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Thank you very much for participating in today's briefing session. I'd like to go straight into the presentation. On the first page, the foreign exchange rate assumption and results are shown.
Now let's move on to Page 2. This is an overview of the first quarter results. Net sales were JPY 248.6 billion. Operating income was JPY 11.1 billion. Ordinary income was JPY 13.1 billion. And net income was JPY 12.5 billion.
Despite certain lingering effects of COVID-19, we were able to finish the quarter with significant increases, both in sales and profits year-on-year. Ordinary income and net income increased substantially, thanks to the foreign exchange rate and gain on sales of shares. Sales and operating income progressed slightly above the plans.
Please turn to Page 3. We can see the results of the first quarter by segment. All of the segments saw an increase in profit, resulting in a significant increase in group-wide sales and profit. Although HPP, the High Performance Plastics Company, was impacted by the shortage of semiconductors and the increase in raw material prices, sales of high-performance film grew steadily, and the smartphone market trended firmly, resulting in performance exceeding the plans.
The Housing company was also affected by the upswing in component prices, but finished broadly in line with the plan, thanks to the recovery in orders as well as our cost reduction efforts. On the other hand, UIEP, the Urban Infrastructure & Environmental Products company, suffered from the prolonged impact of COVID-19 in Japan, particularly in nonresidential demand. This, coupled with the increase in raw material prices, led to results that were slightly below the plans. The Medical business ended slightly above the plans due to a recovery in the number of outpatient tests.
Please turn to Page 4. This slide shows the outlook for market conditions. The number of automobiles manufactured globally is expected to recover in the first half, but the recovery is lower than initially expected due to severe winter weather in North America and the shortage of semiconductors. On the other hand, smartphone shipments trended above the original forecast in April.
In terms of attracting customers in the Housing business, due to the prolonged impact of COVID-19, recovery of the number of visitors to our showrooms has been slow, but the number of overall visitors have continued to increase due to our efforts to attract customers on the web. New housing starts have finally hit bottom and have shifted to a slight upward trend starting in the first half. In addition, the price of domestic naphtha has risen much more than we initially expected in April, and we expect this trend to continue into the second half.
Please continue on to Page 5. This is the forecast by divisional company for the first half. Across the board, increases in raw materials and component prices were more than we expected, but we are forecasting that we will meet the operating income plan announced in April, thanks to a certain level of improvement in market conditions, sales growth in high-performance products, an increase in selling prices and cost reductions.
We expect HPP will continue to be hit by increases in raw material prices in the second quarter and that the shortage of semiconductors will continue, but these negative impacts will be offset by an increase in selling prices and cost reductions. So we have revised the forecast upward from the April plans.
Housing is expected to achieve the plans despite the increase in component prices and the prolonged impact of COVID-19 since orders are recovering. On the other hand, UIEP has been impacted quite severely by the delayed recovery in domestic demand due to COVID-19 as well as by the increase in raw material prices.
Therefore, we revised the operating income forecast downward. We project the Medical business will achieve the original plans, thanks to the recovery in a number of outpatient tests.
Please turn to Page 6. This page shows the forecast by divisional company for the first and second quarters. We exceeded the plans in the first quarter, but for the second quarter, taking such factors as the increase in raw material prices and the continued shortage of semiconductors into account. We expect the operating income for the first half to be in line with the initial plans.
Please continue to Page 7. Here, we have the analysis of net sales and profits. We expect that sales will grow by JPY 58.3 billion year-on-year. As for the analysis of operating income, as you can see here, prices for raw materials rose substantially more than we anticipated in April. In addition, sales volume and product mix were slightly weaker than we expected in April due to the shortage of semiconductors. These negative factors will be offset by increases in selling prices, cost reductions and efforts to control fixed costs, and we expect final numbers to be in line with the plans. And if you look at the analysis of operating income found on the lower part of the slide, you can see that we are expecting increases in raw material prices to be even more severe in the second quarter.
Please continue to Page 8. Here is the forecast of income for the first half. I have already mentioned net sales and operating income, but for ordinary income and net income for the first half, we also expect to achieve the initial plans set in April.
Now on to Page 10, please. Here, we have an overview by divisional company. But first, for the HPP company, the higher-than-expected increases in raw material prices and continued impact of the semiconductor shortage will be offset by the increase in selling prices and cost reductions. We expect profitability to recover to the same level as fiscal year 2019.
The forecast for profit is revised upward. Net sales are expected to increase by JPY 31.6 billion. As for the analysis of operating income, again, the increase in raw material prices is significantly greater than we expected in April. Also, the sales volume and product mix were negatively affected by the shortage of semiconductors, although only slightly, but this impact will be compensated for by increasing selling prices, cost reductions and efforts to control fixed costs, resulting in an upward revision.
