Mitsui & Co., Ltd. (OTC:MITSY) Q1 2026 Earnings Call Transcript

Mitsui & Co., Ltd. (OTC:MITSY) Q1 2026 Earnings Call Transcript August 1, 2025

Mitsui & Co., Ltd. misses on earnings expectations. Reported EPS is $9.23 EPS, expectations were $9.29.

Hideaki Konishi: Welcome. We’ll now begin the briefing of the financial results of Q1 of the fiscal year ending March 31, 2026 of MITSUI & CO., LTD. Thank you very much for taking time out of your busy schedule to join us today. Today’s briefing will be a combination of Zoom webinar and online presentation for institutional investors and analysts. Tetsuya Shigeta, CFO, and Masao Kurihara, General Manager of the Global Controller Division, will give a 10-minute presentation, and then we will answer the questions from the audience. The presentation part will be livestreamed for individual investors to be able to watch on a real-time basis. Now, please refrain from reproducing or diverting all or part of today’s materials without permission.

Today’s meeting will be recorded and made available on demand on MITSUI’s website on a later date. I would now like to introduce today’s presenters: Tetsuya Shigeta, Senior Executive Managing Officer and CFO; Masao Kurihara, Managing Officer and General Manager of Global Controller Division. Myself, Konishi of the Investor Relations Department, will be the moderator. Now, we’d like to begin the presentation. Over to you, Mr. Shigeta.

Tetsuya Shigeta: Good afternoon. I am Tetsuya Shigeta, CFO. Thank you for joining us today. I will begin by giving a summary of the FY March 2026 Q1 operating results. I will then hand over to Masao Kurihara, General Manager of the Global Controller Division, who will speak on the details of our operating results. Summarizing our operating results for the quarter, core operating cash flow or COCF increased by JPY0.5 billion YoY to JPY216.3 billion as we made solid progress against the business plan. Profit declined by JPY84.5 billion YoY to JPY191.6 billion, mainly due to the absence of gains from asset sales recorded in Q1 of the previous fiscal year. Progress is in line with the business plan at 25%. This slide shows the progress of each segment against the business plan.

COCF is showing good progress across the board. Progress of profit varies by segment, but overall, we are on track, mainly due to seasonal factors. Full-fledged contribution from the energy and innovation and corporate development segments are expected from Q2 onwards. Regarding our cash flow allocation, cash inflows totaled JPY270 billion, with JPY216 billion from COCF and JPY54 billion from asset recycling. For cash outflows, investments and loans totaled JPY208 billion. Key investments and loans included ITC Antwerp, our European tank terminal business, which became a wholly owned subsidiary. We also started investing in Blue Point, the low-carbon ammonia project. We will continue to steadily execute investments for growth and asset recycling in line with the medium-term management plan or MTMP.

Since the start of the current MTMP in FY March 2024, we have executed multiple investments for growth across our three key strategic initiatives of industrial business solutions, global energy transition, and wellness ecosystem creation. Some of these projects have already begun contributing to earnings, helping to raise our base profit. Furthermore, investments for growth, which fortify our long-term earnings base, are also progressing steadily. Entering FY March 2026, we executed and made investment decisions in areas in which we have deep expertise, including making ITC Antwerp a subsidiary, a business expansion via an additional investment in Willis Mitsui & Co. Engine Support, an aircraft engine-related business, and began our investment in the Ruwais LNG Project.

Q&A Session

We’ll continue to steadily build up carefully selected investments aligned with our key strategic initiatives. There’s no change to our shareholder returns policy since the FY March 2025 full-year financial results announcement. We’ll continue to consider enhancing shareholder returns while maintaining a balance with investments for growth. That concludes my part of the presentation. I will now hand over to the General Manager of the Global Controller Division, Masao Kurihara, for details of the financial results for the quarter.

