I will now go over the details of our first half FY 2026 financial results and the full year earnings forecast, limiting myself to the main takeaways. Please turn to page four, which provides an overview of the first half results. Order intake increased in all segments excluding Aircraft, Defense & Space, reaching JPY 3,612.5 billion, up 9% year-on-year. The order backlog remained at a level exceeding JPY 14 trillion. Revenue increased 19% year-on-year to JPY 2,523.2 billion. Business profit grew 45% year-on-year to JPY 249.3 billion. Net income rose by 77% to JPY 203.2 billion, supported not only by higher business profit, but also foreign exchange gains and finance income. All key indicators, order intake, revenue, business profit, and net income set new records for a first half. Free cash flow was +JPY 468.3 billion, and interest-bearing debt stood at JPY 482.7 billion.
I will now provide a more detailed discussion of our financial results. Please turn to page seven. The four upper rows on this table show order intake, revenue, business profit, and net income, which I just outlined. The lower rows provide a breakdown of free cash flow, which was JPY 468.3 billion. Operating cash flow reached +JPY 394.5 billion, driven mainly by strong profit generation and continued booking of large advances received in GTCC and other businesses. Investing cash flow was also positive at JPY 73.8 billion, primarily due to the divestment of the former Mitsubishi Logisnext, which was completed in the first quarter. Please turn to page eight, which shows our balance sheet. Total assets stood at JPY 8,314.2 billion, an increase of JPY 44.5 billion from the end of the previous fiscal year.
Cash and cash equivalents increased by over JPY 370 billion, driven by higher contract liabilities, i.e., advances received. Inventories and other assets also grew due to top-line expansion, partially offset by decreases from the business divestment completed in the first quarter, resulting in a modest overall increase. Interest-bearing debt decreased by JPY 33 billion from the end of the previous fiscal year.
Please turn to page nine, which breaks out year-on-year changes in business profit. Business profit rose by JPY 77.7 billion from JPY 171.5 billion during the first half of FY 2025. The main drivers of profit growth were higher revenue and improved margins. Increased revenue arising from execution on the large backlog, along with improved margins at the time of order booking, contributed JPY 103 billion year-on-year to profit. The +JPY 22 billion in foreign exchange impact was due to the depreciation of the yen.
The average rate used for revenue recognition dropped from JPY 146 to the dollar during the first half of FY 2025 to JPY 158 to the dollar. Gains on asset sales also served to add JPY 5 billion year-on-year to profit. Turning to one-time expenses, provisions related to the replacement of components at the IGCC plants in Nakoso and Hirono, aimed at ensuring their stable operation, reduced profit by JPY 40 billion year-on-year. Moving on, I will now discuss developments in order intake, revenue, and business profit in each of our segments. Please turn to page 11. In the Energy Systems segment, order intake increased in all major businesses, including GTCC, with total segment order intake rising 16% year-on-year to JPY 2,304.2 billion. GTCC orders remained strong, particularly in North America and Asia.
Revenue increased 29% to JPY 1,122.5 billion, and business profit rose 80% to JPY 145.1 billion. This significant profit growth was mainly driven by increased revenue and improved profitability in GTCC and Nuclear Power, which more than offset one-time expenses in IGCC. Please turn to page 12. In the Plants & Infrastructure Systems segment, order intake increased in Engineering, Metals Machinery, and Commercial Ships, rising 41% year-on-year to JPY 689.5 billion. Revenue remained roughly flat at JPY 429.8 billion, while business profit declined slightly year-on-year to JPY 41.4 billion due to a high base effect from high-margin projects in the first half of FY 2025. Please turn to page 13. In the Industrial Solutions segment, order intake grew in Engines, HVAC, and other businesses, with total segment order intake increasing by 15% year-on-year to JPY 375.6 billion. Revenue rose 12% year-on-year to JPY 352.6 billion.
Business profit increased 119% year-on-year to JPY 14.7 billion, supported by higher revenue in Engines and the depreciation of the yen. Please turn to page 14. Order intake in Aircraft, Defense & Space decreased significantly year-on-year, primarily due to a high base effect from large Defense orders booked in the first half of FY 2025. However, the order backlog remained high at around JPY 3.7 trillion.
Steady execution on the large backlog in Defense & Space, along with high unit deliveries in Commercial Aviation, drove revenue up 18% year-on-year to JPY 633.4 billion. Business profit rose 27% year-on-year to JPY 76.3 billion. Next, I will discuss the full-year earnings forecast. Please turn to page 16. We have raised our full-year order intake forecast by JPY 1 trillion, driven by strength in GTCC and other businesses. We have also increased guidance for revenue, business profit, and net income, as shown here.
