Before presenting the financial results, I would like to express our deepest condolences to the families of those who lost their lives in the Kumamoto earthquake that occurred two days ago on the 28th, and extend our heartfelt sympathies to everyone affected. Although no significant impact on our business operations has been confirmed at this time, the group will continue to closely monitor the situation, place the highest priority on ensuring the safety of our employees, and take all necessary measures.

We'll consider providing necessary support, taking into account the situation in the affected communities. We sincerely pray for the earliest possible recovery and reconstruction of the affected areas.

Now, the consolidated results of Panasonic Holdings for the first quarter of fiscal 2027 ended June 30th, 2026. First, a summary: sales and profit increased to mark the highest first quarter profit driven by higher-than-expected sales of AI infrastructure-related businesses and adjacent businesses benefiting from the growing data center demand.

Overall sales increased on higher sales of Connect, Electric Works, HVAC and CC, Energy, and Industry. By business, AI infrastructure-related posted a significant sales increase as previously communicated, and so did adjacent businesses, including FA solutions and process automation.

Adjusted operating profit, or AOP, increased in all segments, particularly in Connect, Electric Works, and Industry. OP and net profit increased on an increase in AOP.

Full-year forecast has been revised upward both for sales and profit, reflecting growing AI-related demand and its spillover effects. By segment, sales and profits are revised upward for Connect, Electric Works, and Industry, reflecting strong first quarter results.

Now, some details of the first quarter results. For the consolidated results, sales totaled 2,018.9 billion yen, up 6% year-on-year.

AOP was 186.4 billion, an increase of 94.9 billion year-on-year. OP increased to 182.5 billion, surpassing the previous record high set in 1985 to mark the highest first quarter level in 41 years.

Profit before income taxes and net profit also increased. Next, results by segment.

The following few slides show the year-on-year variance analysis of sales and AOP. First, sales by segment.

Connect posted a sales increase on higher sales of process automation capturing demand for ICT, including AI servers, avionics, and Blue Yonder. Electric Works saw sales increase owing to steady sales both in the Japanese and overseas markets.

HVAC and CC posted higher sales overall owing to increased sales of room air conditioners, air-to-water in Europe, and cold chain. These factors offset the non-recurrence of the year-earlier large-scale environmental engineering order.

In Energy, sales of in-vehicle increased due mainly to higher sales at North American factories and price revisions. Sales of industrial consumer increased due to higher sales of energy storage systems for data centers on strong demand from the growing generative AI market.

Industry posted increased sales on higher sales of products for AI-related infrastructure businesses, as well as FA equipment, including servomotors and servo sensors, for semiconductor manufacturing equipment supported by data center demand. Smart Life posted an overall sales decrease despite higher sales in Japan, mainly of personal care products, due largely to lower overseas sales, including large-size appliances in China and AVC products in Europe.

Next, AOP by segment. AOP increased in all segments, particularly Connect, Electric Works, and Industry are driving the group's profit growth.

In Energy, AOP increased overall. By business, AOP in in-vehicle slightly decreased, due mainly to increased fixed costs resulting from the ramp-up of the Kansas factory, while AOP in industrial consumer significantly increased due to higher sales of energy storage systems for data centers.

Next, year-on-year OP analysis. From the left, increased sales in real terms, positive 40 billion yen; fixed costs, positive 19 billion, reflecting a 35 billion yen effect of restructuring undertaken in fiscal '26 despite strategic investments and inflation; raw materials and logistics prices, negative 37 billion, due mainly to price hikes in copper, resin, and memory; the price revisions and rationalization and other initiatives, positive 54 billion; Blue Yonder, positive 9.9 billion or 6.9 billion rather, due to higher sales of SaaS products driven by cognitive solutions and improved gross margin, in addition to lower strategic investments; exchange rates, positive 12 billion.

As a result of the above, AOP increased by 94.9 billion. OP, including other income and loss, increased by 95.6 billion to 182.5 billion.