Masao Kurihara: I am Masao Kurihara, General Manager of the Global Controller Division. I will speak on details of the operating results. COCF for the quarter increased by JPY0.5 billion YoY to JPY216.3 billion. In the mineral and metal resources segment, there was a decrease of JPY16.3 billion to JPY71.9 billion, mainly due to lower iron ore and metallurgical coal prices. In the energy segment, despite the higher gas prices, there was a decrease of JPY7 billion to JPY45.7 billion, mainly due to a decrease in production volume. In the machinery and infrastructure segment, there was an increase of JPY11.7 billion to JPY36.1 billion, mainly due to the absence of taxes from asset sales in the previous period. In the chemicals segment, there was an increase of JPY7.5 billion to JPY32.7 billion, mainly due to a gain on the reversal of a provision related to a business outside Japan and higher demand in Europe for crop protection.

In the iron and steel products segment, there was an increase of JPY4.3 billion to JPY6.3 billion, mainly due to trading and dividends from equity method investees. In the lifestyle segment, there was a decrease of JPY8 billion, resulting in an expenditure of JPY1 billion, mainly due to an intersegment transaction with others, adjustment and eliminations. In the innovation and corporate development segment, there was an increase of JPY4.6 billion to JPY12.1 billion, mainly due to an increase in dividends from JA Mitsui Leasing. In othersm adjustments and eliminations, there was an intersegment transaction with the lifestyle segment, mainly due to this and other expenses, interest, taxes, et cetera, not allocated to business segments, COCF totaled JPY12.5 billion.

Profit for the quarter decreased by JPY84.5 billion YoY to JPY191.6 billion. In the mineral and metal resources segment, there was a decrease of JPY29 billion to JPY51.5 billion, mainly due to lower iron ore and metallurgical coal prices. In the energy segment, despite higher gas prices, there was a decrease of JPY0.3 billion to JPY18.9 billion, mainly due to a decrease in production volume. In the machinery and infrastructure segment, there was a decrease of JPY75.3 billion to JPY50.7 billion, mainly due to the absence of asset sales in the previous period. In the chemicals segment, there was an increase of JPY12.7 billion to JPY30.9 billion, mainly due to a valuation gain on ITC Antwerp. In the iron and steel products segment, there was an increase of JPY0.5 billion to JPY6.5 billion.

In the lifestyle segment, there was an increase of JPY0.8 billion to JPY14.8 billion. In innovation and corporate development segment, there was an increase of JPY4.1 billion to JPY10.3 billion, mainly due to higher profit at JA Mitsui Leasing. Others, adjustments and eliminations recorded JPY8 billion due to expenses, interest, taxes, et cetera, not allocated to business segments. This page provides a summary of YoY factor comparison. Base profit increased by JPY10 billion. This was mainly due to core businesses in the chemicals segment, LNG-related businesses, affiliated companies in the innovation and corporate development segment, and other factors, while there was lower profit from ships subsidiaries. Resources costs/volume decreased by JPY17 billion, mainly due to higher costs and lower volumes in copper and lower volumes in energy.

Commodity prices decreased by JPY5 billion. While oil and gas contributed to a JPY10 billion increase, iron ore and metallurgical coal decreased by JPY15 billion. ForEx decreased by JPY15 billion, mainly due to a stronger yen. As a result, commodity prices and ForEx decreased by JPY20 billion. Asset recycling decreased by JPY72 billion, mainly due to the absence of gains in the previous period. Valuation gains/losses and onetime factors increased by JPY15 billion, mainly due to the valuation gain on ITC Antwerp. Finally, I will speak on the balance sheet as of the end of this quarter. Net interest-bearing debt increased by JPY0.1 trillion to JPY3.4 trillion. Shareholder equity increased by JPY0.1 trillion to JPY7.6 trillion. As a result, net D/E ratio is 0.45x.

That concludes my explanation.

Hideaki Konishi: That is all for the presentation. Now, we would like to entertain questions. If you have a question via Zoom, please click the raise hand button at the bottom of the screen. We will read out your name, and then, please unmute yourself and ask your questions. Please ask two questions at a time. You may raise your hand repeatedly, but because of time constraints, we may limit the number of people who may ask questions. Please ask your question. Please raise your hand if you have a question.

Unidentified Analyst: Thank you very much for the explanation. I would like to ask two questions, please. My first question, on page 12, in this chart, chemicals, LNG-related, innovation and corporate development, and food, these were the four factors for the increase in the base profit. How are they related? Will they be sustainable into Q2? That is my first question. My second question, going to page six about cash flow allocation. About investment, sustaining CapEx and growth investment, they are totaled together. On the very left-hand side, for the MTMP three-year forecast, if we subtract the two-year numbers, of course, the plan has not been announced, however, it will be JPY1.2 trillion. Rhodes Ridge, of course, there will be FX valuation, but it will be about JPY800 billion this year.

