I'm Kato. Good afternoon.

Before I begin today's presentation, I'd like to express my deepest condolences to those who lost their lives in yesterday's Kumamoto earthquake of 2026, and extend my heartfelt sympathies to everyone affected by this disaster. At this time, we have confirmed no material impact on the Hitachi Group.

However, we will continue to closely monitor the situation and take any necessary actions as appropriate. In addition, based on conditions and needs in the affected areas, we are considering what support Hitachi can provide to assist with the recovery efforts.

Now I'd like to walk you through our consolidated financial results for the first quarter of fiscal 2026, as well as our outlook for the full year. Let me begin with the key highlights of today's earnings announcement.

In the first quarter of fiscal year 2026, the revenue increased 20% year on year, reflecting business expansion, as well as favorable foreign exchange effects. Both revenue and adjusted EBITDA reached record highs for a first quarter.

Led by the continued strong performance of energy power grids business, all four sectors—DSS, Energy, Mobility, and Connective Industries—achieved double-digit revenue growth. The impact on the situation in the Middle East during the first quarter was smaller than we had initially anticipated.

Quarterly profit was broadly in line with the previous year despite the impact of the approximately ¥50 billion special dividend associated with last year's air conditioning business reorganization. On a comparable basis, we regard this as an increase in profit.

Core free cash flow also exceeded the previous year's level despite the absence of large advance payments, supported by improved collection of trade receivables. Now, our outlook for fiscal year 2026: reflecting our stronger-than-planned first quarter performance, order trends, and revised foreign exchange assumptions, we have raised our forecast for revenue, adjusted EBITDA, net income, core free cash flow, and ROIC.

To support organic growth, we plan to increase capital expenditures, including investments in production capacity, and also expand corporate strategic investments aimed at accelerating AI adoption. Developments in the Middle East remain a potential source of significant volatility depending on how the situation evolves.

We'll continue to monitor them closely. The results include several special factors, including foreign exchange effect, when comparing with the previous year.

Let me explain the year-on-year changes in revenue and adjusted EBITDA. Revenue increased by 10% year on year, given primarily by business expansion.

After taking into account the negative impact of the Middle East situation, one-time effects from large projects, and positive foreign exchange effects, revenue increased 20% year on year. Adjusted EBITDA followed a similar trend.

The adjusted EBITDA margin improved by 110 basis points through business expansion and other factors. After reflecting higher corporate strategic investment, the impact of the Middle East situation, one-time factors, and foreign exchange effects, adjusted EBITDA margin came to 11.9%.

The outlook for FY2026 follows the same trend. Revenue is expected to increase by 9% YoY, primarily driven by business expansion.

In addition, after taking into account the impact of the restructuring of home appliances business and ATM business and foreign exchange effects, full-year revenue is expected to increase by 11% year on year. For this forecast, we have revised our foreign exchange assumptions for the second quarter onwards to ¥160 per US dollar and ¥185 per euro.

Adjusted EBITDA is expected to follow the same trend as revenue. Business expansion and other factors are expected to improve the margin by 100 basis points.

After reflecting corporate strategic investment and the impact of the Middle East situation, foreign exchange, and other factors, we expect the adjusted EBITDA margin to reach 13%. Next, first quarter results and full-year outlook by segment as shown in here, including special factors.

DSS: first quarter orders increased 7% YoY, revenue rose 11%, and profit also increased. In Japan, growth was driven in particular by our AI transformation business, which supports customers' AI adoption, together with our modernization business, which upgrades the underlying systems.

Profit increased thanks not only to higher revenue, but also to stronger project management, expansion of the Lumada business, and productivity improvements through AI. For the full year, we have raised our forecast by ¥30 billion for revenue and by ¥8 billion for adjusted EBITDA.

In Energy, power grids orders increased significantly YoY in the first quarter, supported by continued strong demand for transmission equipment, and including foreign exchange effect, revenue increased 37%. Higher revenue, together with productivity improvements, also led to higher profit.

For the full year, we have increased our revenue forecast by ¥360 billion and adjusted EBITDA forecast by ¥76 billion. Adjusted EBITDA margin is expected to improve by 130 basis points to 14.2%.

Mobility: first quarter orders increased 25% YoY, driven by large signaling and control projects, together with foreign exchange effects. Revenue and profit also increased, supported by strong performance in Lumada businesses, such as railway signaling systems, together with favorable foreign exchange.

