Earnings Call: Q4 2021

May 7, 2021

Good morning. I'm Kenny Chihori, newly appointed President and CEO of Mitsui and Company, effective April 1. Thank you for joining us today. I will start by discussing our progress in the first year of the medium term management plan 2023 announced last year and initiatives looking ahead and will then give an overview of results for the fiscal year ended March 2021 and our business plan for the fiscal year ending March 2022. Then I will hand over to Tetsuya Shigeta, Global Controller, who will speak on the results and business plan in more detail. After the deep economic downturn in the world's major economies caused by the COVID-nineteen pandemic, it shows robust recovery driven by the resumption of economic activity in the U. S. And elsewhere, large scale economic stimulus measures and progress with vaccinations. China achieved early control of the spread of its infection and has been the front runner in terms of economic recovery through fiscal stimulus centered on infrastructure. Meanwhile, in Europe, economic activity remained constrained by the renewed spread of infection. Therefore, recovery could be delayed. The situation in emerging markets is variable with relatively low economic impact from the pandemic in Southeast Asia, but a continuing problem in areas such as Southwest Asia and parts of South America where the spread of infection remains uncontrolled. In Japan, full economic recovery is not expected until the vaccination program reaches scale after summer. Amid this varying pace and the regional differences of the economic recovery, we have achieved strong business performance, engaging in a wide range of businesses that are benefiting from the journey back to the economic health. Especially in the Q4 of the fiscal year March 2021, we saw very good ongoing performance in the iron ore operation, backed by strong demand for steel products for Chinese public works and infrastructure projects. In the U. S, where large scale fiscal expansion is driving and rapid recovery, Penske Automotive Group achieved record high earnings in 2020, supported by pent up demand for commercial vehicles such as automobiles and trucks as well as by the impact of comprehensive rationalization measures. We are working with Penske Group on a strategic vision and investigating new business opportunities in the commercial transportation sector. In fiscal year March 21, we achieved robust earnings and shown our capacity to recover from the COVID-nineteen pandemic. However, Missi has strong from the COVID-nineteen pandemic. However, Mitsui has strong partnerships around the world, a foundation for valuable tangible and intangible assets. We aim to make use of our strengths and pursue even higher levels of growth by developing our business in countries and regions, showing strong recovery, leveraging the inherent potential of our positioning. Page 3 outlines our results for the year and the plan for the year ahead. For FY March 2021, core operating cash flow was 658 point 1,000,000,000 yen profit was 335,500,000,000 yen and ROE was 8%. Supported by strong iron ore business, trading, FETPL gains and other factors, we achieved our full year forecast for both core operating cash flow and profit. The planned annual dividend for the year is 85 yen per share, an increase of 5 yen. And total estimated returns to shareholders for the year will be approximately 210,000,000,000 yen or 31 percent of core operating cash flow. Looking ahead to the fiscal year March 2022, we intend to strengthen our earnings base and implement various growth strategies with the aim of reaching our quantitative targets of mid MTMP 2023 ahead of schedule for both core operating cash flow and profit while continuing on to higher performance. For the full year, our plan is for cooperating cash flow of 680,000,000,000 yen with profit of 460,000,000,000 yen We plan to further increase the annual dividend by 5 yen to 90 yen per share for the fiscal year March 2022 and to raise a minimum dividend per share to 90 yen We also made a decision for additional share buyback of maximum 50,000,000,000 yen Repurchasing period will be from May to end of June this year. Please turn to Page 4. I will now look at tasks and progress for the fiscal year March 2021. Amid the spread of the COVID-nineteen pandemic, we focused on 3 strategic topics for the year, namely steady implementation of projects and realizing stronger profitability initiatives to strengthen downward resilience amid rapid changes in the operating environment and continuing on from our previous MTMP, strengthening business management capabilities and promoting digital transformation. For the steady implementation of projects and realizing stronger profitability initiative, we made significant progress such as a final investment decision for the gas field development project in Western Australia and the start of full production for oil trains at the Cameron LNG project in the U. S. Moreover, amid the economic recovery, we were able to achieve sound profits from the stable supply of resources, materials, food and services, which are essential for daily life. In terms of initiatives, strengths and downward resilience, progress included a reassessment of our operations and restructuring our business portfolio, mainly on mineral and metal resources, energy and machinery and infrastructure. We also worked to accelerate the strengthening and transformation of businesses by restructuring and reconfiguring existing business groups to improve our earnings base. Finally, for strengthening business management capabilities and digital transformation, we introduced ROIC, ROIC, ROIC, ROIC, to promote capital efficiency awareness company wide, increase the quality and efficiency of existing operations utilizing DX, while also making measurable progress in the development of new business models. I will now explain our business plan and key initiatives for the fiscal year March 2022. Page 6, please. As I mentioned earlier, we were able to secure some excellent business outcomes, demonstrating our strong ability to produce earnings and generate cash from the emerging economic recovery even as the pandemic continued in fiscal year March 'twenty one. We also saw steady results from our defensive measures to thoroughly reduce costs and restructure our portfolio. So this year gave us a solid footing as a 1st year of MTMP. The theme of our current MTMP, Transform and Grow, and looking ahead, we will continue working to sustainably increase our corporate value by steadily implementing and realizing results from the goals and strategies set forth in our MTMP 2023. If we take a high level view of the post COVID-nineteen world, I'm confident that there are numerous opportunities to grow in areas adjacent to our existing strong businesses. We intend to strengthen these core businesses and use them as catalysts for organic collaboration in related fields to build high quality composite business clusters. By securing the high quality business clusters horizontally across industries, we will strengthen and grow our portfolio. We are aiming to secure these high quality business clusters to further strengthen and maintain our cash generating capability and to pursue both growth investments and shareholder returns. Please turn to Page 7 and 8, which outline our quantitative targets in our business plan for fiscal year March 2022. With the recovery from COVID-nineteen and reinforcing our earnings base boosted by strong commodity prices, we aim to achieve our FY March 'twenty three core operating cash flow targets 1 year ahead of plan and then push on to even greater height in our drive to transform and grow. Please turn to the Slide 9. As I just said, in FY March 2021, we increased our core operating cash flow. Minsay has proved its resilience even in the COVID-nineteen pandemic. And reflecting its strong cash generating capabilities, we are updating our 3 year cash flow allocation previously announced in our MTMP 2023 in May last year. The core operating cash flow forecast has been revised upward from 1,500,000,000,000 yen to 2,000,000,000,000 yen. And overall cash in is expected to increase despite the decrease in asset recycling. After careful review considering the reduction of capital expenditure and the certainty of execution of