Earnings Call: Q2 2019

Oct 31, 2018

Okay. It's time for us to start Tokio Eric from final show announcement for the second quarter of the year ending in March 2019. Thank you very much for joining us today despite a very busy schedule. I am Hirayama of IR department. I will be acting as the moderator for today's Now first of all, let me introduce the participants on our side. Now you can see Mr. Titzlot Sunei, she and represent the Chief Director, Chairman of the Board. Next, Mr. Toshiiki Kawaiip, Representative Director, President and CEO. And Mr. Ken Sasagawa, vice president, Accounting department. So first of all, we'd like to ask Mr. Sasagawa to give us the information about the consolidated financial summary. Mr. Sasagawa, please. Good evening, ladies and gentlemen. Thank you very much for joining us despite a very tight schedule I am Sasugawa in charge of accounting. And please allow me to make a presentation about the second quarter. Consolidated financial summary now. The first slide, please. Here, you can see the highlights of the first half of this fiscal year. As you know, we have achieved the record high sales and profit on the half year basis. For SPE, memory devices drop our sales of new equipment for FPD, the sales for degeneration 10.5 Panel where I tell has the technological strengths was very strong. Our installed base amounted to about 67,000 units. The fuel solution sales increased by 17% on the year on year basis amounting to 1,000,000,000 to provide stable profit. Next, this slide shows the financial summary on the half year basis. In the middle, you can see the red color portion that shows the actual for the first half of this year. Let me start with the net sales, 1,000,000,000. On the right hand side, you can see the announcement made on the April 25th. When you compare with this value as for the net sales, we can see increased by JPY 1,000,000,000 and we are almost the same as the planned level. As for SPN net sales, 1,000,000,000 FPD sales was 1,000,000,000, you can see drastic increase in both cases. Gross profit was 1,000,000,000, again, almost the same as the initial Expectation are focused on but now you can see SG and A expenses 1,000,000,000 and operating income was JPY 175,400,000,000 and it was more than JPY 173,000,000,000, and the net income attributable to owners or parents, which is JPY 135,200,000,000 is more than our initial focused of JPY 128,000,000,000, you can see increase and decrease on year on year basis as holder sales, 33.7% increase, the 42.2% increase for the operating income, and the operating margin was increased by 1.5 point increase and also net income increased by 49.2 percent. You can see drastic and considerable increase in every case. Now you can see quarterly basis financial summary in direct color, you can see the 2nd quarter actual. For net sales, compared with the first quarter, again, 33.8 percent increased 1,000,000,000, SP3 100 58,000,000,000 FPD sales were 1,000,000,000. You can see a drastic increase on the poultry business as well. And actually SB sales was increased by several drivers, including logic and memory manufacturers in Korea and China logic and memory manufacturers. These are the major drivers of SPE sales increase. As for the gross profit 161,600,000,000, the margin was 40.9% compared with first quarter, the margin declined. This is because of the settlement mix specifically FPD segment mix is changed. This is one of the reasons. And also the ratio of the manufacturing costs sales is increased. Next, the SG and A expenses 1,000,000,000 and 1,000,000,000 is the RNA the expenses. During the first quarter, there are some changes in market trend because of that management decided to decrease the SG and A expenses for the 2nd quarter by 10% to control costs. As for the operating income JPY 103,000,000,000, the operating margin was increased by 1.5 points from the first quarter. Income before income taxes was JPY 105,800,000,000 net income attributable to owners of parent was 1,000,000,000. Next slide, now you can see the financial performance on the quarterly basis, the all the information is already explained in the previous slide. So for the quarterly basis, net sales and operating income hit the record high. Next slide please. Segment information is shown on this slide. For SPE sales, as I said earlier, JPY 358,000,000,000, The segment income was JPY 105,800,000,000. Segment profit margin was 29.6%. 1.6percent point increase from the previous quarter, quarter 1st quarter. For FPD, the sales was 1,000,000,000. Segment income was 1,000,000,000, 2nd and profit margin was 25.5 percent. The increase of the profit margin for both SPE and FPD is driven by the sales increase and the proportion of the fixed cost was decreased. These are the major reasons. Next, you can see the new equipment sales by application for SPE division. As you can see here on this slide, the sales themselves increased from first quarter to 2nd quarter in particular, memory propulsion is still high. DRAM and NAND increased is about 66%. When it comes to growth rate, Logic Others and Foundry increased a lot. Next slide, SBE division, sales by region is shown over here. For volume wise, just in the middle, the South Korea orange color portion volume still remains rather high as for the proposition or proportion, China accounts for 20%. Just