At this point, we'd like to start the financial results meeting. Thank you very much for being here out of your busy schedules. At this point, we'd like to start the earnings results briefing for the first to the third quarter of 2017. My name is Nakamura. I'll be serving as the moderator today. Allow me to introduce the speakers. To the left is the President and CEO, Miyanaga. The person sitting on the right-hand side is Mr. Koguchi, Executive Vice President and CFO. First and foremost, our CFO, Koguchi, will give you the presentation for the first to third quarter financial results. Then we'll take questions. We would like to spend the next one hour for this session. We ask for your cooperation.
Good afternoon, ladies and gentlemen. My name is Koguchi. I am responsible for financial affairs within MHI.
Thank you very much for being here to participate in the earnings results briefing for the first to the third quarter of 2017. We'd like you to take a look at the colored sheet of paper. Based on this material, I'd like to give you a quick overview of the financial results. Please move to the page. This table outlines our financial results. First is orders received. Compared with the previous year, there has been a decrease of about JPY 80 billion. It now stands at JPY 2,577.6 billion. The net sales was JPY 2,851 billion, an increase of JPY 157 billion. The operating income, we see 2.8%, which is an increase of about JPY 11.5 billion. The ordinary income was JPY 91.1 billion, which is a large increase year-on-year.
The ordinary income was higher than operating income, so it is the positive of about JPY 11.5 billion. I'd like to share with you the result, the background here. For the interest rates, interest income, and also the foreign exchange, there has been a positive figure, and also the income from equity method investment for Mitsubishi Motors. Last year, there was a major loss, but this year we don't have to have that kind of loss. That means that the JPY 1.3 billion positive figure, that means that compared with the previous year, there was a change of positive JPY 40.2 billion, which resulted in JPY 91.1 billion. The extraordinary gains and losses, it was a negative JPY 8.8 billion.
For the business structure improvement expenses, there was JPY 10.8 billion in SP, TT, and other so-called business improvement activities are related to this. Some of the temporary losses have been recorded for the extraordinary losses. The total figure was the JPY 24.7 billion for the profit attributable to owners of the parent. This is the positive improvement of JPY 36 billion. There has been an increase of JPY 114.6 billion increase over the previous year, which is EBITDA. Moving on to the segment information. I talked about orders received, that there was a decrease of about JPY 80 billion. This shows the breakdown. Power Systems and also the aircraft defense and space, there has been negative growth. In some cases, the business environment was not very good, as you're well aware.
That means that the orders received have not been very good in these segments. For the aircraft, defense, and space, in the fourth quarter, there has been a concentration of the defense-related orders. There has not been a major change, but when I say JPY 44 billion, about half of this has been related to MRJ. In the last year, there had been the recognition, but here for this term, there was not. There was no major shift in the fundamentals. Moving on to the sales. Net sales. For three domains, there has been an increase, especially for infrastructure and industry, I&I. The figure was JPY 118.89 billion, which means that there has been major growth in the mass production products. For aircraft, defense, and space, the net sales grew by JPY 43.2 billion. The operating income.
The Power Systems JPY 40.4 billion increase. The decrease, there was a slight change in the, excuse me, the JPY 40.4 billion, which is a slight decrease. There had been the delay of the electrical constructions. On the fourth quarter, the large amount of income will come into the fourth quarter. If you consider this impact for the MHPS, if you include MHPS, it is higher than the previous term last year. In the industry and infrastructure, this again is a JPY 40.4 billion operating income. The contribution for that is again, the increase in the MS and medium lot manufacturing machineries. For the aircraft and defense space, for the defense and Tier 1 business, Tier 1 business have been progressing well. Because of MRJ, there was a problem.
The result, the final figure was JPY 2.8 billion, which is about the same as the previous year. Moving on to the balance sheet. Please move on to the next page. We have been working on the improvement of the quality of balance sheet. I am quite sure that all of you are quite aware of what we have been doing for the improvement. As of the end of the third quarter, the total asset was JPY 5,884.9 billion and compared with the previous year, and also as of the end of 2017, there was an increase. Until the end of the fiscal year, the balance sheet is decreasing, that would be the result of the payment of the receivables. Because of the MRJ and South Africa, again, the total asset side would be increasing.
