I am Yamamoto. Thank you for joining our financial results meeting despite your busy schedule. Following the materials, I will present the results. Please turn to the table of contents. I will follow the order of table of contents.
As you see, we change the format of the materials for financial results this time. Breakdown of volume by segment and sub segment and variant factors of income statement, balance sheet, cash flow statements are clarified. And the slides have specific efforts to achieve the targets are added for the proactive communication so that your understanding of our company's management will be deepened. Based on this information, we would like to promote high level dialogue with you to improve the quality of our corporate management. I would appreciate your continued support and operation.
Page 3 shows summary of consolidated results for FY 2020. In FY 2020, net sales were JPY 1,488,400,000,000, operating loss was JPY 5,300,000,000, recurring loss was JPY 2,800,000,000, net loss expanded to 19,300,000,000 yen due to impairment loss of sheep and rowing stock segment in addition to the recurring loss, but that improved slightly from the revised forecast as of the end of March. Weighted average exchange rate for this fiscal year was, as shown here, yen appreciated by yen compared to 1 100 and 8.94 yen of the previous year. U. S.
Dollar based transaction was about $1,600,000,000 Page 4 shows consolidated results for FY 2020 by segment. Orders, net sales and operating income by segment are listed in the table. Aerospace Systems, which has been earnings driver, marked drastic decline in sales and profit. On the other hand, in Motorcycle and Engine, initially, substantial decline in sales and profit was anticipated due to COVID-nineteen. And fundamental measures to cut fixed cost was implemented and more than 10,000,000,000 yen of cost was reduced.
Furthermore, as leisure under COVID-nineteen demand of off road motorcycle and automobile for North America increased and profit increased substantially. Popularity of off road vehicles are not waning in this fiscal year, and we'll continue to work on this business actively. Income statement shows items from net sales to recurring income. Details are shown in the table. Gross profit decreased with decreased sales by COVID-nineteen, as shown in 12.
Hydrogen related iodine cost and SG and A cost, including travel expenses due to COVID-nineteen decrease. And as shown in 3, year end exchange rate showed depreciation of yen and gain on FX was posted. As a result, recurring loss was 2,800,000,000 yen with smaller contraction compared to gross profit. Page 6 shows items below recurring profit. In this year, as shown in 7, we sold former dormitory and the company housing sites.
But as shown in 10, due to impairment losses for Sakaido Works of Ship segment and Hyogo and Harima Works of Rolling Stock segment, recurring locks expanded substantially and net loss was 19,300,000,000 yen Page 7 shows details of change in profit. From FY 2019 to FY 2020, operating income decreased by 67,300,000,000 yen and the greatest impact was as shown here affected by the impact of COVID-nineteen by minus JPY54,200,000,000 and 70% of this belong to Aerospace Systems. From this time, details of change by segment is shown on the following pages for your reference. Please refer to Page 8 later. Page 9 for balance sheet.
As for the change in total assets of this fiscal year, as shown in 3, inventories in Aerospace Systems increased due to the impact of COVID-nineteen. But as shown in 4, sales of former dormitory and company housing sites and impairment loss led to almost unchanged total assets. Page 10. As for total liabilities and the total net assets, net DE ratio improved slightly year on year to 100%, but still has some gap to achieve the guidance of 70% to 80%. In FY 2021, we will continue to work to collect trade receivables and curve inventories to improve asset efficiency.
Page 11. Operating cash flow, as shown in 1, deteriorated in FY 'nineteen after the liquidation of receivables in the previous year. And in FY 2020, collection of receivable progressed mainly in motorcycle business, and operating cash flow improved substantially year on year. Investing cash flow was supported by salary controlling CapEx from beginning of the year and by sales of fixed assets, marking substantial improvement year on year. As a result, free cash flow improved 82,000,000,000 yen year on year to minus 2,700,000,000 yen In FY 2021, by further promoting the improvement of asset efficiency, we'd like to achieve free cash flow positive.