For the full year, we have raised our revenue forecast by ¥100 billion and adjusted EBITDA by ¥9 billion. The adjusted EBITDA margin is expected to improve by 120 basis points YoY, reflecting growth in Lumada business, such as railway signaling.

In Connective Industries, first quarter orders increased 25% YoY, led by the measurement and analysis equipment. Revenue increased 13% YoY, including foreign exchange, driven by the expansion of service business in building systems and growth in semiconductor manufacturing equipment, as well as semiconductor measurement and inspection equipment.

For the full year, we have raised our revenue forecast by ¥100 billion and adjusted EBITDA by ¥14 billion. Consolidated basis, first quarter revenue increased 20% YoY.

However, as I mentioned before, differences in the scale of special factors, including foreign exchange effects, mean that full-year growth is expected to be 11%. Next slide, I will explain the results excluding these special factors.

I'll explain the first quarter results and full-year outlook by segment excluding special factors. Excluding special factors such as foreign exchange and business reorganization, Hitachi's consolidated revenue grew 10% in the first quarter.

We expect this growth momentum to continue, resulting in 9% growth for the full year. Adjusted EBITDA margin is also expected to improve by 100 basis points YoY.

In DSS, we expect to maintain the first quarter growth rate through the year, resulting in full-year growth of 6% in FY2026. As in the first quarter, AI transformation and modernization are expected to remain the primarily growth drivers.

We also expect that profit margin to improve. In Energy, the revenue growth rate may appear to moderate from the second quarter onwards.

However, in absolute terms, revenue growth is expected to exceed YoY increase recorded in the first quarter. Supported mainly by planned capital investment in the power grids business, expanded production capacity through workforce growth, and productivity improvement, we expect revenue to increase 21% year on year for full year, excluding special factors, with corresponding improvements in the profit margin.

In Mobility, we expect to maintain the first quarter revenue growth rate throughout the year. We also expect that profit margin to improve through a better business mix in railway signaling and rolling stock business with cost reductions.

In Connective Industries, we expect to sustain the first quarter revenue growth rate through the remainder of the year, resulting in full-year growth of 6% year on year. The key growth drivers include expanding demand for semiconductor manufacturing equipment and clinical analyzers, measurement and analysis systems equipment, and as continued building service business grows.

Also, expansion including Lumada business is expected to improve profit margin. From here, I will explain the progress of the DSS growth strategy.

First, I would like to talk about domestic IT service business. In first quarter, revenues increased by 8% YoY, so as profit.

Growth was centered around AI transformation and modernization. By industry, the financial sector led by insurance and the social sector, including government agencies in local governments and transportation, each grew by double-digit or more, driving us the overall domestic IT services business.

For this fiscal year, we are aiming to increase orders by 7% YoY. To accelerate the growth of this AI transformation business, we newly developed and announced last week the Agentic AI Integration Platform.

This platform, combining Hitachi's domain knowledge with our partners' frontier AI, enable us to achieve both high quality and abrupt development speed. We'll apply it to large project for system integration starting in September.

Next is the overseas IT services business, specifically GlobalLogic and Hitachi Digital Services. These two have been operated as one entity from this fiscal year.

The total of the synergy and standalone revenues increased by 28% year over year in Q1. Synergy revenues expanded significantly compared to last year, primarily in Energy and Mobility.

Despite a challenging market environment surrounding the digital engineering business, standalone revenues exceeded the previous year's levels. For further growth in synergy, we opened an experience center in India in Q1 where customers experience benefits of HMAX solution for building systems.

We are also strengthening our physical AI capabilities with other companies through alliance. Moreover, cross-selling a project that offer end-to-end services from digital engineering to operation expanded in high-tech and manufacturing sectors, contributing to the revenue increase in Q1.

As announced today, we welcome Anand Birje, who will lead overseas IT service business to accelerate business transformation. Next is the impact of the Middle East.

In Q1, a large project in the Middle East was affected, along with some raw material shortages and cost increase. However, the impact was rather limited than initially anticipated.

We have factored in the risk of impact from Q2 onward in the current forecast, but there will be so much uncertainty and subject to change. We'll continues to monitor it closely.

From here, I will explain the highlights of the Q1 FY2026. Revenues and a profit increased across all four sectors, as of core free cash flow.