I always pay attention to this balance sheet in terms of the soundness of the quality of the balance sheet, which is the inventory. Whether it has been covered by the advance payments received on contracts, that means that the trade receivables should be in line with this. That's something we have to seek for balance. This is about JPY 1.5 trillion or lower, which is slightly over JPY 1.4 trillion. This is over the figure of the inventories. That means that the balance sheet has not been deteriorated. As of the end of the third quarter, this is considered the bottom in terms of the balance sheet. Interest-bearing debt at this point is JPY 1 trillion, JPY 215 billion. It is slightly less.
There has been a slight increase of about JPY 300 billion. Still, until the end of the full year, we would be able to reduce this. We have been using the short-term borrowings and the commercial papers. On the net, the assets, there has been an increase. As can be seen here, our net worth has been increased. We have the increase of the other comprehensive income because of the increase of the investment securities. Moving on to the next page in the lower part. Equity ratio is 31.3%, interest-bearing debt, JPY 1,215 billion, debt equity ratio 56%. Compared to the end of March, it has been slightly smaller, but compared to a year earlier, we see an improvement in all of these items. In terms of cash flows, as you can see, free cash flows, -JPY 268.5 billion.
The end of the third quarter tends to be the bottom. When we compare the bottom and bottom, JPY 125.3 billion more. In terms of free cash flow, as will be explained later, for the financial strategy of Mitsubishi Heavy Industries, this is considered to be one of the key items. We are making a detailed analysis in managing this. So far, we are proceeding as planned. JPY 100 billion target for the full year, we believe that we are getting closer to achieving that. Moving on to orders received and order backlog as well as net sales and operating income by segment. I gave you the details already. In terms of orders received, the orange portion, Power Systems, and purple, aircraft defense and space segments saw a decline year-on-year. Altogether, a little less than JPY 80 billion less order backlog.
As we explained at the second quarter earnings briefing, MRJ-related order backlog has been excluded from the information because that's going to be down the road. Excluding those differences, the figure is about the same as in the previous year. Net sales by segment. In all segments, we saw an increase year-on-year, especially in I&I.
As I explained earlier, forklift trucks and turbochargers and other mass-manufactured products are doing well. Operating income by segment. For Power Systems, in nuclear power, due to a delay in construction work, the profit recognition has been pushed back, resulting in decreased. Excluding that, as for thermal power, things are moving as planned. As for I&I, as I explained earlier, we see contribution from the mass-produced products. Overall, forecast for fiscal 2017, at the time of the second quarter, the thermal power system and other factors resulted in the downward revisions. Looking at the end of the second quarter results, we believe that we don't see the need for the revisions to be made from the current forecast. Orders received, JPY 4,000 billion. Net sales, JPY 4,050 billion. Operating income, JPY 180 billion. Ordinary income, JPY 170 billion. Profit attributable to owners' parent, JPY 80 billion. ROE, 4.4%. EBITDA, JPY 370 billion.
As for dividend, we are keeping as is. You can see the impact of the exchange rates. As for the segment information, you can see some notes at the bottom. Before I close, in recent media reports, there are some comments that there is an issue with our financial structure. For our analysts, I'm sure you are well aware of what's shown here, but I'd like to once again go over the efforts being made to improve on our financial structure. As you are aware, used to be that our balance sheet and cash flows were not receiving much attention. After the Lehman crisis, with the liabilities growing, we had some concerns regarding the global competitiveness. So we have shifted to the cash flow management.
In 2012, in the business plan and in the 2015 management plan, we have stressed the improvement efforts on the financial structure, MRJ development, and the commercial ship, the cruise ship projects, I'm afraid, had been the source of concern. Despite this, we have been improving on our structure. The green bars represent the interest-bearing debt in 2015. In fiscal 2015, UniCarriers acquisition was made, and UniCarriers balance sheets, borrowing, and others resulted in increase in the interest-bearing debt. Since then, we have been able to make up for the difference in fiscal 2016. For this year, with the free cash flow of JPY 100 billion being achieved, we can further reduce the interest-bearing debt. In other words, the balance sheet improvement is what we are working on today. Through this, we want to enhance our global competitiveness.
At each of our divisions, be it sales or production, efforts are being made, including the shortening of the delivery, so as to contribute to the cash flow, so as to enhance our financial structure. We believe that these steady efforts are important for us to win in the global competition. That mindset is being spread throughout the company group. We do have the targets for each domain set, and whether it could be implemented as committed is what we are closely monitoring. We're continuing with these very steady efforts, and I'm hoping that you would appreciate these efforts being made. That is the reason why we added this sheet. Thank you very much for your attention.