45. After a break, from 5 o'clock, we will have the presentation on the progress of the 2021 mid-term management plan.

As for the materials for the presentations, please refer to the IR site of Hitachi, Ltd. as well as the news release site for your reference.

Without further ado, we would like to start the earnings presentation, let me introduce the speakers to you. Yoshihiko Kawamura, Senior Vice President and Executive Officer, CFO of Hitachi, Ltd;.

Tomomi Kato, General Manager of the Financial Strategy Division; Masao Yoshikawa, the Executive General Manager of the Investor Relations Division.

Now regarding the outline presentation of the earnings, Mr. Kawamura will be making the presentation.

We will be switching over the screen. I beg your indulgence.

Mr. Kawamura, please.

This is Kawamura. I am the CFO.

Thank you very much for participating in this meeting despite your busy schedules. Now COVID-19 is still running rampant, but we have been able to pursue our business.

I'd like to take this opportunity to thank you for your support. And now I would like to talk about the results for 2020 as well as the outlook for fiscal year 2021.

Please refer to Page 3. These are the key messages for fiscal year 2020.

About this time last year, we were bracing ourselves for COVID-19 becoming serious. So therefore, we had to increase our cash flow.

But in terms of foreign exchange as well as the economic cycle are areas where we have ample experience, so we have the knowledge in this area. However, when we are beset with the pandemic and when there is external shock in the economy, the outlook is becoming uncertain.

Therefore, we wanted to secure liquidity. And operating cash flow, therefore, became an important focus for us.

During the year, in that regard, cash flow has been emphasized in our business management over the year. Please refer to number one, record high will be mentioned several times under number one and number two.

For number one, we have achieved a record-high net income on a consolidated basis. Number two will be presented later.

Furthermore, in terms of cash flow margin from operating activities, we have achieved 9.1%, which is also record high against a difficult business environment. Out of the 5 sectors, we have seen that IT segment continued to drive our business.

IT segment achieved record-high profits. It was JPY 269 billion.

And the ratio was also the highest ever, as you can see here. Now in terms of number 3 at 13.2%.

In terms of number three, the portfolio is making improvements with Hitachi ABB Power Grids, have seen is what we are referring to. And Mobility segment, elevator contributed very significantly in the segment.

The Honda 3 companies have been included in Hitachi Astemo. Major projects are proceeding well for the -- Hitachi ABB Power Grids, the carbon neutral future business is making headway.

We are receiving increasing number of orders for Q4. $2.3 billion intake was achieved.

Order backlog was approximately $10 billion (sic) [ $12 billion ].

Furthermore, in terms of Railway Systems business, the Washington Metro Area Transit Authority business was one. And to the tune of JPY 239.8 billion is the contract that we have been able to achieve.

In terms of the Building Systems, elevators was very strong, especially in China, making significant contributions.

Number four, we have been rearranging the business portfolio in Hitachi Chemical as well as the diagnostic imaging-related business were divested. And for fiscal year 2021, we are poised to divest Hitachi Metals.

And Hitachi ABB Power Grids will be included, and Hitachi Astemo has been established. And we are expecting the GlobalLogic acquisition which will be completed in fiscal year 2021.

Therefore, we have transformed our business portfolio significantly.

The fifth point is cost structure reform. Realized cost reduction of over JPY 120 billion in fiscal year 2020.

Now let me refer to the numbers on Page 4. This is the result for fiscal year 2020 as well as the focus for 2021.

Please look at the left-hand side, the light gray, the revenues. The dark gray is adjusted operating income.

And the years are fiscal 2019, 2020 and 2021. From fiscal year 2019 to fiscal 2020, we have seen a reduction in revenues as well as profit.

Both revenues and adjusted operating income from fiscal '20 to '21, we have increased revenues as well as operating income.

Now please refer to the graph showing the adjusted operating income ratio. We went from 7.5% down to 5.7% and 7.8% was reached.

So we will have V-shaped recovery, making 2020 as the bottom. Please refer to the right-hand side.

Astemo has being -- become independent from the 5 sectors for the purpose of disclosure. This is a joint venture with Astemo.

So it is easy to understand rather than including in the 5 sectors. And with 5 sectors and Astemo on -- you can see that gray is revenues and dark gray is adjusted operating income.

From fiscal 2020 to '21, V-shaped recovery is expected and going from 6.5% to 8.3% in terms of the adjusted operating income ratio. So the target number is 8.3% for the coming 1 year.

