Good afternoon, everyone. I'm Kawakami, President of Social Infrastructure Business Area. I will present strategies and initiatives of the Social Infrastructure Business area. This page shows contents of today's presentation. First, I will explain the outline of the business.
As you can see on the screen, this business area consists of five business units, including bridges, water gates, transportation systems, shield systems, concrete construction materials, and urban development, generating JPY 170 billion in sales in fiscal year 2022, with 60% of revenue from bridges and water gates. Please refer to the bottom half of the page for IHI's offerings, competitive edge, and market share for each business. Next is on the business environment.
Domestic social issues include labor shortages due to aging of skilled workers and declining birth rate, as well as aging infrastructure. Global challenges include natural disasters, such as flood and drought, due to global warming, and energy crises and price hikes from deterioration of the situation in Ukraine, all of which have impact on infrastructure business.
As for labor shortage in the infrastructure business, we are promoting DX to enhance operational efficiencies, and we are also undertaking work style reforms. We expect extraordinary budget to be continuously allocated based on the five-year accelerated plan of the ongoing national resilience projects.
Next is about segment strategies based on the Group Management Policies 2023. In social infrastructure business, we aim at leveraging strong existing businesses to support safe and secure social infrastructure by providing transportation infrastructure, disaster prevention, and water management, as shown on this slide. As a transportation infrastructure operator, we will build resilient global infrastructure and help maintain local infrastructure.
As a water management operator, we will provide maintenance, management, and operation services for water management facilities, as well as collaborating with other domains to develop regional infrastructure with built-in disaster prevention and mitigation.
As for a path to achieving our goals, we will strengthen competitiveness of our domestic business based on the differentiated technologies. We will promote DX and bolster engineering, production, and construction capabilities to strengthen our ability to receive orders. Also, we will develop and deploy technologies and projects for maintenance, disaster prevention, and mitigation to create sustainable infrastructure.
We will deploy and engage in this business overseas, grow revenue and earnings, and strengthen the business foundation by harnessing resources both at home and abroad. Next, on the segment performance targets. In fiscal year 2022, revenue was JPY 171 billion, and operating profit was JPY 17 billion.
By fiscal year 2025, we are forecasting revenue and operating profit to be JPY 210 billion and JPY 18 billion, respectively. We are targeting to improve the operating profit margin, excluding the urban development SBU, from the current five percent level up to seven percent. This slide shows factors for changes of operating profit in FY 2025.
We will increase operating profit from JPY 17 billion in FY 2022 up to JPY 18 billion in FY 2025 by expanding life cycle businesses, undertaking structural reforms, and strengthening earnings foundations. Excluding B in the chart, which is JPY 5 billion gain on sale of land in Yokohama of the former IHI Construction Machinery Limited, operating profit is on an upward trend. This page explains the process for reaching operating profit targets in FY 2025. There are three initiatives.
First is to strengthen domestic orders and improve productivity. Second, to foster creation of disaster prevention and mitigation and life cycle businesses. Third, to steadily expand overseas businesses. By promoting these three initiatives in each business unit, we will achieve our targets.
Please refer to the bottom half of the page for specific actions, which include strengthening domestic bridges and shield systems orders, expanding disaster prevention and mitigation businesses centered on water gates and water management, as well as expanding overseas bridges and shield systems businesses.
This page shows a long-term earnings growth story. By FY 2025, we aim at increasing sales up to JPY 200 billion through initiatives explained earlier, and we also have set a high target of JPY 300 billion in revenue by 2030, by overseas business deployment, LCV, and disaster prevention and mitigation business expansion.
Next, I will elaborate on near-term and medium- to long-term stories for our long-term earnings growth. As a transportation infrastructure business operator, we will bolster domestic orders and capture top market share among expressway companies. In overseas, we will promote regionalization, and by 2040, we will build a network with a view to mobilizing needed resources from optimal locations and stabilize earnings.
In life cycle businesses, we will engage in comprehensive maintenance and management, and we will launch and commercialize life cycle cost optimization consulting business. By 2040, we will strive to achieve business expansion by deploying life cycle business across transportation infrastructure.
In disaster prevention and water management business, we will establish dual use water management technology for normal times and disasters by 2024 and by 2040, we will expand water utilization and flood control business using remote monitoring and operation to capture customer demand. From this page onwards, I will explain the market situation and strategies of each business, starting with the market situation and strategies for domestic bridges.
