This is Fukumoto, General Manager of Finance and Accounting of IHI Group. I will IHI Group's financial results for the fiscal year 2020 based on the PowerPoint presentation materials disclosed at 3 p. M. Today. As explained in October last year, we have voluntarily adopted International Financial Reporting Standards, or IFRS, from this time.
And the figures for 2019 for year on year comparison are also stated based on IFRS. This page shows the contents of the presentation. Please turn to Page 4. This slide shows an overview of the results for fiscal year 2020. Revenue and operating profit decreased significantly in civil aero engines due to the downturns in demand for aero transportation caused from the impact of the spread of COVID-nineteen.
On the other hand, we were able to deliver results to a certain extent such as expansion of life cycle businesses in non aero businesses, mainly in Resources, Energy and Environment as well as company wide initiatives to reinforce the cost structure. Also, some investment property was sold aiming at securing investment resources for creating growth businesses put forward in Project Change. Cash flows improved owing to partial freezing and reduction of R and D and capital investment and also due to property sale. I will explain details using the following slides. Please turn to Page 5.
This slide shows the consolidated results, including orders received in the income statement. The forecast announced on February 9 is indicated at the top left corner of each item. Figures disclosed and explained today are broadly in line with the revised forecast announced on April 26. Both orders received and revenue decreased considerably year on year. As shown at the top right, the average exchange rate for revenue in fiscal year 2020 was 106.40 yen to the U.
S. Dollar. There was 2.79 yen appreciation from the previous fiscal year. On operating profit, there was 64,000,000,000 negative impact from Civil Aero Engines, our core business, as it was heavily hit by the spread of COVID-nineteen. On the other hand, we were able to achieve over 30,000,000,000 yen improvement due to expansion of life cycle businesses set forth in project change, reinforcement of cost structure and reduction of fixed costs.
As disclosed in February, there was also an impact from sale of investment property aimed at securing investment resources for creating growth businesses. All in all, despite recording year on year profit decline, we were able to post operating profit of 27,900,000,000 yen Profit attributable to owners of parent was 13,000,000,000 yen up 4,800,000,000 yen year on year due mainly to smaller losses of investments accounted for using equity method. Please turn to Page 6 for orders received and order backlog by segment. All the reportable segments reported year on year decline in orders received. Orders decreased in Resources, Energy and Environment, Social Infrastructure and Offshore Facilities as well as industrial systems and general purpose machinery due to the reverse effect of large scale projects in boilers, bridges and transport machineries, which were recorded in the previous year.
In Aero, Engines, Space and Defense, there was a substantial decline in orders in several aero engines. Overseas orders received was 367,900,000,000 yen representing 34% of total orders. Please turn to Page 7 for revenue and operating profit by segment. In Resources, Energy and Environment, revenue decreased mainly due to completion of large scale overseas projects in plants despite increase in life cycle businesses of boilers. Operating profit increased due to increase in profit on higher sales in boilers as well as deterioration of profitability in power system and plants in the previous fiscal year coming to an end.
Social infrastructure and offshore facility achieved increase in revenue and profit due to disposition of real estate for sale in urban development. Revenue in Industrial Systems and General Purpose Machinery decreased due to lower revenue in vehicular turbochargers and heat treatment and surface engineering despite increase in transport machineries. Operating profit decreased due to recording the restructuring cost in the agricultural machineries business. But if this onetime cost is excluded, operating profit increased owing to reduction of fixed costs, mainly in vehicular turbochargers, among other factors. Revenue in Aero, Engine, Space and Defense decreased significantly in Civil Aero Engines due to the downturns in demand for aero transportation caused from the impact of the spread of COVID-nineteen.
The segment recorded operating loss of 40,400,000,000 yen due to decline in sales of highly profitable spare parts in servo aero engines despite reduction of fixed costs beginning to take effect. All the non aero businesses achieved solid increase in operating profit against the February 9 forecast, excluding the impact from onetime cost recorded in the Agricultural Machineries business. Results of Aero, Engine, Space and Defense were pretty much in line with the forecast. Overseas revenue was 413,900,000,000 yen recording decline due to decrease in revenue of civil aero engines. Please turn to Page 8.
This is a breakdown by segment of the 19.8 1000000000 year on year decline in operating profit. Negative impact of the spread of COVID-nineteen was 66,000,000,000 yen mainly in Aero, Engine, Space and Defense. Revenues of Civil Air Engines and the vehicular turbochargers will be explained later. Change in revenue had 9,300,000,000 positive impact. This was mainly due to increase in life cycle businesses centered on boilers in Resources, Energy and Environment.