investments, we expect the total amount of investments and loans to be within the range of 1.5 1000000000 yen and thus recognize that there is additional capacity for growth investments and shareholder returns. We have already allocated 140,000,000,000 yen for share buybacks and plan to allocate an additional 40,000,000,000 yen for dividend increases and yen 150,000,000,000 for growth investments, bear in mind of subscribing convertible bonds of Citi Corp, which will be explained in later slide. We will continue to allocate funds flexibly and strategically for growth investments and additional returns in consideration of investment opportunities and the overall business environment. We will now look at our policy on returns to shareholders on Page 10. We plan an annual dividend for the fiscal year March 2021 of JPY 85 per share. For the fiscal year March 2022 and 'twenty 3, we plan to raise the annual dividend to a minimum of JPY 90 per share. We also made a decision for additional share buyback of maximum 50,000,000,000 yen Looking ahead, we will pursue a sustainable increase in shareholder returns as a percentage of core operating cash flow while working to optimize capital efficiency. Please turn to Page 11. I will now explain the key initiatives in our business plan for the fiscal year March 2022. First, I will talk about the formation of business classes of scale. For example, in our partnership with the Penske Group, which I explained at the beginning of the presentation, we began by investing in Penske Automotive Group in 2,001 to develop our North American passenger automobile dealership business and further collaboration led to our investment in Penske Truck Leasing, a truck leasing and logistics company, in 2015. While U. S. Is a developed country, its population is increasing, and growth in freight transportation is expected. Consequently, we started this capital alliance focusing on the commercial vehicle field and transportation service field where we can leverage our knowledge and strengths. Our extensive experience and know how in the truck based auto parts logistics business has been highly valued by Penske, and this know how is now being utilized in Penske Truck Leasing. Together, we offer services to a wide range of customers and partners across the Americas, and the business has now developed a solid revenue base. We hope to further strengthen and expand our portfolio by leveraging these businesses in which we possess strengths and secure groups of businesses across industries that can be developed into functional extensions, horizontal development and expansions into peripheral businesses. Please turn to Page 12. Each project that is currently being planned, developed and promoted is intended to bolster the strengths of the group, reinforcing the foundation of existing business and organically linking peripheral businesses. In addition to contributing to earnings in their own right, we will also accelerate initiatives for industry reorganization, partnering with leading companies and strategic allocation of personnel, etcetera, in domestic businesses here in Japan. Please turn to Page 13. I will now outline the areas of strategic focus in MTMP 2023. In Energy Solutions, we will leverage our core businesses while organically linking peripheral businesses to lead the energy transition. For example, we will accelerate initiatives in next generation fields such as hydrogen and ammonia by utilizing and linking the knowledge we possess in our core businesses in the energy and power generation fields. We will now turn to Page 14 and review our business in Health Care and Nutrition. We will accelerate the developmental foundation for growth through initiatives to broaden target domains from health care to wellness as well as from patient centered to individual centered. We will develop largest wellness services in Asia by combining our real world existing portfolio with advanced digital technologies. To reflect these efforts, our Healthcare Service Business Unit was renamed in April of this year and is now referred to as Wellness Business Unit. Please turn to Page 15. We agreed to subscribe convertible bonds of Citi Corp, an Indonesian business conglomerate with a dominant position in consumer related sectors, including finance, media, retail and property and has proved itself to have an unshakable presence in the midst of the pandemic. Mitsui will leverage the group's strong business platform and the unique strengths to tackle the growing and changing Asian consumer market Through hands on collaboration where we will bring in director and seconded employees, we aim to enhance CD Corp's corporate value, create joint businesses and aim for its public offering. We will now turn to Page 16, and I will discuss our human resources strategy and promotion of sustainability management and ESG. Our human resources strategy is to introduce policies to strengthen individuals and support, transform and grow. In sustainability management, we will continue to actively promote initiatives in the areas of climate change, the circular economy and the business and human rights in the fiscal year ending March 2022 and connect these initiatives to the enhancement of our corporate value. Page 17 on the topic of climate change. We announced our mid- to long term target to reduce GHG emissions in May last year. As a responsible member of the business community, we are proactively tackling the climate change issue to realize a sustainable society. We will work on transition and opportunity through our worldwide portfolio and contribute to reduce global greenhouse gas emissions as well as our own emissions, while at the same time seeking to ensure economic viability. That concludes my part of the presentation. I will now hand over to Tetsuya Shigeta, our Global Controller to explain the details of our operating results for the fiscal year ended March 2021 and our business plan for fiscal year ending March 2022. Thank you. I am Tetsuya Shireta, Global Controller. Please turn to Page 19. First, I will explain the main changes in the core operating cash flow by segment year on year. Core operating cash flow increased by 97,100,000,000 yen to 658,100,000,000 yen In Mineral and Metal Resources, core operating cash flow increased by 64,400,000,000 yen to 308,100,000,000 yen mainly due to higher sales prices at iron ore operations in Australia and an increase in dividends received from Vale even though sales prices declined at coal mining operations in Australia. In energy, coal operating cash flow decreased by JPY 83,300,000,000 to JPY 123,200,000,000 due to a decline in oil and gas prices and decrease in dividends received relating to LNG projects. In machinery and infrastructure, cooperating cash flow decreased by 8,100,000,000 yen to 78,700,000,000 yen In chemicals, cooperating cash flow increased by 26,700,000,000 yen to 62,500,000,000 yen which is mainly due to strong performance in Chemicals Trading and Agriculture related business. In Iron and Steel Products, core operating cash flow declined by 200,000,000 yen to 2,000,000,000 yen In Lifestyle, core operating cash flow was 19,800,000,000 yen a year on year decline of 700,000,000 yen Innovation and Corporate Development achieved co operating cash flow 55,100,000,000 yen a year on year increase of 51,200,000,000 yen mainly due to FETPL gains, strong commodities trading and good performance at ICT's core affiliated companies. Core operating cash flow by other factors increased by 47,100,000,000 yen to 8,700,000,000 yen mainly due to the absence of corporate pension contribution that impacted cash flow in the previous fiscal year. Page 20. Next, I will explain the main changes in the profit by segment year on year. Profit for the year decreased by 56,000,000,000 yen to 335,500,000,000 yen In Mineral and Metal Resources, profit decreased 3,400,000,000 yen to 179,900,000,000 yen due to factors such as exit and impairment losses at Matisse Coal and Nakara Infrastructure and the Kaserones copper mine projects, along with the decline in the sales price at coal mining operations in Australia, which exceeded gains from higher sales prices at iron ore operations in Australia and the increase in dividends received from Vale. In energy, profits decreased by 30,600,000,000 yen to 27,200,000,000 yen due to factors such as