As for the market for steel bridges and pre-stressed concrete bridges, as you can see in the graph, the current level is expected to be maintained until 2035, with expectation for the market expansion from growth of preventive maintenance from 2030. In this market environment, IHI will strive to build technological and proposal edge to capture top market share and aim at leading industry as Japan's top bridge manufacturer.
As measures to increase orders, we will strengthen control tower functions, which is to formulate and execute order strategies by 4 measures: striving to boost orders, sharpening competitive edge with differentiated technologies, strengthening cost competitiveness, and securing resources. Next, I will explain our strategies for shield machines.
As shown in the graph, no major changes are expected in the domestic shield machine market, with a slight declining trend. In this market environment, through technological development and cost reductions and offering of services tailored to customer needs, we aim at capturing 70% of the large diameter market and 50% of the market for small and medium diameter shield machines. Overseas, we will target India and Southeast Asian markets, work closely with our local affiliate company, Terratec, which has strengths in support services.
We will take on a challenge in winning orders for large diameter machines, in addition to small and medium diameter shield machines to achieve market share gains. Finally, on this page, I will explain our strategies for concrete construction materials. Orders for the RC segment, a reinforced concrete for tunnel, are forecast to decrease, and we will focus on synthetic segment.
To maintain our market share of 40% currently, we will narrow down product range to highly competitive offerings. We are developing geopolymer concrete called Cemnon. We will commercialize it and use it as a key for realizing a decarbonized society. On this page, I will explain our strategies for bridge business overseas. Currently, we are undertaking long-span bridges, large packages, in addition to Japan's ODA, Official Development Assistance projects.
In Turkey, India, and Vietnam, and in surrounding countries, we will strive to enhance the business foundation by promoting regionalization, such as tapping into local talents and strengthening the local supply chain. IHI will change to a business structure at each overseas location that can generate revenues at all stages of transportation infrastructure life cycle, in addition to new construction.
In Turkey, where we have continued bridge business for 50 years, together with Turkish engineers and Turkish business partners, we are engaged in solution-based life cycle businesses, beginning with new construction, inspection, repair, maintenance, and management of long-span bridges. In Vietnam, we are planning to take the same approach as we do in Turkey.
In India, with expectations for infrastructure development in the future, we will work with local partners in a bid to continuously receive orders for new construction and shift to the life cycle stage. Next, I will explain our strategies for disaster prevention and water management business. As you can see in the chart, the market for water gates and water management solutions is forecasted to remain flat, around JPY 100 billion, until 2030.
In this market environment, we will tap into the promising municipal market with increased needs for disaster prevention, while at the same time capturing orders continually from the Ministry of Land, Infrastructure, Transport and Tourism. With the integration of water management business of IHI Group with IHI Construction Service in this fiscal year, we have built a seamless structure to be able to offer services seamlessly, covering new constructions, upgrades, inspections, and repairs.
As a result, we are able to make proposals that reflect the entire life cycles, and we believe this will lead to revenue and earnings growth. There are mainly three areas in water management business. First, regarding the dam control market, we will develop and fit emergency operation support functions, which serve as a catalyst for entering the dam control market.
Second, as regards advanced water management at the right bottom of the page, we aim at expanding earnings by adding operational support functions to identify required water volumes and optimize gate operations.
Thirdly, as for remote monitoring, we will create markets and develop and deploy centralized monitoring system for Ministry of Agriculture, Forestry and Fisheries, and municipalities. Through these efforts, by linking upstreams and downstreams in-house, IHI will strive to expand businesses from facilities to covering the entire areas.
Next, I will walk you through life cycle business outlook and our strategies. Based on the estimates of MLIT, the annual infrastructure maintenance and upgrades costs is expected to be halved in 30 years' time, with a shift from corrective maintenance to preventive maintenance, as shown in the chart on the right.
In this environment, we will enter into comprehensive maintenance and management business and leverage BMSS, Bridge Management Support System, that IHI has developed to build infrastructure management techniques, and establish information and communication technology consulting business to rationalize maintenance and management.
To evolve life cycle business as a transportation infrastructure business operator, we will establish comprehensive bridge infrastructure maintenance and management platform to broaden target infrastructure beyond bridges, to include tunnels and roads going forward. We will also work with consultants to create collaborative schemes and entering comprehensive maintenance and management business.
We will form Team IHI with partner companies and build community-based execution structure. As a water management business operator, we will enhance water management system to centrally manage area facilities and provide value anytime through dual use water management technologies during floods and abnormal times. The following pages are for your later reference. That concludes my presentation on the business.