Cash flows and cash positions: on the left, operating cash flow for Q1 significantly increased to 372 billion year-on-year, due mainly to the monetization of the US IRA tax credit through direct pay. Net cash was negative 505.8 0.3 billion.

Next is consolidated financial forecast for fiscal 2027. This is a consolidated financial forecast.

Overall sales is revised upward by 200 billion yen and AOP is revised upwards by 50 billion yen, both reflecting growing AI-related demand and its spillover effects, particularly in Industry and Connect. Operating profit is revised upward by 40 billion yen and net profit up by 30 billion yen.

This shows the fiscal 2027 outlook for demand by segment. Blue is the positive changes, red is negative changes.

Key changes are highlighted. At this point, we expect limited impact from lower demand in our various businesses affected by the situation in the Middle East.

AI-related products demand, including BBU, capacitors, and multi-layer circuit board materials, are growing steadily as expected. Another positive development has been the growing demand for mounting machines in Connect and FA solutions in Industry.

These businesses continue to grow, surpassing our initial expectations, along with adjacent businesses, such as semiconductor manufacturing equipment, which are benefiting from strong demand from AI data centers. This is a full-year forecast by segment.

As mentioned on the previous slide, overall forecast has been revised upward, particularly for Connect and Industry. Starting with the next slide, the assumption of the revised forecast and the key factors behind the changes will be explained.

This shows the AOP forecast analysis by factor in comparison to the initial forecast. Upper graph is the initial forecast, bottom is the revised forecast.

The middle row is the revised amount. As shown in the far right of the middle, OP is revised up by 40 billion yen from 550 billion to 590 billion.

This consists of higher AOP by 50 billion yen and the deterioration in other income and loss by 10 billion yen. About AOP, positive impact of higher sales is 30 billion yen.

About raw materials and logistics costs, negative impact of material price hike is expected to be 66 billion yen, while price revisions, rationalization to have positive impact of 59.6 billion yen. As for Blue Yonder, positive impact of 4.4 billion yen, and forex is positive impact of 12 billion yen.

Those are expected. In the initial forecast, we factored in 30 billion yen risk related to the situation in Middle East and memory price hikes, and we have reduced this to 20 billion yen.

With 50 billion yen increase in AOP and the impact of other income and loss, we revise our operating profit forecast upward by 40 billion yen. Now, let's look at the individual businesses.

First, AI-related business of Industry. The lower left graph shows the results and the sales forecast for AI-related businesses.

Q1 of fiscal '27, sales reached a higher-than-expected 74.9 billion yen, 1.4 times year-on-year, driven by strong customer demand. Reflecting the current favorable business environment, the full-year sales forecast is revised upward by 40 billion yen to 310 billion yen from the initial forecast of 270 billion yen.

In response to the strong demand, we are rapidly expanding our supply capacity. For multi-layer circuit board materials, we are strengthening our supply chain, including multi-high sourcing of key raw materials like glass cloth in addition to building new production plants.

For conductive polymer capacitors, we are accelerating plans to expand capacity at our manufacturing sites. Furthermore, supercapacitors are attracting increased attention due to the surging power consumption of AI servers.

In addition to the CBU solutions under development with Energy, as previously discussed, we plan to start mass production of devices for external customers at the Chitose plant during fiscal '27. With strong demand, AOP margin is steadily improving, and we will continue to pursue proactive business expansion going forward.

Next, the outlook of energy storage system for data centers in Energy. The lower left graph shows the results and the sales forecast for energy storage system, or ESS, for data centers.

Strong growth continues as expected. We are also rapidly expanding our supply capability.

For cell production, we are converting our production lines in Japan from automotive applications, and also plan to start the mass production of cells at the Kansas factory in fiscal '29. For module production, the second Mexico plant is scheduled to start mass production in Q2 of fiscal '27, followed by the third plant in fiscal '28.

To support expansion of the module production in Mexico, we are steadily advancing the localization of the broader supply chain, including power supply manufacturers. Furthermore, we will accelerate the evolution of our products to further strengthen our industry position.

