This is Maruyama in charge of Finance and Accounting of IHI Group. I will explain the financial results for the Q3 of the fiscal 2020 followed by the full year forecast based on the PowerPoint presentation material disclosed at 3 p. M. Today. Please turn to Page 4.
This slide shows the consolidated results, including the orders received and the income statement. The accounting standard for revenue recognition is applied from this fiscal year and the effect of applying the standard is indicated at the top left corner of the relevant items. Orders received were 684,400,000,000 yen down 192,200,000,000 yen year on year. As shown at the top right, the average exchange rate for sales during the period under review was 106.36 to the U. S.
Dollar. There was 2.59 appreciation from 108.95 of the previous corresponding period. Net sales stood at 766,800,000,000 yen down 155,100,000,000 yen or 16.8 percent year on year, mainly due to the impact from the spread of COVID-nineteen and also as a result of applying the accounting standard for revenue recognition. Operating profit was negative 2,500,000,000 yen down 29,700,000,000 yen year on year, mainly due to lower sales despite our company wide effort, including fixed cost reduction. Ordinary profit deteriorated to negative 10,400,000,000 yen due to factors such as increase in foreign exchange losses.
Profit attributable to owners of the parent was a loss of 11,500,000,000 yen Please turn to Page 5. Orders received and order backlog by segment. Orders received decreased in all the reportable segments. The decrease in resources, energy and environment mainly came from the boilers business, which had large projects in the same period last year. The decrease in industrial systems and general purpose machinery was due to the lapping of large scale projects in the transport machineries business in the same period last year and an impact from the spread of COVID-nineteen on the vehicular turbochargers business as well as the thermal and surface treatment business.
Aero engines, space and defense reported a significant fall in the civil aero engines business. Overseas orders received amounted to 200 and 58,200,000,000 yen or 38 percent of the total orders. Overseas ratio fell by 7 point year on year, affected by the lapping of large scale projects in the boilers business in the same period last year and the decrease in the civil aero engines business. Order backlog stood at 1,103,700,000,000 yen down 358,200,000,000 yen from the end of the fiscal 2019. Order backlog decreased significantly in Aero, Engine, Space and Defense since we have changed the calculation method of orders received and order backlog in the Civil Aero Engines business, as we explained in the previous earnings call for the 2nd quarter.
Please turn to Page 6. Net sales and operating profit by segment. This slide also shows the effect of applying the accounting standard for revenue recognition at the top left corner of the relevant items. Resources, energy and environment increased net sales year on year with the increase in the boilers business. Operating profit made a turnaround from loss due to the increase in net sales of the boilers lifecycle business and mostly stabilized decline in profitability previously experienced by the power systems and boilers businesses.
Social infrastructure and offshore facility increased both net sales and operating profit in the urban development business and others. Industrial Systems and General Purpose Machinery decreased net sales due to the lower sales in the vehicular turbochargers business and the thermal and surface treatment business despite the higher sales in the transport machineries business. Operating profit for the segment increased year on year as a result of the increase in the transport machineries business and the decrease in the thermal and surface treatment business due to the changes in their net sales, lower sales in the vehicular turbochargers business and the progress we made in reducing fixed costs. Aero, engine, space and defense reported a significant decrease in sales in the civil aero engines business due to the effect of applying the accounting standard for revenue recognition in addition to the decline in demand for aero transportation caused by the spread of COVID-nineteen. The segment posted an operating loss severely affected by the decline in highly profitable spare parts sales in the civil aero engines business, which offset the effect of fixed cost reduction, etcetera.
Overseas sales were 299,400,000,000 representing 39 percent of the total sales. The year on year decline in overseas sales ratio is attributable to the lower sales in the civil aero engines business. Please turn to Page 7. This slide shows the breakdown of the 29,700,000,000 yen year on year decrease in operating profit by segment. We analyzed that the spread of COVID-nineteen brought a negative impact of 51,000,000,000 yen to industrial systems and general purpose machinery and aero, engine, space and defense.
The impact was mainly suffered by the civil aero engines business with a decline in sales of engines and spare parts due to the sluggish aero transportation demand and deteriorated business conditions among airlines. Especially, the slow recovery in spare parts sales led to a greater impact compared to the time we announced the Q2 results. Sales status of
the Civil
Aero Engines business and the vehicular turbochargers business will be explained later using the slides following this. Changes in net sales had a positive effect of 1,300,000,000 yen The increase in the boiler's life cycle business in resources, energy and environment was among the contributing factors. Changes in construction profitability brought about 6,300,000,000 positive effect, which is attributable to mostly stabilized decline in profitability previously experienced in some projects in resources, energy and environment. Changes in foreign exchange rates had a negative impact of 1,200,000,000. Changes in SG and A added a positive effect of 16,000,000,000 yen in total with our ongoing effort to reduce R and D expenses and fixed costs as part of our countermeasures against the spread of COVID-nineteen.
The negative effect from applying the accounting standard for revenue recognition was 1,100,000,000 as a result of expanding the scope of percentage of completion method and deducting damages and others from net sales, which used to be recorded as non operating expenses. Please turn to Page 8. Quarterly net sales generated by the civil aero engines business. Net sales for the quarter under review were 28,500,000,000 yen but when we exclude the effect of applying the accounting standard for revenue recognition, net sales for the quarter were 54,000,000,000 yen Aerotransportation demand for international flights is still under difficult circumstances due to a series of border controls in place. We observe a slowing trend in the recovery of domestic flights amid turn from the previous moderate recovery trend driven by resumption of economic activities in each country.