Change in construction profitability brought about 8,200,000,000 yen positive impact. This is mainly attributable to deterioration of profitability in some construction projects in resources, energy and environment coming to an end. The negative impact from the change in foreign exchange rate was 2,600,000,000 yen mainly in Aero, Engine, Space and Defense. A change in SG and A had a positive impact of 22,400,000,000 yen in total due to partial freezing and reduction of R and D and company wide fixed cost reductions undertaken as countermeasures against the spread of COVID-nineteen. Changes in other income and expenses had 8,800,000,000 positive impact.
While recording that restructuring costs in the Agricultural Machineries business in Industrial Systems and General Purpose Machinery, the impact from sale of investment property was booked in adjustment. Please refer to Page 9. This page shows quarterly net sales trend of civil aero engines. The figures on this page are based on Japanese accounting standard, taking into account the continuity up until the Q3. Net sales decreased 36.7% year on year.
Recovery is slowing down after the 3rd quarter. Please turn to Page 10. This page shows quarterly trend at the number of delivery and net sales by region of the vehicular turbochargers. Recovery trend was seen in each region after the Q2. But in the Q4 in China, there were some impacts from the shortage of semiconductor supply as well as seasonal impact associated with Chinese New Year.
While this is minor impact on earnings, we will continue to monitor the situation closely.
Please turn to Page 11, finance income and costs. Share of loss of investments accounted for using equity method was 1,900,000,000 yen improved by 10,300,000,000 yen on an year on year basis. Major contribution was made by an affiliate company, Japan Marine United, which has been able to reduce the EBIT loss. Foreign exchange gains and losses also improved following the rapid appreciation of the yen as the fiscal year end approached. Please turn to Page 12, consolidated financial position.
Both total assets and total liabilities decreased from the end of the previous year. Total assets decreased mainly due to the decrease in cash on hand because we spent some of them as working capital. The level of cash on hand at the end of fiscal 2020 was higher than the normal level to be more secured under COVID-nineteen. Total liabilities decreased mainly due to the decrease in trade payables. Interest bearing liabilities was 605,900,000,000 yen as shown on the page, decreased by 700,000,000 yen from the end of the previous year.
Just for your information, 600 and 5,900,000,000 yen interest bearing liabilities does include lease liabilities worth 111,900,000,000 yen which should not be recognized under GGAAP. Debt to equity ratio was 1.85x. Equity ratio was 16.4%. Please turn to Page 13, consolidated cash flows. Cash flows from operating activities was 36 point 3,000,000,000 yen roughly the same as the end of the previous year.
Cash flows from investing activities was 40,400,000,000 yen 45 less cash out compared to the previous year. 2 major factors for the decrease: 1, less spending in CapEx by partially freezing and controlling the investment to sales of investing at properties. Free cash flow combining the cash flows generated by operating and investing activities was a small negative, but improved by 38,900,000,000 yen from the previous year. Please turn to page 14. R and D, CapEx and depreciation, past 2 years results and forecast for fiscal 2021.
Although we made less investment in fiscal 'twenty than the previous year following the suspension on and control over some of the investment items, we are to make necessary investment in fiscal 2021 to create growth business, etcetera. Please turn to Page 15, revenue by region. Revenue especially dropped in North America due to decrease in revenue generated mainly by civil aero engine business. Please turn to Page 16, assets balanced by segment. 1 of the factors for the decrease in adjustment is the decrease in cash on hand.
Forecast of the consolidated results for fiscal 2021. Please turn to Page 18. Foreign exchange rate assumption is 105 yen for $1. Forecast for orders received is 1,160,000,000,000 yen. Both revenue and profit are expected to be higher than fiscal 2020.
Revenue is expected to be 1,180,000,000,000 yen operating profit, 70,000,000,000 yen profit attributable to owners of parent, 35,000,000,000 yen Foreign exchange rate sensitivity, in other words, size of the impact on operating profit by change of 1 yen versus the dollar, should be 800,000,000 yen As for dividends, we will forego year end dividend for fiscal 2020 as already announced. But for fiscal 2021, annual dividends per share is expected to be 60 yen 30 yen as interim dividend and the remaining 30 yen as year end dividend. Please turn to Page 19. Here is the waterfall chart to explain the breakdown of how the OP will increase during 2021 from 2020 level. You will see how we are likely to recover from the COVID-nineteen impact and how we are to grow through what we call performance recovery drivers.