decline in the prices of oil and gas, decrease in LNG dividends and absence of deferred tax assets from Mozambique Area 1 recognized in the previous fiscal year. Despite the recording of deferred tax assets associated with the reorganization of a group of U. S. Energy subsidiaries. In machinery and infrastructure, profits decreased by 43,500,000,000 yen to 45,900,000,000 yen due to exit and impairments in the Matisse Coal Mining and Infrastructure business, losses incurred by UK Passenger Transportation Business and impairment loss at Rolling Stock Leasing Businesses. In Chemicals, profits increased by 21,200,000,000 yen to 43,500,000,000 yen mainly due to strong trading performance in Chemicals and Agriculture related businesses. In Iron and Steel Products, profits decreased by 2,600,000,000 yen to 2,100,000,000 yen mainly due to lower capacity utilization plans during the first half of the fiscal year. In Lifestyle, profits decreased by 19,300,000,000 yen to 12,700,000,000 yen mainly due to the impact of decline in dining out and purchasing demand at affiliated companies in food, retail and fashion and absence of reduction in corporate income tax burden related to the sale of shares of Recruit Holdings recorded in the previous fiscal year. Innovation and Corporate Development achieved profit of 50,200,000,000 yen a year on year increase of 35,600,000,000 yen mainly due to FTPL gain, strong commodity trading and good performance at ICT's core affiliated companies. Other factors such as expenses, interest, taxes, etcetera, which are not allocated to business segments, totaled a loss of 26,000,000,000 yen. Page 21. The table below shows the main factors influencing year on year changes in profit. Base profit increased by approximately 61,000,000,000 yen mainly due to FVTPO recovery along with the increase in stock price, increase in dividend recovered from Vale and start up production of all Camel LNG trains despite the decrease in LNG dividends and decline in operating rate at Gestapo. Looking at resources related costs volume. As a result of cost reduction efforts in each project in energy, profit increased by about 8,000,000,000 yen But on the other side, production decline at the Moeko Thai Offshore field led to a volume related profit decline of approximately 28,000,000,000 yen Asset recycling resulted into a decline of approximately 53,000,000,000 yen mainly due to the absence of sale of Colombia Asia recorded in the previous fiscal year despite a gain on sale of power generation businesses in North America and fashion business. In commodity prices ForEx, profit decreased by about JPY 50,000,000,000 about JPY 22,000,000,000 due to decline in the prices of oil and gas and coal, respectively. On the other hand, higher iron ore prices contributed to a profit increase of about 56,000,000,000 yen In ForEx, Australian dollar appreciation against U. S. Dollar resulted to a decline in profit of about 20,000,000,000 yen Valuation gain and loss and special factors were reason behind the decline of about 10,000,000,000 yen due to an impairment loss at MRTIS, Koko and Nakala Infrastructure Prospects and met by T impairment loss for Temparoza oilfield product. Page 22, I will discuss about cash flow allocations. Co operating cash flow of 660,000,000,000 yen was attributed to strong iron ore business, trading and FTTPL gains. Combined with 145,000,000,000 yen in asset recycling, the result was a total cash inflow of 805,000,000,000 yen Although there was delay in asset recycling versus the plan, sales of the North American power generation business, San Acyclochemical and Casa Ronis copper mining business and Fuji Pharmaceuticals were completed. On the other hand, we excluded investments and loans, total cash outflow of 445,000,000,000 yen for LNG projects under development and oil and gas production projects. And the total cash outflow combined with 65,000,000,000 yen in share buybacks and 145,000,000,000 yen in dividends, brought total cash outflow of 655,000,000,000 yen. Page 23. Now let's take a look at the balance sheet of the end of the current fiscal year. Net interest bearing debt decreased year on year by about 200,000,000,000 yen to 3,300,000,000 yen while shareholders' equity increased by about 750,000,000,000 yen to 4,600,000,000 yen. As a result, net TER has dropped to 0.72x. We will continue to strengthen our financial base through our cash flow allocation framework. Please turn to Page 24. Although the ongoing COVID-nineteen extended downward pressure at the beginning of the fiscal year, our business performance began demonstrating a better than expected recovery during the second half, in tandem with the strong recovery track charted by the global economy. Notable contributions to quantitative and qualitative results were made by essential businesses such as trading, resources, power supply and hospital businesses. Page 25. I will now describe the business plan for the core operating cash flow and profit by segment for the fiscal year ending March 2022. Core operating cash flow is forecasted to amount to JPY 680,000,000,000 an increase of JPY 21,900,000,000 year on year due to a strong commodity market, primarily in the energy sector. Profit is forecast to be JPY 460,000,000,000, an increase of JPY 124,500,000,000 year on year due to the absence of business reevaluation, expecting recovery from the COVID-nineteen and strengthening the earning base. Page 26. The slide shows action plans for the year ending month 2022. We'll continue to sharpen our top trading initiatives in chemicals, lifestyle and machinery infrastructure, while strengthening initiatives responding to low carbon society in multiple segments. Page 27. The following table compares the plan for the fiscal year ending March 2022 with actual results for March 2021 and shows the main factors expected to influence year on year changes. Base profit will increase by about 20,000,000,000 yen This is mainly due to improvement of base profit in lifestyle and machinery and infrastructure, which shows steady resilience recovered from COVID-nineteen and though there is absence of FPTPL gains recorded in the fiscal year ended March 2021. Resources related cost volume will lead to volume and cost related profit decline by about 3,200,000,000 yen mainly by production decline at the Moeko Thai Offshore Field following the previous year. Looking at asset recycling, a decline of approximately 7,000,000,000 yen is expected for the fiscal year March 2022 despite a gain of approximately 6,000,000,000 yen by recycling. Commodity prices ForEx will contribute to an increase of about 43,000,000,000 yen mainly due to increase in oil and gas prices. Valuation gain and losses and special factors will contribute to an increase of about 101,000,000,000 yen mainly due to absence of valuation losses recorded in the previous fiscal year. That concludes my presentation. Thank you for your attention. Now we'd like to start and entertain your question. Thank you very much for the explanation. I have two questions I'd like to ask. About the shareholder returns, I believe it is a dividend of 90 yen and 50,000,000,000 yen has been added. I want to ask about the allocation of the returns. Originally, the earnings power has increased and that surplus has been given to the dividend. And of course, share buyback is also announced. Can you talk about the idea behind this increase? But the volatility seems to be quite high. So the cash flow may change by 100,000,000,000 yen or more. So are you thinking about cooling some of the surplus for the next year? How are you going to allocate a dividend or returns going forward? I'm sure there are many different ideas that is possible. But with a high volatility market now, if you have any ideas of controlling the returns, please tell us. And the second question, as President explained, regarding CTCope as well, but talking about market Asia as a whole, you are going to focus on the Asian market. But in the midterm, in non resources, I have impression that U. S. Is doing well. And historically speaking, there has been failures in the Asia regions, especially you have worked with Ripple and it didn't go well in the past. But with the alliance with Citi Corp that has been announced, What is different from the past projects? What is giving you this idea for success? Can you