Sustaining CapEx, if it’s about JPY50 billion, it will be JPY200 billion. Together, it will come to JPY1 trillion. Please let me know if my calculation is incorrect. If you subtract that in the growth investment, it will be about JPY200 billion. In Q1, it was JPY160 billion. Just comparing the two, investment into growth, what will happen going forward? I think the investment may be tighter going forward. How would you be using the management allocation going forward because it may be impacted? Your ideas on investment going forward and how you’ll be using the management allocation going forward, that is what I’d like to know. Thank you very much.

Unidentified Company Representative: Thank you very much for your question. First of all, on the YoY factor comparison about the base profit on page 12, chemicals, yes, it was very strong overall, especially overseas agricultural chemicals business. Of course, ITC, our US tank business, was also strong. Extending from the existing business and operation, we had seen upward momentum, and that is included. Whether we’ll be able to transit by four going forward, that will be difficult to say, but we would like to extend this further as an increase in profit. As for LNG related, this is for volume and also for dividends. But compared to the year before, every quarter from Q1 to Q4, the allocation when it comes to especially trading, I think it will be more weighted on Q2, but in Q1, we were able to see increase here.

As for innovation and corporate development, the factors within the number is JA Mitsui Leasing, the performance was strong. Of course, commodities and derivatives trading was very good because it was able to make profits and was able to capture that opportunity. It will depend on the market trend going forward and it will depend on the volatility of the market going forward, but we will make utmost efforts so that we’ll be able to increase profit going forward. As for food, there were some accumulation of smaller projects. Especially coffee trading, compared to the previous year, showed improvement. This base profit, and also in relevance to this YoY factor comparison, some say that it is very difficult to understand. However, we are working on the base profit enhancement, and we are seeing very good responses so far.

As for numbers, it may not be matching each other. However, this upside of the base profit is what we’d like to capture going forward so that we’ll be able to expand the profit going forward and work on the turnarounds, et cetera. As for cash flow allocation, after Q1, we are finding to see the trend for the year. Selection of the growth investment is something that we are working on, and our pipeline is becoming rich. Within the management allocation, for example, Rhodes Ridge was announced, and at that time, management allocation addition was explained. This allocation, we believe balance will be important going forward. We are confident that we’ll be able to make a good balance with management allocation, and we will have a good framework almost.

Returns and investment for growth, this is something that we want to certify going into H2.

Unidentified Analyst: Thank you very much for your answer.

Unidentified Company Representative: Thank you very much.

Hideaki Konishi: Thank you. We’d like to move to the next question.

Unidentified Analyst: Thank you very much. I have two questions. The first question, I think I’m asking this every time, but as for energy, in your presentation, you said that for the longer term, the dividend and trading will be skewed as usual. You’re saying that you are making steady progress, but in Q1, cost is not that much increased or gas prices declined. There was a change. At the moment, if there’s any change from your view at the beginning of this fiscal year, if there is any, please share that with us today. Then the second question, as for the overall business, based on your conventional presentation, there is some conservative view because of tariff impact possibly. That’s what you said. But in Q1, I don’t know if there was any impact.

Compared to your view at the beginning of the fiscal year, is there any change, like you don’t have to be that much conservative? If there is any change that you have seen from the view that you had at the beginning of the fiscal year, please share that with us.

Unidentified Company Representative: As for the first question, as for energy, well, in Q1, after the three months were passed for the full-year estimate, we are ahead of the plan. There is going to be contribution expansion more than the plan. In the full-year forecast, when we make announcements for Q2, we are hoping to explicitly announce the numbers for upside. But as for Q1, we are making a head start, as we said, but a full-year contribution expansion is what we are expecting. As for the overall business, conservatism has been incorporated. There are two specific items. The US tariff, well, in terms of direct impact, there could be a cost increase. Indirectly, the US economy downturn and the global economic downturn, that has been affected by the US sluggishness.

