[Interpreted] Ladies and gentlemen, thank you very much for your attendance.

Slide 1-2, I would like to make the presentation starting from that slide, Consolidated Statement of Profit and Loss. Fiscal year 2018 actual revenues were JPY 9,480.6 billion, up 1% year-on-year, an increase of JPY 112 billion.

Adjusted operating income was JPY 754.9 billion, operating income ratio of 8%, increase of JPY 40.3 billion year-on-year. EBIT was JPY 513.9 billion and net income attributable to Hitachi stockholders, second from the bottom, JPY 222.5 billion, which was a decline of JPY 140.4 billion year-on-year.

In the EBIT level in line with suspension of Horizon, a project, the impact of impairment loss JPY 294 billion is included, and in net income included JPY 225.5 billion -- JPY 289.7 billion from the impairment loss of Horizon is included. And just to mention about profitability, operating income margin of 8%, in the previous term 7.6%.

So it was an improvement of 0.4% year-on-year.

And both adjusted operating income and operating income margin for both, we have enabled to have record highs in 2 years in a row. And net income attributable to Hitachi for this as well JPY 289 billion impairment impact of Horizon, as it would have been JPY 512.2 billion; and a JPY 400 billion target medium-term and 8% on margin.

We have enabled to achieve those targets that we set for the medium term.

In the next slide, 1-3, I will like to explain the factors affecting changes in revenues and adjusted operating income on revenues. De-consolidation impact of Hitachi Kokusai Electric had a negative impact of JPY 183 billion.

And again a negative impact from foreign exchange of JPY 47 billion. Aside from that, we had positive impact from business scale expansion of JPY 342 billion.

It is up 4% year-on-year. So excluding impact of reorganization and foreign exchange, we had an increase of 4% positively.

And business scale expansion was due to Information, Telecom, Systems Business, Social Infrastructure, industrial, railway, Hitachi High-Technologies, Hitachi Construction Machinery. And on the adjusted operating income, impact of reorganization of Hitachi Kokusai was JPY 23 billion, a negative factor.

Foreign exchange, the dollar was not affected by euro and other emerging currencies had a negative impact contributing to a decline of JPY 8 billion. And aside from that, profitability improvement of JPY 71.3 billion was seen.

This is up 10% year-on-year.

Moving on to the next page, FYI '18 Revenues by Market. That is Slide 1-4.

For Japan, as you can see on the far right column, year-over-year was 100% flat year-on-year, Outside Japan, 102%. And the ratio of outside business was 51%.

China was 97%, 3% down year-on-year. The building systems saw an increase in revenue.

On the other hand, Automotive Systems in China had a decline in revenue, and there was reorganization impact from Hitachi Kokusai. That's down 3%.

ASEAN and India also saw a decline of 3% year-on-year. Hitachi Construction Machineries, Systems and Services grew.

On the other hand, Kokusai electrics reorganization impact weighed heavy and declined 3%.

On the other hand, North America, Hitachi Construction Machinery grew substantially, so up 2% in Europe, Railway and Hitachi Construction Machinery grew, therefore, a 6% increase year-on-year.

The next Slide 1-5 is the summary of the financial position and cash flows. At the very top, total assets came to JPY 9,626.5 billion.

So the balance sheet was reduced by JPY 480 billion, and that's because of impairment loss from Horizon Project and de-consolidation of Hitachi Kokusai. These are the major factors behind it.

Now in the middle of the table there is CCC that is noted, which was 69.3 days. Our medium-term target was 70 days.

So we have been able to clear that target. And at the very bottom of the table is ROA, which was 3.3%.

Horizons impairment loss, if we exclude that, it would've been 6.2%. So on a normalized basis, the medium-term target of 5%, the effective asset efficiency target, we were able to exceed that level.

And cash flows at the bottom. Cash flows from operating activities, JPY 610 billion year-on-year, a decline of JPY 117.1 billion.

Hitachi Construction Machinery's inventory increased as a factor. On the other hand, cash flows from investing activities was an expenditure of JPY 162.8 billion.

So compared to the previous year, a decline of JPY 311.4 billion. Automotive Systems, in that segment, there was sales of Clarion and proceeds from the sale of Agility Trains, and what's continued from before, which was to continue selling policy holdings of shares.