For CBU solutions, which are becoming increasingly essential as chips continue to evolve and become more sophisticated, we plan to start mass production of CBU solutions in fiscal '27 in collaboration with Industry, leveraging our unique strength of having in-house core technologies in both batteries and capacitors to further enhance our competitive edge. We also plan to complete the preparations for mass production of next-generation BBU built for HVDC within fiscal '27.

Lastly, the outlook for in-vehicle. The line graph on the left shows the sales volume trend of in-vehicle batteries in gigawatt-hour in North America, and the bar graph shows the EV unit sales trend in the United States.

EV sales volume in the US has been steadily recovering from the temporary slowdown experienced in fiscal '26. Demand for our batteries from our strategic partner remains strong.

On supply side, however, we face challenges in ramping up the Kansas factory. We were unable to achieve the initially planned supply volume for Q1 of FY '27.

Given the continued strong demand for our strategic partner, we plan to supply 46 gigawatt-hour for full year in line with our initial forecast by optimizing production mix between Kansas and Nevada from Q2 of fiscal '27.

Can you hear me?

Can you hear me better now?

Thank you. Actually, I'm using Taketazu-san's link, but I am Misumi.

Thank you. I have a question on data center demand.

The benefit of demand for data center, not just the storage systems and capacitors, the so-called AI-related, but I understand that that effect is spilling over to other periphery areas as well, like FA. Do you think this is a special demand, a temporary one, or do you think this could be sustained?

Thank you for your question. In the periphery areas, the demand growth that we are seeing now, is it temporary or sustained, is your question.

We believe this could be sustained. Let me talk about the structure of our business.

At the beginning of the year, the BBU in Energy and in capacitor, Industry, and electronic materials, we've been talking about that in the initial part of a year, but now it's expanding into the peripheral areas like mounting machines of Connect, as well as servo sensors of Industry. We are seeing demand in these servomotors as well.

In other words, our beginning-of-the-year forecast has been rather conservative, looking only at a more assured demand growth, but now we do see the demand growing in the periphery areas as well, which was reflected in the results of the first quarter.

I have another question about Blue Yonder. AOP upward revision $30 million resulting from improvement in gross margin.

What was effective more specifically? Then there is the 23 billion or two, 23 billion yen loss in AOP.

What measures will you be implementing to improve on the profitability going forward?

Thank you for your question on Blue Yonder. I'd like to show you some specific figures to be more clear.

If you can look at page 26 of our material, you can see the figures related to Blue Yonder. Gross margin improvement, where does it come from?

If you can look at the upper left, this is the stand-alone in million US dollars, Blue Yonder stand-alone basis. If you can compare the first quarters of last fiscal year and this, you can see 36 million yen increase in sales, but 51 million increase in terms of AOP, which contributed to the profitability improvement.

There are two factors: first, strategic investments. With a cognitive series deployment to make it the native SaaS, we have been making investments last year.

Now, it's been narrowed down and $25 million or so less this year, which is accounted for in the profit last year. For the remaining 25 million comes from profit, 36 million improvement in sales, and this had a major contribution for the adjusted operating profit improvement.

Once the product is solidly developed, the marginal costs for the sales in ensuing period would be limited, and therefore, we are seeing the pipeline being developed this year, and we are seeing the orders coming in as well, which is contributing to the margin improvement. You asked another question.

Again, going back to the same slide, 23 billion loss this year, what about next year, was your another question. It's very difficult to talk about specifics, but 23 billion is the total of the stand-alone and the intangible amortization following the acquisition.

We expect the stand-alone operating income to improve, AOP to improve significantly next fiscal year.

Thank you very much.

Thank you. This is Yamashita from Toyo Keizai.

I also have some questions.

First question: once again, the Q1, the structural reform in the previous year, the results of it have been emerging. How would you evaluate that?

Smart Life, I think, in terms of profit, the effectiveness of the restructuring is reflected, but more recently, I think that the core is the AI strategy. After the structural reform in the consumer electronics and others, did the positioning of the different businesses such as consumer products change?