As a transportation infrastructure business operator and as a disaster prevention and water management business operator, we aim at growing business further, making contribution to social development by supporting safe and secure social infrastructure, and by providing various social infrastructure. We look forward to your continuous support. Thank you very much.
Good afternoon. This is Morita speaking from Aero Engine, Space and Defense Business Area. First, I'd like to update you on the issue on PW1100G engine around the powdered metal disk problem, as released by RTX earlier. First, I'd like to provide the backdrop to set the context, a bit of a backdrop, knowledge. The engine disk in question revolves at very high speed, and if it breaks, could cause a serious accident.
Therefore, it is subject to design life, such as 10,000 flights or 20,000 flights, and must 100% be replaced after that many usage. This is a generally practiced maintenance approach. One more point. What happened was that powdered metal, the raw material used on the disk, was contaminated.... That is to say, this is not a design issue, but a manufacturing issue.
I'd like to reiterate this point. When I first talked about this in July, in our first quarter earnings presentation, I mentioned that, A, this is an unprecedented phenomenon, and B, just a single non-destructive test on the disk in question is sufficient to capture the defective disk, and that it is the countermeasure we will, shall be taking.
We initially assumed that we should be able to screen out the defective disk by conducting this non-destructive test, a new test, on around 1,000 disks, disks that we had. As a matter of fact, we have already been issued a notification for durability enhancement to mandate us to immediately test around 200 engines with the disk in question. We have already started testing of these 200 units.
After continued technical investigation of this defect, we saw a possibility that a single test may not be able to capture all the defective disks. This is the significant change we have seen since July, and I'm going to elaborate on this a bit further. Flight safety, of course, is an absolute requirement that can never be compromised.
That is why extra care was taken to ensure inspections at much shorter cycle, and overall design life was set shorter. These additional constraints were put in place to ensure 100% flight safety. This is going to significantly increase the frequency and duration of the maintenance, as we now have to conduct repetitive tests on all the disks with the risk, whereas initially, we thought just one test is enough.
The decision was made because we need to be very, very prudent on this type of issue in order for us to 100% ensure that customers are safe and can fly without anxiety. I would like to reiterate on this point. This is a very big trouble for our airline customers, as it ends up significantly increasing AOG, or Aircraft On Ground, the time during which an aircraft cannot fly, as the engines need to be dismantled for maintenance.
In order to minimize AOG, IAE shall be fully committed to such efforts as enhancing our maintenance capacity and capability, investigating the defect further to potentially set the test cycle a little longer, or increasing the supply of spare engines that can be used as a temporary replacement, et cetera.
Both Pratt & Whitney and IAE is once again further taking investigation to identify the frequency of tests that needs to be conducted, and as a result, how much AOG is additionally required and its cost implication. We will communicate to you once again, as soon as we have more concrete assumptions on, of this impact.
At this point of time, I would like to refrain from making any further statement on the potential impact of this matter to our future earnings. My apologies. Now, I'd like to start talking about the future of Aero Engine, Space and Defense Business Area. As we have spent nearly half of this session's time on PW1100G, I'd like to really focus on the key points. What you see in front of you is the table of contents that we have originally planned for.
Now, I'm not going to go through the outline and business environment, and I'm not going to talk about the earnings forecast as well, as the numbers has not yet incorporated the impact of PW1100G issue, and could change substantially after we have done so. So today, I'd like to focus on agenda item number 3, our strategy based on group management strategies 2023.
This is the first page for today. The top page for segment strategy based on group management strategies 2023. We are positioning aero engine business and rocket business as our growth driver. For the two businesses, aero engine business and rocket business, we are aiming to strengthen and grow, and grow both civil aero engines and defense fuels, and drive growth by overhauling our businesses. These two businesses will really be our growth driver.
We shall also engage ourselves in creation of new business areas. At the bottom, the diagram shows the two pillars of the businesses. We believe we need to further evolve these businesses. Again, aero engines include both civil and defense engines. In civil aero engine, we need to evolve the engines currently in our production, for instance, PW1100G, that we have talked about, and boost productivity.
In the field of defense, a very large project has just started, the engine development project for our next generation fighter. We are seeing development and expansion of space market for our rocket business. This business is very closely tied to our defense business. We need integrated effort in both growing our rockets business and as well, missile business. Ahead of such growth, awaits a very important issue that our civil aero engine business faces, which is Carbon Neutrality.