Inclusive of that, total free cash flow was secured at JPY 447.1 billion.

Moving on, 1-6 onward is the revenues and adjusted operating income by business segment. At the very top is Information & Telecommunication Systems.

This saw an increase of 3% in revenues year-on-year. A stock transfer of ALAXALA Networks had happened, but system integration business was robust, thus up 3% year-on-year.

System integration and IT platform products, for both, profitability saw an improvement, and that's an increase of JPY 36 billion year-on-year in adjusted operating income. And Social Infrastructure & Industrial Systems was up 7% in revenue year-on-year, an increase of JPY 35.7 billion of adjusted operating income increase year-on-year, but there were some special factors behind.

However, adjusted operating income declined JPY 23.6 billion from the previous forecast. That's because of EPC, a project overseas, so we had a provision for that.

This is not included in the last previous forecast because of increased progress ratio -- achievement ratio. Overseas EPC projects have been restructured over the years.

We have stopped receiving orders, and the projects that we already have, once they are completed, we will be liquidating the companies and entities involved in that. And these projects, who have continued to work, are nearing completion.

So for potential losses in the future, we had a provision for these projects. And the impact, JPY 80 billion from the sales, that was posted in lump sum.

And adjusted operating income, a loss of JPY 30 billion, and that was provisioned.

Moving on, Electronic Systems & Equipment. Our revenue was 88% of the previous year.

And adjusted operating income dropped by JPY 11.3 billion year-on-year. Hitachi Kokusai's de-consolidation weighed high, excluding that revenue would have been 105%, and adjusting operating income, an JPY 11.7 billion increase would have been seen.

High-tech as well as healthcare grew. Healthcare business saw an improvement in profitability.

So excluding de-consolidation of Hitachi Kokusai, both revenue and income would have increased and Construction Machinery 8% up by year-on-year in revenue in North America, and Asia-Pacific sales was robust, in line with that adjusted operating income increase, thereby JPY 23.2 billion year-on-year as well.

Next on Slide 1-8, regarding High Functional Materials & Components, had a revenue increase of 3% year-on-year. Adjusted operating income dropped by JPY 21.8 billion year-on-year.

Hitachi Metals FA and Electronics and Materials demand declined and Hitachi Chemical, a product mix, deteriorated, and raw material prices went up because of these factors impacting. High Functional Materials' adjusted operating income declined by JPY 21.8 billion year-on-year.

And in April through September, in the previous year, the market conditions continued to be very tough. Therefore, a deterioration of JPY 8 billion compared to the previous forecast.

Next, Automotive Systems, sales decreased in China, North America, sales decrease of Clarion, therefore 3% down year-on-year in revenues. In line with that, adjusted operating income went down by JPY 11.5 billion year-on-year, however, compared to the previous forecast, at February 1, we had a downward revision, the last time, but improvement has been seen since then.

And we have been able to clear the revised target of cost reduction. Structural reforms have been steadily under way.

Moving on to 1-9, Smart Life & EcoFriendly Systems. Accounting to net-based revenue for part of the procured products has happened and a decrease in sales overseas, mainly in Middle East market, price reduction of home appliances in Japan, because of these factors, down 10% year-on-year.

And there was increase in raw material prices and ForEx, therefore, adjusted operating income was down JPY 2.6 billion year-on-year. So there were some special factors when compared to the previous forecast, social infrastructure and industry, which has some special factors, and market deterioration continued for High Functional Materials & Components.

For these sectors, there was decline or drop from the previous forecast, but other than that information, Construction Machinery, for these other segments, there have been marked improvement compared to the previous forecast.

Next 1-10 topics. Let me touch on the progress of Lumada business.

Fiscal 2018 was JPY 1,127 billion revenue. This was a 12% increase year-over-year.

For fiscal 2019, JPY 1,170 billion, 4% increase year-over-year is planned.

first, launch of Lumada Solution Hub to advance and facilitate the introduction of Lumada Solutions. And we also launched the Hitachi Digital Solutions for logistics, optimization service for logistics to create highly effective delivery plans and we are also expanding the global co-creation business utilizing Lumada, co-creating with Sekisui House and KDDI Corporation for new service creation through information sharing platform.

