(Shimizu) While net sales in the 1H are projected to increase ¥1.7 billion YoY, this figure reflects the impact of foreign currency exchange rates, specifically the strong yen. As you point out, actual sales volumes are trending higher than this figure.

(Shimizu) There was a rush in demand in the 4Q of FY2024 owing to the impact of US tariff measures, with a similar increase in net sales in the 1Q of FY2025. We anticipate further growth from the 2Q on the back of such factors as the forecast increase in demand for semiconductor processing materials and successful efforts to capture order for upcoming smartphone models.

(Shimizu) Inventory adjustments largely reflect the decision by the Company’s customers, namely customers in China, to postpone purchases owing to the impact of US/China tariffs. Meanwhile, recognizing that the Company’s customers have secured alternative customers, we anticipate this will trigger a recovery in the operations of Sekisui Chemical Group customers’ operations from the 2Q.

(Shimizu) A recovery by existing customers has not been factored into 1H forecasts announced in this instance. However, we are expecting a contribution to further growth going forward.

(Shimizu) Orders in China are exhibiting growth and have exceeded those of FY2023, making up for the decline last year. Orders from other regions have also surpassed 110% YoY. We believe that the outlook for the 1H is sound. We are confident that we are increasing our share of the HUD film market and anticipate firm trends from the 2H. While our initial plan was for more than 110% growth, we are looking to surpass this target. As far as designed films are concerned, the Company is also feeling the effects of the downturn in sales by certain EV manufacturers. We believe this will continue for the foreseeable future.

(Shimizu) Orders have increased in China owing to the renewal of contracts. We believe this reflects the quality and delivery performance of our products.

(Shimizu) For films other than N-HPPs, we anticipate an increase in sales volumes of around just under 105%. These products continue to maintain their prices. As a result, sales volumes are declining compared with plans especially for sound insulation films. Accordingly, we have slightly lowered 1H sales forecasts in the Mobility field compared with plans.

(Shimizu) Under a new contract that went into effect from January 2025, we are reducing prices in accordance with sales volumes as a volume discount.

(Shimizu) SEKISUI AEROSPACE CORPORATION finally turned a profit in the 2H of FY2024. We have also seen contributions to profit in the 1Q. Production rates at major customers are exceeding expectations, and we anticipate an increase from the 2Q.

(Shimizu) One factor is the sluggish growth in new housing orders in urban areas. However, in overall terms detached housing unit prices have risen 101% YoY.

(Shimizu) The fact that the Company was able to maintain an order backlog of ¥160 billion as of the end of FY2024 contributed to an increase in 1Q net sales. With a short rainy season and extremely favorable weather, construction progressed steadily. This in turn also helped to boost 1Q net sales. Rather than rushing to increase net sales by incurring additional costs as of the end of the 1H and fiscal year-end, we are prioritizing appropriate construction schedules.

(Shimizu) The number of housing starts has declined. Growth in the Company’s housing orders also stands at 95%. However, the product mix is undergoing change with the forecast growth in apartment buildings in particular exceeding initial plans in the 1Q. We will take concrete steps to secure orders at around the same level as the previous year by promoting a variety of measures, including efforts to bolster our sales systems and product lineup.

(Shimizu) First, the need arose to make a provision totaling ¥1.3 billion in the 1Q following the revision of contracts related to raw material transactions in Europe by the HPP Company. Second, plans are in place to post an amount exceeding ¥0.6 billion in the 2Q for repair or replacement costs to address issues following the shipment of construction-related products to a certain customer by the UIEP Company.

(Shimizu) Yes.

(Shimizu) Fixed costs have fallen from ¥14.8 billion to ¥9.8 billion in the 1H under review on a YoY operating profit basis. Of this reduction, the HPP Company, Medical Business, and Other account for ¥3 billion, ¥1.4 billion, and ¥0.6 billion, respectively. The principal components are development expenses, where we are engaging in such activities as the review of development themes while monitoring conditions, and other expenses. Furthermore, this reduction reflects cost-cutting measures undertaken on a Group-wide basis, including at the corporate level.

(Shimizu) PV, LB, BR as well as R&D and other declined ¥0.5 billion, ¥0.3 billion, ¥0.5 billion, and ¥2 billion for a total of ¥3.3 billion.