We spend more on organic growth, primarily capex for facility investment with focus on Energy. For inorganic growth, Mobility completed the acquisition of Clever Devices, IT service company for public transportation in North America.

Moving forward, we will expand our business into the multimodal domain beyond the railway sector. As regards to shareholders' return, we bought back ¥150 billion of our shares in Q1, reaching 27% of the plan for this fiscal year.

Here I will explain the quarterly profit and cash flow on a year-on-year basis. Quarterly profit remain roughly the same as the previous year despite the impact of special dividends associated with the air conditioning business reorganization in the year before.

As for core free cash flow, excluding the impact of large advance received, it increased by over ¥200 billion year over year, attributed to higher adjusted EBITDA and improvement in net working capital driven by better turnaround of receivables. Now I will explain the financial position.

Total assets at the end of Q1 FY2026 stood at about ¥15 trillion, staying at nearly the same as the end of FY2025. Cash conversion cycle dropped from the year of the end of FY2025, mainly due to less receivables and more advance payments to improve the capital efficiency even more.

Next is the revenue by region. We expanded overseas, led by Europe.

Including forex impact, Energy grew across all regions, including Europe and North America, hitting 35% in total. Mobility grew by 18% total overseas, led by the rail control business, particularly in Europe.

CI grew by 21% total overseas, mainly in China, driven by expansion in building system services as well as semiconductor manufacturing and inspection measurement equipment system. This page is order results by segment.

DSS increased by 7%, driven by growth in the domestic AI transformation business, modernization business, and global storage business. Energy saw a significant increase.

Despite nuclear energy's rebound from large-scale project in the previous year, the power grid business benefited from solid demand for power grid equipment in several large-scale HVDC project in Europe. Order backlog exceeded ¥10 trillion.

Mobility increased overall due to large orders in a rail control project. Order backlog increased compared to the end of FY2025, including forex impact.

CI expanded as a whole, driven by increases in semiconductor manufacturing and inspection measurement equipment, as well as clinical chemistry and immunoassay analyzers. There are the highlights of the FY2026 forecast.

As for organic growth investment, we plan to increase capex by over ¥170 billion YoY, with focus on the power grids in Energy. As regards to shareholders' return, there is an unexecuted buyback of about ¥400 billion for Q2 onward, and we'll continue with share buyback.

We are also revisiting forex rate set for Q2 onward. Here I will explain the net income and cash flow on a YoY basis.

Net income is expected to increase year over year due to higher operating income despite the fluctuation in non-operating gains and losses from business reorganization with portfolio reforms executed in FY2025. Core free cash flow is expected to increase YoY, excluding the impact of large advance received.

Despite increase of capex, such as capital expenditure for production expansion and a rebound from special dividends tied to last year's business reorganization, higher adjusted EBITDA and a better net working capital will contribute. Finally, I will explain the Lumada business, a key pillar for our growth, on page 27.

Here is showed performance of Lumada and HMAX, which is a solution for Lumada digital service business. Lumada accounted for 43% in Hitachi's consolidated revenue.

For FY2026, we plan to reach approximately ¥5 trillion, 22% increase YoY, which accounts for 44% of revenue, improving adjusted EBITDA by 17%. The Q1 revenue growth was mainly driven by Lumada business, such as domestic IT services and global storage in DSS, building system services in CI, and semiconductor manufacturing equipment and medical analyzers in measurement and analysis systems.

As for HMAX, Q1 revenue reached approximately ¥110 billion. We achieved 22% progress towards the full-year forecast of ¥505 billion for FY2026.

Key drivers are HMAX in railway, CI, and DSS. This concludes the briefing on the Q1 performance and the full-year forecast for FY2026.

We recognize that the Q1 represent a good start for the second year of the Inspire 2027. In particular, we believe that the growth drivers, excluding the one-off factors explained today, are highly sustainable.

On the other hand, the Middle East affairs and external business environment remain uncertain. We'll push forward growth strategies while continues to enhance risk management.

My name is Takizawa from Fidelity. Thank you very much for this opportunity.

My first question about Q1 energy business, the improvement of the margin compared to your assumption, was it better? Compared to the full year, I think the number is higher.

What is the reason for that? After Q2 and onwards, do you think with the same reason it's going to be higher?

Could you please explain that? Yes,

thank you very much for your question. Yes, this time, Q1 performance of energy business, at first we had a plan.