Based on that, we are conservatively building up our numbers. That’s one factor. The other is that, usually, we believe that there is a reconfiguration of assets as usual and recycling gain incorporated at the time of making plans. Well, there was an increase in uncertainty at the time of making plans. That possible gain that has been incorporated in the plan has been a bit conservative. In Q1, the first item, the US tariff impact, if you look at that, there has not been any direct or much direct impact that we have observed. But on the other hand, if you just look at Q1 alone, it turned out that the inventory that has been already existent in some businesses has been increased or some last-minute demand that we’ve seen. It is very difficult to make judgment based on only three months or Q1.

Well, tariff agreement has been reached in various countries or regions so manufacturers and suppliers’ responses have been now made more clear. Therefore, in Q2, we’d like to closely watch continuously and then make some decisions if we can. For example, in US auto business, new vehicles sales downturn is now beginning to be concerned in the dealer business. In the US auto dealer business portfolio, the maintenance services or leasing, there are different segments. If new vehicle sales downturn is prolonged, then the used vehicles sales could increase. There is a diversified business portfolio. This impact could be partially or fully offset by other businesses. We try not to be too conservative. But as for the second item being still or sitting back and watch, well, inflation and also interest rate hike in the US, there could be still uncertainty, which has yet to be dispersed.

We are still a long way from that. The stakeholders in each of the areas are still keeping their attitude of closely watching how things will play out, so we shouldn’t be in a rush to miss the opportunity. In this fiscal year, additional capital gain, whether it can be estimated or incorporated, that has yet to be decided, and we have to judge in Q2. If there is any signs, then we would like to incorporate that within this fiscal year, but I would like to continue to be careful.

Unidentified Analyst: Thank you. As for the first energy question, you are expecting upside. Trading, dividends, which specific areas are you expecting upside, as far as you can share with us? What are you feeling?

Unidentified Company Representative: Well, mainly LNG projects and trading. But in Q1, E&P business in the US, LNG gas project, they have been quite strong. Operation has to be maintained or high rate of operation has to be maintained. By doing so, we can increase the volume, and prices times volume could enhance revenue and we can expect upside in E&P. Overall, things are not that bad, and we are hoping to maintain that status for the full year.

Unidentified Analyst: Thank you.

Hideaki Konishi: Next question, please.

Unidentified Analyst: Can you hear me?

Hideaki Konishi: Yes, we can.

Unidentified Analyst: Thank you very much for taking my question. I’d like to ask two questions. My first question, I’d like to ask additionally on energy. In Q1, you were able to exceed the plan. It is doing very well. You talked about interest project and trade. Of course, shale, they are doing very well. MEPUSA, on page 38, you’re looking at different individual companies. In Q1, their profit is more than the full-year profit from the previous year. Henry Hub, that is not going up very significantly. But what was the background reasons for this improvement in profit? And what is the outlook from Q2 onwards? That is my first question. My second question, about the whole company, there is strength and weaknesses in different segments. How do you evaluate that in Q1? Energy is exceeding the plan. Machinery infrastructure seems to be very strong. Steel, of course, it seems very strong as well. What is your evaluation in those different segments?

Tetsuya Shigeta: Thank you very much. In MEPUSA shale, I would like to ask the IR manager to add some comments. This Henry Hub, this is the northern part. This is for New York. This is natural gas, and Marcellus is the area in which the development is ongoing. Market is different from Henry Hub, so the price is different. In Q1, we are working on phasing. January to March, in the winter, it was very strong as a market. I’d like to ask the IR manager to add some comments later. But as a whole, each segment, the base profit enhancement that we’re working on in the MTMP is showing progress. We are seeing profitability, its earnings power, being enhanced as well. Excluding onetime factors, just looking at Q1, chemicals and also iron and steel products were very strong.

Looking to accomplish the annual business plan, it is not as if we don’t have any concerns. It’s not as if there are any special factors, but we would like to accumulate each profit opportunities. We want to capture all the opportunities. This is a stretch plan, and we are confident to achieving it. We may exceed the planned numbers. But this is a challenging stretch plan, and we have made that evaluation. The same for innovation and corporate development, we believe the plan is achievable, but this is a stretch plan, therefore. Also, for lifestyle and also with innovation and corporate development, we would like to make sure that we capture all the opportunities. We would like to be able to achieve the plan throughout the year without becoming lax.

