We would now like to start the outline of the consolidated financial results for the second quarter ended September 30, 2014. Let me explain the presenter, Toyoaki Nakamura, Executive Vice President and Executive Officer, CFO; Mitsuyoshi Toyoshima, General Manager of Finance -- Financial Strategy Division; Ken Mizoguchi, Executive General Manager in Corporate Brand and Communications Division.

Mr. Nakamura would like to explain the overview.

So please look at the material, the handout. As you see on the screen, this is the highlights, Page 4, the first half of fiscal year 2014 financial results.

First half highlights. Revenues, JPY 4,496.7 billion, this is up 1% on a year-on-year basis and also up 1% compared to the previous forecast.

Information & Telecommunication Systems and Social Infrastructure & Industrial System, total 8 segments of the total 10 segments exceeded year-on-year. The integration of thermal power generation business and conversion of Hitachi Maxell into equity-method affiliate, these declining factors were absorbed and was up 1% on a year-on-year basis.

Operating income, JPY 214 billion, up JPY 40.5 billion on a year-on-year basis and up JPY 29 billion compared to the previous forecast. And Electronic Systems & Equipment, Social Infrastructure & Industrial Systems, Smart Life & Ecofriendly Systems, total 8 segments exceeded previous year results.

EBIT, JPY 217.3 billion, up JPY 75.3 billion on a year-on-year basis and up JPY 47.3 billion compared to the previous forecast.

Next is the net income attributable to Hitachi, Ltd. stockholders, JPY 91.5 billion, JPY 58.7 billion higher than year-on-year and JPY 31.5 billion compared to the previous forecast.

Total Hitachi, Ltd. stockholders' equity ratio, manufacturing, services and others, the 28.0%, up 0.6% -- 0.6 of a point from March.

And core free cash flow was JPY 37.5 billion. It's an improvement.

And free cash flow is JPY 51.1 billion, up JPY 21.4 billion on a year-on-year basis.

Next, Page 5, please. This is the consolidated systems of -- statements of operations.

Second quarter, 3 months figure will be explained here. Revenues, JPY 2,360.4 billion, this is 99%, a slight decrease.

But operating income, JPY 133.8 billion, this is plus JPY 15.8 billion. This second quarter, JPY 133.8 billion.

Since we started announcing the quarterly results, this is the record high.

Now the waterfall chart of the operating income is on Page 6. This is a 3-month chart.

The integration of thermal power and the Maxell impact of business reorganization, JPY 6 billion; and lower sales prices; and the investment in business development; increase of labor costs and depreciation. And unfortunately, we had a decrease of Power Systems business, about JPY 10 billion.

And these declining factors were made up for by the improvements in large projects and the higher capacity utilization and cost reduction. So a JPY 15.8 billion improvement from last year.

Now this JPY 24 billion lower sales prices and the cost reduction was netted. And the benefit of Smart -- Hitachi Smart Transformation Project, STP, was JPY 22 billion in the second quarter.

And this generated the source of investment for the growth, and this is plus JPY 10 billion. So we have covered and created the source of investment.

And minus JPY 15 billion in increase in labor costs and depreciation was absorbed with higher capacity utilization. And we are promoting the growth strategy.

Next, first -- along with first quarter, let me show you the waterfall chart for the first half on Page 7. The items are the same as the previous page.

The amount, including the first quarter, is like this. For the 6 months, the STP benefit is JPY 48 million.

Lower sales prices, minus JPY 40 billion, and cost reduction, these 2 are netted. Plus JPY 48 billion is the benefit of Hitachi Smart Transformation Project, STP.

And this has generated the JPY 15 billion, the source of investment for growth. And the increase of labor costs and depreciation, minus JPY 30 billion, was covered with higher capacity utilization, JPY 50 billion.

So this is the first half results.

Next, Page 10, please. This is the revenue by market, Japan and outside Japan.

This is the 6-month figure. Japan revenue, JPY 2,401.8 billion, this is 100% year-over-year.

And outside Japan, JPY 2,094.9 billion, and this is 2% increase, 102% year-over-year. Now by region, you see growth in China.

This was 103% on a year-over-year basis. This was -- the strong sales is continuing in elevator and escalator, and that's why we are enjoying the growth.