Page 12. The change of cash flow over the last decade is shown from this time for your reference. Page 13 shows earnings forecast for FY 2021. In FY 2021, we plan orders of JPY 1,480,000,000,000 net sales of JPY 1,005 operating income, 30,000,000,000 yen recurring profit, 20,000,000,000 yen net income, 17,000,000,000 yen and annual dividend, 30 yen per share. As shown here, due to mediating impact of COVID-nineteen, every item shows substantial improvement year on year.
It will still be difficult for ship segment to turn to profitable this year. And impairment loss of about 1,000,000,000 yen on fixed assets to be acquired in Sakaido Works is already included in extraordinary profit and losses. Exchange rates to assume this forecast is 106 yen to the dollar. From this year, due to application of the new revenue recognition standard, net sales will be down by about 1 100,000,000,000 yen Aforementioned figures reflect the change in standard. And please take note that based on the conventional standards, net sales in this fiscal year will be 1.62 yen up by 7% or more year on year.
Page 14 shows forecast by segment. I explained the forecast for the whole company. And this slide shows forecast by segment. As shown in 1, aerospace systems will recover year on year. But as recently announced by IATA, air passenger demand recovery in this year will be slower than initially anticipated.
And the segment will continue to be low sinking in tough condition. Rolling stock will mark substantial improvement year on year due to stable North America business. And Motorcycle and Engine will also improve substantially due to the recurring demand for motorcycle among others. Details will be explained on the page of each segment. Page 15 shows Aerospace Systems.
FY 2020 results and FY 2021 focus are as shown on the slide. FY 2020 results deteriorated markedly from the forecast as of February. This is mainly due to the decline of after sales service business, which is a source of our earnings with slower than initially expected passenger demand recovery in aero engine business. Aircraft business secured profit for the full year. For FY 2021, aircraft business will remain profitable.
Engine business will improve substantially year on year. But due to slower than initially expected passenger demand recovery in FY 2021 and impact by new revenue recognition standard to be adopted from this year, it will be loss making. As for the application of a new revenue recognition standard, conventionally sales of spare parts for after sales service, which were provided by partner companies, were proportionally included in our sales first. But under the new standard, they will not be included. And that reduces segment sales by about 70,000,000,000 yen So sales appear to decrease substantially year on year, but that does not indicate the business scale contraction.
Conventional transactions of spare parts and maintenance services were recognized separately. But under the new standard, they will be treated as one transaction. And the revenue recognition timing of spare parts will be adjusted to the timing of service provision. As a result, revenue recognition timing will be pushed back by 3 to 6 months unusual, and that reduces the profit by about JPY 10,000,000,000. Please take note that this is simply due to time lag, and it would not impact the profitability of the entire program.
Page 16 shows orders and sales of aerospace business and aero engine, number of aircraft sold to Boeing and number of jet engine component parts sold for your reference. Page 17 shows quarterly sales and operating income, which clearly shows historical trend. Please refer to it later. Page 18 shows market overview in our perspective and the specific efforts to achieve FY 'twenty 21 targets. Our view is that MOD aircraft business is stable, but commercial aircraft business is severely affected by COVID-nineteen.
And demand for both sub aircraft and the engine remain weak, and the recovery would take time. In this year, improving revenue in Aero engine business would be the prime challenge, and we will reduce manufacturing cost and thoroughly review the fixed cost structure with a change of business environment. Page 19 shows Energy System and Plant Engineering. FY 2020 results were almost in line with the forecast in February. From FY 2021, this segment will include ship and offshore structure, and the segment will be renamed to Energy Solution and Marine Engineering.
As for forecast, let me explain in the following pages. Page 20. This slide shows sales of major products, including gas turbines and gas engines in the energy business, sales of municipal waste incineration plants and sales of their after sales service. In both businesses, aftersales services are the major earnings source, and we hope you to acknowledge that we aim to expand these high added value businesses in value chain. Page 21 shows quarterly sales and operating income for your reference.
Page 22 continues to describe energy system and plant engineering. As for market overview, in Japan, demand for major repair work on municipal waste incineration plants is expected to continue. And in emerging countries, demand for distributed power plants and other energy infrastructure is expected in the mid- to long term. As for the impacts of COVID-nineteen, as shown here, we have concerned for the postponement of orders of some projects and impacts on after sales service activities overseas. Specific efforts will be presented on the following pages.