We will be making efforts to achieve this goal. For fiscal year 2021, our CEO, Mr.

Higashihara will be talking about the progress made in the mid-term management plan.

And during this period, we are aiming to achieve 10%. But because of COVID-19, 2021 is expected to be around 8.3%.

But in the following year, we will once again aim for 10%. So that is how 8.3% should be valuated below showing the net income.

Looking at fiscal year 2020, that is the JPY 501.6 billion, which is the highest ever. For next year, we want to outperform this, aiming for JPY 550 billion.

So this will also be another record high if realized.

And please turn to the next page. For the past 1 year, we have been focused on cash flow management, and this has had a significant impact on our results.

Please look at the upper front. We have rigorously implemented cash flow management.

And as a result, cost structure reform and reducing working capital and scaling of capital expenditures rigorously and promoting sales of assets were achieved so that the cash flow can be enhanced.

Please refer to the right-hand side, especially the curve shown here. This is -- the ratio has gone from 6.4% to 9.1% in terms of cash flow margins, and we are aiming for 7.9% next year.

Below is the information regarding the cost structure reform. We are making progress in this area as well.

Please refer to the right-hand side. In terms of SG&A ratio, you can see it declined fiscal 2020 -- well -- or gross margin has been declining significantly.

Hitachi ABB Power Grids shared service and access in Europe. And we will try to capitalize on this leverage in the coming several years.

For 2024 -- by 2025, JPY 100 billion cost reduction is what we are aiming for. And we will continue to make such efforts going forward.

Please refer to Page 6. The Lumada is core business for Hitachi.

As you can see on the left-hand side, for fiscal '19, '20 and fiscal 2021, numbers are presented. For fiscal year 2019, so a little bit above the JPY 1 trillion and then JPY 1.1 trillion for fiscal year 2020.

And the focus for next year is JPY 1.5 trillion. The original plan that we have been sharing was JPY 1.6 trillion.

But up to then, we were behind by JPY 200 billion. But according to the valuation we've made, we believe that 2021 is likely to be as planned.

Specific topics are shown on the right-hand side. The first point is the GlobalLogic acquisition of the United States.

Obviously, this will have a significant contribution on the Lumada business going forward. Next is the establishment of the Lumada Innovation Hub Tokyo in on Yaesu exit side of the station.

We will have the collaboration hub with our customers. And we hope that this will stimulate discussions on how Lumada can be utilized.

And Hitachi and Lumada will work together. And Smart Digital Substation project has been won using AI for 100,000 stores of Workman Co., we have started co-creation for implementation at the customer site.

Level 3 Legend of Honda will have AD engine control unit over the -- yes, updated system has been incorporated. This is autonomous driving Level 3.

As you know, Level 4 is autonomous driving. But Level 5 is complete autonomous driving.

But compared to that to Level 3 means that under normal times, autonomous driving is enabled. This is how we have been able to achieve.

Specific topics shown on Page 7. Transform the business portfolio for further growth, we'll -- is what we have been implementing for '21.

We are planning to sell Hitachi Metals. Forecasting gains are expected to be around JPY 114 billion.

Now the environmental value is -- in addition to economic value, and we are making the results in this area as well. In terms of the environmental value, Hitachi ABB Power Grids has been awarded additional order of Dogger Bank HVDC.

[indiscernible] has been won as additional business. Direct current in system has been won.

As additional business, we have also delivered energy storage solution for the Singapore virtual power plant. And these are all environmentally friendly projects.

And JPY 240 billion contract has been won in terms of Washington Metropolitan Area Transit Authority business.

For social value, in health care business, as mentioned here, started collaboration with the SOPHiA GENETICS. This is in the area of precision medicine or customized, personalized medicine.

Now with Axcelead, we will be pursuing the biopharmaceutical business. This is already in progress here.

For Social Innovation Business, established principles guiding the ethical use of AI. And the track record has been achieved so far.

So I have talked about the overall front. From now on, I would like to give you the detailed results of fiscal year 2020.

Please refer to Page 9. There are 2 graphs are shown here.

Left-hand side is the fourth quarter fiscal year 2020 results comparing with the previous year. Right-hand side is the fiscal year 2020 for the full year basis.

And this is also comparing against the previous year. So information provided here for the fourth quarter for Hitachi Chemical divestiture we made.

So there has been impact of decreased revenues as well as earnings, but similar as well as Power Grid is making contribution as well for fiscal 2019.