In North America, 102% on a year-on-year basis, this is strong automobile sales. And Europe, 118%, this is the medical equipment and the railway system business in the U.K.

that are strong. And other areas is 86% negative.

This integration of thermal power business was the factor; so excluding that, it was 116%.

Next is Page 11. This is the consolidated statements of operations by manufacturing, services and others and financial services.

This is a new page this time. In the center, you see the manufacturing, services and others summary of consolidated statements of operation.

This revenue is JPY 4,380.1 billion. This is 100% on a year-over-year basis.

And operating income, JPY 194.4 billion, plus JPY 36.2 billion. And the operating income margin was 3.6% last year, and this second quarter, it was 4.4%, so the operating profit margin is gradually improving.

And regarding the balance sheet, Page 13, please. We have separated the manufacturing, services and others and financial services.

In the 2015 medium term, the financial services will improve -- increase; and manufacturing, services and others will be more efficient. So let me explain the manufacturing.

Total assets, JPY 9,213.8 billion, this is plus JPY 145.9 billion. At the end of the year, there was a sudden yen depreciation, and therefore, there was the increase in the asset of overseas subsidiaries following the conversion of the yen.

And so the increase there and the increase in the market value of marketable securities is due to rising share price. Excluding that factor, it was an increase of JPY 30.9 billion.

In terms of the efficiency of fund, third from the bottom, cash conversion cycle is listed, 79 days. So from March, we have shrunk by 2.3 days.

And so the cash conversion cycle is being more efficient, as planned.

Now cash flow, on Page 14. Let me explain the manufacturing, services and others.

The operating activities provided the net cash of JPY 245.8 billion. This was slightly up.

And the investing activities used net cash more than last year, and so the free cash flow was JPY 51.1 billion positive.

Now Page 15, this is the capital expenditure, depreciation and R&D expenditure. Capital expenditure, Construction Machinery and High-Technologies and the material investments have passed the peak, has peaked out, so it's a slight decline.

But depreciation is the activities from the past, and therefore, it was flat. R&D expenditure, 94%, it is a slight decline.

However, the corporate's R&D is increasing. So for each business segment, the product development has peaked out, but I think it will increase going forward.

Next, Page 19 and Page 20, the first half results. Let's look at the forecast against the previous forecast.

The Information & Telecommunication Systems is the only example. As of July 31, we announced the first half forecast, and the segment alone could not reach the target.

The -- at the beginning of May, it was JPY 35 billion, and yet we thought that the sales would increase, so we increased it to JPY 40 billion without changing the fiscal year. We have been making some investments for the Mid-term Plan and the big data, the overseas healthcare and SAP, the solution-related investment being reinforced.

So about JPY 5 billion, a negative number, impacted and led to the JPY 3.1 billion in reduction. But for the full year, about JPY 2 billion, originally, the increase was expected.

As to Power Systems and the Social Infrastructure & Industrial Systems, Electronic Systems & Equipment and Construction Machinery, all of these segments are increasing their numbers. And the corporate items and eliminations are also increasing.

Page 22, and this is the outlook for fiscal year 2014. The exchange rate for the second half is JPY 100 to the U.S.

dollar and JPY 130 to the euro. The revenue, JPY 9,500 billion, JPY 100 billion up against the previous forecast.

Operating income, JPY 580 billion, up JPY 20 billion over the previous forecast. And the bottom line, net income, JPY 250 billion, JPY 20 billion plus against the previous forecast.

The operating income margin is not shown here but was based on the JPY 580 billion of operating income; operating income margin was 6.1%. It used to be 6%.

And last year, it was 5.6% -- 5.5%. So we target at more than 7%.

And we'd like to increase the actual results, the third quarter and onward, but we will continue to work and watch closely as to how to increase the margin.

Page 25 and 26, the segment breakdown. As you can see the previous forecast comparison, the revenue, Information & Telecommunication Systems, Social Infrastructure & Industrial Systems, Construction Machinery, High Functional Materials & Components, these 4 segments revised upward the revenues.

As to operating income, Social Infrastructure & Industrial Systems, Electronic Systems & Equipment, Construction Machinery, High Functional Materials & Components, Smart Life & Ecofriendly Systems and Financial Services, these 6 segments revised operating income upward.

development of the Social Innovation Business for the next growth. Top line growth plus cash generation equals earning power reinforcement.