Please refer to page 18 and beyond for breakdowns by segment. Note that the business profit forecast of JPY 600 billion includes a risk buffer of JPY 20 billion. We increased the free cash flow forecast by JPY 200 billion to JPY 800 billion. There is no change to the previously announced dividend forecast. That said, we will implement a share buyback program with an upper limit of JPY 300 billion, with the goal of increasing capital efficiency. Please refer to today's disclosure for details. Page 17 breaks out year-on-year changes in business profit. As shown here, the positive impact from higher revenue and improved margins is now expected to be JPY 194 billion, a significant increase over the initial plan of JPY 83 billion.
Although changes in one-time expenses has become a negative factor of JPY 30 billion, we still expect overall year-on-year profit growth to exceed JPY 160 billion. Pages 18 through 20 provide breakdowns by segment, which I will omit here due to time constraints. Please refer to these pages, as well as the appendix on pages 21 through 24, at your convenience after today's presentation. This concludes my presentation. Next, CFO Hiroshi Nishio will provide his assessment of the financial results and discuss our capital allocation forecast.
This is CFO Hiroshi Nishio. Allow me to provide some additional color on the profit bridge shown on page nine. Changes in revenue, margin improvements, and other factors contributed approximately JPY 100 billion in the first half. At the beginning of the fiscal year, we had expected an improvement of around JPY 80 billion for the full year.
Given our performance in the first half, we have now raised our full-year forecast for this factor to JPY 190 billion, as shown on page 17. Performance has been strong across the board. In particular, we are seeing higher profits from revenue growth in GTCC new units, Nuclear Power, Steam Power after-sales services in Japan, and Defense. We are also beginning to see the benefits of improved pricing on new unit projects, lower loss-related costs, and greater production efficiency. We believe these results demonstrate that we are building the earnings power needed to support our 2027 Medium-Term Business Plan. Moving on to negative factors, we recognized a one-time expense of approximately JPY 70 billion in Energy Systems, reflecting a provision for warranty-related costs. This relates to IGCC plants delivered in the past by MHI Group.
Based on our latest technical assessments, we have determined that certain components will need to be replaced periodically to ensure the plants continue to operate reliably. We have therefore recognized a provision for the associated future costs. Going forward, we will work to ensure the stable operation of the plants, minimize future costs, and prevent similar issues from recurring. Finally, let me turn to capital allocation.
This is an update to the outlook we presented six months ago. The chart shows our cash inflows and capital allocation over the three-year period from FY 2024 through FY 2026. As you can see, cash inflows have substantially exceeded outflows, resulting in an increase in our cash balance. As we have explained previously, the main driver has been higher advances received from customers, particularly in GTCC. We continue to plan to use these advances as we execute on the underlying contracts.
Under our 2027 Medium-Term Business Plan, we intend to invest actively in growth to build a more profitable business. These investments will be funded by our existing cash reserves, together with the cash flows we will generate from FY 2027 onward. The investments shown here reflect our current plans. CEO Eisaku Ito will provide further details later in the briefing. While we anticipate substantial cash requirements from next fiscal year onward, both to execute on our order backlog and to fund growth investments, we also believe our current equity position provides sufficient financial strength. It is within this context that our board of directors today approved a JPY 300 billion share buyback aimed at improving capital efficiency. This ends my comments.
This is CEO Eisaku Ito. Thank you very much for joining us today.
I would like to start with a few brief comments on this year's earnings forecast, followed by a discussion of our long-term growth strategy. First, my assessment of our performance in FY 2026. Business profit and other key financial measures are continuing to improve. Our ITO initiative is steadily delivering tangible results. We are improving productivity and driving other initiatives at a pace that outstrips the growth in orders, giving us greater visibility into both near-term earnings and longer-term growth. We are increasingly confident in our ability to deliver further growth under the 2027 Medium-Term Business Plan. Next, I will discuss the progress of our ITO initiative. We are accelerating initiatives to create a virtuous cycle of higher profitability and investment in future growth. Across MHI Group, we are working to significantly shorten lead times by improving our production processes.