On a quarter-to-quarter basis, we have seen an increase in revenues. There is, however, decrease in earnings.

For fiscal year 2020, as mentioned, Power Grid, Hitachi Astemo has been integrated, having an impact of positive revenues as Hitachi Chemicals has been divested. So they will have a negative impact on operating income.

And in terms of 7.5% to 5.7% is the ratio decline. However we are poised to make a V-shaped recovery in 2021.

Please refer to right-hand side. The highlight of the numbers are presented here.

First of all, in terms of overseas revenues, detailed information will be provided later. It is accounting for now 52% at JPY 4.5 trillion.

That's the amount of the overseas business. Lumada business is JPY 1.11 trillion.

And EBIT JPY 850.2 billion. On a year-on-year basis, increase of JPY 666.6 billion.

Net income attributable to Hitachi is record high. EBITDA, this is the largest portion of the cash flow at JPY 1.343 trillion.

Now we have been tracking this from 2008. This is the highest ever for what we have tried.

Cash flows from operating activities is JPY 793.1 billion ROIC is 6.4%. For 2021, we are poised to recover to a 8% level.

Year-end dividend, this will be decided at the AGM going forward, but we are expecting to have a dividend of JPY 55 per share. So that is an increase of JPY 5 on a year-on-year basis compared to the interim last year.

Please refer to Page 10. This is a result of the five sectors and listed subsidiaries.

5 sectors and listed subsidiaries, construction machine as well as metals is shown here. And basically, we have the indication of the revenues and others.

Please look at the revenues for 5 sectors, JPY 7.15 trillion. And for listed subsidiaries, JPY 1.5 trillion.

Total is JPY 8,729.1 billion. On a year-on-year basis, 113% for the 5 sectors.

But unfortunately, for listed subsidiaries, it was at 64%, impacted by COVID-19 as well as the unfavorable market.

Adjusted operating income is shown below on a year-on-year basis for 5 sectors as well as listed subsidiaries. So we have been negatively impacted.

And the adjusted operating income ratio is shown here, 6.5% for 5 sectors and 1.7% for the listed subsidiaries. Total is 5.7%.

EBIT -- or net income rather, JPY 519.1 billion, and for the listed subsidiaries minus JPY 17.5 billion. Total was JPY 501.6 billion.

That's the number for net income.

Please refer to Page 11. This page is about revenue and adjusted operating income.

On the far left, the number for FY '19. On the far right, FY '20.

And you will see what's in between. And in terms of revenues, revenue in FY 2019 was JPY 8.767 trillion.

As you look toward the right, JPY 600 billion because of divestiture of Hitachi Chemical. And Hitachi ABB Power Grids JPY 722 billion.

And with consolidation of Honda's Astemo, JPY 191 billion. And then there's foreign exchange adjustment and others, making FY '20 number JPY 8.729 trillion, which is a decline.

Adjusted operating income, the same process. JPY 661 million is the number for FY '19, JPY 495 billion for FY '20, decline in operating income.

Please take a look at the next page, net income attributable to Hitachi stockholders. You read the graph in the same manner from left to right.

And adjusted operating income on the far left. Net income on the far right.

And you will see what's in between. There is reorganization of profit, Hitachi Chemical and diagnostic imaging business, which was divested.

And railway business, Agility in the U.K.. The shares thereof were also sourced, so a total of JPY 452 billion.

And because of a special severance pay and so forth as part of structural reform expenses, JPY 128 billion. And then others JPY 31 billion.

EBIT JPY 850 billion. To its right, tax expenses.

Hitachi Chemicals taxes, very heavy, JPY 325 billion. And the net income on the far right stands at JPY 501 billion.

Please take a look at Page 13. Part of the balance sheet and cash flow is described.

Top right, there's balance sheet. And please take a look at the gray-shaded part.

As of March 31, 2021, assets in total now are JPY 11.852 trillion, unchanged from last fiscal year on the far right, JPY 1.922 trillion. That's because of acquisition of ABB Power Grids.

And typically, take a look at interest-bearing debt in the middle. As of the end of 2021, JPY 2.4 trillion roughly.

And on the right-hand side, you can see that there is an increase by JPY 900 billion. So interest-bearing debt has increased.

That's a weak factor.

And the very bottom, as debt/equity ratio. FY '19 was 0.35x.

But because of the borrowings, it has increased to 0.54. When it's good, our D/E ratio has been 0.2 or so.