We started the pilot project to streamline the contractual procedures, and we developed and delivered a common system that computerizes and automates multiple operation of Mitsubishi's UFJ Morgan Stanley Securities' retail division.

Now 1-11 topics #2. We acquired JR Automation Technologies and it is scheduled to be completed by the end of 2019.

The preparation is under way. And second is the construction of a digital platform that realizes the efficient maintenance of social infrastructure.

So this utilizing the infrastructure maintenance system, we developed a water leakage detection system that identifies leakage from water pipes with high precision early. This will be launched in fiscal 2020.

And we provided the transmission and distribution system using the high voltage direct current technology of ABB.

We established a new corporate venture capital unit so that we can accelerate the open innovation using this Corporate Venture Capital Fund. This will be established in June.

So supported by this financial performance and topics, let me first talk about the summary of medium-term management plan, 3 points First, is profitability. During the 2018 medium term management plan period, we revised the business portfolio and withdrew from low profitability business.

We did the structural reform, and we also improved the project management. And as a result, profitability improved so we secured -- established a structure to secure profit even when the revenue is declining.

In addition to the product management improvement, we also decided to suspend Horizon Project, and posted the impairment loss and the overseas EPC deal loss was provisioned in 1 lump sum to reduce the future risk. But at the same time, we achieved operating margin of 8%, record high for 2 years in a row.

So we are now well prepared to move to the next stage in the medium-term plan, 2021.

Next, second, is the asset efficiency. In addition to review of the business portfolio, we withdrew from the unprofitable business and also improved CCC to improve the asset efficiency.

CCC target is 70 days and our result was 69 days. And ROA, with the suspension -- excluding the suspension of Horizon, 6.2%.

So the actual asset efficiency is improving.

Third is laying the foundation for global growth. So Lumada business is progressing and we are taking various measures for future growth.

For example, launch of Vantara in North America and Thai Vantara and Thai Lumada and JR Automation, and ABB power grid acquisition. So all these foundations for the global business was prepared.

And cash flow. Free cash flow JPY 400 billion was secured.

Net profit was down year-on-year, but we are focusing on cash allocation. Cash allocation is for the growth investment and shareholder return in a good balance.

So shareholder return will be executed with the profit growth. As you see in the highlight, and as you can see in the attached release, the year-end dividend will be JPY 50.

After the share consolidation basis, last year was JPY 40. This time we added JPY 5, JPY 45.

And also adding JPY 5 according to the achievement of the financial results, we are giving year-end dividend of JPY 50 this time.

Next is the direction and policy in fiscal 2019, Slide 16, please, 2-1.

So this shows our direction and policy. First is target and direction of management.

We will realize sustainable societies through Social Innovation Business and improved customer social value, environmental value and economic value.

To improve the 3 values simultaneously, we will focus on 5 sectors, Mobility, Smart Life, Industry, Energy and IT.

We will accelerate the Social Innovation Business in the 5 sectors by intensive investment in Lumada. And the management structure will be Executive Vice President setting the strategic goals, and this time the Disclosure segment will be mainly categorized by sector.

So Executive Vice President will set the strategic goals, and business unit CEOs will execute the strategy in order to accelerate the management speed.

We will aim for record-high performance beyond fiscal 2018, utilizing the foundation of profit structure built by continuous structural reform and along with aggressive investment for growth; in addition, we will review the disclosure segments, focusing on 5 sectors.

I will talk about this later. And the capital cost we've had CCC and ROA-oriented asset efficiency improvement.

But we will have stronger awareness of capital cost going forward. So from this time onward, we are adding another management indicator, ROIC.

So next is the outlook for fiscal 2019, Slide 2-2. Revenue forecast is JPY 9 trillion.

This is up JPY 480.6 billion, down -- 5% down year-over-year and adjusted operating income JPY 765 billion, a slight increase of JPY 10 billion year-over-year. And the adjusted operating income ratio this year was 8%, and fiscal 2019 will be 8.5%.

And net income attributable to Hitachi Limited stockholders is JPY 435 billion. And ROIC, at the bottom, 2018 was 8.5%; 2019 will be 10.3%.