Aircraft industry around the world has agreed to target carbon neutrality by 2050. In that context, development of such technologies as lightweighting, electrification, alternative fuels, such as SAF, sustainable aviation fuel, and hydrogen, which will considerably enhance the fuel efficiency, will play a decisive role in the future. At the bottom right, we see space, terrestrial, and undersea data.
For space and also defense application, one of our business is to launch rockets, but beyond that, we aim to grow data business to capitalize on the data we have collected from the satellites. I'd like to talk about these initiatives one by one, a bit more in detail. I'm going to skip earnings and profit forecast pages and start with our initiative to achieve carbon neutrality for our civil aero engine business, business. At the bottom, we see bars and arrows representing years and time.
I believe we will be experiencing a turning point at around 2035. We are expecting the commercial launch of next generation narrow body anywhere from around 2035 to 2040. That is to say, we need to offer to the society an aircraft with drastic improvement in fuel efficiency, maybe not exactly carbon neutral, but very close to net zero performance, substantial improvement in fuel efficiency.
Afterwards, we expect full-fledged conversion of fuels to non-fossil fuels, and by 2050, we should expect advent of revolutionary aircraft. Here, we are presenting three technologies that are key for doing this: lightweighting, electrification, and hydrogen. There are technology development ongoing across the world. Lightweighting is focusing on composite materials development, such as CFRP and CMC, shifting to the use of more electric power, or using liquid hydrogen as a fuel for an aircraft.
We aim to lead the world in such technology development, which is ongoing across the world. Next, I'd like to talk about defense area. As you may well know, the cabinet has approved what we call three national security documents, which set path for dramatic reinforcement of defense capabilities and define defense industry as the core of the defense capability of the nation.
They are aiming to significantly grow the defense industry, and as we may all know, they are increasing the defense spending. Our focus in that context is represented in a diagram at the left bottom of the page. We have our existing business, such as aircraft engine and ammunition supply, and we want to stretch the size and scope of our business beyond that.
One is to grow our existing business with the Ministry of Defense by increasing the volume and widening the range of equipment that we provide to them. Expanding to global business may be another opportunity. Another opportunity is to capture the new trend in warfare, new strategy and tactics to provide equipment that are different from conventional equipment.
These are the three opportunities of growth we are eyeing on. On the upper half of the page, we have a number of examples of such opportunities to give you more concrete vision. For instance, we will manufacture missiles and rocket motors with higher performance and in higher volume, and deliver them to the Ministry of Defense. This is an area that is undergoing significant evolution. Next Generation Fighter would be a most promising opportunity for our engines.
Focus on durability and toughness should expand our spare parts and maintenance businesses. Unmanned assets are a new technology. We have incremental opportunities for our key equipment, such as UUV, unmanned underwater vehicle. Another significant change we expect is data processing and information gathering, reconnaissance using satellites. We already have small business here, and we are expecting this to grow significantly.
Next, our space business. Conventionally, our mainstream business has been what's on left, left bottom of this page, developing and manufacturing such hardware as rockets, rockets parts, and components and satellites, and delivering them to JAXA. First, we shall shift more to launch service business, and then ahead of that, we will need to expand to peripheral data business, which I have touched upon earlier, where we leverage on the data collected by our satellites. We believe this is going to be a significant opportunity.
There are many such businesses here listed, such as vessel monitoring, ocean surveillance, or tropical forest management. Space, maritime, and land survey-surveillance is another opportunity, which is closely tied to defense. These would be business opportunities for a hardware manufacturer like IHI. In order for us to bring what I've mentioned into reality, we need to enhance our basic capability.
That is to say, we need to overhaul our production to enhance the efficiency and renovate our business structure. One driver for doing this is digital. As you may know, digital is evolving very fast and bringing big, big, big changes. We have to admit that we are slightly lagging behind in this area. We really need to catch up. We need to further evolve our monozukuri or manufacturing capability, which we have honed for long.
We have newly established Transformation Center, an expert organization to drive innovation, working on DX and working to fundamentally enhancing our production efficiency. There are four pillars of this initiative. At the bottom center, we have business structure reforms to renovate our administrative systems. On the left, development process reforms will develop MBSE and MBD system, and we drive carbon neutrality together with production efficiency enhancement.
A very important key here is quality. We need to exponentially enhance our quality. We believe that in the end, that will lead to enhancement in production efficiency and reduction in cost. We are undertaking the holistic innovation, joining forces of all the business areas of IHI. I would like to stop here for my presentation.