So 0.54 is a very high debt/equity ratio for us. But with operating cash flow, we would like to bring it down to below 0.5, further down to 0.4, 0.3 in a year's time or so.

And cash flow is stated at the bottom. Free cash flow as of FY '20 was JPY 334 billion.

And core free cash flow, JPY 419 billion. You can see the year-on-year number on the far right.

We're going to -- we're focusing on cash flow, and the result is shown here. So that was up to FY '20.

Let me give you a forecast for FY '21. Please go to Page 15.

Here's the highlight in terms of the forecast. Revenue, adjusted operating income are given.

Y-o-Y numbers show that we're going to increase revenue up 9%. And adjusted operating income, plus JPY 244.8 billion is planned.

Take a look at the graphs. Revenue planned is JPY 9.5 trillion.

And on the right, adjusted operating income targeted is JPY 740 billion. This is the officially announced number.

And the operating margin will be up from 5.7% to 7.8%.

It's different from the 5 sectors' 8.3%, but overall, it's 7.8%. And on the far right, as I said, Lumada is on plan, revenue is expected to be JPY 1.5 trillion.

EBIT, JPY 820 billion. We're going to have another record high next year.

And EBIT, JPY 1.37 trillion or rather JPY 1.370 trillion. That's a record high.

ROIC will come back to 8.3%. And ForEx rate, JPY 105 to the dollar.

Please take a look at Page 16. This separates 5 sectors versus listed subsidiaries.

From this year, Astemo is separated from 5 sectors. And then there are listed subsidiaries.

Both the 5 sectors plus Astemo as well as listed subsidiaries will see increase in both revenue as well as profit. 5 sectors plus Astemo is going to enjoy a market recovery, acquisition of Power Grid as well as Astemo, so increase in both revenue and profit.

Listed subsidiaries will also, due to market recoveries, see increase in revenue and profit. And please take a look at the graph.

For 5 sectors, JPY 7.77 trillion. Listed subsidiaries, JPY 1.73 trillion.

Total JPY 9.5 trillion. And the percentages as well, in total, 109%.

And you can see the Y-o-Y numbers to see that there's going to be an increase in revenue as well as profit. Adjusted operating income ratio 8.3% for 5 sectors; lited subsidiaries, 5.5%, 7.8%.

And at the very bottom, net income attributable to Hitachi JPY 529 billion, plus JPY 21 billion, coming to a total of JPY 550 billion. Adjusted operating income is going to increase by JPY 740 billion as well.

And moving on to the next page. You can see the evolution of FY '20 to FY '21.

It's the same for revenue as well as adjusted operating income. There's lifting from Power Grid as well as lifting effect from Astemo and GlobalLogic is acquired.

It will start to kick in from July. And there's ForEx impact.

And so revenue will be JPY 9.5 trillion. The same with adjusted operating income.

Please take a look at Page 18. Here net income attributable to Hitachi stockholders is given.

On the far right, JPY 740 billion, this is net income attributable to the parent. And it will come down to net income on the far right.

There's proceeds from the sale of Hitachi Metals, which will be incorporated. And there will be expenses from structural reform and other adjustments.

So EBIT will be JPY 820 billion. Interest will worsen by JPY 20 billion.

And tax expenses will also weigh in. And net income will be JPY 550 billion.

So these are the main numbers in terms of the forecast for FY '21.

Starting from Page 20. Sector-wise numbers are given.

Just to give you the highlights, Page 20, the IT sector. In the middle, adjusted operating income.

There are 3 bars. On the left is for FY '19.

In the middle, FY '20. On the far right, FY '21.

Light gray portion, the bar is service and platform. GlobalLogic is part of this.

And the darker part of the bar is the front line business, front business. Adjusted operating income ratio will be down from 13.2% to 12.5%.

And please take a look at the tax. That's because of disposal of intangibles from GlobalLogic.

On Page 21, energy sector, please take a look at the middle bars, adjusted operating income, FY '19, '20 and '21, FY '20 and '21. FY '20 and FY '21, you can see the light gray portion is underneath 0.

That's because of acquisition of ABB PG. Structural reform expenses had to be paid and PPA amortization.

And these accounted as negative numbers.

Moving on to the next page, Industry. FY '21 not just the manufacturing sector in Japan, but manufacturing sectors around the world are going to recover.

So profit is expected to rise. Please take a look at the middle set of bars, adjusted operating income will rise by 5.5% in FY '20 to 8.1% in FY '21.

