Good afternoon, ladies and gentlemen. My name is Kozawa. Now I would like to give my explanation on fiscal year 2020 second quarter financial result. The material has been released beforehand, so I will not go into too much detail. I just talk about the highlights and supplementary remarks. First of all, let me give you the outline of the financial performance comprehensively, and also please refer to page four and five of the slides. In all items of order intake, revenue, profit of each stage, they're lower year-on-year compared with the previous year. The performance seems to be sluggish. Against the annual projection, including the impact given by COVID-19 announced in May, our evaluation is that the performance roughly stays within the assumed range. Regarding COVID-19 impact in the second quarter, it shows sign of recovery.
I would like to supplement some explanation using slide 14. By business domain or plant business, such as energy plants, infrastructure, separate from sluggishness in order intake due to delay in business talks and progress in construction work. On the other hand, medium lot products business, which was expected to drop significantly, hit the bottom in the first quarter, turning to recovery. On top of that, voluntary reduction of fixed costs became effective, showing steady progress, more than expected in the beginning of the year. Nuclear power, defense, and space business are steady. Page five. Profit from business activities and net profit were in the loss of JPY 58.6 billion and JPY 37 billion, respectively. The first quarter results were a loss of JPY 71.3 billion and JPY 57.9 billion, respectively. Just taking three months in the second quarter, marginally, it turned back to profitable.
In page six, this is the result of fiscal year 2020 first quarter breakdown between SpaceJet-related business and non-SpaceJet business to see their revenue and earnings. Profit from business activities of non-SpaceJet business comparable to regular revenue was in the negative, JPY -2.4 billion in the first quarter. On the aggregate basis in the first half of the year, it became positive at JPY 23.6 billion. The loss of JPY 82.2 billion of business activities includes impairment charge on CRJ program of Bombardier Inc. acquired on June 1st. The first quarter was a loss of JPY 68.8 billion. In the three months of the second quarter, the total loss became JPY 13.4 billion. Slide seven, financial results by segment. Reorganization of domain from this fiscal year led to partial review of segmentation.
Segments called as industry and social infrastructure was broken down into Plants & Infrastructure Systems and Logistics, Thermal & Drive Systems. To make comparison easier, figures of new segments are compared year-on-year. The details will be added using slide 10. Page eight is the balance sheet. The total asset dropped by JPY 280.9 billion from year-end, becoming JPY 4.7047 trillion. In the previous year, total asset was JPY 5.1874 trillion. Down by JPY 480 billion. Typically, in the mid of fiscal year, total asset tend to expand, but this fiscal year, accompanying transfer of shares of MHPS, total asset was squeezed down by JPY 407.8 billion. Investment interest-bearing debt is on the rise, shown by the red bubble. This is because FCF, free cash flow, was in the negative. Financing has no particular problem. Major financial indicators and cash flows shown on page nine.
Every financial indicator seems to worsen, this is just a change already assumed from the beginning of the year. Operating cash flow is dropping year-on-year due to decline in profit and increase in working capital. Investment cash flow as a whole is flat from the previous year because investment in SpaceJet development was contained, and there was some outlays in CRJ acquisition. At page 10, order intake and order backlog. Order intake grew on Aircraft, Defense & Space segment. For other segments, it was lower year-on-year due to COVID-19. GTCC and nuclear power defense aircraft are on the rise. The order backlog declined compared with 2019-end because sales exceeded orders intake this year. Page 11 shows the breakdown of the sales.
Due to the change in the business because of impact given by COVID-19, the business sectors such as aircraft, automobile s, large lot products business decreased in terms of earnings. Having said so, Logistics, Thermal & Drive Systems, the sales revenue was JPY 182.9 billion in the first quarter. In the plant business, such as steelmaking machinery, engineering revenue is due to a suspension of progress in construction. Nuclear power, defense-related, were steady. Slide 12 shows breakdown of profit from business activities by segment. Unfortunately, with the exception of corporate, all of the segments had a decrease in profit. In particular, the energy segment saw a large decline in profit.
In addition to the significant decline in sales of the aircraft engine business, as you know, the postponement of service construction work from the first half to the second half, and the delay in construction work at Mitsubishi Power were also factors. The medium products business is showing strong signs of recovery. The Logistics, Thermal & Drive Systems segment has grown from a loss of JPY 2.6 billion in the first quarter to a profit of JPY 4.5 billion in the second quarter. Slide 19 and subsequent slides show the current situation of each segment and their effects on the annual forecasts. Please refer to them later. Slide 13 shows the change in profit from business activities compared to the same period last year.