However, compared to that, the number was better. There are some factors behind that.

In terms of yen, there is an impact from the foreign exchange. However, in dollars, it's increasing.

Mainly, the order situation. Compared to our assumption, it was very strong.

Q1 order situation I explained, large-scale orders we have received as well. Other than that, what we call base orders, they are not large orders.

However, for example, transformers and those equipment, those are very successful, and that really contributed to the performance of Q1. We were doing capex spending, and including the increase of hiring, we are increasing the capacity.

Also, productivity has been enhanced. Last year it was as well.

In Q1 as well, compared to our assumption, it was better. We have a lot of products we are making, and we have so many different projects going on.

As much as possible, we would like to strike a very good balance. We are spending our investment on IT, and that is really contributing.

During the explanation, I was talking about the foreign exchange. Also other than temporary factors and other than special factors, we have added some explanations at page 7 of the slide, as you can see here.

As for the revenue, the percentage I talked about, after Q2 it looks modest compared to Q1. However, looking at the value, in Q1 there is an increase more than three times as much.

In Q2 and Q4, you can see it in terms of the growth rate. The growth rate year on year might be the same as Q1.

The margin as well, 100 basis points and over is our assumption. That means, basically, they should remain.

However, having said that, what we cannot project right now is the enhancement of the efficiency of production in the field. This is really the contribution of the field and the effort of them.

It's possible that it might change up and down. Thank you very much.

Thank you. My second question, it might be related to your explanation, and you are talking about HMAX EBITDA ratio was 22%, and you have four segments.

HMAX exposure, for example, it should be different from the breakdown of Lumada business. What is the specific subsegment or segment that has a contribution of HMAX or the improvement of the profit margin?

Yes. HMAX last fiscal year, we only had the fiscal year's number.

Year-on-year Q1 growth cannot be disclosed. I'm sorry, we don't have the number here.

However, we believe that there is a two-digit growth, especially the contribution comes from CI, building, and high-tech business, and mobility, railway business. They have contributions.

As for building, as we have announced, HMAX for building for remote monitoring, and as for high tech, especially the predictive analysis for the equipment, and also each of them really contributed. As for the margin, about 20% and over evenly.

Compared to the other sectors' profit margin, the growth here really looks significant. This really is attraction.

Thank you very much.

Thank you. Move

BofA Securities, my name is Hirakawa. Thank you for taking my question.

First question is about the domestic IT, as explained, AX and modernizations really driving the performance, I understood that. On the other hand, during the Investor Day, you said 7% growth, if you continues to do that, then that will reach to the ¥3 trillion of revenue at some point.

However, the ¥5 trillion, which is the significant figure, has been already represented, and there's a significant demand for the AX. Right now your number is 7% of the revenue growth.

Can you actually foresee the double-digit growth, and if you have that visibility, when that is going to be realized? Do you have enough capacities leveraged by the AI, for example?

That's my first question.

For this year, domestic IT service, this domain that you asked. The late single-digit order is visible now.

As asked, this is not enough to hit the ¥5 trillion. There are two drivers.

One is leverage of AI. How much of the productivity improvement we could achieve is one key.

As of the end of '25, 10% of the productivity improvement was achieved. We're trying to push this number up.

For the next year, FY2027, this number should goes up to 30% from 10%. That's the internal target.

This is ambitious target. How far we could achieve, it is still not really visible, but this is a great contributor to the improvement of the productivity.

Another one is inorganic growth investment. For the domestic IT service, we don't that much around it.

However, some specific targeted domain, if there is any opportunities out there, we would like to seize the moment. These two factors, if these two driver will work, then we could actually start to foresee as the ¥5 trillion was in the range of achievement.

As for the productivity improvement effect, that would contributes to the higher profitability.

Productivity improvement itself, how does it works? Because now you have a better visibility that actually the how it explained.

Yes. In a domestic market, we have a limited number of the IT resources.

We haven't been able to fully accommodate all the demand. If we can improve the productivity leveraged by AI, we could accommodate more the customers' needs and demand.

Thank you. The second question is about the HMAX.

During your presentation on the HMAX, you brought up the CI, specifically in the buildings and IT, as a contribution drivers. To me, the railway is a starting point of HMAX, so that the railway business accounts for the significant part of the HMAX.