talk about the strategy over market age in addition, please? If you have any strategical comments, we would appreciate it. Thank you. Thank you very much for the question. So the first question is about returns, and the second question was about market Asia. So I'd like to ask Hori to answer those questions. Thank you. Yes. Thank you very much for the question. As for the first question, about dividend and also about the share buyback. About the increased dividend for the past fiscal year and for this current fiscal year, and the minimum paid dividend will be increased as well. So what led to this decision? We are in the midst of recovery from COVID-nineteen pandemic, and we are looking at the increasing the base profit. And that is ongoing, and that has been confirmed. And that surplus will be allocated to the additional dividend. Looking at the world as a whole, how are we going to be on track for recovery to secure profit? That basics is something that we summarized and consolidated to come to this decision. When it comes to the market, of course, iron ore, it is at a record high at the moment. But on average, and also looking at the next few years when it comes to recovering in the demand, what will be the normal that can be expected is something that we take into consideration. And the upside from the market, which is sometimes exceeding the normal and also a portfolio reallocation, that is something different from the base profit perspective. And those will also be taken into capital allocation. Therefore, with Agility, we will work on capital allocation. And also understanding the characteristics of the increases in the base profit, we will put to investment into growth and also to allocate the surplus into the share buyback. With Agility, we will make these moves so that we'll be able to have a total shareholders' returns level that can be elevated going forward. But basically speaking, from the previous medium term management plan, we had a 3 year period. And the rate of the share returns was something that we will reconsider in the current MTMP. We want to elevate it further. That is our basic thinking. And of course, to make effective use of the capital and also to increase and raise our cash generation per share so that we'll be able to have a higher value, that is something that we will focus on going forward as well. So capital effectiveness is something that we will focus on going forward. There are a number of parameters that need to be considered into making decisions. So we would like to engage with you further to make the appropriate decisions going forward. And as for the second question about Citycorp and about market Asia. Citycorp, what they expect of us is that I'm sure you are looking into CityCope as we made the announcement. But in Indonesia, domestically, this City Corp has been made by people from Indonesia, and they have grown this company to this scale. Real Estate, Retail, Finance, Insurance and Media and Digital, these are the fields that they are active in. And also, they have TV, a station, terrestrial. And of course, in order to capture the growing consumer market in Indonesia, I think they are going to be a very strong partner. And when we talk with Citi Corp, their products or services that Indonesian people are going to welcome. And they say that many of them come from the outside. But to procure from domestic Indonesia to outside can be difficult. These are some of the comments made by the CTCO personnel. For example, in the U. S, in the health care related fields, we have products or services that can be offered to people in Indonesia. So these are the businesses that we may be linking. So we like to understand Indonesia well with Citi Group so that we will be able to secure products and services from outside of Indonesia to go into domestic Indonesia. So this is where we can expect a synergy effect. And Citi Corp is working with the professionals who are growing within Indonesia, and they are also growing the content. So I think that is an area of collaboration that we can look into as well. And I think you may be asking what are the probability of success going forward. Of course, our portfolio is very, very strong. And Indonesia has been impacted by COVID-nineteen as well. But past year, they have shown a very strong downward resilience against the downward pressure. And that led to the deal announcement that we have made. So thank you very much for your question. May I ask an additional question, please? On a related note, In the past, you have looked at consumption businesses in the past, including Indonesia. But what were the reasons they did not go well? And what have you learned from it in order to lead on to this work of strategic alliance with CT Corp? Of course, when it comes to CT Corp, what we can say is that online and offline and to the growing consumer layer, we are able to offer different menu in terms of media and retail and also in banking area as well. We believe that we can work with C. D. Corp. Because they have a total platform that can connect them to different layers of the consumers. I think that is a kind of alliance that we can have with Indonesian cooperation, and that can be a way to strategically move in Indonesia. So I think this is a different scale from the past project that we have had. So we will add functionality. And Citi Corp is going to look for IPO that is going to lead to growth. Therefore, Citi Corp strengths as an institution. I think that is a mission that we need to work on with this strategic alliance. And in that trend, we believe that this is a unique project that we can work on. I hope I have answered your question. Yes. Thank you very much. Thank you. Thank you very much. Now next question. Thank you for taking my question. Thank you for the presentation. I have two questions. First, President Hori took office as President and this is the first time that you have this earnings report as President. So during the tenure of the presidency, what is it that you want to achieve? That's the first question. Especially finance and the non finance, which is related to ESG, in both aspects, what are the challenges and issues that you have in mind? And how are you going to go about running the business? That's the first question. And secondly, the decarbonization or GHG impact, that is my second question. As was presented in slide, in 2020, GHG impact, 34,000,000 tons. That was the first time that you externally disclosed this figure. And 2,030, you are going to reduce the impact by half. So from the point of view of reduction, what are the action plans that you have in mind currently? And what is the timescale that you have for that? And also, this is not directly related to GHG impact, But from the super long term, the asset stranded asset that could be stranded for the oil assets, this is a risk for investors. So how are you going to do the management of all assets that you have? Can you answer those questions? Thank you for the questions. The person will answer the questions. Thank you for the questions. During the course of my presidency, what is it that I would like to achieve? This is too quite a limited time that I have. But in this setting, I'd like to share 1 or 2 aspects with you. First, under the pandemic, what I was struck most strongly is that including Japan and non Japanese countries, there is no physical traffic or traveling done. In the field, how many local managers that can do the business in the field, that matters the most. That's what I thought important. So the human resources acquisition and investment and development, that has been our focus. And because of that effort, we have been achieving what we have achieved in the last fiscal year and this fiscal year. And furthermore, how are we going to further elevate this level is something that we have to figure out in order to enhance our presence as a corporation globally. And that is one main issue that I have in mind. In the field, if there are managers that are autonomous and that can make their own decisions In the group companies or the headquarters that we have globally, how we can enhance our capabilities as a company is a key question. And many global issues that we have to tackle and as we do so, after the post corona era, we have to do a good business and to do a value added