like first quarter, China grows rapidly. Next slide, please. Now you can see field solutions sales on a quarterly basis. For SPE 1,000,000,000 FPD billion in total, 1,000,000,000. Again, customer order increases. The parts and modification demand is rather strong, so we are very happy to see the sales fluctuation as planned. Now you can see the balance sheet. Actual on the left, you can see assets. The total compared with 1st quarter increased by JPY 53,400,000,000. The major reason for this increase on the top, you can see the cash and cash equivalent increased by 1,000,000,000. This is the major driver of the increase. Of assets. Also for inventory, compared with 1st quarter declined by JPY 37,500,000,000 because of merchandise and work in process. Next, the liabilities, the total of liability compared with the 1st quarter 1,000,000,000 declined by 1,000,000,000, customer advances of 1,000,000,000 decrease. Next, net assets compared with the court first quarter increased by JPY 77,200,000,000. The major reason for this increase is because of the increase of the retained earnings, you can see the increase of the shareholders' equity by 1,000,000,000. Next, you can see inventory turnover and accounts receivable turnover. Along with the sales increase, you can see the improvement in turnover for both cases. For the accounts receivable turnover, thanks to the sales increase and customer mix, you can see 3 days improvement from the first quarter. As for the inventory turnover, again, because of the increase of the sales, but because of the reduction in the shipment inventories decreased. As a result, you can see drastic improvement in terms of the inventory turnover. This is my last slide showing cash flow The figures are shown on this slide. The cash flow from operating activity, plus 1,000,000,000 On the bottom, you can see cash flow from investing activities minus JPY 12,200,000,000. Cash flow from financing activity minus JPY 5 1,000,000,000. As for this, because of the share repurchase for the purpose of the medium term incentive, we have 1,000,000,000. That's all from me, myself. Thank you very much. Now next, Mr. Kawai, our CEO, will present business environment and financial estimate revisions. So Mr. Kawai, please. Once again, I am Kawai, Thank you very much for coming to our financial announcement, despite a very busy schedule. As Mr. Hirayama said, I'd like to make a presentation on business environment and financial estimate revisions. The first of all, business environment shown over here. For the SPE CapEx, continuously Namely demand is rather strong, especially DRAM investment is increasing for WFE as a whole, we are expecting 5% to 10% increase on year on year basis. The growth rate of WFEB by application will be explained by using next slide, but by and large, there are some push out of the customer's investment plan over the past 3 months compared with the previous meeting The range was decreased by 5 points. However, investment level remains rather high. For FPD Production Equipment CapEx for TFTRA Process, The equipment demand is expected to continue at the high level comparable with 2017, thanks to significant expansion of investment for generation 10.5 despite some adjustment investment for small, medium panels used for mobile application in. For FPD, there had been no changes from the previous meeting over the past 3 months We have 2 months ago for this year, both FPE and FPD, the equipment market is driven by the very strong demands and you can see the very high level investment continuing now. This slide shows the 2018 calendar year, WFE market growth and business opportunities by application. 1st of all, as for DRAM, for DRAM investment, last year, that was the growth of 70%. And this year as well, you can see additional 10.50% to 55% growth as expected. DRAM spot price declines a little bit. However, DRAM contract price remains high level. Continuously, strong demands continues and investment for the purpose of increase of the capacity accounts for about 70% of total. And bit capacity per wafer is still increased. For that up as 80% of investment is for the leading edge device nodes. Drivers are for servers because of the high shipment level and the high average content. The R outlook is declined by 10 points compared with 3 months ago, the growth rate As far as growth rate is concerned, this is the biggest application for growth rate. Next, non volatile memory, there is no change from the previous meeting. Just like DRAM last year, non volatile memory growth was about 70%. This year, you can see the same level that as last year or plus 5% growth is expected. Again, high level of the CapEx is expected for non VATA Memory. NAND features very high price elasticity, when price goes down, its market is expanding. Investment is focusing on denying Leya, which is a leading edge generation. So supply increases and when the price goes down furthermore, the contents of SSD for PC and data center will be increasing. The number of layers is stem and cleaning system, which feature high value added, and that's where we can differentiate ourselves from the competitions. As we said before, including fill and deposition and high speed test system, in all product range, we try to enhance our position in the nonweta Memory market. Next Logic And Foundry, we are expecting