Could you give us your response to those results?

Yes, let me answer to your question. The restructuring that we have conducted since last year, and we are seeing the good results of it, and we are seeing the reflection of that.

The total number, about 35 billion per quarter up to Q3 mainly. For the full year, we expect 100 billion or so, and I think we are on track in achieving that.

As for the cost of the restructuring, the major areas as of the last fiscal year, we already explained that, but conducted in all of them, Industry and Smart Life, and also the corporate, I think those are the areas that we spent the most. For each segment, if you can check on the results, I think you can see that higher profits are realized.

As for Smart Life, as in your question, since last year, we have worked on the restructuring, and the revenue due to the lower demand in China led to some decline, but in terms of profit, I think we have seen the clear recovery. Does that answer your question?

Thank you very much. I do have another question.

Earlier, you mentioned that the Connect and the mounting machine business is doing very well, that's very interesting. There are ups and downs, but in Q2 and onwards, can we expect that the strong demand of AI-related to continue?

Yes. In Q2 and onwards, we believe that we can continue to expect that.

Until last fiscal year, cyclicalness of the demand in China that led to the downtrend, or there was a risk of that for the mounting machines. That's what we said last year, but is it cyclical or is it supercycle?

Without starting the downtrend, I think that we are seeing the strong demand, and we are getting the strong pipeline from the Taiwanese manufacturers, we expect this trend to continue in Q2 and onwards.

Thank you very much. That's all the questions.

Can you hear me?

Thank you. Ono from Nikkan Kogyo Shimbun.

I have two questions. First to Onikubo-san: upward revision has been made, and the operating profit is expected to set a new record for the first time in 42 years, I understand.

What is your personal take on that? Things that were difficult in decades, and for the first time in 42 years, the new record is to be set.

I know that AI-related business is a plus, but what others are the factors? A second question is on Kansas Energy factory.

You said that you're struggling with a ramp-up, and since the business environment is favorable, I think you need to really expedite the ramp-up to catch and capture that momentum. What are the reasons for the difficulties you are facing?

Is it materials or is it the infrastructure, the facilities-related or the shortage of labor?

Thank you for your questions. First, upward revision: first time in 42 years, that is the full-year operating profit.

What is my personal take? I believe this is just a starting line.

Not that we have achieved something, but rather towards fiscal '29, we are to aim for even higher standards. That's what we have been communicating as a group, we really need to work towards that.

That's my frank reaction. What are the factors for this new record?

Lots of factors. Last year, we implemented structural reform that have really inconvenienced and caused pain to many people, and we have also worked on the businesses with issues, and we need to continue with these efforts, but including market capitalization, which we really haven't seen much progress, I think everything that we worked on diligently has come together for a big effect.

Your second question was about our Kansas factory. It's really the operational factors, the proficiency factors, that is resulting in the current situation.

We had assumed various situations based on our experiences, but there were some unexpected cases as well. Not just Kansas factory, but from Nevada, we will be providing a support for a quick recovery because there is a strong demand coming from our customer.

We consider this to be the top priority, the ramp-up. As for recovery in Q2 onwards, there are two things: one is to make sure we go back to the initial trajectory of the ramp-up of Kansas factory, and we need to catch up on the cumulative basis.

Since we do have a factory in Nevada, it's including the model mix. Our plan is to have a combined results to achieve the initial forecast.

Thank you.

Thank you very much.

Iwato speaking from Nikkei Business.

I have two questions if I may. First, for this time, you exceeded your plans, and for the full year, for the first time in more than 40 years, you're updating the results.

The share price has gone up and maybe it's in the adjustment phase. AI-related name is a part of the reason, I think, to push up your share price, but there could be some risks involved as a AI manufacturer.

How do you see the risks and opportunities? Another question is about the highest profit is expected for the full year.

The fiscal discipline, investment discipline, could you comment on that as well?

Yes, thank you. Let me answer.