business. And in order to do that, what is it that is necessary as a system? Well, because that we are in the during the pandemic, we can come up with something new. So that's what I feel quite strongly. With regard to finance and non finance aspects, what we would like to I would like to achieve, that is your part of your question. Financially, on a continued basis, the core business and the peripheral businesses around the core will be pursued solidly. And energy transitions and broad based healthcare, the healthcare in the broader definition, will have to be monetized. And you have to create values. And you have to always stick with our mission to generate cash. And you have to enhance the management power in the local field. And as you can see, we like to increase the businesses as business clusters in the core. And so what we have, if you drill down and deepen enough, then we can see what may not be so visible to others. And how we can do this continuously would be a key question. And as we do so, if we can create values and generate cash in a tangible manner, that will be the key. And that would contribute to growth investment and shareholder return, and that will be the prerequisite for coexistence of both aspects. And that's how I would like to grow the company. Now for the non financial part. There are global challenges that are becoming increasingly complicated with larger number of parameters or variables, be it climate change or supply chain, the whole supply chain. We need to do a good job, a solid job. And there are many challenges associated with that. And we have to increase the number of tools that we can resort to. The breads globally and inter industry collaboration will be important and diversity has to be secured in our group. That will be the key. There are many views and you have to look at the business from various perspectives and otherwise you can't solve various challenges. And there are many business models and technologies globally that are available, and you have to have a good understanding of those that are available. And so in that sense, the overall trend toward ESG will be helping us increase our strengths and also enhance our presence and also present opportunities for us. And in this regard, in this context, the greenhouse gas emissions for our company is the second part of your question. In this chart, in the middle, in 2030, that's the target that we have for the reduction and transition and opportunity combination. And for more details, in December, we are going to have ESG Day, and we would like to give you more details. And what is most important for the reduction by 2,030 is the reshuffling of the portfolio that we have that are ongoing, how we can make it effective and economically viable and shortest in the period in terms of the timescale? That will be the key question. And part of the some of our assets will be looked at whether they will be economically viable and part of those assets could be exited from and we are now in the process of negotiations or in the process of tapping into those assets. And once decided, we can make disclosure. So there will be a concentrated efforts in the first half of this fiscal year probably in this regard. But at the same time, the assets that we have are actually serving as a mission critical power supply for those countries that we are in. And so we have to be responsible for that. But as long as we are operating the businesses, new tools if we can use new tools and assets, then we can reduce the GHGs and that will be the responsible mission. And so reshuffling a portfolio and enhancement of operations, the combination of those will also help us reduce the emissions in the first half. As for the stranded assets for oil related ones, we will not we will make sure that, that won't happen. We have to make sure that there will be economic viability, but at the same time, we have to maintain responsibility in our approach. As we consider energy transition, we are an actual business operation operator, but we have to take leadership in the new era and we have the potential to do that. So we have to make sure that those will coexist. And to the global challenges, there will be action plans that need to be done and we have to translate our actions into those action plans. And that's how we have drawn this GHG emission roadmap and that's how we intend to proceed. Does that answer your question? Thank you very much. Yes. Thank you very much. I have two questions I'd like to ask. The first question For the fiscal year just ended, I'd like to just confirm the results. In the original plan, JPY 180,000,000,000 of profit was announced. There has been excluding one time factors that has been excluded and the result was 400,000,000,000. So in other words, there is a difference of more than 200,000,000,000. So machinery, infrastructure, these are the areas in which we saw an upside in the results. Is it coming from the resource market? Or was the impact from COVID-nineteen smaller than you had expected? Or did you see positives coming from the efforts you have made in the past? Reviewing the past fiscal year, what are the thoughts that you have about the results? And the second question is for year ending 2023, March 2023, have given us the target, as I referenced, in Chemicals. And also in Life Size, for example, yen 30,000,000,000 yen 20,000,000,000 yen these are the profits projected to increase in these segments. Where do these increases in the profits come from? You mentioned that you'll be working on strengthening core businesses. But on Page 12, you talk about the areas in which you can expect increases of profits. How will they be linked to ring to those numbers that you have announced? If that can be explained, we would be appreciating that. Thank you. Yes. Thank you very much for the question. So, Hollie, would like to answer that question. Yes. Thank you very much for the question. So we are now seeing MTMP last year, and that was when their environment was very uncertain with the COVID-nineteen pandemic just starting. And I'd like to review the year from that point of view. So thank you for the question. Well, originally, the COVID-nineteen impact, we were expecting it to come to about 200,000,000,000 yen for the company as a whole when we formulated the MTMP. And 100,000,000,000 coming from the market and the other 100,000,000,000 and totaling 200,000,000,000 yen as an impact. But for March 2021, it was about 60,000,000,000 yen of impact that we had seen coming from COVID-nineteen. And for the market, we were expecting 100,000,000,000 yen, but it ended at 10,000,000,000 yen impact. And the others and when it comes from the market, of course, we need to see the recovery in different countries. But the others, 50,000,000,000 yen, that is coming from mainly taking in the recovery of the markets. Fashion and distribution, where field is very important, these are the areas in which we are yet to see recovery. But looking back on the past year, in the first half, we thought the impact would be about 200,000,000,000. And in the first half, the pace was pointing to so. However, the recovery started in China. And in the U. S, we are seeing them going into recovery mode in many of the industries, and we were able to tap into that. And that happened in the second half. So that led to the macroeconomic figure that I mentioned earlier. But to classify the impact is very, very difficult. But the operation that we have been seeing has shown the numbers that I mentioned right now. So for March 2022, €50,000,000,000 decrease had been seen. And whether that is going to disappear is something that we need to think about. But whether in the fiscal year ending March 2022, whether everything will recover fully is not sure. Some of them will be in the midst of recovery. But we will make efforts with the pent up demand so that we can see increases in the numbers, recovery in the numbers. And fiscal year ending March 2022 number are the mixture of all the factors that I just mentioned. And for the fiscal year ending March 2022, the drivers is for lifestyle, for example, we'll see recovery in the hospital health care area. And in fashion, of course, they are struggling now. However, compared to the previous year, including the food industry, we believe that it is going to recover in the current