Page 23 shows precision machinery and robot. In FY 2020, market environment was solid, in particular for hydraulic components, and sales and profit were up compared to the forecast in February. In FY 2021, we are rather conservative for hydraulic component sales for China, but expect robots will increase sales further. And as a whole segment, both of sales and profit will increase. Page 24 shows orders and net sales of hydraulic components and robotics.
Sales of hydraulic components to China and sales of robots by segment are shown for reference. Page 25 shows quarterly sales and operating income for reference as before. Page 26. As for the market overview, regarding construction machinery, demand in major markets of China expanded strongly and has been robust. In other markets except China, initially, markets were sluggish due to COVID-nineteen, but currently recovery trend has been clear.
Robots demand for semiconductor has been strong. As for specific efforts, in order to compete the follower companies that try to catch up in the field of construction machinery, we will develop electrification and automation, leveraging our technology to secure solid profit. As for robots, capturing market needs, we would promote open innovations through collaboration not only with competitors, but with academia, government and the startups as well to explore market. And through RE phase market orientation approach, we would expand businesses. Page 27 shows ship and offshore structure.
FY 2020 results showed slightly better profit compared to the forecast in February. From FY 2021, this segment will be incorporated into Energy Solution and Marine Engineering, and the forecast will be explained in the following pages. Page 28 shows delivery year by type of ship, order backlog and the change in order backlog for your reference. Page 29 shows quarter sales and operating income for reference. Page 30.
As for market overview, as shown here, submarines and governmental ships are stable, but difficult condition for commercial ships continued. For the time being, we will build LPG carriers, which have relatively strong competitiveness as energy carriers and gas fuel vessels and link them to the shipbuilding of our large liquefied hydrogen carriers on commercial base in the future. Page 31 shows rolling stock. In FY 2020, especially North America was affected by COVID-nineteen pandemic and the process delayed. And unfortunately, the business failed to turn profitable and operating loss was 4,500,000,000 yen as forecasted in February.
As reported at the end of March, in Q4 FY 2020, as extra ordinary loss, impairment of 11,200,000,000 yen on fixed assets in Hyogo Works and Harima Works were posted. Through this, majority of residual book value of depreciation asset except site was disposed as expenses. In FY 2021, COVID-nineteen impact will weaken and sales for North America will increase. And this segment will be profitable for the first time in 5 years since FY2016. Page 32 shows order sales of domestic and Asia and North America.
As appendix, sales seemed profitable after sales related business, which is focused in the business and the progress of M9 project for Long Island Railroad in the U. S. Are shown for reference. Page 33 shows quarterly sales and operating income for reference. Page 34 continues on rolling stock.
As for market overview of rolling stock, market will expand in the mid- to long term, but imminent issue is to stabilize North America business. In order to be profitable in this fiscal year, stable operation in North America business is indispensable. And this year, we set up the company wide North America Business Task Force to provide the company wide support so that process will be streamlined and productivity and the quality will be improved. Page 35 for Motorcycle and Engine. FY 2020 results are as shown here.
In addition to the robust sales, better than February forecast, in particular, demand for off road vehicles for North America has been strong. And the sales promotion cost was less than expected, and that improved profit substantially. In FY 2021, recovery of demand for motorcycles and sustained demand for off road models in North America are expected, and both sales and profit will increase substantially. Page 36. This slide shows orders and sales of motorcycles for developed countries, motorcycles for emerging market, utility vehicles, ATVs and PWC and general purpose engines.
Wholesales of motorcycles by country are also shown for reference. Page 37, this slide shows quarterly sales and operating income for reference. Page 38. As for market overview of motorcycle and engine, in FY 2020, due to initially expected substantial sales decrease affected by COVID-nineteen, we cut fixed cost by 10,000,000,000 yen plus. In this year also, we will control fixed cost ratio to sales to improve business structure.
At the same time, we will improve marginal profit rate by reducing sales promotion cost and cutting manufacturing cost. And by reviewing inventory level, we will pursue to improve asset efficiency. In the mid- to long term perspective, we will work on development of EV with an eye on decarbonization. Page 39 shows Energy Solution and Marine Engineering. This slide shows the FY 2021 forecast of the new Energy Solution and Marine Engineering, combining energy system and plant engineering and ship and offshore structure established in this year.