Page 28, our 2015 Mid-term Management Plan progress. More progress was seen in these areas.

In Japan, we delivered optimizing control system for heat-source equipment to the Abeno Harukas skyscraper. And also, the Organization for Cross-regional Coordination of Transmission Operators system adopted our proposal.

In the North America, RBWR, it's the Resource-renewable Boiling Water Reactors, for this initiative, we started joint research with 3 American universities. Usually, it takes 100,000 years for toxicity to attenuate to the natural uranium level.

But with RBWR, it can be reduced to 300 years, as well as disposal site area will be 1/4.

In the U.K., the 234 AT-200 rolling stocks will be sold to Abellio. And for that, we have obtained a preferred bidder status.

And in Singapore, we have acquired a -- the Stone Apple Solutions; and in Malaysia as well. In Iraq, we won contract for the pretreatment facilities in -- for the desalination plant.

And next, Page 29, for the Information & Telecommunication Systems. We integrated the system solutions business in the social infrastructure, financial and government, public sectors, and strengthened its ability to provide solutions.

Actually, we are going to make this integration in the -- in April next year.

As to Power Systems, Social Infrastructure & Industrial Systems, as of October 1, we established a front engineering division for energy solutions, transmission and distribution and renewable energy-related business. In this area, there the crossing of different business segments, so that's why we decided to establish the front engineering division to allow our customers to receive a proposal at one stop from us.

And we create corporate culture of growth. And as of October 1, Hitachi and some group companies decided to abolish the grade-based pay, which is based on seniority system; and to replace it, that we are going to use the compensation system based on the Global Performance Management system so that we can deploy right people in right places.

And this is the compensation system for the management in Japan.

Last one, the STP, Smart Transformation Project. In the first half, it was JPY 48 billion, the benefit.

But for the second half, we are going -- we have -- did raise the target from JPY 90 billion to JPY 100 billion for fiscal year 2014.

Main initiatives and progress for the first half. From 2016, the next, the mid-term plan will start, so we need to evolve into the second phase.

And for that, we are going to accelerate process-focused reforms for the overall optimization of E2E. And this reform should be -- should take place in the mainstream of the process-focused reforms.

And the cash-generation capacity should be increased, and we are going to reduce cash conversion cycle. And when we fail, that would cost a lot.

So we are going to strengthen our product management, and we are going to share expertise and know-how, across-the-board manner. We are going to share the cross-functional knowledge and know-how.

As to global logistics, the reform that we are going to use the Hitachi Transport System's IT infrastructure. For example, when we go China, ATM in China, we are going to optimize inventory, and we have already started that effort.

On the operations side, operational reform, we are going to transform part of the financial and accounting indirect operation to Genpact group in November.

So the JPY 5.5 dividend per share is going to be raised to JPY 6, and the board has approved that today.

Thank you very much. We are going to move to Q&A session.

I have 3 questions. First, regarding the social infrastructure.

You mentioned escalator and elevator, but the reason the income was higher and the full year operating income was higher. And for the second quarter and full year orders...

Third quarter or...

Second quarter and the full year plan and forecast, please, for the Transport and the Social Infrastructure & Industrial Systems?

First of all, Social Infrastructure & Industrial Systems operating income increased. The factors -- reasons for that, this was in the infrastructure, we were able to reduce costs in the infrastructure part of the business.

Yes, infrastructure was the big part. This infrastructure team is -- was causing some inconvenience in the past; but this time, we didn't.

And so we -- if we don't have a project loss, we think we can at least achieve this level. And China is going as planned, we are generating profit as planned, so there's no negative factors in China.

Now full year increase, in the social infrastructure, you see an increase of JPY 5 billion. This is infrastructure team business accounts for half of this increase.

There is less negative factor. And the remainder is the urban planning and development and the transport.

Order, now orders in the second quarter, this is the Social Infrastructure & Industrial Systems.

If possible, information and telecommunication and the entire company, please?