Next 2-3. Factors affecting changes in revenues and adjusted operating income.

Left side, revenue impact of reorganization in Hitachi Kokusai Electric and Automotive Systems business. The business sales impact will be negative JPY 207 billion, and foreign exchange factor is negative JPY 113 billion.

Excluding that, in all segments excluding except for Hitachi Chemical is down. So others is negative JPY 160 billion.

On the other hand, adjusted operating income impact of reorganization, negative JPY 6 billion, foreign exchange negative JPY 17 billion, profitability improvement is plus JPY 93.1 billion. So that brings us to JPY 825 billion, 9.2%, but Lumada business, Social Innovation business will be reinforced through further investment.

This growth investment will be JPY 60 billion more than last year. So this pushes down the profit.

Including that, JPY 765 billion, 8.5% is the plan for 2019.

From next page onward, let me talk about the segment revenue and operating income. This time as you see here, we have new business segment IT, Energy, Industry, Mobility, Smart Life.

This is by area. So we re-categorized by domain and others, the 4 listed subsidiaries are also listed here.

So listed and nonlisted companies were mixed in the past. And multiple listed companies were mixed.

This time we reorganized to make it easier to understand.

And the strategies in each segment, the strategic unit in each segment will be the Disclosure segment. So we reorganized ourselves.

Page 20, 2-5, is the revenue, adjusted operating income and EBIT by business segment. So dynamics.

In most segments, revenue will go down. First, IT, 3% down year-over-year.

Adjusted operating income, as you see on the dynamics column, maintained high profitability despite decrease in adjusted operating income, temporarily due to strategic investment for expansion of Digital Solutions business. But 10.7%, 2018, we reached 10% in fiscal 2018, and we will continue exceeding 10%.

Energy, revenue will decline sharply due to the substation, this for the industry will be in Energy. And the Power Generation deals will decline in 2019, and that's why revenue will go down.

Industry. Low profit business is being withdrawn and the provision for loss in 2018 will be -- will not recur in 2019.

And the low profit business, reorganization will push up the operating income. So revenue goes down, but profit will go up by JPY 35 billion.

Mobility, 93%. So revenue will decline, because in the previous year, the UKIP delivery was completed.

So in 2019, it will be relatively lower. On the other hand, the Elevator business is included here with cost reduction, profitability will improve.

So operating income will increase slightly and the operating income ratio will improve from 7.6% to 8.2%. And 1 point in industry, adjusted operating income in fiscal 2018 was 2.3%, rather low, but this is because of the provision for EPC project.

So overseas EPC provision. Excluding that factor, it was 6.2%.

And in fiscal 2019, we plan to raise this to 7%.

Now bottom, Smart Life, Automotive Systems, business restructuring efforts are enjoyed; and Global Life and Home Appliance and Healthcare, the profitability improvement, business reorganization are promoted. And thanks to that, revenue goes down, but operating income will improve.

It says 94%. The big reason is Automotive Systems business sales.

Next is 2-6. Hitachi High-Technologies.

Our trading related part will be narrowed down. So revenue will be down by 3%.

In biomedical and next-generation device, the R&D expenditure for growth area will be made, bigger than last year. So revenue will be down.

Hitachi Construction Machinery. The foreign exchange rate is JPY 100.

But we group, this is corrected to JPY 110 to a dollar. So on JPY 110 base, this is what it looks likes.

Because of foreign exchange factor, revenue will be down, but mining has strong demand, mining revenue will go up and with the business structure, structuring efforts, the operating income will go up. Hitachi Metals down 2% because of the business transfer of aluminum wheel business, but we are taking measures to reduce cost and so profit will be up.

Due to profitability improvement and Hitachi Chemical, one is the foreign currency factor, but due to business expansion and profitability improvement, we can enjoy operating income increase. And corporate items and eliminations EBIT was down by JPY 61.3 billion, but Kokusai Electric gain on sales the one that's not included in the segment, the gain on sales of Kokusai Electric in 2018 will be absent in 2019.

That concludes my explanation.

We would like to move on to questions and answers.

[Interpreted] So with the new segmentation, I think it has become easier to understand, easier to see, which is good. So taking this opportunity, I would like to ask about the 5 new segments.