minus 10% to 15% from the previous year. For this outlook compared with 3 months ago, we are declining our expectation for investment by 5 points for logic. There is no weakening trend of the demand for the product, but there is only some adjustment for the technological factors. When technological factors are solved, you can see increasing trend of WFE investment. For foundry, Interfusion GPU market will be increasing And the WFE investment will be increasing as well. So the patterning and the skating require a much more complicated demanding technology and we are providing diversified products So we think the larger opportunities for our business. So there is no change in big picture and Semiconductors are essential to realize IoT society. So when you look mid term, long term, the equipment market SB market, there should be no change at all at present. Mobile PCs are the major ones, remaining still now, but in the future, beyond 2020, we will see the tangible applications replaced by for debt application. Therefore, midterm, long term outlook remain unchanged. Next, This shows SP business progress for this fiscal year. Our focus area includes Hitching film deposition and cleanings. So in those areas, we are winning next generation PORs, especially for etching. Just like last year, we are winning the PORs to expect the improvement of share. We have been talking about the proposal for the process integration and our posal for process integration is contributing to winning PORs. I cannot share the information of details like application, but for critical module, it is necessary for us to see the neutral optimization among different processes. So you can see some synergy effects, and we are winning POA from other processes. As well. Along with the expansion of the IoT application, upgrade of equipment, and used equipment sales like expanding steadily. In addition, you can see the increasing trend of shipment of the new equipment. But accordingly, you can see the demand of the parts and service. And you can see increasing sales In the previous meeting, we announced the start of the operation in the distribution building in Miyagi Factory this time We are very happy to announce that construction of the new development building is completed. And from next month and on, as we reported the other day in Miyagi, we are going to increase the production line from 1 to 2 to increase the overall capacity of Miyagi Factory. We talked about the midterm long term outlook Now in order to address the expanding hedging market, we are making active investment to prepare for the increasing demands. Now you can see the flat panel business progress. So sales of degeneration 10.5 equipment is rather big and proportion of these cells is really big. Accordingly, we have the technologies necessary for generation 10.5 and our profit margin is improving as well. In addition, the other day, we announced 2 new products. The 1st new product is about PICP Hching system. For generation 8, we did have the product, but we have the new equipment for generation 10.5 as well. The other one is inkjet printing system for generation 4.5 panel used for the OLED. We have released this new product. So we are going to see Vilaria Sized TB with higher resolution. We expect the increasing sales of this new equipment. So the business progress, especially we have been talking about improvement of profit margin and we focused our efforts in the area. 20% of the profit margin is expected. At the same time, we are going to register record high sales for this fiscal year. Now I'd like to talk about revised financial estimate for this fiscal year. In the beginning, we expected the sales of JPY 1,400,000,000,000, but because of the push out of the customer investment in the second half, we have revised our sales outlook to one point to JPY 28,000,000,000,000. As Mr. Sasava Vaseralia, about the 2nd quota actual. As for the first half, we are very happy to say our actual for the first half as planned. For second half, there is some downward revision. But when you look at the full year sales, you can see 13.2% increase we are going to see the 3 consecutive year record high results. As for the breakdown, SPE increased by 10.9%. FPD increased by 46.5%. Gross profit increased from previous year by 1,000,000,000, achieving 1,000,000,000 operating income increased by 1,000,000,000, achieving 1,000,000,000 net income attributable to owners or parent increased by 1,000,000,000, achieving 2 30 1,000,000,000 and net income per share is JPY 1445.2. SG and A expenses, we will not decrease SG and A expenses compared to this previous year even if there is some decline in the profit margin in order to obtain the share in the expanding market, we be well prepared, we are going to keep appropriate level of investment in the future. On this slide, you can see SB Division, new equip mentioned sales focused by application. As you can see here, just like the first half, even in also in the second half, memory is the driver, major driver. There is compared with the previous meeting, As for DRAM investment, you can see some trend of push up by a large. For Novartial memory, there is no change from the beginning of this fiscal year for logic and foundry. In the 1st year, there was no change from the initial focused, but there is some trend of to go sharp in the second half of this year for investment. This slide shows R and D expenses and CapEx plan. For R and D expenses, we are going to scrutinize all planned items. We are going to implement necessary item, but compared with the initial focused, we are going to have the R and D expenses of JPY 116,000,000,000 declined by JPY 4,000,000,000. There is no difference in the CapEx plan and depreciation, we are going to carry out the proactive investments so that we can see the further growth and achieving the midterm business plan. Finally, let me talk about dividend forecast. There is no change in our shareholders' return policy. The interim debt is JPY 413,000,000. The year end dividend is JPY 311,000,000. 