For Information & Telecommunication System, second quarter, JPY 477.7 billion; in Power Systems, JPY 170 billion; and the Social Infrastructure & Industrial Systems, JPY 387 billion; and Electronic Systems & Equipment and all together, JPY 290 billion; the Construction Machinery was JPY 200 billion; and the High Functional Materials, JPY 358 billion; automobile, JPY 230 billion; and the Smart Life & Eco Systems, JPY 188 billion; and others, Logistics was JPY 255 billion. So to put things in perspective, first of all, in the Information & Telecommunication Systems, first half result was JPY 1,060,000,000,000.

This was 106% on a year-on-year basis. And on a full year basis forecast, on a full year basis, we are aiming for above 103% on a year-on-year basis.

And the Power Systems, because of the impact of the thermal power business is large, and so excluding the thermal power, in the first half, it is around JPY 250 billion on a year-on-year basis. Excluding the integration of the thermal power business, apples-to-apples comparison is over 130%.

The new power generation is growing. And for 2014, we are aiming for above JPY 500 billion; and on a year-on-year basis, over 120%.

Now Social Infrastructure & Industrial Systems, IEP is included -- not included in some parts. So as total, 2014 order is around JPY 980 billion, and this is 134% on a year-on-year basis.

And if we include IEP, it is a little around 100%. So in order, we are aiming for JPY 1.8 trillion.

This will be 124% on a year-on-year basis; and including IEP, around 104% or 105% on a year-on-year basis. So overall, 104%, 105%.

And the power is smaller, and so on a full year basis, it is large, 120% year-on-year. So this is our order forecast for the full year basis.

Second question, in the Information & Telecommunication System, you said that the sales are strong, and you just mentioned the orders. But the current sales, what is growing in the Information & Telecommunication Systems sales?

And the full year forecast, too, what part is strong, if you could mention some industries?

So the growth in sales is system solutions and platform. Both are growing 106% and 107%, respectively.

And telecommunication network is not that good. Now operating income is growing in system solutions more.

In the solutions, the strong area is finance and public government, financial and public. Until now, it was to improve the efficiency of the administration.

So in Japan, this efficiency in administration work does not grow our top line, and so we had to think about what to do with the residual headcount. So in Japan, this kind of investment was small.

We didn't think we had to do such investment in the past, but current trend is to change the management, how to grow the top line. That kind of investment is being more conspicuous in Japan, so we think this kind of investment will continue into the future.

So that is where we see an increase.

So you're seeing a top line growth? Any industry that has stand out, that has taken your attention?

Global players, the financial services players that are doing business globally. The financial institutions are making big investments, so I think that is where the increase will be.

And the government, public, it doesn't -- top line is not important for them. But in terms of the change of system in the future, the IT investment for the reform, the transformation, this is something that did not happen in the past, so this will be a big trend going forward.

You mentioned JPY 17 billion completion of the unprofitable projects; IT project and the Social Infrastructure & Industrial Systems, a total of JPY 17 billion. So I want to confirm that this unprofitable project has been completed.

The Information & Telecommunication Systems and infrastructure -- social infrastructure, the system is continuing, so the system has not completed. However, the problems have been resolved pretty much.

Have been studying at this arena for 25 years, learning a lot from you and a very good performance. And I have some 2 vague questions.

As to the innovation for the social infrastructure, the government systems will change by 2020. This -- the keyword would be affected.

But what about after 2020, what will be the keyword to support Hitachi after 2020? The growth frontier will be limited around 2020.

And in infrastructure, that we'll be very close to the completion by 2020. And after 2020, what is the keyword to support the growth of Hitachi?

What is in your mind Nakamura-san? Around 1990, the history-high revenue comes -- came from the DRAM mainly.

And the quality currently is much higher, but the commodity products, including DRAM and storage and home appliances, were driving your growth. And it's very easy to tell what product is driving your growth.

And even from a layperson's perspective, it was easy to read. But now B2B, B2D and B2C and so on, it's a very difficult and complicated and deeper and globalized business.

So when you look at risks, it's not easy to detect and understand risks. So this means that the management system or the system's management capability is even more important.

And of course, results are in front of us, and operation reforms are going on. I understand it, but compared to other global players, how do you evaluate your own management capability?

More specifically, do you think that you have to make more investment in the systems? Or do you think that you have to change management governance?

Any specific thoughts in this area?