Q2 2019 profit last year from business activities, excluding SpaceJet, was JPY 88.2 billion on a fundamental earnings basis. In the second quarter of the current fiscal year, fundamental earnings were JPY 23.6 billion. This slide shows the difference between the two quarters. The JPY -59 billion at the left end, highlighted in the light red, represents the decline in profit in the commercial aircraft and the medium products businesses, mainly due to the COVID-19 impact. This corresponds to factors contributing to the decline in profit of JPY 140 billion at the beginning of the fiscal year, when forecast was announced. On a quarterly basis, we have assumed that the first quarter will have the greatest impact, but it is within the expectation for the full year. The supplementary explanation is given on the next pages.
The JPY -47.7 billion on the right-hand side of the graph is due to sales increases and decreases in businesses other than those mentioned. This includes the impact of delays due to the temporary suspension of overseas plant construction work caused by COVID-19 and the impact of deteriorating profitability on the same projects. Foreign exchange effects include a decline in earnings due to the yen's appreciation against the dollar, JPY 109.3- JPY 107.1, which was more than JPY 2 per dollar compared to the same period last year. Cost reduction of JPY 18 billion in fixed cost reduction and other cost improvements of JPY 27.1 billion and other asset management and other factors were added to this amount. Please go to slide 14.
This slide shows the added information as of the second quarter of the year to the impact of COVID-19 assumptions we used in our initial plan presentation on May 11. Tier one commercial aircraft business, which is to supply aircraft bodies to mainly Boeing, is down about 40% in the first half of the year, as shown here, without taking into account the COVID-19 impact. In the first quarter, it was about half of the plan before taking COVID-19 effect into account, in the second quarter, it has recovered to a 15% reduction. For the fiscal year as a whole, we expect to be at or slightly below the bottom of our initial forecast. Sales of our engines progressed to the bottom line in the first quarter, they seem to be recovering slightly in the second quarter.
For the full year, we expect this to remain within our initial forecast, near the bottom line. Sales of medium products recovered as expected from the first quarter to the second quarter. Depending on the future status of the corona infection, we expect to see an improvement in the fiscal year compared to our initial forecast. I would like to summarize the results up to the second quarter, but as a result of impairment loss associated with the acquisition of CRJ and the impact of COVID-19, there was a large decline in sales and profit compared with the same period last year. We believe, however, that this is within our expectation for the full year. Overall, we are in line with our initial plan. Now, I would like to give you an explanation of the financial results for the year ending in March 2021. Please go to slide 16.
On October 29th, we announced a revision to the full year forecast. In total, we have revised upward the gain from the sale of MVOW shares due to the reorganization of our renewable energy collaboration with Vestas, which we announced at the same time yesterday. This is about JPY 50 billion. In addition, we have revised our forecast based on the current progress in each segment. Please refer to slide 18 for more details.
This slide shows the outlook for orders, sales, and profit from business activities in each segment. I would like to explain the main points of each segment in turn. There is no change in the energy segment in terms of orders and sales, while the gain on the sale of MVOW shares is included, JPY 50 billion. The forecast for income is revised upward by JPY 30 billion to JPY 130 billion, taking into account risk of deteriorating construction profitability in the thermal power business.
In the Plants & Infrastructure Systems segment, we have lowered our forecast for revenues and profits by JPY 100 billion and JPY 25 billion respectively, due to the delays of construction work caused by COVID-19. For Logistics, Thermal & Drive Systems, we raised our previous forecast by JPY 40 billion to JPY 10 billion based on the progress made in the first half of the fiscal year.
At Aircraft, Defense & Space, the profit forecast is in line, but is revised downward by JPY 5 billion to JPY -95 billion, reflecting the current status of Tier one aerostructure business. This includes SpaceJet-related losses, which has not been revised. There is still no indication as to when the corona pandemic is ending, and the future outlook is hard to see. We are determined to move forward in order to achieve the full-year goal. This is the end of my presentation. Thank you very much.
Thank you very much. My name is Seiji Izumisawa, CEO. From my side, I would like to talk about our 2021 Medium-Term Business Plan. Please open to page two. First of all, I would like to say that this Medium-Term Business Plan, at this time, was compiled half a year earlier than normal. This is because of the impact of COVID-19 and changing environment of thermal power business, and review of our strategy in commercial aircraft business. The plan required major reviews. We decided to compile the plan six months beforehand. This time, in the business plan, we focused on two areas. The first is how we should assume the market condition against the impact of COVID-19, and how we should restore our profitability. Secondly, many of the businesses become mature. How we should think about the direction of the growth of MHI going forward.