The highest profit for the full year is expected, and how do we evaluate the current share price? Yes, as you commented, as a AI-related name, that's kind of a big category, and sometime ago, we went up to the very high share price, and more recently, it's in the adjustment period, and you're right.

As about that, well, we are not in a position to determine our share price in the market. For us, we need to do what we need to do.

This highest profit is not our goal. We want to go higher in the next fiscal year and onwards, and we want to take actions for that, and we want to communicate so that you can understand that.

As a result of that, I think that how our company is evaluated is something that is decided in the market, and that's how the share price is determined. As for the second, fiscal discipline: in the medium to long term, we'd like to maintain the good discipline to expand it.

As including the AI-related businesses, there will be some upside, and if there continue to be upside in revenue and cash, I think we should consider a further increase. As for the AI-related businesses, I think it's growing more than our expectations.

Additionally, I think that without a delay, we need to increase the investment and increase our production capacity. I think we have to look at both of those factors in a good balance so that we can control it well.

Thank you very much.

Masuda from Yomiuri. One question: this fiscal year was positioned as the year to transition into the growth phase.

Looking at first quarter, how successful do you think you are in terms of transitioning into the growth phase?

Thank you for your question. Yes, we are to transition into the growth phase this fiscal year, and that was the message of the management at the beginning of the year.

We do see the effect. If I could repeat what has been said, for FY '29, generative AI products in Energy and Industry are the core areas expected for growth.

How can we actually see the financial results in those areas would be the key, and as far as the first quarter is concerned, as you have seen, we have seen the results as expected.

I see. Thank you.

This is Harada speaking from Goldman Sachs. Thank you very much.

I have two questions. First, AI-related has been the driver.

I think that was one of the characteristics. On page 11, you're showing the Connect FA and FA solution in Industry, and AI-related and the semiconductor-related, how much of those businesses out of the total?

The related question about the Industry on page 14: what I'm interested is in the edge area, the robotics is mentioned. Physical AI, for example, China, Korea, there are some movements that we see in some of the names, and is physical area also related to your business?

Could you comment on that? That's my first question.

The second question is that the BBU and MEGTRON and capacitors are much talked about. In your case, MEGTRON, capacitors, technically you are, I think, leaders, but at the same time, Taiwanese players, I think that they are expanding their capacity.

Competition, it's not just based on the technology, but you have to also consider the capacity and the sales channel and so forth. Vis-a-vis the global competitors, how do you plan to compete against them if you can talk about the strategies?

Thank you.

Thank you. Let me answer to your questions about the AI-related.

This time, in Connect, the mounting machines, and also FA-related business in Industry, what is the percentage of those? Specifically, I cannot clearly say the percentage number, but in the appendix or supplementary material, for example, in Connect, the mounting machine, the process automation is the subsegment.

In terms of sales, it's about 85 billion booked in Q1. I'm not saying that all of them is AI, but the mounting machine and the welding machine, that is the area of the process automation, and that's the size of the sales.

FA-related solutions in Industry, in the subsegment, there's a FA solution in Industry. If you can check on those numbers, you'll be able to see.

The robotics, about those, we are not seeing the large-scale numbers, in the future, there's a potential, and there are various devices that we can contribute. That is the current situation.

Also MEGTRON and capacitor, capacity expansion, Taiwanese players have been very aggressive in doing that. Yes, we recognized that fully, and especially MEGTRON for the circuit board materials, I think that we have a very high product capability, but the production capacity expansion was some of the challenges that we had.

Now, we converted the phase completely. The capacity expansion for the circuit board, the Ayutthaya and other areas, Suzhou and others, we explained that in page 14 of the presentation.

We'd like to show the expansion of the capacity so that we will not be late in responding to the demand in the market and try to increase our position.

Within the holdings, how you see those businesses? Of course, you are conglomerate, in some cases, it's possible that the decision-making could be delayed.

Is that something that holdings is very much focused upon, we don't have to worry about that?

Correct. You do not need to worry about that.