2020, the Tokyo -- the year of Tokyo Olympic Games. Japan will have transformed itself by then.

Well, the social infrastructure, would it be very close to the completion by 2020? I don't think so.

Maybe some of them are obsolete, and it will be a continuous effort of changes. But when it comes to buildings and the properties and the facilities, in other words, hardware building would not be the focus in 2020.

It will be rather what we call solutions, including softwares and services, equipped with hardwares. In other words, the key is going to be IT, so the facilities in IT.

And operational technology and IT strength will be combined to produce more efficient, effective products. So when it comes to IT, the information will be global, so we will see many changes.

The components, facilities and IT, these 3 things will continue to be keywords, I think. So the question is how to infuse -- or how to fuse and how to combine these 3 things, and that is the key for survival in the global arena.

So the global, the business development makes it difficult to understand risks. It's absolutely true; that's the reality.

For example, Hitachi headquarters is located in Tokyo, but we can't control everything which is happening globally. When you are in Tokyo, I think it's impossible.

So we will either go more global, for example, in America or in China or in Europe. In each area, in each region that we'll establish the control room, if you like, in each region.

The easiest example is the Transport System. If it's just running stock, that we can use the Kasado Works factory to manufacture and to export, especially when the yen is so weak.

But rather, this signaling system or control system or the operation or the timely delivery of the rolling stock, and all of these things to be delivered one stop. For that, we need to have a group of people who can make decisions locally, and then we will see risks better.

The customs and tradition are different. Our way of thinking in Japan and our way of life and laws are different.

In India, Europe and Thailand, all the countries and regions have different mechanisms. So the management power of Hitachi compared to global peers, well, I would not say we are kindergarten, but because some of our business is well established, maybe high school student; and the global peers are graduate students maybe.

Maybe that's the picture.

IT and the other actual work, hard work, the combination will be very important. Panasonic, for example, says that rather than focusing on the personal computers, they will also forecast on the terminals and the soft side as well.

And the NRI and the soft side or the entity only doing the soft side is a different example. And it seems that when it comes to hardware, including a PC hardware, terminals are shrinking as a business; but combined with IT and specialized in each section, each business section, that could be differentiating factor.

And as to terminal-related business, what is your thought? I have this impression that you have left the business aside.

Are you planning to strengthen that business as well? Or are you going to outsource that business and that would also will give impact on the local plants and the Omrons, the business and how all of these pieces fit together in the picture?

And that is my additional question.

Components are very important. But PCs, since it is kind of a window to the business, is it very important?

Well, I don't think so. The systems connecting everything and the contents of the software are important.

And when it comes to just one application, program or product, one application, and you sell those -- the program products, that's fine. But those products will go down the same way as hardwares because of the competition.

So rather, we'd like to package everything as a solution so that our customers can enjoy the functions that they need. I think that's the way we go.

So in that picture, PC, when it comes to PC, we are going to buy PCs from outside. ATM, we are going to provide a solution in the payment service business.

As to whether we continue to produce the hardware, well, I don't know. But when it comes to ATM, it's not everything you can to produce it, so recycling module and everything will be produced by Hitachi for ATM going forward.

I have 3 questions. First is Power Systems segment.

In the first half, the operating income exceeded the plan. In Europe project, was the cost smaller than expected?

But you have kept the full year forecast, so the project that had trouble, what is the situation now? Could you elaborate?

In Power Systems, JPY 4.3 billion higher than the forecast in the first half. I cannot explain this in one phenomena, but in July 31, I did a revised forecast in this Power Systems plant problem that we incorporated in the first half.

The additional countermeasure cost I mentioned was JPY 21 billion, but this was down to JPY 16 billion in the first half. It is total JPY 26 billion.

Of the JPY 26 billion, we put most of it, JPY 21 billion, in the first half. But given the progress, we thought we front-loaded too much.

So on a full year basis, the cost is increasing as planned, meaning we are taking countermeasures, so that has not changed.

Second question is about foreign exchange, if possible. I think yen weakened slightly in the first half, so what was the impact in the first half?

And full year, it changed from JPY 98 to JPY 100 to $1. So in this JPY 580 billion, I think initially, you meant -- included this foreign exchange.