In GTCC, we are moving forward with plans to approximately double production capacity for new units by FY 2030 compared with FY 2024 through process improvements and automation, all without major investment. We are also working across the group to expand into new business areas by leveraging our shared infrastructure platform and combining expertise from different businesses. These efforts are already generating promising ideas for future growth, including the development of systems that use waste heat to generate steam. We are also accelerating the expansion of our data center-related businesses in North America, a key growth market. We have secured orders for UPS projects in North America and obtained regional certification for our large centrifugal chiller products, marking steady progress in our initiatives in the region. At the same time, we will continue to monitor market developments closely and respond flexibly as conditions change.
With technology and competitive dynamics evolving rapidly, we will also actively pursue external partnerships. One example is our capital and business alliance with Preferred Networks, aimed at developing AI technologies for mission-critical applications. By combining external technologies and expertise with our own capabilities, we aim to create new value. We are continuing to optimize our portfolio of businesses. In addition to completing the divestment of the former Mitsubishi Logisnext, we have agreed to divest our Tier 1 business supplying components for Bombardier's business jets. Going forward, we will continue to focus our resources on areas where we can leverage our strengths and achieve higher growth. Next, I will speak about our medium-to-long-term initiatives. As society evolves, so do the challenges it faces. Throughout our history, MHI Group has helped address the needs of each era, from providing critical infrastructure to contributing to decarbonization efforts.
Today, we face a series of major disruptions that would once have been difficult to imagine, including geopolitical instability, supply chain fragmentation, increasingly severe natural disasters, and cyberattacks. Against this backdrop, we believe society needs more than simply the ability to recover after a disruption. What matters is resilience, the ability to minimize the impact of unexpected events and sudden far-reaching changes while keeping daily life, work, and economic and social activities running with as little interruption as possible. This growing need for resilience is creating significant new business opportunities for MHI Group. By bringing together our diverse products, technologies, and services, we believe we can play a significant role in making society more resilient. Take safety and security, for example. Beyond our role in Defense and disaster response, ensuring a reliable supply of affordable energy is equally essential to keeping society and the economy running.
In energy, we have a broad range of technologies, including GTCC, Nuclear Power, Steam Power, geothermal, and biomass energy. These capabilities can help ensure reliable energy supply even in the face of fuel supply disruptions or major natural disasters. Equally important is the ability to maintain facilities in good condition during a disaster and restart operations quickly afterward. We believe these capabilities deliver significant value to our customers and society. Unmanned systems offer another example. Designed to operate in harsh environments, they can serve a wide range of needs, from delivering supplies after major disasters to transporting materials at manufacturing sites facing labor shortages and conducting inspections in hazardous locations. These examples may seem quite different, but they all share a common theme: resilience. We aim to identify new business opportunities in infrastructure and industrial machinery through the lens of resilience and turn them into future growth.
Next, I will discuss growth investments. As our CFO explained, our profitability is continuing to improve steadily. By increasing productivity as we execute on our substantial backlog, we aim to build a more profitable business. This will support further earnings growth beyond FY 2027 and enable us to consistently generate strong cash flow. Then we will reinvest this cash in future expansion. Let me start with growth and capital investments. Our primary focus will remain on improving productivity by shortening lead times while concentrating capital investment in strategically important areas. In GTCC, for example, the growing installed base of gas turbines serving utility customers is expected to drive sustained demand for hot parts used in after-sales services. These components require sophisticated manufacturing expertise and are a key source of our competitive advantage. We will therefore prioritize investment in expanding their production capacity.
We will take the same approach to capital investment in other growth areas, including Defense, Nuclear Power, high-density outfitting ships, and Engines. Beyond the products highlighted on this slide, we have many other promising ideas under consideration. We will also move forward with our strategy to expand into new business areas by leveraging our shared infrastructure platform and combining expertise from different businesses, as I mentioned earlier. Our aim is to create synergies that are unique to MHI Group. We will also strategically increase R&D investment in next-generation products, resilience-related technologies, and critical components that strengthen the competitiveness of our products and services. To bring these initiatives to fruition, we will leverage collaboration both within and outside the group, pursue open innovation, and consider M&A opportunities. The groundwork we have laid under the 2024 Medium-Term Business Plan is beginning to steadily deliver results.
Under the 2027 Medium-Term Business Plan, we will build on the expansion of our existing businesses, particularly GTCC and Defense, while identifying new opportunities based on society's evolving needs, with resilience as a key driver of future growth. When we announce our next medium-term business plan in May, I look forward to sharing a clearer picture of how we intend to achieve this goal. This concludes my presentation. Thank you for your attention.