4 year basis increased from the previous year by 16%. So we can see record high dividend over the past 5 years in a row, we are going to improve the shareholders return by increasing our profit. Thank you very much for your kind attention. Now we'd like to entertain questions from the floor up until 6 o'clock. I'd like you to limit your question by one with the follow-up question. Could you identify your self by name and application before asking question. And could you speak slowly and precisely because this financial announcement will be uploaded to the website. Could you raise your hand if you have any questions? Thank you very much. I am Madaki from Nomura Securities. I think now what division is just the same level as we saw in the market I'm relieved. Actually, the market where industry environment is getting worse. However, when you look at the utilization of HAC factory or orders of materials or things announced, but I think we can see some bottom out trend. How do you think about that? If you're just giving yes or no, it's not so interesting, could you give us some reasons? If it's not checked bottomed out, then could you let us know the timing of bottom up out? May I answer to that question? A present when you look at the entire market trend, as I said in my presentation, memory is the major driver. At present, the mobile application is the largest portion. In addition, data set up should be 2nd biggest application. For mobile application, the customers productivity improvement is in the good progress because of that, there are some adjustments. For data center, CPU and memory, the supplydemand balance should be considered because of that, the memory centered investment is a bit delayed. That's the feeling I have. In the future, for CPU and logic as well, there are several challenges, but if those challenges are resolved, maybe you can see some increase of the memory demand as well. So I wonder when adjustment will be overcome or completed. If possible, that logic scaling might be proceeding in the second half of next year and in 2020. We want to see the big plan for investment that is the wishful pro focus for the future. I have a follow-up question, Hitachi High-tech and SCREEN announced that they have bottomed up and you can see some increase in orders. And your suppliers as well, they said they have recovery in the orders. And it would need also other competitor set in August. There was some bottom If you also say we you have already bottomed out, it is really encouraging comment. How do you view this situation? So it is generally said that there is already bottomed out and you will see increasing trend in the future. And there is a big expectation in the second half of next year. And I don't disagree with or to that general perspective, but the market is expected to control the balance of the supply and demand properly. So I think there might be some shift by 3 months or 6 months. And I'm not sure because it's not me, myself, to take care of the market. So I don't know about the shift by 3 months or 6 months. But when you look at the end industry as a whole, we are in the charge period. The fab plan as well is expected to be implemented as planned. By 2020, there is about 20 fab project So I think evaluation is going We have the big expectations and we can have big expectations for the future. Thank you very much. I am Miamoto from Mitsubishi FA Morgan Stanley Securities. On page 20, you can see WFE market by application and I'd like you to give me some explanation by using this slide. The figures for 2018 has been changed from 56 to 58, revised downward to 54 to 56, which is understandable. But in the previous meeting, you said there is no revision for 2019 and beyond. And you said $61,000,000,000, but how do you view the trend beyond 2019. So 2021, 62,000,000 or 1,000,000,000, that's what you said in the previous meeting. But if you have any outlook beyond 2020. Could you share that with us, please? For the midterm business plan, let's say 2020, year 2020. We don't change our of our focus, but 2019 we are getting into some adjustment period, just like the answer to the question given by Mr. Wadaki, at present, We are not able to give you some specific figures or number. It's too early for us to say the figures for year 2019. Okay? So in the previous meeting, you said there was no revision. And this time, for 2019. As of today you can say maybe there could be some increasing possibility or decreasing possibility either. I think for this fiscal year, we will see the record high profit increase in both income and sales. So now you can see very high level of the business performance