In the final year of the MTMP, that will be the level that we’ll be going for. We still have that flagged within the Company as a target going forward. We would like to continue to make efforts, so we’ll be able to come close to that target.

Hideaki Konishi: Going back to your first question, I’d like to make some additional comments. As for the selling price, as Mr. Shigeta mentioned, January to March, the real terms will be phased, and it will be recorded in April to June. Higher gas prices during the winter months are shown in Q1. YoY, we are seeing improvement in the gas prices. When it comes to cost, especially Marcellus production, the productivity is quite high, and that is maintained. The unit price, it is improving every quarter, and we are seeing cost improvement as well. This may be related to the question asked by the previous investor. But as was mentioned earlier, in the annual basis, JPY25 billion energy cost reduction is seen. In Q1, it remained at JPY1 billion.

Are there any positive factors? Is there an upside? I think that was what the question asked. Marcellus productivity improvement has led to cost reduction partly. At the beginning of the year, increasing cost, one of the factors was Waitsia operation start. With that, OpEx was added on, and that was one of the factors. That was not shown in Q1, and that will start to appear in Q2 onwards. That is my comment. Thank you very much.

Tetsuya Shigeta: This is Shigeta once again. By segment, in order to achieve the targets, of course, we are not saying that there are no concerns. However, at the beginning of the year, we had PAT of JPY170 billion, and we believe that this number is achievable and we must achieve this number. We are aiming to achieve the MTMP final year target. We are not showing any numbers, I’m sorry, but we are looking to achieve as much added on as possible going forward.

Unidentified Analyst: What you are saying is that this JPY770 billion is a target, but you have a higher target. Especially in lifestyle or innovations and corporate development or energy, you have a higher ambitious target. For that ambitious target, you will continue to work hard in order to achieve that higher target. Is that what you’re trying to say?

Tetsuya Shigeta: Yes, your interpretation is correct.

Unidentified Analyst: Thank you very much.

Hideaki Konishi: Thank you very much. Next question, please.

Unidentified Analyst: Thank you very much. I have the first question. Just for clarification, cash allocation part. The Rhodes Ridge, in particular, has been worked on for an extended period of time. The onetime investment amount is huge, and you are relying on bank loans as well. The cost in relation to that has been incorporated in this fiscal year in your plan. But in your presentation, you said that in the three-year framework, this will be digested, and management allocation should be starting to be finalized. That’s what you said. There is only a small period of time left for the MTMP, but do you think that you can manage within this fixed framework without having any special treatment, or in the future strategies, industrial business and energy transition, you are going to sow the seeds for the future growth?

I’m just asking whether you are going to set aside some special framework or are you going to be able to flexibly manage in terms of management allocation. The second question. Last year, there was some impairment loss in the renewable energy and the mainstream business. In Q1, the numbers have not been improved. That’s my impression. What is your future outlook for this mainstream for the recovery as well? If you can explain that, that will be appreciated.

Unidentified Company Representative: For the first question, first of all, for the management allocation, in March this year, Rhodes Ridge business explanation was given. At that time, the management allocation or balance sheet will be utilized to have additional JPY400 billion. Right before that, there was a net zero estimate for cash in and out. At that time, there were five more quarters left, and we wanted to have some flexibility and have more options for business management. Based on that decision, we have injected JPY400 billion. There is no total for in and out, but JPY400 billion more in outflow. JPY800 billion in full amount has not been set aside. What was set aside? Rhodes Ridge is not explicitly set aside for this three-year period of MTMP.

It’s not necessarily the case that in the previous MTMP, there was some net extra in inflow and cash outflow, but it is very difficult to manage exactly in three years. There could be some positives and negatives that we cannot avoid. Then JPY400 billion approximately has been used from the balance sheet. I’m not sure if I understood your definition of setting aside from the framework. Growth-rich investment has not been fully set aside from the normal framework, but we wanted to maintain some business discretion. There was additional JPY400 billion. JPY400 billion outflow on a net basis, that was what we figured. The remaining nine months, we believe that we can manage, and we are hoping to be able to do so. Of course, if things change, then we have to revisit this, and there could be some various possibilities.