Orders and sales of shipment offshore structure will decrease, but orders and sales in former energy system and flight engineering will increase. As a result, for the whole segment, orders will be up substantially with slight increase in sales. On the profit front, in addition to the deteriorating profit in ship and offshore structure business year on year due to reduced shipbuilding of commercial ships, in Energy System and the Plant Engineering business, FY 2021 will have fewer profitable project than FY 2020. And as a whole segment, profit decreased substantially. Page 40.
Orders and sales are shown in the former category of Energy System and Plant Engineering and Ship and Offshore Structure, so please refer to them later. Page 41. Quarterly sales and operating income in the former category of Energy System and Plant Engineering and Ship and Offshore Structure are shown, so please refer to them later. Page 42, still on Energy Solution and Marine Engineering. As for specific efforts in this segment, recovering orders is the prime challenge because recently, order in energy system and plant engineering, in particular, has been well below the initial forecast.
By steadily capturing the project that have been temporarily frozen due to the impact of COVID-nineteen and the new project for COVID post COVID, we will improve profitability in the next year and onward. This segment covers diverse products involving hydrogen supply chain, including liquefied hydrogen carrier, hydrogen liquefier, on-site liquefied hydrogen tank and hydrogen gas turbine for power generation. In order to establish the leading position in decarbonization field, this segment set up the Hydrogen Business Soon Office. In cooperation with Hydrogen Strategy Division in Head Office, we accelerate efforts for commercialization demonstration scheduled in 2025 and commercialization in 2,030 or beyond. Sakaido Works will serve as the engineering plant in future, shifting resources to hydrogen tank created equipment and facility.
Page 43 shows shareholder return. This slide on shareholder return was added newly. As shown here, in our dividend policy, with stable dividend in mind, mid- to long term consolidated dividend payout ratio is set at 30%. And in FY 2021, based on this policy, we assumed a dividend of per share. However, this is purely bottom line.
And when the revenue from PCL testing service, which is not included in the plan today, our focus is more visible, we'd like to review dividend. Due to these conditions, interim dividend is undecided. But with more certain forecast of the aforementioned conditions, we'll consider the announcement. Page 44 shows project topics. Since the previous results meeting in February, we have decided to explain the topics which will show the mid- to long term growth potential of the company on separate pages.
Firstly, let me explain progress of the hydrogen related project. As shown by picture, in January 2021, we conducted bursting test of liquefied hydrogen carrier, Suisso Frontier. And in the same month, we commenced operations of a brown coal gasification and hydrogen refining facility and the hydrogen liquefaction and loading station in Victoria, Australia. As mentioned before, as of April 1, Hydrogen Strategy Division was established to promote hydrogen related business across the company with company wide oversight. We formed consortium with YAMA Power Technology and Japan Engine to pursue joint development of hydrogen fueled marine engines and developed cargo containment system for large liquefied hydrogen carrier with world highest carrying capacity and obtained AIP from KRAS NK.
Please refer to this later. Page 45 shows another project topic, progress at the PCL viral testing service, which is increasingly highlighted. In this system, 1 container can test 2,500 samples a day, and result is available within 80 minutes. In the test process, all stages are automated by robot after obtaining sample and workload of medical staff will be reduced. Currently, we received many inquiries from local municipalities and medical institutions.
As of today, projection of annual revenue is difficult, and the business forecast that is announced today does not include this as mentioned. When we can have certain visibilities, I will let you know in timely manner. Page 46. From this time, we would show our efforts in non financial sector as ESG topics. In March, we reached the agreement to standardize the swappable batteries with 4 major motorcycle manufacturers in Japan.
It will contribute to reduce environmental impact and promote electrification. In the field of governance, in June 2020, Kawasaki transitioned to a company with audit and a supervisory committee from a company with auditors to separate the governance of management and execution. The ratio of outside directors increased to 46%. Our ESG related variations by society as shown here for reference. Page 47 and onward show the CapEx depreciation, R and D expenses and number of employees at the end of fiscal year among others in the Appendix for reference.
This concludes my presentation.