fiscal year. And of course, in machinery, especially in Asia, especially with automobile, we believe that the recovery can be expected in the fiscal year ending March 2022. When it comes to chemicals, the operations where we are participating in the manufacturing, for example, methanol, this market perspective is going to be very important, and Novus market is improving as well. And these are the drivers for the increases in the forecast for fiscal year ending March 2022. Does that answer your question? Well, the second question was about the reference number that you have given for the next fiscal year. For this fiscal year and the next fiscal year, you believe there will be an improvement. And for March 2022, in the Non Resource 3 segments, you are looking for increased profits of JPY 20,000,000,000 JPY 30,000,000,000. So you are looking for recovery into next year. And you also talked about the efforts that you'll be making. So can you be can you give us more explanation about these points as well? Yes. Sorry, you're asking about the fiscal year ending March 2022. So I did refer to that year as well. So I think that makes it easier to answer your question. For fiscal year ending March 2022, as I mentioned earlier, the negatives that we had seen as impact coming from COVID-nineteen, but they will recover in that fiscal year. And we will accumulate those profits. And in reference, we have given a figure for each of the segments. And these are the factors that are impacting those numbers. For example, machinery and infrastructure, FPSO, you are looking at gas distribution and also power generation. These main businesses is going to contribute to organic growth. And when it comes to Chemicals, agricultural related business clusters, these are the areas in which we are seeing growth. And the affiliated companies, when we talk with them towards the next MTMP, they are saying that there is potential for growth for the next 3 years in the 3rd year of the MTMP. And when it comes to lifestyle, we are looking at recovery in the food industries. And when it comes to IHH, the hospitality related companies, we believe that the results will grow in those areas. So the profits in a normal situation and plus offer are something that we are starting to see more clearly. So these are the numbers added. These are, of course, reference numbers, but we have added and accumulated them. So in the 3rd year, on the MTMP, I think we have changed the color and shown you the prospect or potential for growth. But when we went into the MTMP at the beginning of the COVID-nineteen pandemic, I think the situation has changed. And we now see the outlook more clearly in the going into the 30 of the MTMP. We have reviewed and given color to those factors to come to the figures for the fiscal year ending March 2022. So as I mentioned at the beginning with capital allocation, this is something that we have reshuffled. So we have looked at the options that we have in front of us to come to these targets. Thank you very much. Thank you very much for your explanation. Next question? Thank you for taking questions. There are two questions. First, the Page 13, Energy Solution is my question. As President Hori said, Energy Solution, energy transition will be the strengths of your company. And existing areas and next generation areas, what you would like to do are shown in this slide. By looking at those, various companies are mentioning something like this. And how much of that will be made into profit? It was timescale and scale magnitude. So in terms of profits of magnitude, at what timing can you generate a profit as a company? The second question is about next page, Page 14, Healthcare. This diagram has been shown every time and you are putting together the strategies based on that as I am aware. But if you look at the existing Healthcare business, what is the profit scale that you have And how much growth that you're expecting for the period of mere term management plan? And also, at this moment, for the investments in IHH, before you bought IHH or before you made additional investment, the equity that you used to have? And looking at the current status, what has gone as you expected and what needs to be changed? And what is it that you that is changing your approach going forward? Thank you for the questions. The President will answer those questions. Thank you for the questions. Energy Solution and Wellness, I'd like to explain 1 by 1. For Energy Solution, I said that this will be opportunity for us. And why is this an opportunity? First of all, in the current existing businesses and the player the major players in the global area that are going to be the major players, we're talking to them on a top to top basis. And what would be the responsible transition? And the approach toward transition in each of the countries and each of the regions, there are differences strategically and you have to be well aware of that. And there are technological advances and innovations with longer scale time longer term scale or short term ones that can produce solutions in a short term period. And so the industry boundaries, the existing players and new entries, you have to distinguish between those and work with them and broaden your portfolio menu. And what the ability that we can do that is an important, we have to do that solidly. And that's why we have come up with Energy Solution Headquarters, a business unit. And in the previous Investor Day, the Head of the Energy Solutions Business Units made presentation. And in the current business that they have, how much profit they can expect was shown. And they have to be cautious about these figures. But in the near term, what we have been doing, if you accumulate all these, what is coming out by 2,030 would be 2,000,000,000 yen I think that's what the head said, as I remember correctly, if I remember correctly. And on the back side of that is the new business models that we can see as we go along and the new systems that will become visible at the same time. And for those, you have to make upfront investments with a longer term horizon. And so for the larger ones, we are going to transition too. That's how we are going to do this. So that is the that will be the different order of magnitude from the short term ones as we tackle the global energy transition because we won't be good enough if we don't do that. And it takes some time. That is no question. But talking about hydrogen, as you may have heard, technological innovation and infrastructure collaboration will be required to make it a reality. And competitive hydrogen sources of or the countries that have the sources and how we can translate them into actual demand, if the local production and local consumption can be achieved, that would be easier. But if we have to go across the sea, you have to also take that into account in economic viability. And you have to broaden the partnership and geography and where we should take positions in order to make the business That makes sense. And therefore, the profitability opportunities and scale that are coming out from energy transition will have to go through the demonstration processes. And then we can talk about that to you. But that is the kind of scale that we have to take into account though. And with regard to healthcare, nutrition, agricultural business units and wellness business units in March 2021, as the numbers are shown in the data book. But in the actual current business, there is a certain scale that we have achieved. But what we are aiming for going forward is much larger than that. And we have to take more time to talk about the scale. But what I need you to continue to stay focused on is in the case of healthcare around hospitals, you have to increase the near term flow of the revenue, but we have been doing various investments. So recycling and reshuffling of portfolio will be also pursued at the same time to generate cash. And as we go along, we have to increase and enhance the current flow of the revenue. So in the Healthcare business, the profitability may go up and down going forward for some time, But that's the nature of the business model that we are engaged in. And I hope you would understand that. And especially in the case of IHH, you talked about the initial investments, but 15,000 beds is the scale that IHH Group