But -- and for the remaining 6 months, if you could share with me the foreign exchange sensitivity.

In the first half, JPY 98 was the assumption for the second quarter but...

JPY 104. The result was JPY 104.

So that was -- yen depreciated by JPY 6. As a result, in terms of revenue, JPY 35 billion.

And in operating income, JPY 5.5 billion was the positive factor in the first half. Compared to last year, JPY 8 billion positive impact in the operating profit.

In power, that JPY 5 billion decrease -- decline in power; and therefore, in the first half, JPY 3 billion positive. Now the foreign exchange sensitivity.

First of all, euro is fluctuating, so it's hard to see; but in dollar, JPY 2 billion; in euro, JPY 700 million to JPY 800 million. So JPY 1 fluctuation makes JPY 3 billion difference or so.

Now power, including weaker yen, we don't know how it will trend in utility, and there are some changes that we are seeing in the foreign exchange fluctuations, so it's hard to see. But for the second half, both dollar and euro selling by, we have a fluctuation of around JPY 3 billion for each JPY 1 movement.

Including utility, power, about JPY 2 billion fluctuation for each JPY 1 fluctuation for dollar and euro combined.

How much on a full year basis, in the JPY 580 billion, how much is incorporated?

For the full year basis, in the second half, we are assuming JPY 100 to $1, so not incorporated much. Compared to year-on-year, second half, JPY 10 billion plus on operating profit basis.

The energy cost will be a negative factor on a full year basis. So we think it will be a positive JPY 10 billion or so, but the energy cost, minus JPY 10 billion.

So that is the situation.

Third question, regarding the railway transport business. As Kawasaki Heavy Industries made a comment, I would like to ask you the same question.

In the North America, Chinese rail manufacturer won the order. And so what do you -- how do you see them as a competitor?

And the Italian rolling stock manufacturer is up for sale, not just U.K. but the European -- Continental Europe, advantages and disadvantages of expanding business on Continental Europe.

As CFO, what do you see the advantage and disadvantage, whether or not you will actually do something? What's the positives and negatives?

Are you talking about the CNR and CSR? North company, South company?

No, no, Boston and the merger.

CNR, they can produce at low cost because the volume is completely different, so they can produce at low cost, manufacture at low cost. So competing only with the rolling stock will be difficult, difficult or in terms of competition, competitiveness, and therefore, we need high-performance, high-speed rolling stock.

That's where we need to compete. And we think that kind of competition will expand going forward.

But we have been evaluated the high performance in the U.K., and so that is what we need to reinforce and focus on. The standard-type rolling stock and the commuter train, we have won the order for 234 vehicles from Abellio.

And not just rolling stock but also the management, the operation, we want to expand to management and provide service to our customers. So that is how we are changing our business model now.

So it's not just the rolling stock railway vehicle. So that's the area we would like to expand our business into.

Now Finmecca (sic) [Finmeccanica], I think you were referring to Finmeccanica. This is an individual case, so we have not decided to buy or not buy them.

Finmeccanica, we do not intend to evaluate this company, Finmeccanica, but we are building a U.K. plant.

And in U.K. alone, there -- this business has a 100-year history, so there will be more projects going forward.

Therefore, this U.K. plant will do the business for U.K.

possibly, and some projects may go to Germany or Switzerland; Continental Europe, possibly. And so this commuter train, if we receive more orders for commuter train, then maybe we want another plant in Continental Europe as well.

However, from my standpoint, we have to ensure the investment return, not just the transport segment, but there are other businesses, too. So we have to compare which return is higher, so not just rolling stock, the signal and control for the entire Europe.

Otherwise, we cannot enjoy high profitability. So in terms of the rolling stock plant, that is not our high priority.

So from the overall picture, that is not our priority.

I have 2, 3 questions. The background of this term plan, so in the first half, the upward revision, and you added only JPY 20 billion, so maybe JPY 9 billion reduction in the second half, I suppose.

And in the last revision, that you listed up the 6 or the 7 risk elements, and I thought that I saw your face, Nakamura-san, behind those risk items. So as CFO, how do you look at risks and what risks in what segments?

And what kind of contingency measures you have for these risks? So could you please talk about how you develop the full year plan or numbers, including risks?