The initiative under a project called Project Change, which should allow us to achieve the business targets. Sekolow Aero engine business, a business heavily affected by COVID-nineteen, is likely to generate more sales by selling more engines and spare parts to certain extent, following the increase in air travel demand, especially for domestic flights in each market in summertime onward. But on a total basis, contribution to the OP should be almost 0 because more spare parts sales for sure means greater profit. But for newly made engines, most of the initial phase, which will cause negative impact on the profit. In the meantime, we are expecting to grow OP by approximately 34,000,000,000 through 3 major business recovery drivers: 1, by strengthening cost structure 2, by expanding life cycle business and 3, through business structural reform.
On top of that, we are planning to sell our assets to finance growth business creation as we did in fiscal 'twenty. Please turn to Page 20, orders received forecast by segment. On a total basis, orders received is expected to increase by 63,000,000,000 yen We are expecting the life cycle business to grow, especially under Resources, Energy and Environment Business and the demand from auto component related business to recover under Industrial System and General Purpose Machinery Business. Please turn to Page 21, Revenue and OP Forecast by segment. All segments are expected to generate higher revenue than the previous year.
Resources, Energy and Environment segment contributions will be made especially by life cycle businesses, including Power Systems and Nuclear Energy. Social Infrastructure and Offshore Facilities segment contributions will be made mainly by progress in overseas large sized bridge projects and increase in domestic maintenance works. Industrial System and General Purpose Machinery segment revenue will increase following the demand recovery in vehiculars harbor charter business and Heat Treatment and Surface Engineering. Aero, Engine, Space and Defense segment, to a certain extent, we are expecting sales recovery in engine and spare parts in civil Aero engine business. Reasons for the increase or decrease in OP will be explained on the next page, but Aero, Engine, Space and Defense segment is expected to incur a loss again of 27,000,000,000 yen following the ongoing COVID-nineteen situation, although the size of loss is expected to be smaller than the previous year.
Please turn to Page 22, analysis of change in OP from the previous year. Resources, Energy and Environment. OP will be up by 3,900,000,000 yen from the previous fiscal year, thanks to the profitability improvement in Power Systems Business. Industrial Systems and General Purpose Machinery, OP will be up by 17,600,000,000 yen for two reasons: 1, demand recovery in auto component will translate into sales growth 2, thanks to the cost structure improvement effort, including efforts to lower procurement costs and to improve productivity, mainly in the telotarosurter business. Aero engine, space and defense.
Although we are not expecting demand recovery in several aero engine to contribute to the OP, OP will be up by 13,400,000,000 yen by strengthening the cost structure mainly through newly made engine productivity improvement. SG and A will increase partially because we are expecting these expenses to go up following the increase in sales. Adjustment includes increase in R and D related to developed strategic technologies such as electrification and carbon solution to create new growth businesses. Change in other income and expenses and adjustment were 18,000,000,000 yen does include some buffer for asset sales proceed and potential business performance volatility risk. Gain on sale of asset in fiscal 2020 was a little bit more than 20,000,000,000 yen which will increase to approximately 50,000,000,000 yen in fiscal 2021.
50,000,000,000 yen includes the 16,000,000,000 yen to be generated by the sales of land and building of former IG Shipyard and the 5,500,000,000 yen to be generated by sales of land of rental property in Yokohama and others, which are currently under discussion. Please turn to Page 23. Under project change, one of the highest priorities is to strengthen cash generation ability. And so we consider cash conversion cycle as an important KPI. To report the progress we are making, we are to disclose consolidated cash flow forecast from now on.
Cash flows from operating activities will be JPY 60,000,000,000 net plus in fiscal 2021. Cash flows from investing activities will be JPY 30,000,000,000 net minus in fiscal 2021, including the proceeds we will be generating through property sales. Free cash flow, combining the cash flows from operating and investing activities, will be 30,000,000,000 yen net plus. We will continuously make effort to shorten the cash conversion cycle to further strengthen cash generation ability in the future. From Page 24 onward, we have financial results by segment, which I have already covered in my presentation, so let me skip.
Page 26, let me inform you that we have newly established Carbon Solution SBU under Resources, Energy and Environment segment. Page 33 onward are appendices. Please take a look later. This concludes my presentation. Thank you.
This is Ide, CEO of IHI Group. I will go over the management review. First of all, I would like to explain about the progress of Project Change. As already explained, project change is a new medium term management policies announced in November last year, and the 3 years covered by project change is positioned as a preparation period for us to build a new business portfolio. Key points of project change are as described at the bottom left of the page: return to growth trajectory, overcoming operating environment changes and implementing financial strategies, and based on that, creating growth businesses.