I'm sure that it's difficult to express, but for FY2026 ended in March 2027 or the following year, how does HMAX exposure would change? How the HMAX is going to grow, and how the energy is going to be playing its role in this context?

So ¥110 billion is the actual result as of the end of the Q1, and half of this ¥110 billion is CI. Specifically, building and high tech, followed by railway business.

Also the DSS and energy follow. As of now, in order to number the CI since it has a significant exposure compared to the mobility, so that's the result.

The ratio, I cannot really refer to it. Every sector, every BU expected to grow, all of them will be as the contribution drivers in a mid-term perspective.

Thank you. That's all.

Thank you. My name is Yasui from UBS.

About energy, that's my first question. At first, you were talking about efficiency improvement.

Could you please elaborate on this in concrete? At new factories, you have increase, and so the lead time for production is getting shorter, and this is a new factory, you have new machines.

Is that the contribution for the efficiency? In terms of the continuity going forward, if you can achieve high margin per revenue, is that true?

Or the cost for materials is increasing, how are you passing the cost to the end users and customers? What's the significance of this continuity?

That's my first question.

Yes, for FY2025, the trend is the same. FY2025, the revenue increased.

It's not only about increase of the capacity of production. We cannot explain it only with that.

I don't have clear numbers. However, to some extent, yes, production capacity increase was the contribution.

That is really true. There is a significant contribution.

To what extent we can continue this trend, but before efficiency, looking at the backlog situation always, the margin per backlog is what we are checking. Far, the average backlog, we are looking at the gross margin.

It's improving. It has been improving.

In that sense, by managing the backlog, we can increase the gross margin ratio and the production efficiency. FY2026, we saw a great improvement.

FY2024, the previous year, our ERP system introduction was completed. We are getting used to using it, and FY2025, we are seeing good results from that.

About AI, we are using AI as well to enhance our business efficiency, we do have that project as well. How AI utilization can improve productivity is the next point.

Another factor is project management. We have had so many large projects and orders such as HVDC.

The period is very long for those projects, we might have some risks associated. However, we are doing de-risking out of EPC.

E and P, engineering and procurement, are our focus. As for civil, the construction, we don't include the C part in the construction to receive orders.

In terms of project management, we always make an effort. The cost, excessive cost to make it efficient, well, compared to the past, that kind of cases already declining.

In terms of project management, we are really improving the situation. That really contributes to the profitability.

Additionally, about price situation, so many products are increasing cost, your procurement cost increases and selling prices are increasing. I am not talking about increasing prices because of the cost, but because of the tight demand and supply situation.

Can't we just expect the profit increase because of the price increase?

Yes, as you point out, HVDC project might have 5 to 6 years in the project, how to reduce inflation risk is one. Project management includes what I have described.

I'm sorry I didn't explain that clearly, but basically we are using a lot of indices. When costs increase, we can reflect them on the selling prices to customers.

That is our system. These are indices.

There are not so many cost reductions, but cost increases could lead to, well, a pass-through. This is not increase of the profit, but we can, of course, increase the margin, but we can stabilize the business.

That is our recognition.

Yes, thank you very much. My second question about overseas GlobalLogic and storage business.

Block storage business had been very good, you said. At the same time, DRAM and NAND, they are getting very high in terms of the prices.

For storage business, did you enjoy increased profit? Selling prices are increasing, it looks like you have increased revenue.

GlobalLogic, especially in the US, because of the death of SaaS, you have a negative situation. When you look at the market situation, it looks like the situation is deteriorating.

Could you please elaborate on this part?

Yes. About storage business, block storage, for high-end products, we have made announcement about new products, and they are well accepted by the market.

They are selling very well. Because of that, the storage business has really growing the revenue.

DRAM, as you have pointed out, the prices are increasing. As for this one, basically, we are passing through the cost to the selling prices.

The volume is increasing overall, so that is why we have increasing revenue and profit. Next fiscal year, Q1 was not very good, that is part of the factors.

The direction is an improvement stably. GlobalLogic, as a company, it's separated.

However, from April this year, GlobalLogic and HDS are integrated in operation. There is a cross-sell effect, and HDSS itself was logistics and also manufacturing accounts.

They had them, and they have additional industrial and automobile industries accounts as well. They are increasing profit and revenue, both of them.

GlobalLogic, the market situation is very difficult. Also, they want to increase profitability, that is their focus.