Page 21 (sic) [ 23 ], Mobility. Again, in the middle on adjusted operating income, profit margin will arise quite substantially to JPY 102 billion in FY '21.

This is greatly contributed to by the elevator business. Page 24, Smart Life sector, again, adjusted operating income.

You can see like gray portion of the bar, which is Astemo. As I said, FY '21 will be separated from the 5 sectors.

So on the right-hand side of the bars, you will no longer see that part.

And what will happen to our Astemo automotive business? On the next page, adjusted operating income in FY '20, there was a problem with supply of semiconductors.

So it was down. But in FY '21, it is expected to recover.

Page 21 (sic) [ 26 ] less subsidiary, Hitachi Construction Machinery, again, take a look at the middle part of the page. You will see the margin in the circle.

In FY '20, the situation was very severe. Our margin was 3.9%.

But in FY '21, it is to rise and recover to 6.9%.

Page 27, Hitachi Metals. FY '20 was unfortunate.

There was a lot of depreciation and amortization. So a negative 0.7% margin.

But in FY '21, profit margin is to recover to 4% in positive territory.

Page 28 and onward, this is by segment. FY '19, '20 and '21, you will see the comparison.

And what I would like you to focus on is the IT sector. Third line, adjusted operating income ratio Y-o-Y on the far right.

With PPA amortization, 0.7 points down year-on-year. But Energy's adjusted operating income ratio, 2.7% in FY '21, which is year-on-year 7% up.

Industry, 8.1%. Mobility, 8.2%.

And Smart Life, 9.7%. Automotive, 6.1%.

Construction Machinery, 6.9%. Hitachi Metals, 4%.

So other than IT, all the other sectors are expected to recover. IT alone, because of PPA amortization, the number is going to go down slightly.

Take a look at Page 30. This is revenue by region or market.

Clockwise, top left, starting from North America, Europe, China going down. Japan, to its left, ASEAN, India, other areas and other areas.

This shows the growth rate year-on-year. North America, more or less flat.

Europe is recovering by 10%. China is up 20%.

And Japan is very tough, down 8%. ASEAN India as well down by 5%.

And other areas, up 24%. Well, they are not shown here, North America, Europe and including other areas, because we are incorporating ABB PG, the contribution is quite substantial.

Overseas revenue is JPY 4.574 trillion. It's 52%.

And this will further rise, but now the ratio is 52%.

Lastly, about our disclosure on Page 31, we have been working hard to improve our disclosure. And we're going to take a step forward.

ROIC is going to be disclosed by sector, as you can see. And as is described here, EBITDA will also be disclosed sector-wise.

On the far left, IT, JPY 378 billion. EBITDA, this is the largest chunk of the cash flow.

Starting from that energy, Power Grids and conventional energy is separated out. Industry.

Industry and industrial products are separated. Mobility, Building Systems versus Railway Systems.

Smart Life is divided into 2 Smart Life versus measurement and analytics. And then Astemo, Hitachi Construction and other listed subsidiaries.

And the total comes to JPY 1.370 trillion. And I hope this will provide a reference for the analysts and others.

That concludes my presentation. Thank you very much for your attention.

I will be happy to answer your questions. Thank you.

I hope you can hear me. So I have 3 questions.

First question is regarding the presentation that you presented, the Hitachi Metals is expected to be -- that is -- what is going to happen to Hitachi Construction Machinery. 6.9% recovery has been made in terms of operating profit margin.

But in the -- from the past, there are challenges for them to become globally competitive. What is your take on that?

Second is a more detailed question for ABB shared service. You are going to be consolidating functions there.

JPY 100 billion cost reduction is expected. What functions are going to become common in what areas?

Please elaborate further. Third question is regarding Lumada revenues.

42% for this year, that is a sudden growth that is expected. GlobalLogic contribution is likely as well.

What is the contribution to be made by them? And as a result, what is going to change in terms of the overseas ratio for Lumada sales?

So that's all in terms of my 3 questions.

Thank you for your questions. For one and two, I'd like to respond.

And for the Lumada question, I would like to ask Mr. Kato to respond.

First of all, regarding Hitachi Metals has been decided what is going to happen to Construction Machinery. For '21 mid-term management plan, we want to identify the direction going forward.

This is unwavering. Nothing has been decided yet, but the best capital structure will be identified, and we are now investigating all the possibilities.