and I think next year should be very similar to this year. So basically, there should be no change from this year to next year. It remains flat yes, almost correct. Generally speaking, we're getting close to the bottom of the market maybe in the second half of next year, market trend will start recovering and I don't agree to that general comment. Or trend. However, if you ask us any exact numbers, there are various adjustments going on, customer production capacity is increasing and the logic scaling is also progressing. So those things impact the customer decision. So specific gears, are not able to be shared Thank you very much. I'm Magawa from Goldman Sachs, Japan. I have a question about the share repurchase buyback. When you look at the fluctuation of the stock price and you have revised your figures downwards, so that could I think the share buyback could be one of the options you could take, but you didn't carry out any share buyback. Why you didn't? And if you have any plan and you always said, flexibly address the share buyback And could you just give us your feeling about deflexibility of your stance? So let me answer to your question rather straightforwardly. I'm sorry, I cannot give you the very good answer, but various situations need to be considered. So we must remain flexible when it comes to the share buyback policy. So all we can say is remain flexible in this policy. Thank you very much. So what do you think about M and A? Do you have any position or policy for the M and A are you thinking about M and A? If you have some idea, what is the range of the size or area semiconductor S FPD, any other areas, could you share your idea, please? For M and A, we have no reason to deny it. Stakeholders, our growth shareholders benefit and technology innovation for our customers. When you think about all those things, if you can find some beneficial things, option, of course, we need to think about ROI. If there is some benefits, we can think about the option of M And A. And size of the M And A needless to say, you need to think about the internal reserve as well and you must make a decision by thinking about the balance against the internal reserve. So we cannot give you any specific size. There is we cannot set any limitation up a limit of the size of M1A. For M and A, we do not deny it. That's how I can answer to your question. Thank you very much for your presentation. I'm Yossita from Deutsche Securities. First question, once again, I'm sorry. Next year, WFE market, trend, you said there should be no change from this year. However, when you divide next year by half, the first half and second half of next year, how do you think about the trend from the first half of next year against second half of this year? And how do you see the second half of next year You don't have to give me any specific fears, but could you just share your idea with us, please? For log shaped customers, from logic customers, in some cases, they are us to bring forward the delivery date. So I think customers are thinking about these issues right now So there could be the possibility of some pulling forward or the initial plan might be followed as it is. As far as our company is concerned, we are supposed to be ready for any demand even if there are changes in demands. As for the memory, So when you look at next year, 1st and second half, usually, remember investment in the 1st half is higher, but now you can see some push out to the second half. Do you think the investment really materialize in second half of next year Or if there is such kind of increase in second half, there might be some oversupply in early 2020. But how do you see the investment for memory? 1st and second half of next year. For memory, It's being prolonged a little bit, So now on the customer side, productivity is already rather high. In that sense, Honestly speaking, I have no idea, but continuously, the memory investment remains high. That's how I can answer to your question. Just confirmation, first half next year for logic and foundry, the investment will increase. You can see some peak. And second half of next year, maybe memory investment recover getting closer to this year's level? Yes, that's correct. Some additional question now you said in the middle of the second quarter, you detect some changes in the market and you dereduced SG and A expenses, but for next year, when you look at the market trend, R and D expenses, depreciation and CapEx, how do you see how do you plan those things for next year? Next year, once again, we need to have we need to think about next year's plan next year if you see continuously high demands and patterning, scaling, And whereas for structure, for example, high game material or low game materials, we need to address those approach We also take some action for the new devices and packages as well. So every business potential exist and we must optimize our investment to meet those business potentials. But for the large manufacturing factory, for firm Deposition. In Yamanashi and tohoku region specifically, We already announced the construction of new factory. Therefore, the area for investment should be new application. There should be the focus area of future investment from now on. Thank you very much. Hiroagawa from Merrill Lynch Securities, Japan. For this fiscal year, I want to ask