The recovery of profitability, in addition to recovery from the impact of COVID-19, we will take measures against businesses with challenges, reduction of SG&A. We would like to achieve a 7% business profit margin in fiscal year 2023. Energy transition, new mobility and logistics are going to be the new fields that we would like to develop. In the plan, JPY 180 billion will be invested. In 2030, it will be expanded to JPY 1 trillion. Please go to page five. This is our group mission. Our mission is to integrate cutting-edge technology into expertise built up over many years to provide solutions to some of the world's most pressing issues and provide better lives. Our strength, which is our DNA, is to support the society by offering products for both land, sea, and air to support our national security.
Also make products for deep sea and space. New challenges are appearing. Threats of climate change, digitalization, and cyberattacks. In order to cope with those new threats, in addition to the strength that we have, we are going to take our initiatives so that we can create a green society with a high level of convenience and amenity in people's life. Our group, in 10 years' time, after working on the initiatives, is shown here. There are three areas: Energy, Environment, and Social Infrastructure, Aircraft, Defense & Space. We will make a structural reform in those businesses. In energy and environment, to realize carbon neutral by 2050, we would like to give contribution to a shifting of the society. Using hydrogen as a fuel in carbon cycle, we have a wide span of technology and insight, and we can promote energy transition.
Also, AI will be used for machinery systems. Networking automation can create new values in auto-driving vehicles. We will offer new value in new areas by integrating digital technology and machinery system. We will cope with the new challenges, such as cybersecurity for national security of defense, air, and space. In this business plan, we would like to review the history during 2010s. We have been expanding our business through M&A and promoting a structural reform. We have been expanding order intake and revenue and expand EBITDA. In 2015 MTBP and 2018 MTBP, we have been expanding the size, and we have been working on strengthening a financial foundation. Competitive situation in pricing became fierce, and we had delay in SpaceJet development and not enough investment in growth in those days.
With the drop due to COVID-19 and also structural drop in commercial aircraft sector, we will not only go after the expansion of the business. More than that, we will aim for recovery of profitability and improvement for future growth. Please refer to page nine, the targets for fiscal 2023, the third year of 2021 business plan. Improvement of profitability, the company aims to achieve the business profit margin of 7% and ROE of 12%. The company will invest heavily in new areas such as energy transition and mobility to create the JPY 100 billion business. Balance sheet and shareholder return targets are indicated. Please go to page 10. The following table shows the financial indicators and their chronological trends in 2021 business plan. The left-hand side on page 11, 2018 business plan, and the right-hand side, 2021 business plan.
We will improve the revenue, increase cash flow from operations, and reduce our investment in SpaceJet. We will invest in growth areas and business expansion based on that. At the same time, we will repay debt and improve our financial strength. Please go to page 13. SpaceJet's delivery date. First of all, the delivery date for SpaceJet was postponed in February this year, and the company announced in its May earnings announcement that it would postpone its development schedule due to COVID-19 and the progress so far. We will continue to examine the schedule in detail due to the impact of the pandemic. That was the explanation we have made. Subsequently, a chief engineer was appointed to take care of the design and verify the current design situation so far at the airframe level.
He's also verifying the 3,900 hours of flight data that we have had so far. The market for commercial aircraft in general has temporarily declined due to the effects of COVID-19, and the production of aircraft components has been reduced. On the other hand, this is a long-term growth area, so we are preparing for full-scale recovery by streamlining the production process and expanding the business through international collaboration. We are also preparing for the recovery period from 2024 onwards by promoting efficiency and developing new technologies and participating in new international programs. For SpaceJet, based on the business environment and development status, we have suspended its M90 development activities. In the meantime, the company will continue to improve the business environment for the reopening of the business and complete the type certification documents.
We expect the CRJ business to recover relatively quickly, we expect to utilize commercial aircraft business know-how as TC holder. Page 15, please. This is the profit improvement plan. The bar chart on the left-hand side shows business profits excluding SpaceJet for FY 2019. We are forecasting zero for FY 2020. As explained earlier, the negative factors are profits due to lower profits from business activities from the new COVID-19 and investment in SpaceJet. This reflects the Vestas situation as well. In order to achieve a 7% operating profit margin by FY 2023, we will take a variety of measures, including minimization of SpaceJet costs, recovery from the impact of COVID-19, and growing existing businesses, addressing issues and restructuring, and reducing SG&A. Please note that the SpaceJet expenses are not included in this graph because they are included in the commercial aircraft segment.
Please turn to page 16. These are the areas hit hard by COVID-19. The business sector is strongly affected by the corona, and we think the aircraft recovery is coming from 2024. We are reducing the size of SpaceJet program and try to achieve a lean structure so that we can achieve highest profitability.