And there's no change in terms of our direction for Construction Machinery. The optimization of business [indiscernible] remains unwavering.

And in the last year of the midterm management plan period, we should be able to identify the direction for this entity. For the shared service for ABB, we are thinking about 3 areas.

First of all, in terms of procurement purchasing. ESC purchasing will become increasingly important going forward.

Therefore, we believe that it is necessary to integrate, because they have knowledge on the part of ABB. And in terms of human resources as well as corporate affairs, this is also an area we can integrate.

And finance functions can also be integrated as well.

In Tokyo, there are regulatory reporting. So not everything can be integrated.

But we hope that we can maximize this possibility as well. So for the Lumada, Kato san, please take this one.

Regarding Lumada, as Kawamura san has mentioned, within the IT sector, the GlobalLogic impact will be JPY 90 billion in terms of revenues for 9 months. That is assumed.

For Lumada, basically, we believe this is going to be a Lumada core business. Therefore, as shown on Page 6, in terms of the core biz, it's going to increase by JPY 200 billion.

And about half of that is going to be accounted for by GlobalLogic, according to our assumptions. Now what about the overseas ratio?

Yes. For fiscal year 2020, [indiscernible] is around 40%, [indiscernible] 30% and [indiscernible] is 50%.

For '21, on the other hand, for GlobalLogic will now be incorporated. And therefore, for overall, 50% will be our target.

That's all.

Regarding question ABB. I have an additional question for shared service.

That means that Tokyo's general affairs as well as finance and corporate, it seems that the headcount will decline. Is that the case?

Yes, that is the likelihood. But we have not yet identified the numbers.

But when the work transfers, there should be a reduction in headcount.

The question that I have is when you acquired GlobalLogic, going forward, the balance sheet will increase by JPY 1 trillion because of the acquisition. But in total, there's going to be a reduction of JPY 2 trillion according to the CFO, Kawamura san.

With Hitachi Metals' divestiture, I believe the balance sheet will shrink. Moving forward, well, I'm not sure if it's going to happen in 1 year's time or a 2 years' time, but how will you manage your balance sheet?

What will the balance sheet look like? What's going to be your expectation or forecast?

Well, thank you for the question. At the end of March, I made a statement, and that remains the same.

This is part of our efforts to replace assets. At the end of FY '20, the balance sheet, as was discussed earlier, in terms of total assets was JPY 11.8 trillion.

And we're going to replace assets, inclusive of Hitachi Metals, which is divested. JPY 2 trillion of assets are divested.

And the GlobalLogic is JPY 1 trillion, which will come in. So on a net basis, a reduction by JPY 1 trillion.

So total assets on the balance sheet will go down from JPY 11 trillion to JPY 10 trillion. It's the same as what I said at the end of March.

And how will it be managed going forward? As of today, as far as large acquisitions are concerned, we don't have no further plans for that.

So the balance sheet will look like this for the next few years. But then, of course, operating cash flow will go up, and debt will be repaid.

So the balance sheet will turn more solid. But this is how it looks.

And will the balance sheet swell in a major way? No, we're not expecting that to happen in the next few years.

There's another question I would like to ask about the acquisition of GlobalLogic. I believe this is a trend in the last few years.

And this is relevant to other acquisitions. It seems that in an acquisition, goodwill tends to be very large.

GlobalLogic has repeat customers. 90% or over of their business is from repeat customers.

It runs a very stable business. But because of that, acquisition price is going to be large, and that in itself could be a risk.

So with increased goodwill, how do you see the risk? And how are you going to hedge the risk?

If you have any views you can share with us, please.

Well, as you rightly pointed out, we've had large acquisitions, including ABB PG and GlobalLogic this time. It's true that goodwill is increased.

With PPA, we do automatically amortize goodwill as well as another part that is dealt with through the generation of cash flow. Goodwill that has the potential of impairment, we take a very close look at it.

We conduct impairment tests every year, take a closer look to see if there are any uncertain factors included in goodwill.

We are doing everything we can. And we manage balance sheet from a macro view.

And how much of impairment, if it happens, is going to be absorbed by our balance sheet or cash. We're looking at it from that perspective.

So what would be the maximum of absorption that we can make in terms of impairment and also taking a macro view. So if I may, both macro and micro view, we are dealing with this.

I have 3 questions. First question is regarding IT service.

For fiscal 2021, the revenues in plan for profit is what I'd like to ask about. With GlobalLogic inclusive thereof, it seems that revenue is not going up significantly, according to the numbers you've presented.

