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This is Yamada from the finance and accounting division of IHI. I will explain IHI Group's financial results for the first quarter of the fiscal year 2018 based on the PowerPoint presentations disclosed at 3:00 p.m. today.
Please turn to Page 4. This slide shows the consolidated results, including orders received and the income statement. Orders received were JPY 241.6 billion, down JPY 48.6 billion year-on-year. In fiscal year 2017, the closing date of the fiscal year of certain overseas consolidated subsidiaries has been changed from December 31 to March 31. Although it's not described on the slide, the effect of these changes was an increase of JPY 31.4 billion in orders in the first quarter of the previous fiscal year.
As shown at the top right, the average exchange rate for sales was JPY 108.22 to the U.S. dollar. There was JPY 2.91 appreciation from JPY 111.13 at the previous corresponding period. As explained on this slide, the effect of the financial reporting period unification was an increase of JPY 57.9 billion in sales and an increase of JPY 1.4 billion in operating profit in the first quarter of the previous fiscal year. Net sales decreased by JPY 65.2 billion to JPY 337.1 billion, mainly due to the effect of these changes as well as a pullback from the progress of large-scale projects in the previous corresponding period.
Operating profit was JPY 12.7 billion, down JPY 12.7 billion year-on-year, mainly as a result of profitability deterioration in the Civil aero engines Business. Ordinary profit was JPY 16.7 billion, down JPY 5 billion from the previous corresponding period. Year-on-year decline in ordinary profit was smaller due mainly to improvement in share of profit and loss of entities accounted for using the equity method and reduced costs associated with the contractual delivery in July. Profit attributable to owners of parent was JPY 6.1 billion, down JPY 5.5 billion year-on-year mainly as a result of recording income taxes for prior periods in this quarter. As explained, although both sales and profits were down year-on-year, they were generally in line with the internal budget.
With regard to transactions between IHI and the foreign consolidated subsidiary in Thailand, IHI received a reassessment of tax payable based on the transfer pricing taxation from the Tokyo Regional Taxation Bureau. In response, IHI recorded additional taxes of JPY 4.3 billion on income taxes for prior periods.
With regard to the transfer pricing taxation, it is our perception that we have handled it appropriately. Therefore, we plan to take necessary measures in accordance with rules and regulations to request entire cancellation of this reassessment.
Please turn to Page 5 for orders received and order backlog by segment. Orders decreased year-on-year in all the segments. In Resources, Energy and Environment, orders decreased year-on-year mainly in the Process plants Business. In Social Infrastructure and Offshore Facility, orders received decreased year-on-year in the bridge/water gate business. In Industrial System and General-Purpose Machinery, excluding the effect of the financial reporting periods unification, orders increased year-on-year in the vehicular turbochargers business and the thermal and surface treatment business. In Aero Engine, Space and Defense, orders received decreased year-on-year in the aero engines for Japan Ministry of Defense. Overseas orders received was JPY 90.3 billion, representing 37% of total orders. This ratio decreased due to lower orders in the Process plants Business and others. Order backlog totaled 1,470.1 billion yen, down JPY 96.9 billion from the end of the previous fiscal year.
Please turn to Page 6 for net sales and operating profit by segment. First, please note that in Resources, Energy and Environment, from this quarter, the power systems plants was renamed the power systems plants for land use. Sales decreased year-on-year in Resources, Energy and Environment owing to a pullback from the progress of large-scale projects in the Process plants Business in FY 2017, decreased sales in the power systems plants for land use business and the power systems for land and Marine use business and partly from the effect of the financial reporting periods unification in FY 2017. Operating loss of this segment was at the same level as the previous corresponding period, mainly due to improved profitability for the power systems for land and Marine use business and nuclear power business and a decrease in SG&A despite a decline in net sales.
In social infrastructure and offshore facility, sales decreased in the shield systems business and the F-LNG/Offshore structures business, while sales increased in the bridge/water gates business. Operating profit decreased in the shield systems business and the transport systems business. Sales in industrial system and general purpose machinery decreased overall, while the net sales in the vehicular turbochargers business and the thermal and surface treatment business, among others, increased, excluding the financial reporting periods unification in FY 2017.
Operating profit was at the same level as the previous corresponding period, mainly due to the effect of the financial reporting periods unification in FY 2017 despite an increase of sales in the thermal and surface treatment business and so forth. Sales in Aero Engine, Space and Defense increased year-on-year in the Civil aero engines Business. Operating profit decreased year-on-year mainly due to higher sales of the new PW1100G engine as well as an increase in expenses associated with maintenance programs.
Once again, we are making progress in line with the initial forecast. Overseas sales totaled JPY 178.3 billion, representing 53% of total sales.