We are also promoting space saving and human resources saving, and applying automation. We will reduce space costs and reduce fixed costs, and create a lean structure. In addition, we will utilize the opportunity to reduce production to promote labor savings and automation. Please go to page 17. Along with the recovery from COVID-19, the market for distribution equipment and chillers is expected to expand due to the automation of logistics and increased use of natural refrigerants for the global environment. As the number of coal-fired thermal power plant installations has greatly reduced, we will shift the resources significantly to service sector and restructure and consolidate the organization and business sites. In addition, for shipbuilding division, we will promote the structural transformation by strengthening engineering and other measures. The group's common task is to reduce HNA. We are working to achieve a 20% reduction. Please go to page 18.
I'd like to explain about the human resources. The company has already reduced its workforce in overseas countries by 2,000 to deal with the decrease in production. In Japan, we are taking measures to reduce the workforce by 3,000. In addition to internal relocations, various programs are in progress. We aim to reduce the workforce by 1,000 in the first half of the year. We have already achieved this. Page 20. This is our initiatives in growing business area. About energy transition, we're going to take the initiative as a group to achieve carbon neutral by 2050. A reduction of CO2 emission and CO2 capture will be required to achieve carbon neutral. For reduction of CO2, mobility, light industry area, we will promote decarbonization and electrification. Also, we will be expanding CO2 capture activities and also conversion.
In order to achieve carbon neutral, on page 21, we are going to integrate all the products and technology that we have accumulated. First of all, towards a realization of carbon neutral society, electrification of mobility will be pursued and a CO2-free fuel will be used. Also in residential area, electrification, energy saving will be promoted, and a proposition on decarbonization and energy saving will be promoted in industry. Also ammonia use and hydrogen use, which are CO2-free, will be promoted for fuels. In energy, in the middle, we have been coping with thermal power generation. We will achieve higher efficiency and also hydrogen gas turbine will be promoted to achieve a lower CO2 emission and decarbonization. Introduction of a new energy, reusable energy system, will be promoted. We will promote a nuclear energy which does not emit CO2.
As such, we will be giving contribution to realizing carbon-free society. Page 23. There are three initiatives mentioned as the new initiatives. Production of hydrogen, ammonia, and CO2 conversion, capture, and also fuel-fired gas turbine. These are the new business areas that we will promote. Next is a new area in mobility. The second growing business area is mobility. Digitalization of various products and using AI technology for machinery system, we are going to offer new value. In logistics and machineries, we will achieve higher automation integration, and automatic solution will be offered in logistics area. Embracing technology, energy, and management technology will be integrated to offer proposition cold chain. We're going to connect various businesses that we have been accumulated and using M&S technology. With a limited amount of data, AI technology can be utilized.
In the electrification initiative, risk companies will focus on developing core components, such as to enhance the competitiveness of wide range of products, including power generation facilities, railways, ships, aircraft, and defense systems. The promotion of these initiatives requires a cross-sectional approach, which the growth strategy office we established in April will take leadership. On page 24, you can see the example of a cold chain and our activities in more detail. We have business in logistic systems and environmental control and equipment. In order to integrate them and maximize the efficiency of the entire system, we need to optimize their function and features. At the top, you can see our group has accumulated operating data. At the top and also at the bottom, we have modeling technology and simulation technology. By integrating those, we can optimize the best system.
Further, in collaboration with external parties, we can create value by tracing the state of preservation status of products to achieve safety and security, and by reducing distribution losses to contribute to ecology. Please go to next page. Service expansion. We will expand our services by promoting a digital transformation. On the right-hand side, you can see the group has systems such as operating support and maintenance management, and a wide variety of systems. The company possesses various simulation technologies and utilize them in its services. A task force has been set up within the group to expand the services business of each segment. On page 26, we explain about the cybersecurity initiatives. Cybersecurity is not an emerging threat or new business area, but this is the area we have to address and respond to.
The group will apply the technologies developed in the defense and space fields to the civilian sector as well, including applications in the fields of disaster prevention, defense against threats to social infrastructure, and the monitoring and inspection of critical infrastructure. Next page, please. Basic technologies to support and develop growth areas. The group's strength is to utilize technologies developed and accumulated in a wide range of business fields. This is a strength. Open innovation in the development of advanced technologies such as AI and other types of intelligence, and the development of the products and systems. This is something we can do. As you can see in the right, there is a new initiative to promote innovation in the search for innovating technologies. We have created a YHH, Yokohama Hardt ech Hub, in April this year.
It's a place of co-creation to support research and venture companies to realize innovation. Lastly, on page 29, here is the summary. We have explained our 2021 business plan. We are focusing on profitability improvement and growth investments as well as the establishment of the business foundation. The engine for the growth is energy transition and mobility. Those are the two new areas where we are focusing going forward. This concludes my presentation.