has achieved, which is quite a scale. And post corona, the high value added treatment that can be provided in hospitals and prevention of diseases and pre disease treatment at home are being integrated. And that is a transformation that we are seeing and that should be captured and which this is important. And the longest term health care theme would be taking the data and sort them out. And security and anonymization and compliance with the regulation, those will be taken into account. And as we can see in the diagram, we have to be able to be contributing to various fields in our businesses. And as a largest shareholder of IHH, When we look at those projects, we have to make sure that those projects will be a win win for all stakeholders. And this will be biggest value big value in the future. And in our group, excellent team has been assigned with this. Does that answer your question? Yes, thank you. And you talked about IHH and wellness strategies. Thank you for that. But there's one follow-up question. In 2018, you made additional investments. And in March 2019, you made additional investments. After the acquisition, what are the new challenges that you have realized by holding on to IHAs? And what needs to be changed that you have as an issue? Well, the new it's not the new issues that we have come to realize, but this is the issue that we have thought of all along. If there are hostels across the countries and going beyond national borders, the way you run the hospitals and distribution of resources and hospitals management resources are divided. And because of the national borders, they become inefficient. But we have to enhance the business efficiency because we have this in a group. So data collection is one key point in this regard. And as a shareholder, we have to make contribution. And from that perspective, how we can take this IHH Group and concentrate and centralize the resources of the management resources of the hospitals, including the concentration and centralization of purchasing and how we can make sure that this will go in a systematic manner to enhance efficiency of hospital operation. There is much room for growth. That's what I have realized and this is one of the opportunities instead of challenges. Thank you very much. Thank you very much for taking my question. My first question, if we could look at Page 12, As the previous person asked about the time line for the plan going forward, of course, management resources and strategic focuses were explained. But long term contribution to profits, that can be expected from the various projects listed on Page 12. When it comes to allocation of management resources going forward, the strategic focus and the time line, I do understand the balance between the 2. But when it comes to the time line going forward, what is the management allocation going forward with the resources that you have? For the long term projects, there may be some risks going forward, and the risks may be raised going forward. So how are you going to balance those factors going forward is my first question. And the second question related to the pipelines. In the core businesses and the scenario that you have drawn, the business portfolio will be enhanced and quality to be enhanced. These are the 2 pillars that you'll be working on. But when we look to the future, 2, instead of achieving good quality projects going forward, would you be focusing on the current projects? When it comes to solution businesses, the downstream projects, improving those projects will be something that you'll be focusing on. Is that correct? So can you talk about the asset recycling, which has gone down in number? So Mozambique and Casa Lones, I think these were the 2 projects that you have mentioned that were the factors for the asset recycling. But going forward, what will be the asset reshuffling that you'll be seeing? So can you talk about the trend going forward with the core businesses? Yes. Thank you very much for your questions. So, Julio would like to answer those questions. Yes. Thank you very much for your question about the time line and about the results achieved from these projects that we have outlined. Referring to Page 12, these are the core main projects that we'll be working on. And for example, the balloon Kojo Hachi, the additional interest in Koja Hachi was announced. And I think this is something that we can see results immediately. Our FPSO and also gas, fired power, these are the projects, the pink dots. I think these can give immediate results, and that is going to add to additional profit. When it comes to nutrition, for example, agriculture related businesses, that is going to lead to increased food production. And we are going to have small to midsized acquisition that is going to result in business clusters. And we believe these are going to give immediate results. So and as I mentioned earlier, in the strategic focus, they are long term focuses as well. In the strategic focuses, they are short term as well as long term. So we'll be combining these 2 going forward. And when it comes to Health Care, we will reshuffle the portfolio so that we will have profitability. So asset recycling is going to lead to financial results, and these are something that we want to make visible. And I believe that is a portfolio management that we need to pursue. So investment gain, FVTPL, for example, this is very difficult to budget. However, we want to make it a healthy investment. We hope that it will be included in a healthy manner in our financial results. So cash generation and portfolio reshuffling is something that we want to combine together going forward for healthy management. And when it comes to asset recycling and improvement in the quality, what is our perspective as a whole, I think was your question. And FETPL, I mentioned just now. And in addition to that, the GHG reduction, we are going to change the portfolio going forward. The thermal portfolio is a transaction that we'll be working on going forward, and that, I believe, is a possibility. And we are tapping into that at the moment. So portfolio will be reshuffled in asset recycling purposes. And on the other hand, we need to improve the quality of the current businesses. The core businesses that we know very well, horizontally, they are areas in which people find difficult access, but we can. And these are the areas that we want to focus on. So in that sense, they may be areas of investors going forward. So horizontal operation of the businesses and also improving quality of the current businesses is going to be very important. If we can secure talent that can work on these areas, I think this will be possible. So we will be proactive to do so. And with that kind of thinking, we will manage the whole picture, and we will come to the capital allocation vision that we have announced in the MT and P. Thank you. Did that answer your question? Yes. Thank you very much. Thank you very much. Next question, please. Thank you for taking my question. There are two questions. Firstly, the market Asia and cash generation is the first one. Previously, including IH Investments, I think you've been making upfront investments. EV, enterprise value has been enhanced for IH, but cash recovery has not been as much as we expected. And then we are making you are making upfront investments in CD Corp. And for the next few years, you are talking about the balance of investments and cash generation in the Asian market. Are you going to continue to do upfront investments? Or in Asia, you are going to also pursue cash generation and recovery of the returns? If you can just focus on Asia and give me the answer, that would be appreciated. That's the first question. And the second one is Mozambique LNG. Because of terrorist attacks, Doton has declared 4th module and it may be delayed by 1 year or so. And your basic policy for Mozambique currently and if possible, what would be the impact on the finance and current schedule and exposure that you may take? So if you have something in mind in terms of risk factors, if you can disclose that, that would be appreciated. Thank you for the question. The presenter will answer the questions. Thank you for the questions. As for the market Asia, it is true that IHH and CT Corp are the ones that we've made investments 1 by 1, 1 after