some questions about the revision of your financial estimates. For memory and CPU balance should be the major reason of the pressure of the investment. That's what you said. When it comes to Logic And Country, there is also a revision that is what is the reason why the pushout was necessary for low those VPN foundry as well. The customers has technical challenges and they are working on those technical challenges. It really depends on the progress of that. So foundry and 10 nanometer, is that what you mean? I'm sorry. I cannot give you any specific comment on that. Please allow me not to comment me comment on that. I am Mike Gawa from Credit Suisse. Securities Japan. I have a question about the cash and cash equivalent as of the end of March and free cash flow focus for this Korea. That's a fast question. I also have some follow-up question later. As for the cash flow, I'm sorry, in our company, cash flow and cash and cash equivalent, we are not allowed or supposed to make any comment on that. We are now to disclose the information compared with the end of September, there is some declining trend? Yes, that's correct. There is a decrease in trend from the end of September to the end of March. After until 2017, suppliers didn't increase or make any investment, for example, by carrying out to shift work to take care of the expansion of the market After that, the newer companies announced the construction of new factory and you also announced very aggressive if suppliers have made decision for investment. And by now, I think suppliers have invested some money and they hire some employees increased fixed costs. At that time, Inc. Your company announced downward revision when it requests the sales for the second half, the 17% reduction from in the first half, maybe supplier site 35% to 40% reduction in demands. In such a case from your company, for example, to shorten the payment period conditions or in order to help suppliers to maintain their operation. You may have some inventory. Do you have any plan to provide any relief to the suppliers. I am asking this question, how much money you have for the purpose of the share repurchase? Present, we don't have any decision made for that, but in our company, we have been taking very flexible approach for every aspect and our corporate culture remain unchanged So we try to remain flexible to take care of any issues coming up. So you are kind or very soft your suppliers. It's a bit difficult for me to answer to such kind of emotional question, but we try to remain flexible in every aspect We think our suppliers are our partners, suppliers, therefore, In each factory, we hold suppliers' day to communicate with suppliers. In addition, also in the head office, we hold the suppliers' day to share the market trend and our policy and direction with the suppliers. As for the new technology, in many cases, we received proposal from those suppliers. Because they are partners. And in order to realize customer's idea, to make it business, we need to support customer properly and that will make customer happy as well. So supplier is a very important partners, and we are going to respect our suppliers from now on as well. I'm Nakanomeo from Jefferies, Japan. For memory supply demand balance, I have a question on that respect. Calendar year 2018, at the end of this calendar year at the end of December, when it comes to supply capability, if there is full yield level, For DRAM and NAND, how much bit supply increases expected? How do you see the supply level of DRAM and NAND? In bit level. For bit demand for both DRAM and NAND, almost the same as this year, a little bit higher than this year. That's the demand we are focusing or expecting, I'm sorry, 2018 I'm not talking about demand, but I want to ask about the supply of DRAM and NAND at the end of 2018 calendar year. For supply for NAND between 40% to 45% for this year and for DRAM, again 20% to 25%. Probably in the market, there is a concern in the market. So actually the supply capacity will be increasing because of the multi layer or scaling. However, demand might be declining in especially first half of next year, then supplydemand gap will be increasing and that gap remain unfilled for years for a long time. That's a concern in the market. But you said do you see the supply much larger than that? So it's better for us to think about demand supply separately. As Kawai san said earlier, I think there is a stronger concern for NAND. But NAND features very high price elasticity. So the supply demand balance should be considered and customer remain flexible in changing or deciding their investment. Thank you very much. Thank you very much. I'm Haniaya from SMBC Nikko Securities. I have one question. As for the entire picture of the picture, currently we have the U. S.-China trade war, are there any risks and opportunities, opportunities might be difficult to be identified, but could you share your idea, please? For U. S.