Thank you for your participation in our FY twenty twenty five Financial Results Meeting and while you are busy schedule. I am Kentora Matsuka, I'm Executive Vice President. Yesterday, it was reported that the tariff negotiation with The United States has reached an agreement and it is hoped that this will mitigate future impacts. However, the automotive tariffs that went into effect in April have already had an impact on our sales activities in The U. S.
Market. In addition, there is a growing trend to compensate for declining sales in the market such as The U. S. By expanding sales in other regions leading to the increased competition in various markets. As a result of these circumstances, we recognize that the sales environment surrounding our company is more challenged than ever before.
These business conditions were the main reason for our challenging first quarter result for FY 2025 as shown on this slide. Although net sales decreased by only about 3% Y o Y, operating profit decreased 84% Y o Y to 5,600,000,000.0 yen Ordinary profit was 4,800,000,000.0 yen and net income was JPY0.7 billion. Retail sales were JPY194000 units similar to the previous year. Please turn to Page four. On this slide, you can see the factors behind the Y o Y changing in operating profit for first quarter of FY twenty twenty five.
In terms of volume mix and selling price, it delivered an operating profit increase of 7,800,000,000.0 yen driven by strong haul sales in ASEAN, Japan, Europe and other regions as well as improved selling prices in North America. Sales expenses reduced operating profit by 9,000,000,000 yen mainly due to an increase in incentives in the multiple markets in line with intensifying market competition. Procurement cost and shipping cost improved JPY 1,100,000,000.0 in total as deterioration in inflation effect was reversed by the reduction in procurement cost and shipping cost. R and D expenses increased as planned resulting in a JPY0.8 billion decrease in operating profit. Other items improved JPY6.3 billion due to improved quality cost and general expenses.
Foreign exchange rates had a negative impact of 20,900,000,000.0 yen as the overall trend moved in an unfavorable direction and compares to the same period last year. Tariff effects were 14,400,000,000.0 yen Please turn to Page five. I would like to explain our global sales volume. Declines in Oceania and Europe were offset by increases in Latin America, Middle East and Africa and Japan resulting in the overall retail sales volume similar to the same period last year. Next, I will explain the situation by region.
Please turn to Page six. First, I will explain the ASEAN and ASEAN regions. In ASEAN markets, while interest rates have been falling, recovery has been slow in Thailand, Indonesia and TIV remains sluggish. In contrast, markets in The Philippines and Vietnam are relatively stable. The situation by region.
Furthermore, in addition to the entry of new competitors such as Chinese companies, sales competition in other Asian countries is intensifying as automakers seek to compensate for the delayed market recovery in Thailand and Indonesia. Even in this challenging environment, we have focused on expanding our market share by implementing a range of the sales strategies such as launching new models and strengthening our collaboration with theaters and the finance partners. In addition to carefully implementing sales activities, we'll continue to aim to expand our sales share and improve profitability by launching new models in a timely and strategic manner in market segment where growth is expected. Next, in Australia, which accounts for the majority of the Oceania region, persistently high policy interest rates led to a slight Y o Y decline in automotive demand. Additionally, the exclusion of behalf from tax incentives posed challenges for our core models.
Although competition in the remaining years will rebuild our market advantage by enhancing our competitiveness centered on the new Triton, which now has a complete lineup. Please turn to Page seven. Next is Latin America and The Middle East and Africa. In Latin America, in the backdrop of the economic recovery in the major countries, automotive demand has remained robust. In this environment, we increased our year over year sales by expanding sales of newly launched models.
We aim to maintain the sales momentum and achieve further growth through upcoming new model introduction. In The Middle East, automotive demand has been solid particularly in the GCC countries and a previously sluggish pickup truck market in Saudi Arabia is showing sign of the recovery. In contrast, our sales in The UAE, Saudi Arabia and Kuwait remain flat compared to the previous year primarily due to our inventory mix, price competition and delivery delays. Going forward, we intend to penetrate the market through flexible pricing strategies and strengthen in cooperation with local distributors centered on a model renewal. Please turn to Page eight.
In Japan, North America and Europe, in Japan, the domestic automotive market has maintained stable demand and the sales of the DELICA D5 and Outland PHEV performed strongly, allowing us to achieve the sales results that outpaced both TIV and our own prior year results. As a result, our market share has steadily expanded. To further grow our sales volume and market share, we will work in close cooperation with our dealers to strategically strengthen our sales capabilities. In North America, we were also significantly impacted by external factors such as a surge in The U. S.
Demand ahead of anticipated tariff driven price increases followed by a subsequent market correction and contraction in Canada's electric vehicle sector due to the suspension of electric vehicle subsidies. We will continue to respond flexibly to these evolving conditions. In Europe, our sales were challenged by a combination of factors, including sluggish demand in major countries, intensified competition and strong price pressure. Looking ahead, our focus is on expanding the sales of Outlander PHEV for which full scale sales have now commenced and we are preparing for new model launches scheduled for the second half of the fiscal year. Please turn to Page 10.
As was announced yesterday, the Japan U. S. Tariff negotiations have reached an agreement on the focal issue of automobile tariffs. The agreement stipulates that the 25% additional tariff in effect since April will be adjusted to 15% inclusive of the existing base rate. This agreement itself contains a positive element as the tariff rate is lower than initially feared.
However, the impact of these tariffs on the business has been multifaceted and we are not in a position to be unilaterally optimistic. Specifically, as we have already explained, in the first quarter when the additional tariff took effect, we incurred a significant tariff payments. Furthermore, as an indirect consequence, global sales competition has intensified as many companies shifted their export focus to other regions. Considering all these factors, it is difficult to fully assess the entire impact at this stage. And given that there are both positive and negative factors at play, we will maintain our current earnings forecast for the time being.
Once our detailed assessment is complete and we have a clearer outlook, we will promptly inform you of any necessary revisions. We appreciate the understanding. Next, I will explain the business highlights. Please turn to Page 12. On Thursday, July 17, the new midsize SUV Destinator made its world premier in Indonesia.
The model was exhibited at the thirty second Indonesia International Auto Show, which started to Wednesday, July 23, where sales also commenced. The Destinator is the third in a series of global strategic models from Indonesia, following the crossover MPV Expander and the compact SUV exports. It is scheduled to be rolled out globally in stages starting with ASEAN region and expanding to South Asia, Latin America, Middle East and Africa. Please turn to Page 13. The full scale sales of X Force have commenced with the new addition of a hybrid electric vehicle model.
This model is the company's second HEV following the Expander series, which was launched in Thailand in February 2024. Furthermore, following their gasoline model, the HEV model has also received the highest five star rating in the ASEAN EnCap Safety Performance Assessment. Since its announcement on March 20, it has shown a strong start receiving about 5,000 preorders, which has exceeded the expectations. Amid the low price of incentive from Chinese EVs, we will continue to leverage this model to capture new growth opportunities in our Thailand business. That concludes the explanation.
The automotive industry is currently undergoing significant transformation driven not only by the recent developments in tariffs, but also by the continued expansion of Chinese manufacturers and the evolution of new technologies such as AI. In order to address these issues, we will continue to stabilize our business by reviewing and strengthening our business foundation with a sense of urgency. Thank you for your attention.