You have already explained in the presentation, but Page 32 and onward, you further describe the details. So for this fiscal year's plan what have been changed, in a nutshell?

If you could go over that once again, I'd appreciate it.

Page 32, IT and onward. If we could just go over the slide.

Front Business decline of 3%, that is what you are planning. The last time orders were up 3% or 4% from what I heard, if I remember correctly.

If we look at Tankai flash report, investment to be increased by 15% in the financial sector and so forth. So how are you selecting your business and IT topline?

Why are you expecting a decline in the revenue?

[Interpreted] Well, I forgot to mention that we are now disclosing the breakdown. It's good that you mentioned it.

So IT segment, as the questioner said, Page 32 and onward, for each segment, the breakdown is given. In small meetings, I think we have explained these before, but for the main BUs, including IT and others, we are now disclosing the breakdown.

Revenue and adjusted operating income is now disclosed for IT and other major segments and getting back to the question, in the Front Business, financial services, there's going to be a decline, specially ATMs. For ATMs, revenue is down.

That situation has been continuing. And another factor is large projects.

They have come full circle and there were many projects that were completed by the end of fiscal year 2018. Therefore, Front Business revenue declined and that is what we are expecting.

[Interpreted] So you are not being conservative, or are you just reflecting the reality?

[Interpreted] Yes. Digital solutions are robust, new Lumada business is growing, but there is a decline in excess of the growth we are achieving, especially in ATMs.

So this is a reflection of market conditions there. And there are peaks and dips in projects, so that's also reflected.

[Interpreted] So energy segment, nuclear power, I do understand that there is a decline in revenue. In income, you are also expecting a decline in income for nuclear power?

[Interpreted] For both nuclear power and energy, in fiscal year 2019 compared to the previous year, there are less projects. Therefore, the sales revenue will decline, and therefore, in line with our adjusted operating income will also decline.

[Interpreted] Page 34, industry. JPY 35.5 billion increase in revenue, JPY 30 billion out of that is because of elimination of EPC impact.

So EPC-related projects, can we understand that we are about to see the end of that?

[Interpreted] Well, yes, we are partly still having so many issues over trading and commercial business, but we have this large project that we have been working for, for some time. And in order to shut down the future risk, we have had a lump sum provisioning for that project this time.

We have posted any potential losses in the reserve that we could think of. So I don't think there will be any major negative impact in the future.

I think that risk has been reduced.

[Interpreted] Railway and Mobility, you are planning a decline in revenue there. So you think that growth will peak out?

[Interpreted] Well, orders have been quite brisk, quite robust. But, so we are securing quite a number of orders, but our revenue will be posted earlier, especially in FY '19 or FY '18, the previous term and the year before, '17 and '18, large IP projects in the U.K.

were posted. In revenue, lump sum revenue was posted in FY '18.

So compared to the previous year of FY '18, there will be a decline in revenue and also a decline in operating income.

[Interpreted] Last question. Life segment, automotive, increase of JPY 13.3 billion in income.

You may have explained this, but in the previous term for the Automotive business, temporary loss, temporary cost, if there were such temporary costs, could you once again go over them?

[Interpreted] On the Automotive segment or Systems, it's not temporary. We have implemented structural reforms substantially under the new leadership.

And in the fourth quarter, we have been able to see tangible numbers. So fourth quarter for Automotive systems, our profit is increasing year-on-year.

We had structural reform, not that there was special cost incurred. It's more improvement in operating income.

As he just said, in the fourth quarter, we have been able to validate improvement in the business, specially FY '18 second quarter, 1.9%, operating income ratio. That was the bottom.

And in the third quarter, 3.6%, fourth quarter, 7.9% was posted. So it's been increased quite steadily.

And 2 years ago, fourth quarter 2017, 6.1%, that was the number. So comparing fourth quarter to fourth quarter, 7.9%, that was in fourth quarter 2018.

It was a level that was not seen for some time. And we have been able to have good cost reduction, which is reflected.

