Good afternoon. I'm Tetsuya Shigeta, CFO. Thank you for joining us today. I will begin by giving a summary of the first quarter operating results. I will then hand over to our Global Controller, Masao Kurihara, for details of our operating results. During the first quarter, the global economy continued to be under a highly uncertain environment, such as new supply restraints caused by the Russia-Ukraine situation, as well as the impact of the zero-COVID policy in China and rising inflation. Meanwhile, even in such an environment, we are able to continuously display strong performance through trading functions aimed to support stable supply in our global business portfolio. Please turn to page three of the presentation materials. I will summarize our operating results for the first quarter of the year.
Core operating cash flow, COCF, for the period increased by JPY 30.5 billion to JPY 300.4 billion. Profit for the period increased by JPY 83.7 billion to JPY 275.0 billion year-on-year. Both figures increased year-on-year and achieved high rate of progress against the business plan announced in May this year. Although we have to stay cautious about the level of uncertainty of the business environment going forward, there is no change in the shareholders' returns policy. We will maintain the minimum dividend of 120 yen per share for this fiscal year. We are conducting share repurchase of up to JPY 100 billion from its announcement in May till September. Progress rate on volume of the share repurchase was approximately 51% as of the end of July.
In addition, today, we decided to cancel most of the treasury stocks held as of the end of June. We will continue to implement flexible approach to shareholder returns in order to achieve our target for total shareholder returns being 33% of core operating cash flow for the cumulative three-year period of Medium-Term Management Plan. Please turn to page four. You can see that the high progress was achieved in most of the segments. In addition, all segments saw increase in quarterly profit year-on-year. In particular, trading of raw materials and other materials, the automotive business in North America and healthcare business, which showed significant growth in the previous fiscal year, have continued solid performance in this quarter too.
High levels of progress were achieved due to a gain on the sale in the real estate business in Innovation & Corporate Development segment, and valuation gains in the Lifestyle segment. Furthermore, commodity market conditions and Forex have positively impacted our performance. The rate of progress was slightly low in the Energy segment. Steady progress is being made against the yearly plan, while valuation losses on derivative transactions was recognized in this quarter ahead of physical deliveries in subsequent quarters in LNG trading.
Please turn to page five. I will explain the business environment and Mitsui's responses. The external environment risks assumed at the time of formulation of the business plan are increasing, but we demonstrated our various capabilities and continue to strengthen and expand the earning space. Firstly, in demonstration of trading functions, we demonstrated functions aimed at stable supply by utilizing diverse supply sources and logistics functions in a wide range of areas, such as Mineral & Metal Resources, Energy, Chemicals, Iron & Steel Products, and food. Further, we maintain strong profitability through the global business portfolio, which has been our strength. In the Americas, we continue to demonstrate strong profitability that has been prominent since the previous fiscal year. Examples are the automotive business, including the Penske Group, Cameron LNG, the real estate business, Newmont, and the Chemicals businesses.
We also achieved good performance in Erdos and IHI in Asia and in the crop protection business in Europe. Furthermore, we decided to make a growth investment totaling JPY 130 billion in the energy solutions area. We strengthened efforts in major renewable energy projects through investment in Mainstream and participation in an Indian project. As also mentioned in page 19, the ratio of renewable energy out of our power generation assets increased to 22% as of end of June. We also strengthened efforts in the carbon management domains by investing in Climate Friendly and new forests in Australia. Furthermore, we made progress in the clean ammonia business, such as joint project with Abu Dhabi-based ADNOC and the conclusion of a joint development agreement with US-based CF Industries. Please turn to page 6. In this section, I will discuss cash flow allocation for the current period.
Cash in for the period was JPY 370 billion, comprising COCF of JPY 300 billion and asset recycling of JPY 70 billion, including the sale of property in the U.S., et cetera. Cash out was JPY 288 billion, comprising investment and loans of JPY 237 billion and share repurchase of JPY 51 billion. The main investment and loan deals were investment into Mainstream, a large renewable energy project in India, participation in Climate Friendly and oil and gas projects, and maintenance and CapEx paid for Australian iron ore and coal projects. Please turn to page seven. Now let's take a look at the balance sheet as of the end of the first quarter of the current fiscal year. Compared to the end of March 2022, net interest-bearing debt increased by approximately JPY 300 billion to JPY 3.6 trillion.
