies and also technology startups. Next, in Europe, the decarbonization needs of industrial customers, in particular, are being activated against the backdrop of high environment-related targets. In Asia, we believe that for the time being, the mainstream will be the shift from coal to gas for low carbon power generation. We also believe that in the future it will be essential to move forward the fuel conversion for decarbonization. In Japan, I believe that energy policy will see a significant expansion of renewables, sustainable use of nuclear power and decarbonization of thermal power.
We will respond to the needs of each of these markets and contribute to the decarbonization of a wide range of regions and industries. As I just said, we have decarbonizing existing infrastructure and building hydrogen solutions and ecosystem and building a CO2 solutions ecosystem. These are the three approaches we have on page 16. Increasingly, the decarbonization needs, as for decarbonization of existing infrastructure, the need for decarbonization of thermal power is increasing. In the area of nuclear power, we are promoting the development of the next generation light water reactors and the small reactors, along with support for restarting domestic operations. In the hydrogen ecosystem, a number of energy storage projects are underway in the United States.
In the hydrogen ecosystem, a number of energy storage are also in progress, mainly in Europe and other areas. Please refer to page 17. This is the decarbonization of the existing infrastructure. We focus on hydrogen, ammonia, biogas and other fuels. We have to work on the conversion to these. What we have to do is rapidly increase all these operations. As can be seen on the right-hand side, the number of needs has increased fivefold compared to the previous year, and business opportunities are expected to be increasing. Page 18. This is one example. Here, this is the decarbonization for the private power generation, the domestic power generation market. It sells the power generation.
They are mainly the cement in the case of the industrial sectors, such as petrochemicals and paper manufacturing, steel and cement, which account for about a quarter of Japan's CO2 emissions. They have been working on their own power generation facilities, and many of them use boilers to supply both electricity and hot steam. In the case of switching from boilers to renewable electricity alone is not enough to simultaneously supply heat and steam for use in factories, which is a problem. We have the largest share of the domestic private power generation market and are familiar with complex processes. In this area, we try to work on the commercialization of these. On page 19, you will see our approaches about nuclear power.
For nuclear power, allow me to repeat myself. To contribute to decarbonization through nuclear power, we will steadily promote efforts to restart existing plants and establish a fuel cycle based on the 22% nuclear power ratio targeted for 2030 in Japan's energy policy. In the first half of this year, we contributed to the restart of Japan's first plant over 40 years old. What we try to do is that we will focus on the development and commercialization of next-generation light water reactors and small reactors with even higher safety standards, with the aim of achieving decarbonization by 2050. Moving on to page 20. This is about the hydrogen ecosystem.
As was mentioned in the United States, while renewable energy sources are increasing, the need for energy storage is growing in order to ensure the reliability in power supply. Batteries are superior for short-term energy storage, while hydrogen storage is superior for long-term storage, and we are participating in both projects. We have already introduced the Advanced Clean Energy Storage project for hydrogen storage in-
The four new projects have been launched in the last six months. These are the projects that we are showing here. Once the hydrogen storage project is realized, we will be able to use this as a hub to stimulate negotiations for hydrogenation of existing and new gas turbines. Page 21. This shows the progress of our global projects in the United States, excluding hydrogen. As I explained six months ago, we have added new MOU with TotalEnergies for joint verification of LCO2 carriers and Suez for consolidation of CCUS for industrial use. We are also making steady progress in other projects as well. Next is mobility in new areas.
Please open to page 23. To realize a carbon neutral society in early stage, along with energy transition, a decarbonization energy savings are required on the energy user side.
New mobility and logistics position is the name of this business, and we will be making efforts for further decarbonization, energy saving, and manpower saving, which is considered to make a great transformation and growth going forward, and will contribute to a safe, secure, and comfortable lifestyle through such initiative. We will be creating solutions along with the customers through component sophistication and make the machinery intelligent. In the area of sophistication of components, we will try to achieve manpower reduction and energy saving. We're going to accelerate open innovation. At Hardtech Hub, we have partly started a proof of concept testing along with the customer. ΣSynX is a digital technology concentration or platform to make machinery systems intelligent.
In ΣSynX, each individual machinery system is connected to each other to achieve optimization of the smooth harmonization between man and machine. Next is logistics, automated logistic and cold chain. As a key component in this area, for instance, unmanned forklift of high efficiency and natural refrigerant using CO2, we are developing those products and tied to ΣSynX to achieve higher efficiency and energy savings. Optimization of demand and supply will be able to be achieved, and storage efficiency can be enhanced by 20%, and the throughput of the warehouse can be doubled. Page 27. This is the electrification component business. This is the initiative at the data center. Various refrigerating equipment and decarbonization power supply equipment are considered to be key components in this area.
By tying those systems, it will be possible to save energy. Refrigerating system and electricity system can be optimized using our solution. Compared with the past, compact equipments and system will be able to be realized, and the data center with such high efficiency will be able to be realized. As for autonomous driving, various POC testing will be required. Reproductive equipments have been developed by MHI, and we're able to conduct highly reliable testing using such machineries and devices. In order to conduct testing, it requires expense and time, so improvement of simulation has to be done. It will be possible to offer highly reliable testing services from us.
We have formed partnership with Applus+ in the ADAS, which is supporting automobile certification in Europe in starting such a service activities. In 2026, this is the projection of the size of the market. We're going to expand our business to meet the requirement of the market.
Finally, I will explain the carbon neutral declaration. Please refer to page 29 to 30. Mitsubishi Heavy Industries declared that it will be carbon neutral in 2040. Mitsubishi Heavy Industries believes that the realization of the carbon neutral society is a global challenge and that we, as a proven leader in the field of decarbonization, have a responsibility to lead the fight against climate change. Through our products, technologies and services that contributes to CO2 reduction, we will work with partners around the world to contribute to the realization of net zero. We have established a slogan, Mission Net Zero, and each and every one of us, including myself, will take actions for that.
As for the numerical environmental targets, we aim to achieve a 50% reduction in Scope 1 and 2 by 2030 and net zero by 2040. About the CO2 emitted from our products, we work on carbon capture. Compared with the 2019, this should be the in net zero for the 2040 and the, in 2030, 50%. That's the goal we have. Page 32 shows the roadmap for that. About the CO2 reduction, emission reduction for our group. Alongside with what I just explained, we would like to introduce our own technology so that decarbonization can be realized. Based on that, we are able to realize the carbon neutrality for our own product and the, our own plants. Starting from our own products.
We work on the decarbonization and electrification. Carbon capture can be utilized. That's something we have, we had to work on. Let's take a look at the kind of system that we try to utilize for the reduction. Compared with 2014 and 2019, this is a curve that we try to realize in order to decarbonize the emission. Page 34. As a leading company, we make sure that Scope 1 and 2 reduction by our customers should be enhanced by ourselves, and this is done with all the businesses. We make sure that the customers will be able to reduce the carbon emission in all areas. We have been working on this in various fields.
For example, gas turbine replacement and also modification of the products, and also restart of the nuclear power plants and so forth. This way, we try to work on the realization of the decarbonization or the carbon emission reduction, and this way we will make a contribution to the Japanese government goal for the carbon neutrality. Carbon neutrality is a long-term approach that involves the effective use of existing facilities while introducing and updating innovative technologies. The Mitsubishi Heavy Industries Group will contribute to the realization of the sustainable society by reducing the cost of transitioning to carbon neutrality through technologies. That's all for me. Thank you very much.