Strategically, for lower profitable businesses, they make decisions about orders receiving or not. They have a growth, and Simplus, last year's acquisition, that is contributing as well.

When you look at this one, unfortunately, the revenue in Q1 only, unfortunately, the revenue slightly declined, and profit unfortunately declined slightly. For the fiscal year, well, some of them are increasing, we'd like to increase the increasing part so that we can achieve increasing profit and sales, both of them.

Since the integration is going on and they have a lot of collaboration, it's very difficult to split, please look at the entire picture.

Thank you very much.

This is Harada speaking from Goldman Sachs. Thank you for taking my question.

I have two questions. The first question is about energy.

You've been stating a strong order intake for Q1. I believe we received a large-scale project, on a normalized basis on where we are right now and as for the mid-term target for revenue, are you outperforming or rather in line?

Can you give us more sense? Also, what I would like to know is 800 V datacenter architecture, you've been partnering with NVIDIA for development.

The other day, Jensen Huang made a comments on the solid-state transformers release. If you have any trend on your end, I would like to know more in detail.

That's the first question. Thank you.

Can I go on the second question as well?

Yes, I'll I'll answer to the first question as for the power grid as an energy sector. First quarter, the 37% in a revenue.

However, considering as the one-off effect in forex, it will be 24% increase. Out of 24% -- so I said the 37% in a growth, and a breakdown is here.

The power grid is a 35% increase. In a breakdown on a dollar basis, Hitachi Energy is 22%, $1 billion year-over-year increase.

As for the on a full year, for the full year, we are expecting the similar growth. In that sense, in a mid-term perspective, for this year particularly, the late teen is what we anticipated.

For the full year, in the US dollar basis, 20% of the increase is expected. The growth ratio wise, we're outperforming.

We cannot really make decision based on the this year as a single year. If the next year continues to drive the same momentum, and we will be able to outperform from the mid- and long-term perspective.

It is too early for us to make any comments on that. We'll continues to keep an eye on it.

As I said, not just increase in an order intaking, but our production improvement will contribute to the better results. As for the 800 V, Tanbata-san, do you have any follow-up comments on that?

As you pointed out, 800 V architecture and technical development has been supported by ourselves in the architecture itself. The 2028 is the year when the architecture, this particular architecture is going to be applied and adopted.

For us, the early adoption and the delivery taking advantage of the existing technology, so that's the area where we can make an early contribution. That's the area we try to expedite the pace of a partnership.

The the power conversion, especially as the from the the grid to the rack, and this project is planned to be rolled out in early 2027. Once we can deliver, we can make it simpler and reduce the space for the deployment of the system.

The early pace that we can make a quick contribution to the datacenter. As for the SST, the control technology as power electronics and other technologies are integrated.

Any of them are the all the strengths in a capability that the Hitachi Energy already has. R&D, together with an R&D, we'll we'll continues to work on for the for future deployment.

The conversion to the SST would take a long time. The datacenters' entire solutions, the early bump-up of the datacenter is not the area where we can immediately contribute with an SST.

As I said, to control the system is the area where the Hitachi Energy can make a contribution on early stage.

Thank you. The second question is about on page 10, DSS, GlobalLogic and synergy.

Hitachi Digital Services business has been growing strongly. As for the margin, as a Hitachi as a whole, what kind of impact can we expect, especially the energy, mobility?

In-house system development could contributes to the higher margin, I assume. If you could share some numerical numbers on a quantified numbers, that would be very helpful.

Also on the same page, the Anand will be assuming the new position in this domain, and with this new organization and change in organization, what kind of expectation you have? On to the first question, Hatakeyama, can you answer to that?

As for the indirect synergy in our definition, taking advantage of the GlobalLogic, rail or mobility as well as the energy synergy should be answered by myself. Please refer to page 27.

All these numbers are the energy and rail. These are fall under the Lumada business, and out of Lumada, the revenue GlobalLogic in a digital domain for energy and mobility, energy and mobility for the customers contributes to the revenue.

When you look at the margin or profitability, for example, FY2026 Lumada digital service, say, and 20% in total, and digitized asset is 14%. As for the HMAX business, the GlobalLogic is involved in HMAX business as well.

All this business, once it starts to grow, indirect synergy will grow accordingly. On to your second question, as announced, within the DSS, DEAI BU is there.