Fiscal position has been maintained in a sound status, but basically, we are hoping to maintain this status. As for the mainstream, we have been struggling significantly, and we may have caused concern. In the renewable energy platform, we are working on this project and a more recent global attitude for renewable energy. If you look at that, things have been slowing down. There has been headwind for us. That’s what we are facing. We would like to continue to work with partners so that we can narrow down the focus areas so that we can be successful in turnaround. This is going to be the focal project for us.

Unidentified Analyst: Thank you.

Unidentified Analyst: Thank you very much for your presentation. I would like to ask two questions. My first question, about the Q1 metallurgical coal business, it was a loss in Q1. YoY, the cost is improving, the volume is going down, and the market may be the declining factor. But with this market, it will go into a loss. Is that the situation? I’d like to know the background factors. The second question, about food, about coffee trading, in Q4, it was a loss, but in Q1, that issue has been solved. Will there be no concerns going forward regarding this trading? That is my second question.

Tetsuya Shigeta: Thank you very much. The first question, I would like to ask the IR manager to give some additional comments if needed. But for this fiscal year, currently, part of the operation is being suspended, and of course, there may be some areas in which coal mining may be difficult. Volume and the cost increase per unit is what we are facing at the moment. Therefore, it was negative as a whole. As for the coffee trading, your second question, YoY or QoQ, we are seeing improvement significantly. This is because the coffee market, it went up to about 400 cents. But in Q2, it has gone down, and it is less than 300 cents at the moment. The shrinkage of the position, sorry, I’ll take it back. There are some limitations, and of course, with the residual contract, there is some contraction.

We’re in the midst of making improvements. We would like to make sure that we can secure a position that will not impact profitability, and we’re trying to come up with measures. However, it is still very unstable, and that has not changed. Of course, we are seeing improvement, but it is not as safe. We can say for sure that we’ll be making losses going forward. It will take time for us to reach that stage.

Hideaki Konishi: As for your first question, Mr. Shigeta has said everything that needs to be said. But currently, two coal mines are being suspended. We do have fixed costs. However, we are not gaining anything from that operation. I think that is the current situation, and we are facing challenges. Thank you.

Unidentified Analyst: Thank you very much for the explanation.

Unidentified Company Representative: Thank you.

Hideaki Konishi: Thank you. Next question, please.

Unidentified Analyst: Thank you very much. I have two questions. First one, there’s no disclosure, but iron ore price, supply-demand balance and cost, in terms of these, what is your expectation for the market situation, if you can comment on that? The second question, IHH in Q1 has seen decline in profit. What was the background behind that? And what is your future outlook for this business?

Unidentified Company Representative: Thank you for the questions. For the first question, I’d like to ask Konishi to answer the question. For the second question on IHH, on a YoY basis, there was a onetime factor. Also, in this quarter, in terms of operation, there was some utilization rate that has declined slightly. But overall, the hospital business itself, the number of beds is now being increased, and M&As have been utilized to increase the number of beds. That’s what we’re working on, and things are going steadily and making progress.

Hideaki Konishi: As for business expansion, we are steadily making progress, but there was some onetime factor in the previous fiscal year. On a YoY basis, there was a decline, but this is one of the existing business pillars. We are behind the future growth and supporting the future growth. As for iron ore prices, well, it is close to USD100. It has been recovered. It has exceeding USD100 and then went down. There’s back and forth. But cost curve and if you look at supply and demand, I think there could be solid market prices. Unless there’s a major stimulus package from China, upside might be limited, but we are expecting solid price. M&A is something that we were asked about. In the public information, the shipment is going to be started by the end of this year, about 1 million, and then ramped up for the next three months.

What will be the speed of ramping up that will be executed, that is going to be the key impact on our business. But in the cost curve, if you look at the Chinese domestic mine price, then we don’t expect any major drop in the prices. As for the second question, for IHH, let me make some additional comments. In Q1 of last year, in the Turkey hospital business, there was some deferred tax assets posted. There was absence of that this fiscal year, so there was a decline. But on an apple-to-apple basis, we are in line with the plan. Thank you.