I see. Thank you very much.

Thank you. Hirakawa from BofA Securities.

My first question is on company overall for first quarter. The AOP high level, now, compared to your internal plan, which you did not disclose, how better or how worse was it?

On page 13, you do have the variance analysis for OP. Now, it has been reduced due to a buffer.

My second question is on Industry. You said that first quarter was very strong.

Now, when we triple the results for the first quarter, it will be 1.3 trillion, whereas your forecast is lower than that. What risks are you incorporating in your forecast?

I think these are the areas where you can expect growth in ensuing quarters, I would like to hear what the risks that you are taking into account are.

Thank you for your questions. About the first quarter results, how did they compare to our internal plans?

The results were better than our internal plans. Generative AI-related products did grow as expected, but as was mentioned earlier, servomotor sensors and mounting machines, this periphery area products, grew much further than we had expected, and therefore, the actual results were much better than our internal plan.

Other income, 10 billion, I think, is your second question. We can't really pinpoint to any particular areas, but there are various projects that are continuing, so that's a buffer related to that.

In Industry sales forecast is not four times the results of the first quarter, you said. It's not that we expect any slower momentum, but the effects of the foreign exchange is part of the forecast.

Business momentum itself, for the second quarter, we do not foresee any risks of the current momentum being lost. We believe sales and profits will be the same or stronger in the second quarter onwards.

I see. Thank you.

Thank you. Yasui from UBS.

Wonderful performance, congratulations. About BBU, I have a question and three small questions, actually.

The intent of the question is that in Q2 and onwards, is there upside in sales? Q2, the module will be manufactured in Mexico, you mentioned.

How much of the impact is expected? The second part: if Nvidia Rubin will be emerging, with that, I think that the production is starting.

Q2, Q3, and onwards, per rack, the capacity is going to increase, and battery cell changing from 80 watt to 120 watt, that's possible. The unit price, do you think that it will go up per rack?

The third point is that the inferencing, the CPU demand is increasing. CPU, the GPU, and other rack, the demand potential, would that be increasing in Q2 and onwards?

Thank you for your three questions. About BBU, the further increase in sales, is there a possibility for that?

From the module perspective, the Rubin and also CPU, I think from three points you asked the questions. Before answering each, but the conclusion is that on page 15, BBU this fiscal year situation is shown, and concerning that, as we mentioned, the hyperscalers, the information from them we are collecting, and also we are looking at the demand based on that information, and for full year, 1.7 times, 550 billion is the what we aim for.

That's the overall, and we are not updating that number so far as of now. As you commented, the each part, in order to achieve the total number, I think that each part are incorporated as parts and components, and the module starting the production starting in Mexico is necessary to expand, and also the operation of the Rubin, I think that the percentage will be not so high, but including the capacity and our portion will increase.

Also non-GPU, TPU, and ASIC, and including CPU, various needs is expanding. For us, I think we are always having such discussion.

When you look at the overall picture, I think that the 550 billion is maintained at the same level, or it's not changing so far.

Sorry to be persistent, just one point as a follow-up: with the Rubin, the unit price, do you think it would go up? The unit price increasing, but

from our perspective, BBU, the solution evolution is what we are trying to do. As the evolution continues, yes, the unit price would go up.

The capacity, you commented on that, and the output, which is necessary, would change. Also the CBU was mentioned, and so it's not replacing BBU, but it's BBU plus CBU, total solution will be expanding.

All of these will lead to the higher unit price.

Thank you, that's all.

Thank you very much.

This is Nakane. Can you hear me?

One question, I understand. I'd like to focus on cash flow.

There was the IRA tax credit effects, and you did revise the forecast on the full-year basis as well. Operating cash flow compared to last year's, how is it going to look like?

If you can talk about the figures, that will be the best, but my interest is this: as far as the BS is concerned, the inventory turnover is increasing. What do you think would be the impact of that on the OP?

Regarding the free cash flow, 20 billion investment is being expected, as was mentioned earlier. Should we expect for the increase in investments going forward?