It's true that JPY 29 billion adds on to the operating income in the first half. So simply put, maybe we could increase more, but there are some issues in China.

And in Europe, there is some uncertainty in the financial sector, and that crisis concerns are emerging again. And when Europe goes wrong, that would certainly give impact in China.

So in the second half of 2014, the corporate items and elimination, JPY 25 billion. The negative number increased by JPY 25 billion.

Last time, I said JPY 20 billion, but now it has increased to JPY 25 billion. And there is no particular specific reason for this increase for the corporate item elimination, but just all in all, this is the current picture.

And what about segment risks? The emerging countries in the Middle East, because of the IS data problems, that we cannot deliver our products and services as we planned, and that would give negative impact on our revenue and profit.

So currently, we are watching closely those risks, and we check every 3 months. And in the third quarter, if it is better than the current forecast, then maybe on a full year basis, we can improve numbers.

Maybe it's hard for you to say, but is there anything that you, for example, for the Information & Telecommunication Systems and profitable projects, any specific examples that you have concern about?

Well, my concern is in the emerging countries, for example, the -- related to group for the Social Infrastructure & Industrial Systems, and it is in the Middle East, and there are some concerns about it. But at this moment, it is okay.

It is -- we are fine. That said, nobody can tell exactly what will happen in the future, so we are looking at risks closely.

As to Automotive business, it's not just about Automotive System, also High Functional Materials & Components. The automotive-related business accounts for the large chunk of that business segment, so if anything goes wrong in China, that would give impact.

We think that the U.S. is still doing well, so we will be fine.

But from October through March period, if the situation in the U.S. is good, then we think that we can achieve our targets.

The FIT has -- if that holds, is there any impact from that going forward?

Well, it's about an Automotive System, sir.

No, FIT, when I said FIT, I mean the feed-in tariff, the regime.

Oh, I'm sorry, I just misunderstood. As to the feed-in tariff issues, this is the answer.

As to the solar power production business, if we assume that the utilities would not buy any more from us, well, in that picture, maybe there is a risk, and the FIT itself is a stretch. And next year, the price might go down dramatically, some kind of changes will happen.

But it's not just the FIT price problem, it's also the distribution, the network problem because there should be the matching between the supplier side and the demand side -- supply side and demand side. If not, there should be blackouts.

So the business model is kind of blurred. It's not really a well-established business model.

So the approvals at 2013 -- up until 2013, the number of approvals increased, but that will not happen if there is no change. But of course, when it comes to the better, improved Transmission & Distribution System, that will be a good news but not for this year.

As to the cost of materials, raw materials, it's coming down, and the rare metal and the iron included. What is the impact of the raw materials in the first half?

And what will be the impact for the second half? Any update?

Utility price and the fuel cost, in the first half, JPY 5 billion; the second half, about the same level. That's our assumption.

As to raw materials, 2013, there was a big impact. There's some impact from the weaker yen, but the market is softer.

So on a full year basis, the impact will be limited to JPY 4 billion to JPY 5 billion and including FX.

I think so, too, that yen is weakening, but the market -- the prices are coming down.

Yes, that's right. Market is softening, so of course, there's some negative impact, but that will not be a big impact on the management.

I have 2 questions. Long-term story, on Page 29 of your presentation today, you mentioned that you will change the compensation system for management in Japan.

In this category, the personnel costs, will it go up with the introduction of this new system? Or will this be a reduction on overall costs?

And if the total cost is reduced or if the compensation will be higher for some and lower for others, if this will be skewed or unbalanced, then from your historical background, what do you think will happen to the loyalty of the employees? I think there will be change in the loyalty of your employees.

So the change of the compensation system and the loyalty management of the employees, what is your view? So that's my first question.

And the other question is you mentioned the Italian company, whether you will acquire or not. From CFO's point of view, using the limited financial resource to acquire companies, may be some -- similar to a lottery in some way.

So to use the money to acquire a company or use the same financial resource for the listing of your subsidiary or wholly owned subsidiary, I think using it for the latter purpose is more visibility, higher visibility. Which do you think is the better use of your fund, limited financial resource?

Let me answer your second question first. Using the money to acquire outside company or using the money to make a subsidiary a wholly owned subsidiary, that is a different, different way, different story.