Meanwhile, shareholder equity increased by approximately JPY 200 billion to JPY 5.8 trillion. As a result, net DER became 0.62 times. We have a strong financial base sufficient to withstand the growing uncertainties of the business environment. Please turn to page eight. I will now explain the Russian LNG business. We conducted reassessment based on the uncertainties surrounding the Sakhalin-2 project. As a result, the fair value of Sakhalin-2 project was decreased by JPY 136.6 billion. Mainly due to this reason, balance of investment loans and guarantees decreased to JPY 271.8 billion as a net position after deducting provision on guarantees. There will be no change on shareholder returns as the reassessment will not be impacting our P&L or COCF.
We will continue to take appropriate action while discussing with relevant stakeholders, including the Japanese government and business partners in respect of Sakhalin-2 and Arctic LNG 2 projects. That completes my presentation today. I will now hand over to our Global Controller, Masao Kurihara, for details of the first quarter performance.
I am Masao Kurihara, Global Controller. I will now provide details of our operating results for the first quarter. Please turn to page ten. First, I will explain the main changes in COCF by segment compared to the first quarter of the previous fiscal year. COCF for the period was JPY 300.4 billion, a year-on-year increase of JPY 30.5 billion. In Mineral & Metal Resources, COCF increased by JPY 14.8 billion to JPY 142.2 billion, mainly due to higher coal prices despite the impact of a downturn in iron ore prices. In Energy, COCF increased by JPY 5.2 billion to JPY 52.4 billion, mainly due to increase in oil and gas prices.
In Machinery & Infrastructure, COCF decreased by JPY 2.4 billion to JPY 35.6 billion, mainly due to a difference in the fiscal year for the dividend from equity method affiliates. In Chemicals, COCF increased by JPY 7.5 billion to JPY 32 billion, mainly due to steady trading business of sulfur and fertilizer-related materials. In Iron & Steel Products, COCF decreased by JPY 0.9 billion to JPY 2.9 billion. In Lifestyle, COCF increased by JPY 5.7 billion to JPY 22.3 billion, mainly due to steady trading business and an increase in dividends from equity method affiliates. In Innovation & Corporate Development, COCF decreased by JPY 0.2 billion to JPY 11.9 billion. Other factors such as expenses, interest, taxes, et cetera, which are not allocated to business segments totaled JPY 1.1 billion.
Please turn to page 11. I will now explain the main changes in profit by segment compared to the first quarter of the previous fiscal year. Profit for the period increased by JPY 83.7 billion to JPY 275 billion. In Mineral & Metal Resources, profits increased by JPY 0.8 billion to JPY 119.8 billion, mainly due to factors such as higher coal prices despite the impact of a downturn in iron ore prices. In Energy, profits increased by JPY 24.9 billion to JPY 23.7 billion, mainly due to increase in oil and gas prices. In Machinery & Infrastructure, profits increased by JPY 9.7 billion to JPY 38.9 billion, mainly due to strong automotive and commercial vehicles businesses, primarily in North America.
In Chemicals, profits increased by JPY 7.2 billion to JPY 23.1 billion, mainly due to steady trading business of sulfur and fertilizer-related materials. In Iron & Steel Products, profits increased by JPY 0.3 billion to JPY 7 billion. In Lifestyle, profits increased by JPY 12.6 billion to JPY 26.5 billion, mainly due to steady grain trading and healthcare businesses, as well as valuation gain for a put option. In Innovation & Corporate Development, profits increased by JPY 10 billion to JPY 20.4 billion, mainly due to gains on sale in the real estate businesses. Other factors such as expenses, taxes, interest, et cetera, which are not allocated to business segments totaled JPY 15.6 billion.