Recently, IT service investment is expected to increase. And looking at other companies, it seems that other companies are assuming growth in IT.

So in terms of the revenues for IT, it seems that you have a conservative forecast. Why are you taking a conservative approach?

Second question, regarding ABB Power Grids, fourth quarter, it seems that the revenue had an upside, but it seems that profit -- operating profit had been subject to downside. That's declined.

Now why was there upside in revenues, but the downside in the profit? With the climate change, with increasingly important, power grid is an area that there is room for growth.

Now you have talked about the orders received. But what is the current market environment in the area?

Third question regarding Astemo. Fourth quarter was very strong in terms of performance.

According to the numbers I have in terms of revenues, quarterly, is around JPY 420 billion, and operating profit is JPY 35 billion. So this -- as your multiply this like 4x, it's JPY 1.6 trillion and JPY 140 billion, respectively.

That is the expectation from the outside. In terms of the internal plan, are you saying that it is JPY 97 billion because of a conservative approach?

Please elaborate further on these numbers.

As regarding GlobalLogic as well as IT revenues will be responded by Kato san. And regarding ABB and Astemo will be responded to by [indiscernible].

Now regarding IT for '21, more than half are generated in the domestic market. The outlook for the domestic market is such that we are seeing signs of recovery from fiscal 2020, but this is still gradual recovery.

And fiscal 2021, in terms of IT market, we believe it is going to be a negative growth, and it is likely to fully recover in positive from fiscal year '22 onwards. The x orders are increasing in terms of revenues.

However, for the overall, we believe that the numbers we presented are more likely.

Regarding ABB, as you have rightly pointed out, for fiscal 2021, interest and fee income was very strong. Fiscal '21 was only -- not for the full year, but for fiscal 2021, in terms of revenues, one, a little bit below JPY 1 trillion.

And that is the outlook currently, and it's not a full year. It's only partial.

That's about JPY 300 billion revenues increase. Therefore, growth is very strong.

On the other hand, as I have already mentioned today, the restructure reform cost that is increasing to the tune of JPY 10 billion. PPA will decrease going forward.

However the expenses will reach a certain level by adding -- but with increased revenues, profit, the margin should recover.

For Astemo, you asked whether this is a conservative outlook. Actually, I'm Chairman of this company.

And recently, we had a Board meeting where we had discussions. That is one factor.

But in terms of semiconductor, there's a disruption that is taking place. In the first half, there was a shortage in supply.

That was incorporated into the numbers for the first half. And therefore, the outlook is very conservative.

But the semiconductor, if it recovers faster than expected, we could have an upside. That is our take.

But currently, we are assuming that there will be a disruption in terms of the semiconductor supplies. Kato san, please?

Regarding power grid, for 2020, in the fourth quarter, I think that's the question raised. As you have rightly mentioned, it looks like a lower profit for this area.

This is an impact of foreign exchange rather than the main business. In foreign exchange, we typically hedge.

So hedge accounting will make sure that it does not persist in the P&L. But there are many projects in this business.

Therefore, it's not been persistent. Foreign exchange impact is therefore reflected here.

So it looks worse because of the foreign exchange impact.

Regarding Astemo, there is additional comment by Yoshihara san. Now for this year's upper -- let me weigh in.

And in terms of market data, there is likely to be a semiconductor impact. But compared to peers, there's no [indiscernible] and the like.

The operating profit Street forecast is not to achieve 10%. So 8% or below 8% is the prevailing view.

And that is the reason why for Astemo, we have a similar outlook.

In terms of revenues, on the other hand, in terms of volumes, 10% to 13% of recovery is expected. In terms of profit, according to the Street forecast and 9% to 10%.

In terms of volumes, revenues seem weak. For Astemo, last year number is only pro forma, but it's down to JPY 1.4 trillion to JPY 1.5 trillion.

That's a pro forma assumption to be made. And based on that, revenue increase by 10% is not aggressive.

It is in line with the overall market. So that's what I wanted to add.

I have additional 2 questions. Regarding IT service, domestic is slated to be a negative market, according to your explanation.

Specifically, do you have numbers to verify this? According to my take is that customer performance is likely to recover.

So I think that investment is likely to increase. But you have a negative outlook on this.

So I'm thinking that there must be rationale on why you have this outlook. So please elaborate further.