Please turn to Page 7. This is the breakdown by segment of the JPY 12.7 billion year-on-year decline in operating profit. Changes in net sales had a JPY 2.1 billion negative impact due to higher sales of the new PW1100G engine in Aero Engine, Space and Defense, which brought down OP despite positive impact in industrial system and general purpose machinery. Change in construction profitability had a JPY 6.7 billion negative impact. In Resources, Energy and Environment, profit increased for the power systems for land and Marine use business and the nuclear power business. As for the process plant project underway in North America, the construction profitability has not changed since financial closing of the previous fiscal year.
In social infrastructure and offshore facility, profit declined in the shield systems business and the transport systems business. In Aero Engine, Space and Defense, profit decreased due to an increase in expenses associated with maintenance programs. The negative impact from the change in foreign exchange rate was JPY 0.7 billion.
A change in SG&A was an increase of JPY 1.8 billion, mainly in industrial system and general purpose machinery, excluding a decrease of JPY 6 billion from the impact of the financial reporting periods unification in FY 2017. The negative impact of changing the financial reporting period was JPY 1.4 billion against the previous corresponding period.
Please turn to Page 8 for nonoperating income and expenses. Share of profit in equity method affiliates improved JPY 3.3 billion and booked a profit of JPY 3.8 billion. As for Japan Marine United Corporation, thanks to the weakening of the yen and others, a quarterly profit was booked. Foreign exchange gains and losses improved by JPY 1.2 billion and booked a gain of JPY 1.6 billion. Others, which is a net of miscellaneous income and expenses, improved JPY 3 billion year-on-year. The improvement comes from the settlement of the contractual delivery delay of power system plants for land use and others. Those costs were booked during the corresponding period of the previous year.
Please turn to Page 9 for the breakdown of extraordinary income and losses. There is no new bookings in this quarter.
Please turn to Page 10. This is consolidated balance sheets. The first quarter end interest-bearing debt was JPY 339.5 billion, up JPY 17.2 billion compared to the last fiscal year-end. Owing to the increase in interest-bearing debt, debt-to-equity ratio became 0.96x, while due to the profit booking of JPY 6.1 billion, equity ratio improved to 20.1%.
Please turn to Page 11. This is consolidated cash flows. Cash flows from operating activities during the quarter declined JPY 17.1 billion year-on-year due in part to the deterioration in working capital and was an outflow of JPY 6.6 billion. From investing activities, the outflow increased JPY 26.4 billion compared to the same period of the previous year when proceeds from sales of shares in Westinghouse was booked and was an outflow of JPY 19.6 billion. As a result, free cash flow, which is a sum of cash flows from operating and investing activities, was an outflow of JPY 26.3 billion. During this fiscal year too, through such activities as shortened cash conversion cycle, we will continue to work on enhancing cash generation.
Please turn to Page 12 for R&D, CapEx, depreciation and amortization. The numbers shown here are actual results. There are no major changes year-on-year.
Please turn to Page 13. This shows the geographical breakdown of overseas sales explained on Page 6.
Now I'd like to touch upon the forecast for fiscal year 2018. Please turn to Page 15. There are no changes to the forecast for orders received, net sales and operating profit. Forex assumption from the second quarter and onwards are JPY 105 to the U.S. dollar and JPY 130 to the euro. Forex sensitivity is calculated at JPY 700 million for every JPY 1 movement against the U.S. dollar.
Please allow me to skip explanations on Page 16 and 17.
Pages from 18 show results and forecasts by segment. These are the pages we usually ask you to just refer later on. But today, I'd like to explain about the gap of operating profit between the first quarter result and the full year forecast by segment.
Firstly, on Page 19, Resources, Energy and Environment. As you can see from the operating profit chart, in the first quarter, operating loss of JPY 100 million was booked when the full year forecast is a profit of JPY 20 billion. This is due to the sales booking timing for high profit margin maintenance construction on boilers, nuclear power and others. They concentrate in the second half of the fiscal year.
Next on Page 21 is social infrastructure and offshore facility. The first quarter operating profit was JPY 700 million and full year forecast is JPY 12 billion. The gap is mainly due to the domestic bridge project, whose sales booking concentrates at the end of the fiscal year.
Page 23 is industrial system and general purpose machinery. The first quarter operating profit was JPY 4 billion and the full year forecast is JPY 22 billion. We are basically seeing the same trend from last fiscal year.
And Page 25 is Aero Engine, Space and Defense. The first quarter operating profit was JPY 9 billion. And for the full year, JPY 44 billion operating profit is expected, even though losses due to increase in sales of new engine PW1100G is still expected to be booked. The cost booked last fiscal year to address the initial problems will be cleared up this fiscal year. And from other reasons, too, we expect full year forecast to be caught up.
Page 27 and onwards are for your later references. Thank you very much for your attention.