Please turn to page 12. This page shows the main factors influencing year-on-year changes in profit. Base profit increased by approximately JPY 7 billion, mainly due to various businesses such as automotive and Erdos, steady trading, and dividend increase in LNG business. While valuation loss on derivative transactions was recognized in advance in LNG trading and dividend was decreased in the iron ore business, et cetera. Looking at resource-related costs and volume, profit decreased by approximately JPY 14 billion, mainly due to the impact of rising labor and fuel costs in the Mineral & Metal Resources business, and volume decrease in the Australian iron ore operations due to factors such as tightening of the labor market caused by spread of COVID-19 and bad weather.
Asset recycling resulted in an increase of approximately JPY 8 billion, mainly due to gain from sale of real estate property in the U.S. and real estate company in Singapore. In commodity prices Forex, a profit decreased by approximately JPY 27 billion due to decrease in iron ore prices, while profit increased by JPY 27 billion for coal, JPY 25 billion for oil and gas, and JPY 4 billion for copper, which resulted in JPY 29 billion increase in profit. In Forex, profit increased by JPY 45 billion, mainly due to weaker yen. Finally, valuation gain loss and special factors contributed to increase of approximately JPY 9 billion, mainly due to valuation gain in Lifestyle. That concludes my presentation.
Thank you for the presentation. There are two questions.
First, from the perspective of the sheet of some major items, what are the parts that went strong in the first quarter and expected to continue in the second quarter, or things that are going well but because of slowdown in economy, which are starting to show some weaknesses? Which are the segments that applied or belong to those classifications? That was the first question. Secondly, in the first quarter, there's profit that is making progress, but what about the returns to the shareholders? For payouts, toward the end, you talked about base profit and plus JPY 7 billion, which seems to be a bit small.
LNG trading and derivative has pushed it down, and iron ore, dividend or Vale dividend was there in the last fiscal year, but it's not present. If you exclude this, then the base profit is accumulating. JPY 120 per share in dividend on a cash basis, so 33% and 1.6 billion shares, then JPY 600 billion will be the basis probably for the dividend. Base profit is now increasing in the short term. Do you have any plan to increase JPY 120 as a minimum dividend, or what is your view on that possibility? Well, thank you for the questions.
Firstly, in the previous quarter, the fourth quarter of the previous fiscal year, the segments are continuing to stay strong and expected to stay strong. The first thing that we can say is the North American automotive business, Penske Group initiative, but other than that, in Canada and in Latin America, things are expanding. In automotive business in North America and Americas look solid and expected to continue to be strong. IHH Healthcare and other healthcare businesses, and North America, physicians and nurses' dispatch business is staying strong. We are doing this business in the wellness business. In the previous quarter, it has expanded, and it is expected to maintain its strength. We are confident of that.
On the other hand, or rather, the raw materials and process materials trading in the previous quarter and in this quarter, things are going well, but because of slowdown in economy and decrease in demand, if you expect that, then the margin that we can enjoy now could be reduced slightly. This could continue to the downside risk of the profit. There's a concern that the profit could be reduced. I wouldn't say this would go way below the expected level. It really depends on the severity of economic slowdown. It is not the case that we are hitting the limit of expansion, but this is a segment that can be subject to or vulnerable to changes in the environment.
As for shareholders' returns, JPY 120 per share in dividend at the beginning of this fiscal year. This was changed in the third quarter in the previous fiscal year. There are concerns, the environment, but regardless of that, we are making sure that this will be achieved. As for total shareholder returns, in the current Medium-Term Management Plan, in the three-year period, 33% of core operating cash flow is something that we will deliver on. This is something that we are quite mindful of. In the full year, plan has not been changed from the forecast that we had at the beginning of the fiscal year. After the first quarter, more than 30% progress has been made.
We would like to make sure that 33% return will be achieved. Thank you.
I would like to ask two questions. The first question about the resources, you gave explanation, but what about cost and volume? Iron ore and coal, compared to the original forecast, I think it is deteriorating, but energy seems to be better. So labor cost is going up and fuel cost is going up, but what is the difference compared to the forecast? Do you think this status condition will continue going forward? My second question, related to Russia, the Sakhalin-2 asset was reviewed. What about Arctic LNG 2? Nothing has been changed, was the explanation, but what is the difference between the two? You talked about the rating of Russian Federation, so there may be some additional losses that may be coming in the future.