Second, regarding Astemo assumptions, in terms of expenses in the fourth quarter, profit -- capacity utilization without the -- and it seems that fourth quarter was very strong. I want to know whether this is sustainable or not.

Please elaborate.

Regarding IT, Kato san will respond.

Now regarding IT, IDC numbers is what we are referring to. And I don't have the numbers with me.

So let me get back to you on that. Regarding Astemo, as you've rightly mentioned, fourth quarter, the numbers were subject to significant upside.

When we made the analysis of this upside, there are orders from the automobile manufacturers and we are seeing increasing orders. This is because in the first half of this year, the orders are being expedited, front-loaded, and that is having an impact as well.

Therefore, going back to what I was referring to earlier, for the first half, we have a conservative outlook. So we had a significant increase in the fourth quarter.

Taking that into consideration, for -- we have taken a conservative outlook for the first quarter and second quarter of fiscal year 2021. What is likely to occur in Q1 and Q2 had been front-loaded into Q4 of last year.

Thank you.

Yoshizumi from SMBC. I have 3 questions.

This is a follow-up to an earlier question. IT, fourth quarter order intake increased as well as increase in order backlog.

If you can elaborate on that. OP margin of 15% is quite high.

Compared to the growth in revenue, growth in operating profit is higher. And why such high profitability, if you could please explain?

Well, Kato will talk about IT.

Yes. Fourth quarter for the IT sector, order intake is affected by ForEx and so forth.

After adjustment in the fourth quarter, 96% of -- last year for the full year, 95%. So order intake is robust, but only slightly.

And order balance for IT is up to JPY 1.1 trillion. This is affected by COVID-19.

But this is about the same as a year before.

So if you could provide a background to op margin improvement in the fourth quarter as well.

With respect to the OP margin, the same with IT and others, the fourth quarter number in IT in terms of revenue was very large. And I think the same trend applies here.

And we conduct ESI business in domestic margin and projects as well. And the risks expected did not manifest.

In overseas last year, we performed a structural reform, reducing fixed costs that started a year before, and that impact was worn out. And that's why the profitability came high.

In the fourth quarter, order down 4% for the full year, minus 5%?

Correct?

My second point has to do with cost or expenses. So corporate elimination, there was an upside of JPY 47 billion from the plan in FY '20.

So you have not spent all the expenses. JPY 47 billion is a quite large number.

So why did this happen? And the growth investment of JPY 26 billion, what was the actual?

And in the new fiscal year, how much of that is going to be spent?

You are talking about the IT sector all along. I would like to turn to Kato san.

Well, question I was asking about corporate overall.

Kato will answer.

So corporate elimination for FY '20, there was an upside from what was announced in February. That was what the question was all about.

It's not that there was one single large factor. There were multiple factors that came into play to contribute to the upside.

And this is with respect to Hitachi consolidated numbers. And there's a brand revenue.

Because of increased revenue, it went up. And in the corporate sector, expense reduction in travel.

Travel expenses went down more so than expected. And in the fourth quarter, investment projects were more rigorous roughly selected most so than the plan.

And because of these factors, the number went up. And for growth investment in FY '20 increased by JPY 11 billion.

So compared to the last announcement, it's down by JPY 15 billion. I said that we're being more selective in investment projects and that is why -- FY '21, we're not disclosing the number for this.

But investments related to Lumada are to be increased according to our plan.

My last question, question #3. Earlier, with respect to power grid, Q4 impact in ForEx.

And for the fourth quarter, I think in terms of profit and loss, it went down. Is that because of different networks?

And in the new fiscal year, you're going to have structure for PPA, JPY 80 billion; and for the new year, down by JPY 30 billion. Is that going to be the case?

If you could please explain.

Q4. For Power Grid, why did it go down?

Impact from ForEx accounts for 50% of the change. I think it accounts for 60% to 70% of the total difference, and that's the extent of impact from the fluctuation of the ForEx rate.

FY '20 versus FY '21, if you could please look at Page 21 in the slide deck, Power Grids, it was part of ABB. There was no consolidation systems development, PMI, PPA amortization, these are referred to as related expenses as described on Page 21.

As you asked, FY '20, FY '21, related expenses have not changed. PPA amortization in FY '21, JPY 52 billion.

In FY '21, it's JPY 41 billion, so down by JPY 10 billion. And these related costs, systems development cost is part of that.

So systems development cost is going to increase starting from FY '21. And that's not much changed from FY '20 to FY '21.

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