-China trade friction, I think it is necessary for us to have a close look at it. In particular, short term movement requires very close attention. However, when it comes to midtermlongtermperspective, needless to say, data will be growing and that requires large numbers of semiconductors So the IoT trend remains unchanged in midterm long term basis. So I don't have any major concern in the longer perspective. As well as our company is concerned, we try to provide variable innovative technologies and service to the market For short term, there might be various impacts, so we must pay close attention. However, for midterm and long term perspective, demand is expected to grow continue I'm Shibana from Citigroup. I have related question to the previous question. Let's say American Manufacturers are not allowed to deliver their product to Chinese market does tell Is it possible for Tel to deliver your product to Chinese market? The American government has its own policy and Japanese government its own policy. So those 2 are not directly linked to each other at present. That's how I view However, the American made parts or American people are not allowed to go to Chinese market, for example, or American equipment, America made equipment, including metrology equipment. If they are not allowed to be supported or delivered to the Chinese market, that might have significant impact because in order to come up with fabricate devices, you need to use multiple tools. 1 single process 2 cannot make any devices. So it might be possible for us to review or revise our plan in the future. Just like the previous question, We need to think about those possibility, and we must be careful to have a close look at the situation of the trade fictions. I am Dania Anton from Macquarie Capital Securities. I have one question about field solution business. I want to know the focus for this year and outlook for next year. Earlier, you talked about the number of shipment. Which is increasing and in store basis also increases. But orders for new equipment is declining, but for example, next year, installed base, you may see some possibility of having some recurring business increase. As for your first question, solution sales forecast for this fiscal year, about JPY 280,000,000,000 is expected. At present, we have achieved JPY 140,000,000,000 just in the middle level. An installed base, we will see the increasing trend for the installed base, a new demand is decreasing a little bit completely with our focus, but we see 2 digit growth rate in year 2020. Including modifications, customers will be very active for investment, including modification, solution business is expected to grow steadily. Thank you very much. So those figures for SPE and flat panel display, Could you give us those figures, please? On the full year basis, JPY 275,000,000,000 1st half JPY 140,000,000,000 second half JPY 135,000,000,000 and FPD accounts for JPY 100,000,000,000 and remaining is a SPE meaning 1,000,000,000 for SPE. Thank you very much. I want to ask a question about FPD because there is no questions for FPD so far. For all at generation 4.5, usually G6.5 is a majority, but generation of 4.5 may have different application or you may have finalized orders. Could you make some comments on that? Now I want to see the future stability inkjet, then printing system will be applied. So that will be scaling And also as you made a announcement in OLED Conference G8.5 is another possibility. So not only G4.5 you may see generation 4.5, as you said, it is for pilot purpose. So in order to promote the technology innovation, they are using generation 4.5 for the trial basis. So at this moment, they are supposed to verify the manufacturer's ability for the mass production so that they can move on to the larger size. The higher resolution demand is rather high continuously So Inkjet Technology, actually we have increasing inquiries for Inkjet technology. That's how I can answer to your question. Thank you very much for your presentation. I'm Sivra from Daiwa Securities. My question is a bit related to the previous question. For R and D expenses and fixed costs, I have A question, 2020 and beyond, market expect to grow furthermore and you said there is no change in your focus for the future growth. For example, when you look at FWFE market in 2019, let's say it's declined, let's say 10% to 15% but you continue investment by looking at the future growth beyond 2020 or if market is declining in order to come up with profitability for each individual fiscal year are going to reduce R and D cost Do you could you share your idea about flexibility of R&D investment? For the new big strength, you can see increasing trend by and large. So me, myself, short term mid term and long term, we'd like to pursue optimum performance. That's what we are seeking for. So of course, we may suspend not urgent, not necessary investment, but when it comes to the midterm long term we try to continue our original plan. For internal reserve, we can make the use of the internal reserve for that purpose. And I think the market will be expanding furthermore. In order to address such kind of increasing trend, we are continuously enlisting for our future growth. For the current development, long term elements and also short term elements. There are different elements when development, long term and short term. So when it comes to the creation of something new, it may take several years. So for that low term investment should not be suspended. Thank you very much. Thank you very much. That's all for today's session. This is the end of today's financial announcement. Thank you very much joining us despite her very busy schedule. Thank you very much. Thank you very much.