Why was there a decrease in the valuation of Sakhalin-2 that was announced this time? That is my question.
Thank you very much for the question. The first question about the cost and volume and factors related to them, as you put it correctly, in the Mineral & Metal Resources. Of course, coal and iron ore, because of inflation and with the material cost going up, that had an impact. With COVID-19 impact as well, and also with labor situation also being an impact in iron ore and coal, the cost had increased. On the other hand, when it comes to energy, in the individual items, of course, our deposits are increasing and the cost per ton had gone down.
I think these are the factors that impacted the cost and volume balance. When it comes to Mineral & Metal Resources, with iron ore, in some of the projects there was some ramp up. Also in Australia there was very heavy rain, which led to decrease in the volume. I think this is a factor that impacted the iron ore to a degree. That is my answer to the first question. As for the second question, the biggest factor was for Russia, there was a presidential decree that was announced. As for Sakhalin-2, it is outside of Russia in which the company is being registered. As for Arctic LNG 2, it is a Russian company, and whether it will be impacted by the presidential decree, these factors may impact.
As for the Russian re-rating with the reassessment of the discount rate and with the Sakhalin-2, the future cash flow forecast, whether the status quo will be maintained or not, or whether we should think about other scenarios, is going to change the scenarios going forward. We took the average and reflected that average on the fair value. On the balance sheet, by the end of March, it was JPY 200 billion, but now it was decreased by JPY 136 billion. There has been some rating difference, therefore the discount was put forward. With the P&L impact, there will be about JPY 100 million of impact, and that is the difference between Sakhalin-2 and Arctic. Thank you very much.
Thank you for the presentation today. There are two questions. Firstly, I would like to ask about Sakhalin-2 or rather Russian businesses more, in more detail. First of all, the presidential decree. Before the presidential decree, the current status of operation and construction is something I'd like to know about. The Sakhalin-2 operation has not been affected at all, rather, for example, LNG ships or vessels, whether you'd provide insurance or not. If you don't, then you may not be able to take LNG business. There are some impacts in other businesses like that. For Sakhalin-2 business, in order to continue the operation, there is not much impact. Is that true? Also, as for the Arctic LNG 2 construction, is the construction going as scheduled? Is there any impact or not?
That's the first question I'd like to ask. Second question, it's about the whole energy business and profit changes. Earlier you talked about the derivatives loss recognized in the first quarter. At the same time, if you look at individual companies, for example, the Marcellus Shale gas in the United States or Eagle Ford, the profit in those seems to be expanding quite significantly. They are stronger than planned. The derivative loss in the first quarter will be offset
In the full year. Is it the things in the first quarter are actually going beyond the plan in the first quarter? Is that true?
Thank you for the questions. The Russian LNG business, there are two projects. As for the Sakhalin-2, first, the operation status, it is going well. There's not much impact that I would like to report to you. As for Arctic LNG 2, with regard to construction, things are making progress. In the first train, which is expected to start production in 2023, there is no change in the plan. Secondly, for energy business as a whole, well, what you said is right. As for the energy as a whole, the oil price increase, and also, Forex profit has been also affected in the recovered profit. Things are going above the plan. The energy trading loss recognized in the process ahead of the delivery, physical delivery.
Well, in terms of logic, in the end of March next year, we cannot say that there won't be any differences in fiscal years. As all the contracts are being delivered, the profit will be recognized as planned.
Thank you. A follow-up question. On June 30th, a presidential decree was issued, and from July 1st, within one month, the assets will be transferred to Russian companies of Rosneft. The due date has been already exceeded. What is the status whether you can maintain your equity interest or not? As far as you can share with us, please let us know.
Well, at this moment, the newly established company or the establishment of a new company, there's no information that we received. We would assume that there is no company that has been established yet. With regard to details of the presidential decree, we have not been able to receive any information, so we're still waiting for that. We are dispatching people to the actual local site. We are preparing for that, b ut as a trading firm, we understand the importance of stable supply of energy to Japan. We'd like to take appropriate action by talking to relevant stakeholders. Thank you.