This is the place where Hitachi Digital as well as the GlobalLogic, HDS, and also the Hitachi Vantara. In a nutshell, the Hitachi's digital business driving center as a business unit.

The head of this business unit used to be a Mr. Abe.

He's concurrently this position. Now, the Anand will assume this position as the head of this BU, as stated during the Investors Days.

Because of the AI, there's a huge tailwind for Hitachi. Not just the HMAX business, but we trying to deliver on productivity improvement for customers while pursuing the internal operation improvement.

DIBU needs to cover the vast area. We decided to have exclusive personnel leading the team.

Anand, the taking advantage of the AI in a global arena, he has an extensive track record around that. Leveraging his experience, DIBU should be led by this great leader.

Because of this organizational change, AI leveraged business expansion should be achieved. I myself have a high expectation on this change in organization.

That's all from my end. Thank you.

Thank you very much. Ryugen from Nikkei newspaper.

I have one question about energy business. Continuously your order situation is good, favorable.

In the early stage, you might have a solid strategy to make it a revenue, maybe production increase and the others. Could you please elaborate on that part?

Yes, thank you for your question. Yes.

Investment to increase capacity and capex spending, as I explained today, we have a plan to increase our capex spending, especially FY2024, '25, '26, and next year as well. Probably the same level of capex spending will be implemented.

Right now we are hiring out as well, and as planned, the progress has been good. Additionally, we are using AI for higher efficiency, that is our aim.

As for making systems, we are spending on IT systems. Since last year, the efficiency has improved, there is a contribution.

By utilizing AI, the cycle of our operation can be shorter. Going forward, we are going to tackle this initiative as well.

When our aims are clearer, we'd like to talk about that.

Thank you very much.

Thank you. Can you hear me fine?

Thank you. My name is Nakanishi from Nikkei BP.

I have two questions. First question is about the energy market outlook, mid- and long-term perspective.

I would like to know your outlook for both perspective. Based on the order intakes as well as the external environment, including the customers' trend and also the semiconductor trend, what kind of the items are factored in?

You asked about the mid- and long-term perspective. As for short- and long-term perspective, for the short-term perspective, the industry outlook, we have a high visibility.

Based on our order intakes and the actual development of the orders, we have a better visibility on the short-term perspective. As for the mid- and long-term perspective, for the large project, multiple project, precondition, terms and condition need to be decided as a part of the framework agreement.

Also our production capacity needs to be reserved as a part of a capacity reservation. This is a part of the agreement with our customers.

Based on that, we make decision on the capex investment. That actually only give us in a sense for the large-scale projects.

Basically, the power demand is constantly monitored, including the demand for the other energy resources and also the industrial trend using a multiple different methodologies. Recently, we tries to foresee 10 years' time.

For example, in last year, as we stated, we are expecting a further growth until 2030, that's what we could say until last year. For the large system, a delivery plan go beyond 2030.

Until 2030, we are expecting a further growth until 2035.

Thank you. Just a follow-up question: capacity is decided based on the customer's demand and needs, for example, does a customer make an advance payment and for the sake of the capex investment?

For example, in a case of framework agreement, we have let's say if we have a multiple different contract, terms and conditions including the payment, all these is defined and decided between us and customers. Even for the multiple one, we try to get as a framework, but the timing of the payment usually comes at the time of the signing of the contract.

At the time we usually receive an advance payment. Another question is about the physical AI.

Taking advantage of the domain knowledge, you tries to deploy it in the infrastructure area. As for the physical AI, compared to the global benchmark, how do you measure your capability and the strength in terms of the physical AI, and what are the challenges that you needs to address?

Thank you.

As for the global benchmark, it's really hard to say. In the case of physical AI, our absolute strength is OT in a product that we have.

We have business as the customers' energy or the CIs or rail businesses. Using the multiple different physical AI together with the DSS, which tries to deploy it, and this is the competitive advantage over the others.

The model itself, it's not internally developed. However, the frontier AI-leveraged alliance is formed with other like counterparts, so that would allow us to use the state-of-the-art technologies.

We tries to maintain this kind of environment, and that itself is the foundation of ourselves. What really matters to us is the speed, because when it comes to the competition, how fast we can move ourselves is key.

Focusing on the speed, then we can even greatly leverage our capabilities and the strength.

Thank you.