Please turn to Page 9. Quarterly numbers of deliveries and net sales by region for the vehicular turbochargers business. Net sales in China have been on a recovery trend since the Q1. Other regions started to follow China in the Q2, sustaining the recovery trend in the Q3 as well. All regions recovered to the level of the same period last year.
Please look at Page 10. This is the breakdown of non operating income and expenses. Share of loss of entities accounted for using equity method was 800,000,000 yen including 8,300,000,000 yen of improvement. This is mainly due to the reduction of loss related to the affiliated company Japan Marine United. Please look at page 11.
This is a breakdown of extraordinary income and loss. There's no change about this breakdown. 1,600,000,000 of extraordinary income includes gains from the sales of fixed assets such as land properties owned by a subsidiary. Next, please refer to Page 12. This is the consolidated balance sheet.
The balance of the interest bearing debts is just shown in the middle of the table, yen576,200,000,000 up by yen 88,000,000,000 from the end of last fiscal year, leading to the debt equity ratio of 1.57 times. Equity ratio is 19.8 percent, 1.1 points improvement from the end of last fiscal year, mainly due to €27,400,000,000 increase of earned surplus at the beginning of this year with adoption of revenue recognition standard. Please look at the Page 13. And upper table is the cash flows from the operating activities recognized €78,700,000,000 of deficit with cash disbursement increased by €11,300,000,000 from the year earlier. For cash flows from investing activities, disbursements was 44,600,000,000 with a 4,400,000,000 of decline in disbursements year on year.
Main disbursements of cash was for the construction cost for the buildings of the Tsurugashima Works, which completed in the fiscal year 2019, but it was offset by suspending and reducing part of the CapEx. Consequently, free cash flows combining operating and investing cash flows recognized €123,400,000,000 of deficit. Below the table shows that represents actual recognition of R and D expenditure and CapEx as well as depreciation and amortization. R and D expenditure and CapEx have decreased due to the partial suspension and reduction of them. Please look at Page 14.
This is the regional breakdown of the overseas sales presented earlier in Page 6. Sales in North America have substantially dropped with declining revenue on civil aero engines business mainly. Next, please let me explain the full year forecast on a consolidated basis for the fiscal year 2020. First, please look at the Page 16. This is the full year forecast.
The full year forecast is compiled on the IFRS basis because we will adopt IFRS from the reporting at the year end of FY 2020. But we also presented the 1 on a GAAP basis for the convenience of your apple to apple reference. We have downwardly revised the full year forecast of orders and sales by €40,000,000,000 for each from the last one announced on November 10 last year. On the other hand, there is no revision into the forecast of a consolidated profit except for some segment wise revision, which we will explain later. For your information that assumed exchange rate for Q4 are 105 yen to the U.
S. Dollar and yen 120 to euro. The currency sensitivity is yen 200,000,000 to the U. S. Dollar.
Please look at page 17. We initially project sales decrease by a 10,000,000,000 yen and a profit decline of 6,000,000,000 yen year on year, mainly because of the civil aero engines business, particularly spare parts was adversely affected by resurgence of COVID-nineteen. However, we could manage to maintain the profit as in the last forecast with additional SG and A reduction with accumulated efforts on the total cost and the fixed cost reduction as well as the reversal of part of the risk buffer resolved for business performance fluctuation. Next to Page 18. The impact of COVID-nineteen pandemic on the civil aero engines business.
Our early expectation that the demand on the domestic short haul air travel for small and middle sized aircrafts will slowly recover towards the year end did not hold true due to struggling tourist demand hampered by resurgence of COVID-nineteen infections as well as additional traffic restriction imposed in Europe. Therefore, recovery of demand is expected to slow down again in the following months toward the fiscal year end. On the other hand, the demand for long haul flights for large sized aircraft has not indicated any big change either and the difficulties is expected to continue for the time being. Under all those changes in the business environments, we project that highly profitable spare parts sales will further decline from the last forecast. Next, please turn to Page 19.
This is the forecast of orders received by segments. Orders in the Resources, Energy and Environment segment is expected to decrease by €30,000,000,000 due to mainly to the delay and the timing of the receiving orders for power systems, boilers and plants. Orders in the Air Engine, Space and the Defense segments dropped by JPY 10,000,000,000 for civil Air Engines Businesses. Please look at page 20. This is a table listing segment wise full year forecast on the revenue and operating profits.
Analysis on the change of operating profit from the previous period will be explained in the next slide, so let me focus on the change of revenue in this page. Revenue of Resources, Energy and Environment segment is projected to go down by €20,000,000,000 for the Power Systems or Plant businesses, caused by decreased orders of post performance after recognition of revenue. The revenue of aero engines, space and defense segments also goes down due to the impact of different sales of spare parts for civil aero engines business. Please look at Page 21. This shows the analysis on change of operating profit from the previous period by segment.
In Resources, Energy and Environment segment, negative impact of declined revenue is expected to be offset by increase in the profit of nuclear lifecycle business or reduction of SG and A expenses. And all in all, there is no revision into the forecast of operating profits. The operating profit of Aero, Engines, Space and Defense segments is projected to go down by €6,000,000,000 due to the drop of revenue in Civil Aero Engines business. As for €3,000,000,000 recognized as the changes in other income and expenses and adjustment reflects that the part of the buffer reserve for business performance fluctuations was withdrawn. Please allow me to skip pages after Page 22 representing the overview of each segment because I have already explained that contents in my presentation so far.
And please refer to pandasies in the page 31 and onward later for your information. That's all my presentation today. Thank you very much. Thank you.