About cash flow: the first quarter cash flow, operating cash flow, 372 billion, was partly related to the IRA tax credit, about 220 billion, and therefore, it was higher in the first quarter, but on a full-year basis, we do expect cash flow to increase. Last year, it was 620 billion, and for this fiscal year, we expect the amount to be more than that.

Regarding free cash flow, until last year, investment related to Kansas factory had an impact, but with the peak-out in investment and increase in operating cash flow, we expect the three-digit billion yen free cash flow to be secured. As for the investment increase in Industry, the demand is very strong, and demand is growing at a faster rate than we had been anticipating, and so for capacitors and electronic materials, we are implementing the capex earlier than the original plan, but this would mean that operating cash flow would also be expedited, and therefore, we expect the cash flow to be expedited as well.

Thank you.

Thank you. This is Fujiwara from Citigroup Securities.

On page 13 of the presentation material, in the middle, there is a lot of changes, and the raw material prices and the price revisions are the major ones. I'd like to ask each one of them.

The raw material prices, about the 70 billion yen increase in comparison to the plan. In which segments and which materials and components were affected?

Also the price revisions, I think that there was upward revision, in which segments were the major one? Also about the Industry, the demand is very strong.

With further price revision, is it possible to absorb the higher material costs?

Yes, let me answer to your questions. About the higher prices of the materials, roughly speaking, it's all increasing.

I think we can say that. It's not really a particular segment, but it's very difficult to find a segment which was not affected by the higher materials.

Of course, there are different materials, about the rising material prices, of course, related to the oil price, the resin, and the memories, and a metal, the copper, silver, and specific for the devices, tantalum and the glass cloth. Again, it's difficult to find the materials of which prices are not increasing, all the parts are affected.

As for the price revisions, there are two things: one is that material prices are increasing, but as we mentioned, the price revision, we are taking the good measures. We are increasing the profit with the higher sales and the lower fixed cost.

I think that we have a very good pricing policy for the higher material costs and prices. The second point is that what is needed, for example, AI-related materials and the peripherals, I think that the demand is stronger than supply, and there are a lot of demand, we want to make sure that we take the price policy and to increase the unit price.

It's not just to reflect the higher material costs, but we want to increase the prices. Especially in the devices, in the segment profit, we want to improve the bottom line or margin, we are seeing the results of that in Q1.

Thank you very much.

Thank you. Katsura from SMBC Nikko.

One question: in the first quarter, you made this upward revision in the first quarter earnings briefing, which is kind of rare for a Panasonic. Understand that AI-related and periphery businesses were strong was a factor.

Now, the impact of the situation in the Middle East, I think, was assumed to be about 30 billion, and with regards to the refund of the US tariffs, as reported by other companies, I'm wondering if you experience the same benefit as well. The backdrop, I think, the exchange rate assumption remains same at around 140 yen to dollar, and so there are pluses and minuses in terms of the effects on the revision, can you elaborate on that?

Thank you for your questions. For the second quarter onwards, is there a possibility of further upward revision, I think is what you're trying to get to.

The refund of the tariffs being paid, as well as exchange rates, these are major factors. The basis of the businesses are strong, and I think we can expect continued growth in the second quarter onwards as well.

As for the exchange rates, as mentioned earlier, we had assumed the stronger yen, and weaker yen is positive for the entire group, so that's a factor. With regards to the refund of the tariffs, if you can look at page 19 of our materials, you can see the combination of the tariffs impact.

The tariffs being paid, as well as refunds, about 7 billion refunds for the first quarter, and 7 billion for the full year as well. There are some uncertainties, we do not expect zero effect in the second quarter, there is a possibility of upside to a certain degree.

And 34 in the first quarter maintained on the full-year basis as well in terms of the new tariffs. If a 301, Section 301 is to be applied, then this could have an effect, but there are many uncertainties, we're just for now assuming that Section 301 would be applied.

These are the basis of our forecast.

I see. Thank you.