Thank you very much for taking my questions. My first question is about investment influence. You explained about that Mainstream and large-scale renewable project in India. When you made the investment, the explanation was given. Among the total project, you said that you'll be taking time to make it being established. For this big project, what is the scale and what is the timeline going forward? If you could give explanation as much as you can, it will be appreciated. My second question is once again on Sakhalin-2 project. The major companies, your partners, have recorded losses related to withdrawal. When you think about the maximum risks, what are the impact on the P&L? Any changes to the flow going forward? What is the maximum risk perspective that we should be aware of?
Depending on the scale of the risk, of course, you may have to review your risk assessment. Please, comment as much as you can. Thank you very much.
Thank you very much for your question. As for the renewable energy business, Mainstream in Ireland, as for the positioning of its platform, under its umbrella, we are working on onshore, offshore, wind, and also solar energy, especially in Africa, Asia, and also Central and South America. These are the areas that we would like to focus on. As for the timeline, we would like to take time, maybe 5-10 years, to develop this project. There are projects which we have not touched on yet. There is a list of such projects. We will be taking in green projects going forward so that we'll be able to build a platform together with a Mainstream project. As for renewable energy project in India, this is solar energy and wind energy and also batteries.
These will be used, so it will be a 24-hour operation. As soon as it is completed, we hope that we'll be able to make contributions. Midterm renewable energy ratio will be about 30%. That is our target, and we see that the projects are accumulating to make that possible. As for Sakhalin-2 project, FVTOCI JPY 90.2 billion outstanding balance. If that becomes zero, of course there will be some impact damage. However, as a whole, we believe that there is no influence there so far. The content of the presidential decree is not known yet. Whether we can call it a maximum risk or not, we cannot tell at the moment.
The anticipated contract amount is something that we have reflected in the balance that we have given. I hope to have your understanding. Thank you very much.
I have two questions. First question in put option. R-Pharm has recognized one-time gain of JPY 1 billion. How does it work? R-Pharm is a Russian pharmaceutical company, and you have a 10% stake. At the moment, as a put option, this much amount has been recognized as a gain. What is the background? Pharmaceutical companies are not subject to sanctions, I would guess, but if there is any additional information you can share with us, that would be appreciated. Second question, it's about the details, but your coal business is something I would like to ask about.
On page 15, the metallurgical coal and thermal coal profile is shown here in your company. Basically, in terms of price, the metallurgical coal is decreasing and thermal coal is increasing. If you sell the metallurgical coal, and you can take the difference in prices between metallurgical and thermal coal, can you do that, or would it be difficult to do that? If you have any thoughts on that, about the plan, that would be appreciated.
Thank you very much. The first question on the Russian pharmaceutical company or business, R-Pharm, put option fair value valuation and JPY 9 billion in gain has been recognized. The investment in R-Pharm is a 10% stake. In terms of accounting FVTOCI, that is the valuation of the investment.
On the other hand, to the founder, we have a put option of the shares of the company. At this time, the fair value put option in ruble, due to stronger ruble since the end of March, in terms of yen, the gain has been recognized. For example, the accounting logic is a bit complicated, but if the value itself of the R-Pharm is decreased, and then it will be recognized as OCI, and you can exercise the put option at a certain price. As derivative, you can recognize the gain. That's how it works. This time, because of the changes in ruble, the gain in terms of yen has been recognized. As for the coal business, as you know, the thermal coal business is something that we have withdrawn already from.
As for metallurgical, the quality and grade from the perspective of these, the metallurgical coal cannot be used as thermal coal as they are so easily. We have withdrawn from a thermal coal business, so we're not considering to replace them with something else. That's all. Thank you.
I'd like to ask one question. In Chemicals, Nutrition, Agriculture, looking at the first quarter, it looks very strong. What is the sustainability of this business going forward?
Thank you very much for your question. In the first quarter, fertilizer trade was very strong. When it comes to sustainability of the business, NA business, agricultural products and agricultural materials business, we are expanding the global value chain of this business.
Unrelated to the Ukraine situation, a global stable supply in Americas and also in Europe, we believe that we'll be able to sustain the profitability contribution. When it comes to sulfur, and of course, a liquid sulfur, this is something that can be used for fertilizers, and I hear that that business is very strong as well. Thank you very much.