So for Automotive business, impact of reorganization such as sales of Clarion that had weighed high, so a major decline to 87% in revenue, but actually, if we exclude the impact of reorganization, there is net increase. Motors, inverters and electronic business is increasing, structural reform will continue to be pursued and fruits of that will continue to be reaped, and selection of focus of products will also continue.

We would like to seek further improvement. Thank you.

Any other questions?

[Interpreted] I have 3 questions. First, is social -- for social infrastructure, revenue JPY 80 billion, and JPY 30 billion operating income, and the provision -- sorry for a lack of understanding, but as EPC deals near completion, the risk declines and disappears.

That was what I was expecting. But were there some unplanned -- what is the background to this unplanned action you took this time?

[Interpreted] In the large-scale EPC, this was the last remaining large EPC. This is for the additional work, the sales price or the cost we paid to the vendor, from the additional work was not fixed.

The work is 99% done. But there was this unfixed portion so on the percentage -- without a percentage of completion basis, we could not post the sales up to this point because of this unfixed part.

But at the end of 2018, fiscal '18, we saw big progress. The work is now done, 99%.

So for the unfixed portion, we did the provision from conservative point of view.

[Interpreted] I understand. Second question, fiscal 2019 operating income increase/decrease analysis.

So with profitably improvement JPY 93.1 billion and the JPY 30 billion -- excluding JPY 30 billion, JPY 63.1 billion, what is the breakdown if you have big components? If you could break them down, please?

And in each business you said profitability improvement. Is this from the business restructuring or other efforts?

What is the background to the profitability improvement? What led to the improvement in profitability?

[Interpreted] This is just a rough explanation, but JPY 93.1 billion. The breakdown is, so the overseas EPC provision is plus JPY 30 billion.

And personnel cost and depreciation increase is down JPY 62 billion, JPY 62 billion negative, and down. Improvement in the product mix and the decrease in scale.

The product mix is improving, withdrawal from products or more selection and concentration. The product mix is changing, and this is plus JPY 43 billion.

So the product mix, more than offset the decline in revenue. And the sales price decline was JPY 57 billion negative, Elevator and Products related business.

So sales price down is JPY 57 billion and raw material increase is JPY 10 billion. Other cost reduction and the business restructuring improvement is JPY 149.1 billion.

So that is the breakdown of JPY 93.1 billion profitability improvement. So improvement in the business mix and product mix contributed in cost reduction.

Price decline and the raw material increase was offset by this positive factor in fiscal 2018. The price decline in raw material increase was more than offset by the cost reduction.

So we are reducing more cost than these negative factors. We will continue this in fiscal '19.

[Interpreted] Third question is Lumada. If possible, Lumada profitability, the core and the overall Lumada profitability, could you explain?

This was mentioned in President small meetings. So for fiscal '18 and fiscal '19 outlook.

Could you elaborate?

[Interpreted] Yes, the driver for this profitability is Lumada core. In fiscal '18, Lumada core, including development investment, it reached more than 10%.

Fiscal 2019, Lumada core will be more than that, will improve to even higher level. So this will be more than 10% and the revenue in Lumada business combined with SI business is still a little short of 10% in fiscal '18.

In fiscal '19, development investment -- including the development investment, it will be a little short, but excluding development investment, we will exceed 10% profit ratio. JPY 1.17 trillion is still small.

We need to multiply this by much more and by doing so, we can improve our profitability. About 80% of Lumada core is IT sector, utilization in the IT sector, and the remaining 20% is industries.

So we want to increase this area. So we will accelerate the bigger scale and also improve the profitability at the same time.

[Interpreted] Follow-up question. So multiplying the business, in order to do so, the core business, what is the ratio of the domestic business for the core part?

In overseas, I think thing you will be profitable by selling this in package. And I wonder how much preparation you have been able to do for overseas market in that regard?

[Interpreted] Core business, 10% comes from overseas. The ratio is still low, however, in the future, we would like to increase our business overseas.

In terms of topics, we talked about JR Automation acquisition decision. They have a customer base centering around North America, and they could become candidates for Lumada core business.

And so we would like to continue to look to increase the global business for this.

Well in overseas, there are 2 things that we have to do, 1 is to strengthen delivery, resources, to expand the footprint, and to secure customer base. By so doing, we will like to expand our business and another thing that we need to do is to have solution core, apply that to co-creation examples of customers and create a platform that facilitates that and a development environment that is conducive to the business need to be developed and expanded.