We cannot compare those 2. Wholly owned subsidiary, they are already our group companies, and so raising 51% to 100%, acquiring 49% of minority interest, using money to acquire minority interest, what's the advantage of that?

The funds flowing outside can be minimized. But this outside outflow of business, it's just the dividend, and therefore, spending money to acquire 30% to 40% minority interest just for the dividend and make it a wholly owned subsidiary, I think that's nonsense.

Rather, in running a business, group companies that are listed, if we think there is a lack of unity as a group company or companies, if there's a conflict in the companies that we made wholly owned subsidiary, then we should make -- use money. We have to think from a perspective whether we can improve the share, market share.

If we have the top share, the largest player in particular market, then we do not have to spend money for the growth, so we should spend our money elsewhere. So wholly owned subsidiary, if we do not have to spend money for those listed company, then we can do maybe share buyback.

So acquiring an outside company, this is to acquire a capability that we do not have. So this and raising the shareholding to wholly owned subsidiary, that is different.

In order to spend money to acquire a company, if we have impairment, big impairment, that is a waste of money. That will hinder the company from growing, so we have to closely watch what we acquire.

If we find a good company and purchase by 20% or 30% or 40% premium, that's not good either. In Hitachi Group, we have to think if we can generate new added value that can be built on what we have.

Just because the company is good does not mean that we will purchase to add a brand-new business line. Nothing will be added to our business.

We will become like a fund if we do that. We will not be able to provide new added value.

So we have to bring the future cash flow to the current value, and therefore, if we don't do that, then we will only repay the debt with what we purchased, and that is meaningless. When we run a business, we do not have to send our personnel resource entirely.

But if we want to acquire a company where we can have a win-win situation on both sides, if we are confident that, that will happen, then if we are confident that we can get the return, even if we have to pay a lot of money, then it makes sense. So we need to increase equity, debt/equity ratio.

If shareholder ratio goes up, then we can procure funds, and we can grow our business without a downgrade in rating. We should not do anything that we hesitate or have reservations on.

In Global Performance Management, in Japan is eliminating seniority system. You may think that this -- we are doing this to reduce the wage or labor cost, but the overseas revenue ratio is now 47%.

And so as you just asked, we are trying to establish overseas bases and do things accordingly. And there may be foreign workers and Japanese workers in those overseas bases.

If Japanese employees are under the seniority system, then the capable talents, it will be difficult for us to bring in talents who have good experience. And that is why we want this grade-based system.

If the performance goes up and if we have full -- many talented people, then the competition will go up. And if not, then the wage will go down.

In order to compete with the global companies, we have to do this. So widening of gap or the overall wage decline, that is not what we are thinking of.

We are thinking of -- we want the employees to think that the way we are moving into is right direction. We started from Ibaraki Prefecture, so we were a typical Japanese company.

However, with this, I believe the loyalty of the employees will improve. This will improve the transparency, so the seniority system or the promotion because he or she is liked by others will not happen.

It's not that we have that now, but that will not happen.

Just one question. It's not about your performance.

About Hitachi Appliance, GE has curbed out its home appliance business. And as to Hitachi Appliances, do you have a similar idea for Hitachi Appliances and the Johnson Controls that related discussions are at hold, so do you have any update on that?

In accordance with our business direction, the home appliances, white home appliances, because when it comes to social infrastructure, it's about IT and the power system and the rolling stock are the focuses. But at home, in the society, infrastructure is the home appliances.

I don't think TV is part of infrastructure at home. So to build infrastructure at home, of course, in the past, in Japan, the home appliances helped women to go out to the society.

It was a tool to allow women to work outside. And that would spread out to India, Southeast Asia and in China.

And as GDP goes up, the labor force becomes a very important issue. So the infrastructure building at home is very important for those developing countries to develop further.

We do not have a [indiscernible] like GE. We do not have engine for aircrafts, but we are moving on in the other social infrastructure business that can contribute to the further development of the emerging countries.

So in that sense, we would like to continue to work on home appliance business. And there is -- and the JCI, there is no hold, JCI business attire.

And some time in the near future, there will be a time for us to talk about it.

In the near future, meaning in several years?

No, no, not that long. With that, we'd like to conclude today's meeting.

Thank you very much.