Unidentified Analyst: Thank you very much.

Unidentified Analyst: Thank you very much. I would like to ask one question. This is on page seven. About the Taiwan wind power, can you talk about how it is starting up? In Niigata, this was a growth factor, but I believe there were some revisions made. Yesterday, in England, this wind power generation, there was a news of acquisition. With renewable energy, I believe there may be some difficulties, but can you talk about some of the background factors that may affect this business?

Unidentified Company Representative: About Taiwan, about the offshore wind power business, the construction is ongoing steadily. In the two sections, 73 are to be started up. By the end of June, five wind turbines have started commercial operation. By the end of the year, 37 turbines in one of the zones will start commercial operation as planned. There will be a contribution to profit starting in FY2025. In the other zone, we are starting commercialization starting next fiscal year. For domestic operation, we would like to see investment decision made, and we are continuing the negotiation with our partners and stakeholders. The construction cost is going up, and with FX impact, of course, we are facing difficulties. We are going to go for economicality as well.

The situation is challenging, but we hope to be able to reach a decision to invest and we would like to continue with our negotiation. In Europe, the wind power business and the acquisition of the port required for maintenance is what is necessary. This is going to midterm effort because this is going to be a long-term operation business. When it comes to renewable energy within the value chain, where we need to make the move is going to be very important. Of course, the generation plant, we are working on that as well. With iron and steel products, of course, this kind of turbine material, in other words, raw material acquisition is something that we are involved in as well. But we need to work on maintenance port. That will be necessary. In Europe, which is a mecca of wind power operation, we would like to accumulate experience.

In the mid- to long term, we would like to work on this operation. We are working on decarbonization and that effort may be gaining less speed, but this is something that we need to work on. We believe there’s a consensus to work on renewable energy so we would like to work on it on the mid- to long term. Of course, for wind power, there are different usages that can be considered. Oil and gas business, support is offered by different sections. Slowdown may be seen in offshore wind power, but in other businesses, we may be able to offer services. By doing so, we think we’ll be able to guarantee its feasibility.

Unidentified Analyst: Thank you very much.

Hideaki Konishi: Thank you. Next question, please.

Unidentified Analyst: Thank you very much. I have one question. On page five, core operating cash flow progress has been summarized in this table. I’d like to have some clarification. For energy, earlier, there were various explanations. You’re going to build up profits going forward. If you do this, then core operating cash flow will be linearly built up. Is that a correct understanding? Also, for other segments, the progress rate seems to be varied. If there are any segments that are more positive than expected or negative than expected, if you can share that with us with some reasons, that will be appreciated.

Unidentified Company Representative: Well, if I can give you the overview and then ask [Kurita] to follow. As for lifestyle, there’s minus number, negative number. The headquarter’s loans to the projects, the interest rate has been paid in a lump sum manner. There was a special factor. There’s no impact on the overall total, but there were some numbers that are going back and forth between the different segments. I think there is going to be a steady progress overall. We haven’t included this in the presentation, but in around June, there will be some money paid as dividend, but that has been postponed to early July. There was some time shift in terms of payment. Especially for core operating cash flow, given that, for the full year, we are making steady progress, and we may be able to seek some upside. That’s where we are.

Unidentified Company Representative: Let me explain more on that. As for energy, you asked the question. Like in profits for this fiscal year, towards H2, it is expected to increase. In terms of progress rate, it’s 21%, but as we go along in the fiscal year, as we approach the end of this fiscal year, steady progress will be made and there will be some upside. In machinery and infrastructure, there’s some time shift or time lag. The progress rate is good, and we are going to be in line or ahead of the plan. Then for the rest, we will be in line with the plan or ahead of the plan. Thank you.

Unidentified Analyst: Understood. Thank you.

Hideaki Konishi: Thank you. We are very close to the ending time, so the next question will be the last question. If you have a question, please click raise my hand. No questions? If there are no additional questions, with that, we’d like to end the Q&A session. I’d like to talk about the IR event. December 4 on Thursday, in the afternoon, we would like to have the Investor Day 2025. The details will be announced as we make decisions going forward. With that, we’d like to end this conference call. Thank you very much for your attendance despite your busy schedule. Thank you.