These are key initiatives of project change, and we have been making company wide efforts to achieve them. This page shows a summary of the 1st year of project change, looking at what kind of results we have achieved so far. We recognize that the business has been hit quite heavily by the spread of COVID-nineteen. Especially, the impact on civil aviation demand has been bigger and more prolonged than we originally anticipated. Over a long term perspective, carbon neutral initiatives are expanding around the world and happening very rapidly.
In such a business environment, some of the results of project change we have delivered so far include the business structure reform. We have undertaken various measures to strengthen business structure of aero, engine, space and defense, such as reduction of fixed costs and so forth, which I will explain later. All the other businesses, except for Aero, Engine, Space and Defense, achieved higher operating profit than the previous year. Also, base revenue and profit increased for life cycle businesses. Those were some of the results we achieved.
In addition, to create growth businesses, as you can see in the results section, we set up strategic technology headquarters as of April 1, with myself serving as General Manager. We are working as one at a corporate level to develop strategies, technologies and new and growth businesses driven by this newly established strategic technology headquarters. Issues include our capabilities to generate cash. As for creating growth businesses, we established strategic technology headquarters just explained, but we need to enhance the speed of realization of creating growth businesses, which we regard as a major challenge. As General Manager of Finance and Accounting explained earlier, operating profit for fiscal year 2020 was hit by substantial decline in revenue and profit in several aero engines.
On the other hand, profit increased due to expanding life cycle businesses and strengthening cost structure, mainly in resources, energy and environment. As for the forecast for fiscal year 2021, although recovery of aviation demand is slower than initially anticipated, by reinforcing the earnings base, we are aiming at generating €70,000,000,000 in operating profit. Strengthening the cost structure, expanding life cycle businesses and accelerating business structure reforms are key initiatives in project change, and we will further strengthen our effort in implementing them with an aim at realizing the operating profit margin of 8% in fiscal year 2022. As trends of aviation demand especially has huge impact on IHI Group, please allow me to explain the situation more in detail. The table at the bottom left shows demand trend by segment, 1, 23.
First, the domestic flight demand is forecast to recover after summer in countries like United States, where vaccinations are progressing. And we are starting to see some signs. With such, we have expectations for recovery in demand for engines that we supply to small and midsized aircraft secondly, the international flight demand for large aircraft. As there is no progress in easing of entry restrictions, recovery of international flight demand is pushed back. Thirdly, cargo aircraft demand is high, exceeding the pre COVID level.
Forecast for the number of engines serviced is at the bottom right of the slide. As you can see, there will be recovery in fiscal year 2021 compared to fiscal year 2020, but it will still be below 2019. A major recovery is expected in 2022. And in 2023, it's forecast to go back to the 2019 level. In fiscal year 2020 2021, we will work on strengthening the business structure in civil aero engine.
By thorough reductions of cost and inventory, among others, we aim at building a lean structure so that we can make a jump start in the recovery phase. Now moving on to improvement of cash conversion cycle. As explained earlier by General Manager of Finance and Accounting, cash conversion cycle went up to 124 days in fiscal year 2020. Due to increase in working capital in several error engines caused by a buildup of components and others to which orders were placed before the spread of COVID-nineteen. As indicated at the 3rd bullet point under priorities, we will strive to optimize ideal production lead times and procure parts just in time by the end of fiscal year 2021 to achieve CCC improvement down to 110 days in fiscal year 202180 days in fiscal year 2022.
Another key initiative of project change is expanding life cycle businesses. Except for aero, engine, space and defense, life cycle business revenue went up 13% year on year. Toward fiscal year 2022, we will expand life cycle businesses by 30% across the group with an eye on deploying them globally. Some examples are shown on the page, including maintenance and repairs of boilers and domestic bridges. Life cycle businesses are currently progressing in resources, energy and environment, but we will expand them also in Industrial Systems and General Purpose Machinery and other segments.
We will also proactively pursue digital transformation in life cycle businesses. Furthermore, we are currently working on to shift resources to expand life cycle businesses.
Next is shifting resources, which I have briefly mentioned right now. To catch up with the business structural changes, we have already reallocated 800 employees and will reallocate 100 more employees from the manufacturing side to solution related businesses, including lifecycle business, other growth businesses and highly profitable businesses. We are not just physically reallocating these people, but also making sure we provide the right education to them to learn more about solutions. And we are also making sure we conduct the right matching between the job and the talent because we understand transition between different types of businesses cannot be smooth without providing the right care to the people. We have been able to develop a framework to make it happen, which we would like to utilize to treat people carefully and rightly.