We need to take initiatives and measures for that, and such measures could include M&A or investment for development. So both fronts need to be worked upon.

So both sets of measures are necessary for expansion. Any other questions?

[Interpreted] I have 3 things I would like to ask. Point number 1, I am looking at Slide 18, investment for growth, JPY 60 billion.

If possible, we would like to know the segment breakdown and how much investment will be allocated to Lumada-related business. Well you said that you don't have enough delivery resources for Lumada.

How much increase are you planning for delivery resources for Lumada this year?

[Interpreted] So segmental breakdown. The answer is that for the details of segmental growth, on June 4th, when we have BIRR Day, we would like to explain together with the strategy.

What are the major factors in JPY 60 billion? Well, development of solution core, that's one.

That's included. And in order for all be used to use this, we would like to develop a common platform and strengthening of digital human resources.

They are included in this investment amount.

So growth investment of JPY 6 billion includes a lot of Lumada-related initiatives. Other than that, initiatives to strengthen global Front Business and for product business, new business incubation and R&D.

They are also part of this.

[Interpreted] So, much of the growth investment has to do with IT?

[Interpreted] Yes, not everything, but yes. And others, high-tech medical business, R&D for the medical area, which does require R&D efforts.

That's also included. And true, a lot of IT is included.

So growth investment will be made into each of these segments.

[Interpreted] Well, just a supplement. JPY 60 billion of growth investment, that's quite sizable.

And this was rather unanticipated. So JPY 60 billion, the amount itself is -- do you think that it will not be easy to spend it all?

Or you have a lot of initiatives that you would like to spend money on, so is it easy for you to spend JPY 60 billion?

While looking at eliminations and others, it doesn't seem that you have a lot of buffer incorporated. So if you're not using the whole JPY 60 billion, that could serve as a buffer perhaps, I thought.

So do you already have a budget that ensures the full expenditure of JPY 60 billion?

[Interpreted] Well, R&D is such that we're not going to be pleased when R&D investment is decreased. A smaller amount of R&D expenditure is something that we are not happy about, but then, of course, we would like to increase efficiency of development, and that will lead to better efficiencies.

And we have a lot of things we would like to do in different segments and areas, but then we will have to screen the initiatives before we allocate the budget.

So buffer is not included in the JPY 60 billion.

And Corporate eliminations segment, the risk buffer in that segment is not incorporated this time. Well, the reason is, from this time onward, we are going to align according to these sectors, we have budget for the sector and we are going to disclose the segment according to the sector; and EVP will be responsible for the strategy of each business.

They will come out with management goals and BU heads will be implementing those targets. So we would like to show increased accountability vis-à-vis these headquarters, including yourselves, we want to operate close to the market.

That's our intention. So we do not have any explicit buffers included in corporate eliminations, however, there could be changes in the business environment.

In order to prepare for such potentiality, we need to continue with cost reduction, cogs reduction, we need to implement and be successful at that more so than planned so that we can fully prepare.

[Interpreted] Now Lumada core business revenue target. Well, in the past you've always overachieved your revenue target, and I do think that you're not being too aggressive in setting the goals, but in the last 3 years, on an annual basis, we have been expanding at JPY 100 billion level.

And since that, you're expecting a slowdown this time. And in the background potentially, perhaps in the domestic market, Hitachi has already clinched deals that can be secured already.

And in overseas, you may not able to grow your business at such a high pitch, is that the case? So this appears as a slowdown from our perspective, if you could please explain?

[Interpreted] Well, not that the available market has saturated. That is not the case.

We are seeing an increasing number of co-creation cases. To translate them into large revenue, to consolidate that as a major service business in order to multiply the business, we lack resources.

We don't have enough resources. Resources in overseas are particularly lacking.

And there is still room for growth in the domestic market as well. So we have to increase, expand resources.

For overseas in particular, we need to consider M&A like the one that we have decided on JR Automation. We will take measures to enhance resources, and as a solution, we have to be more agile and speedy in delivering this.

And we need a platform, a framework for that, and as part of the growth initiative and growth investment, we would like to undertake that. This needs to be even greater.