Please turn to Page 11. On this page, we show the status of the 3 strategic fields, all of which are progressing in excess of the plans. The concern, again, is the impact of the semiconductor shortage on demand. For the electronics field, demand for panels drove sales in the first quarter. In the second quarter, we expect the non-LCD business to grow as well. For the mobility field, although aggregate demand has been slightly weaker than we expected due to the semiconductor shortage, we are expecting sales of high-performance films, mainly for interlayer film for HUD, Head-Up Displays, to grow steadily.
We expect to achieve almost 30% growth in sales volume for these HUD films year-on-year. Also, high-performance interlayer films, in general, as you can see in the graph on the lower right, are growing steadily. So we will secure profits through these products. On the other hand, for Aerospace, demand for aircraft is expected to remain sluggish. Therefore, we will continue to drive our streamlining efforts according to the plans.
As for building and infrastructure, shown on the lower left, global demand for CPVC, in particular, is recovering, and business remains firm. Also, fire-resistant and no combustible materials are expected to progress broadly in line with the plans, thanks to the recovery in the demand for domestic housing.
The Housing Company will continue to be negatively affected by the increase in prices for materials, in particular, wood and steel, but it is expected to achieve planned operating income and net sales through a recovery in orders and cost reduction efforts.
On the upper right, you can see the trend in orders. New housing increased by 26% in the first quarter year-on-year. Renovation increased steadily as well by 38%. We are expecting 8% and 18% growth, respectively, for the first half. So we do expect a recovery in orders. In accordance with this, net sales are expected to grow by JPY 23.4 billion.
On the right, you can see the analysis of operating income. We are expecting increases of JPY 600 million in operating income for housing, JPY 700 million for renovation and JPY 200 million for other businesses.
In the Housing business, the negative impact caused both by the long rains in May and June that slowed down the number of houses sold slightly compared to what we projected in April and by the steep increase in prices for materials is expected to amount to JPY 1.5 billion. This is to be offset by reductions in fixed costs, resulting in overall increase of JPY 600 million. And for others, we expect the Town and Community Development business to start contributing fully to earnings, so we expect a positive impact of JPY 200 million.
Here, we have measures for growing new housing orders. The chart in the upper middle shows that subdivision housing, especially ready-built houses, which we have been focusing on since the last fiscal year, is expected to trend quite strongly, and the expectation that this business will underpin the general recovery in orders remains the same for this fiscal year.
On the lower part of this slide, we show the 3 growth measures. On the sales front, we plan to strengthen our proposals by integrating online and off-line activities. The nationwide rollout of the experience-based, life-sized model, GREENMODEL PARK, is something we would like to focus on, especially.
On the product front, we will promote the Smart House No. 1 Project as part of the commemoration of the 50th anniversary of our housing business. We aim to achieve 90% in the ratio of 0 energy houses of the fiscal year.
In terms of land strategy, we will take the know-how we gained in the Asaka Lead Town project and roll it out to subdivisions throughout the country, and we will drive 10 Town and Community Development projects that will cover 300 lots. These initiatives will help us secure orders in the first half.
This is the UIEP company. We worked on recovery in sales volume and product mix and the reduction of fixed cost, but due to steeply increased prices for raw materials, a sluggish domestic nonresidential sector and the slow recovery in the demand for aircraft, we are revising the forecast for operating income downward for the first half.
Net sales were decreased by JPY 2.5 billion, but the impact of the business transfer will be JPY 5.4 billion. So essentially, we have an increase in net sales. As for the analysis of operating income, again, the prices for raw material rose much more sharply than we expected in April. Although we do expect to grow in sales volume and product mix, that is not enough to offset the increase in raw material prices, therefore, we are revising the forecast downward.
These are the 3 strategic fields in UIEP. In piping and infrastructure, due to the impact of COVID-19, recovery in the domestic nonresidential sector is particularly slow. On the other hand, for plant piping in Asia and Japan where semiconductor CapEx is robust, the trend is quite steady.
On the lower left, in the building and living environment area, since the new housing start is recovering, we expect the earnings to increase. For the area of advanced materials, shown on the upper right, as the demand for aircraft sheets continues to be sluggish, the recovery will be slower than expected. However, we are making progress in developing other applications such as for pharmaceutical science.
In addition, FFU was affected by some delays in certain construction projects, but the demand for FFU for railway sleepers overseas is trending firmly. Our prioritized products and overseas sales are progressing in line with the plans.
Lastly, the Medical business. For the Medical business, since the number of outpatient test is recovering both in Japan and overseas, we expect to be able to achieve almost the same level of operating income as we had in fiscal year 2019. The pharmaceutical and science business is progressing steadily. Net sales are expected to increase by JPY 5.5 billion. As for the analysis of profits, diagnostics in Japan and overseas are driving increase in profit compared to last year.
Here, we have an overview by business. The domestic diagnostics business is expected to recover to 2019 level, thanks to the recovery in a number of outpatient tests. In the overseas diagnostics business, demand for test kits is slowing along with the increased vaccination rates in the United States. But this is offset by an expansion in the sales of blood coagulation reagents in other countries, mainly China. On the lower left, we see that the drug development and enzyme business are both progressing in line with the plans.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]