Next is about strengthening cost structure. Specifically, we are to improve breakeven point and enhance productivity. As a track record, we have been able to improve the breakeven point of vehicular turbocharger business by approximately 10%. In addition, we have been expanding global basis procurement and reducing variable expenses. As for the bridge business, we have been able to shorten the manufacturing lead time by roughly 50% by continuously working on to visualize the operational processes, standardize the drawings, synchronize processes between plants and sites.
In the past, we had major size projects whose profitability worsened significantly compared to the initial estimate. But in fiscal 2020, the number of such projects has become to 0. We have been taking measures to manage potential project risks appropriately. And we believe that finally, now we do have the structure or mechanism to manage the such risks. We will keep controlling such potential risks tightly, not only for the large also for mid- and small size projects.
Next is about creating positive workplaces, which is related to people. When we are to focus more on achieving carbon neutral, we need to create more new businesses and get variety of ideas from our people. We expect every single employee to foster creativity and make the most of them. To let it happen, we have been introducing new work practices, and we are to develop an environment where people with various background can achieve results. And to, 1st of all, share awareness for our employees to have happier work life and personal life, top management has been conducting dialogues with the employees.
I myself had dialogues with more than 60 employees during the previous fiscal year and we'll continue them in the future. Next is progress in deploying carbon solutions. We do have scenario for becoming carbon neutral by 2,050. First of all, we are promoting more use of hydrogen, ammonia and renewable energy. Especially, we are working on various initiatives to promote fuel usage of ammonia and to capture and store carbon and valorize carbon dioxide.
Please turn to the next page. Let me share some details. Here are the initiatives IHI is currently working on. First one is the coal and ammonia coal firing. Now we are being able to coal fire up to 20% ammonia to generate power at coal based thermal power plants.
And for ammonia coal firing gas turbine, as the first case on a global basis, IHI has been successfully co fire up to 70% ammonia. We are to focus more on renewable energy in the future, especially to generate green hydrogen. As a specific plan, IHI is currently considering to conduct demonstrational experiment to produce hydrogen in Australia. Moving on to carbon recycle. IHI is now getting increasing number of inquiries related to methanation, a technology to synthesize methane from hydrogen and carbon dioxide.
We will keep focusing more in this area. We are also making a good progress in improving mobility efficiency. Over the past 20 years, IHI has been developing powertrains, especially e compressors for fuel cell vehicles. The compressor picture you see on the slide is the compressor already commercialized, which is the one we are supplying to Mercedes fuel cell vehicle. It is also inevitable for air transportations to reduce carbon dioxide.
Engines have to be lighter. So we have been developing technologies to develop compound material to make them lighter. Development of sustainable aviation fuel and hydrogen based fuel are another areas we are working on. We are developing multiple technologies related to electrification as well. Another growth business is maintenance disaster prevention and disaster mitigation.
As of today, although the size of initiatives we are working on is not big yet, we are working on multiple initiatives. For example, developing earthquake earthquake resistant infrastructure is one of the areas we have been working on from before. Another example should include equipment monitoring, disaster and operations in the event of disaster. We are also using meteorological and environmental information for river monitoring, infrastructure, Watergate and dam monitoring. We will do more in these areas in the future.
Next is structure for creating growth businesses. As mentioned at the beginning, IHI has established strategic technology management headquarters under the direct control of myself. The headquarter has started to work on activities from April 1 and currently focusing on carbon solutions and electrification as also mentioned at the beginning. The headquarter will serve as a control tower to develop plans and strategies for the whole IHI Group to develop strategic technologies and create growth businesses. IHI will accelerate the speed of growth of these growth businesses under the leadership of the headquarters.
As announced today, Iichai will make Meisei Electric a wholly owned subsidiary. We concluded share exchange agreement today on May 13, which will become effective on August 1. Meisei Electric's core businesses are unique, which are meteorology and disaster prevention and space and defense. They have strong capability in communication and control, which allows them to observe the earth. We are making this company a wholly owned subsidiary because we believe they will fill in our missing pieces in the areas, including carbon solution, space development and disaster prevention and mitigation.
We will collaborate with them to achieve growth in these areas together. Our investment stance. As already mentioned, we have secured finance to make investment in growth businesses by selling some of our properties in fiscal 2020 fiscal 2021. Using the proceeds, we will make investment in the areas including hydrogen and ammonia, electrification, new materials, digital transformation and M and As. We have recognized 380,000,000,000 yen as the budget for these investments for the coming 3 years, out of which 30% or 40% will be invested for growth businesses.
Finally, let me make some remarks on project change. It has been still only a while since we started the project, but we are fully determined to work on the structural reform. IHI will achieve additional growth with lean and flexible structure. We will accelerate the speed of growth and explore various opportunities.