[Interpreted] Building systems. I'm looking at Page 35; 6% revenue decline is forecast and income profitability, conversely is expected to grow.

I understood that orders in China were growing, so orders of -- in the fourth quarter, in China, how was it? What's the reason for expecting a decline in the forecast?

[Interpreted] Well, I don't have the number for the fourth quarter. Structurally, it has not changed, but the number of units sold in China is growing successfully.

It's brisk. But the unit price is declining.

There are 2 implications. The price of the same product is coming down compared to the past.

And high-end products alone, we are not able to secure enough volume. So we're trying to increase the volume of sales for mid-price-ranged products and that brings down the sales -- average sales price.

And fiscal year '19, we are expecting a stronger yen in the ForEx rate. And on the other hand, a cost reduction is being pursued quite vigorously.

We're seeing the results of that. FY '19, we believe that we can still continue with cost reduction and because of these factors, we're expecting a decline in revenue, but increase in income.

[Interpreted] In the next fiscal year, will Yantai be consolidated?

[Interpreted] We only have 30% investment. It's an equity method affiliate, but Yantai is yet to be a consolidated subsidiary.

So their sales are not going to be consolidated, but then we would like to seek synergies as early as possible in terms of cost and sales.

[Interpreted] Time is running out, but perhaps the last question please.

[Interpreted] I have 2 questions. So this year's forecast, your thinking on the forecast for fiscal '19.

Excluding EPC loss, it seems as operating income goes up, but it depends on how you look at the growth investment. So operating income declined.

It seems that operating income may decline. And there's no buffer, you said.

So it seems like it's full. In the past, you had buffers here and there and you had some leeway, headroom.

So after the Golden week, you will have the announcement, but it seems like this is not a big, grand start. The probability of achievement, I know the business environment is difficult and others are also projecting operating income decrease, so what is the makeup?

You changed the categories, so it may seem difficult to compare it, but is this very full, no headroom or? So, if you could give me the impression?

[Interpreted] So given the business environment, it's difficult. But on the other hand, we are growing, trying to grow the business that is not impacted by the business environment fluctuations.

So for that, this is not strong enough, I agree with you. But we are aiming for, in 2021 medium term plan, we are aiming for more than 10%.

And that remains unchanged.

So towards that goal, Lumada and Social Innovation business will be the big driver and the core 5 areas will be increased, grown through measures, various measures. Digital solutions, the internal implementation of digital implementation can lead to further cost reduction internally.

AI, Big Data and analytics were not utilized in some areas in internally, so we will implement this more to improve efficiency. So we will make sure we do that.

So the business environment is difficult, but we will continue reducing costs and so the cost reduction planned in this plan, we will do more cost reduction than what's included in the plan. And this will be very important to achieve the plan for this year and front load the cost reduction, so that we can achieve 10%.

We are still lagging behind our competitors. So as measures to achieve this goal, we will implement what we have prepared.

So it's not that tight either. Yes, I think, it's attainable.

[Interpreted] Free cash flow. So you sold some businesses.

So you have JPY 400 billion core cash flow excluding the reorganization, I don't know if Hitachi Chemicals can be sold, but core cash flow, the cash flow from business, doesn't seem like enough, or big? So what is your projection?

Cash flow margin, because of higher inventory, fiscal '18 cash flow margin was 6.4%. Fiscal '19 will be 8.5%, same as operating income ratio.

So it will be around JPY 770 billion. And if we achieve that, fiscal '19 cash -- so core cash flow excluding CapEx will be JPY 320 billion, cash flow from operating activities.

So we will increase profit and also increase the working capital efficiency to improve the cash flow from operating activities. So that operating cash flow margin can be comparable to operating income ratio, and if we -- and use the excess for investment.

[Interpreted] So this -- so in the past, you had inventory, but going forward, you will aim for JPY 350 billion?

[Interpreted] Yes.

With that, we would like to conclude the meeting. Going forward, right after Golden week, 10th of May, at 16:00, we will have a medium-term business plan to be presented by Higashihara, the CEO, and IR Day be June 4.

So please attend. Thank you very much for your attendance despite your busy schedules today.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]