another and the timeline is a bit longer. And of course, it is natural that you ask questions about cash generation. So I need to focus on that. In the case of CD Corp, this is going to be a long term one because for the longer term, we believe that this company will grow. And the way you enter the market or the enter into this business is something that requires and warrants caution. There is foreign investment regulation and buying shares immediately would be a difficult one objectively. So we have the convertible bonds with conversion rights. That's the way we enter into that with downside protection. And at the same time, we have to make sure that the business model of CT Corp will become more robust. And by that, in so doing, we make a contribution. And this will, I believe, will lead to higher quality IPO. And we can also convert the bonds into shares without regardless of the regulation. And also through potential IPO, we can make sure that there will be a higher liquidity. And holding on to the bonds, during the period of holding on to the bonds, the coupon is taken into budget and we can also offset investments through that to some extent. And ultimately, with the liquidity, we will make sure that there will be profitability in the future from this business. And at the same time, as I said earlier, the content introduction from outside of Indonesia, when it comes to that, in investments in CT Corp, outside of the investments in CT Corp, we are working with CT Corp or with a third party to establish profitability foundation. That is a highly probable proposition. And so in that sense, convertible bonds that we made investment into will be used as a leverage to take in the profitability from peripheral businesses. And at the same ultimately, rather, we would like to make sure that there will be this will be profitable. Of course, it takes time, but you have to have a broader perspective to ensure the profitability foundation. And you also mentioned IHH, you have to enhance the value to increase the number of options for us and be it dividends or the whole healthcare portfolio reshuffling, through all these, you have to generate cash and that is something that we would like to achieve. In the case of Colombia Asia, the portfolio recycling was done. That was done in the same ecosystem. So as you look at that, you can understand what we're going to do. The way the cash is going to be generated may be going through some up and downs, but we would be continuing with engagement with the investors and ask for your kind support in that. With regard to the question in Mozambique, as you may have seen in the media reports, from the local sites, there was a town called Parma, 6 kilometers away from the site and there was an attack on that. And completely, it was stabilized by the Mozambique government and the Parma government said that there is no problem anymore. And we call this secure island in this energy project. So this is isolated area and we have been doing construction. But because of worsened security, together with Sotal, we made decision to suspend the operation for the moment. And Mozambique government is working with neighboring countries to continue the stable security and they are taking every measure to make it stabilize. And once we see that there is safety ensured, we would like to resume the operation. So the Total and as an operator and Mozambique government as a host country, we're working with those parties. And it may take 1 year. That was mentioned by the Mozambique government. But in order to secure security, there may be a delay in by 1 year. So it was Total that has said that, not the Mozambique government. And we understand that's the way it was said. And in the contracts with the operations that Total is engaged in, Part of that operation has gone through false material declaration, but the other operations are still ongoing and the stakeholders are fully aware of the situation to restore the security. So as there is news to share with you, we would like to do so. But right now, we are temporarily suspending the construction. Does that answer your question? Yes, everything is clear. Thank you. We have a lot of questions. However, because it is very close to the closing time, we would like to make the next question the last question for today. Thank you very much. I would like to ask you 2 questions, please. On Page 7 of the material, maybe it will be redundant with the questions referring to the PAT. For March 2023, JPY 650,000,000,000 is given as a core operating cash flow. And it shows that maybe there is a peak out. But when it comes to cash generation, do you think it's sustainable for March 2023? You may be looking at gain from resources, but can you talk about this in detail, please? And the second question is about Page 17 of the material. It was asked earlier about the GHG impact for 2,030. You are looking at 50 reduction. So can you talk about the net emission towards 2,030 and beyond? And it shows that you are trying to make some contribution when it comes to emissions. And you are talking about 2,000,000 tons of reduction contribution. And you talk about forestry and company owned forest that is going to make contribution. But can you talk about this in detail, please? Thank you very much for your question. So President will answer your question. Yes, thank you very much for your question. On Page 7, for March 2023, as you can see, this is quite self explanatory. But the mineral and metal resources, iron ore price, looking at the historical normalization, that is something that we are expecting to give this figure. I think oil will not change that much, but when it comes to the commodity market, how they will be placed is going to change the numbers somewhat. We are not looking for a pick out, but we believe in the time line on the surfaces, how we will be able to gain the profit from the competitive market is something that we are focusing on. Therefore, in the MTMP 2023, we will review the numbers, and the short term outlook is being reflected in the numbers that we give. And when it comes to other businesses, in the commodity businesses, the cost will be reduced going forward. And machine and infrastructure, chemicals and also innovation, corporate development and Lifestyle, these are the segments in which we would like to increase the base profits going forward every year. That is going to be very, very important. And we believe that we will see certain results, concrete results in the fiscal year ending March 2023. And your question on climate change, Page 17. We talk about the transition, opportunity in transition. And after the contribution that we make, the global GHG emission, that is going to result. And that is something that we are targeting. What each country is going to account officially? I think the consensus is now being formed. So reflecting that consensus, we will update the numbers. And the Scope 1, 2 and Scope 3 categories are the emissions that we'll be calculating. And in order to answer your question, in the Forestry industry and also in the food business oh, no, excuse me, in the Forestry business in Australia and also in Asia, we are trying to create a framework to calculate the contribution. And the reduction contribution comes to 2,000,000 tons. These are the company efforts that we are going to make. We'll be disclosing these efforts and look at the overall balance. And we'd like to disclose the numbers going forward for your understanding. Thank you very much for your question. Does that answer your question? Yes, thank you very much. Well, thank you very much. Thank you very much. We have more questions. However, it is time to close this session. So we'd like to close this Q and A session. If you have questions, please contact the IR department of our company. We have an announcement to make. As you can see in the last page of the PowerPoint material, June 8, we will have the Mitsui Company Investor Day. The details will be sent by e mail to all of you, and we are looking forward to your participation in that Investor Day. Thank you very much. With that, we'd like to close the conference call for fiscal year ended March 2021 and our business plan for fiscal year ending March 2022. Thank you very much for your participation today despite your very busy schedule. Thank you.