Earnings Call Transcript - EJPRF 2026-11-02

Kise, Other

Thank you very much for joining us today for our second quarter financial results presentation, especially during this period between public holidays and despite the inclement weather. I would also like to express my sincere appreciation to the many participants joining us online. I would like to begin by highlighting our financial performance for the current fiscal year. Thanks to strong railway passenger demand and other factors, our consolidated operating income for the first half of the fiscal year has exceeded our initial projections. In light of these results and our outlook for the remainder of the fiscal year, we have decided to revise upward our full-year earnings forecast. We have also decided to increase our annual dividend forecast from 84 yen per share, representing a payout ratio of 37.2% to 88 yen per share, including an interim dividend of 44 yen. This decision reflects both the upward revision to our earnings forecast and the shareholder return policy set out into the next stage, 2034, under which we aim to gradually raise our dividend payout ratio to 40% by fiscal 2027 when our growth investments are expected to stabilize. As a result, our dividend payout ratio for the current fiscal year is now expected to reach 37.5%. Further details of our financial results and earnings forecasts will be presented later in Section 3. Next, I would like to explain our medium-to-long-term strategies for realizing our group management vision to the next stage in 2034. As we pursue further growth across the JR East group, I would like to address three areas relating to trust, which forms the foundation of all our businesses. The first is safety. We have positioned the pursuit of ultimate safety as our highest management priority with the aim of ensuring that everyone can use our services with a sense of security. As a unified group, we remain committed to strengthening trust by providing that sense of security. In our mobility business in particular, we are making steady progress on the six priority initiatives we announced following the series of transportation disruptions that occurred in January and February 2026. These initiatives, including operational procedures review, are designed to ensure safe and stable transportation going forward. I would particularly like to highlight the fifth initiative concerning equipment maintenance. For fiscal year ending March 2027, we increased our total maintenance expenses by approximately 30 billion yen compared with the previous fiscal year. Maintenance work, which had been curtailed during the three years of the pandemic, is now progressing according to plan, and we expect to fully eliminate the maintenance backlog resulting from COVID by the end of this fiscal year. The second area is group governance. We are strengthening our governance and compliance frameworks by establishing the necessary organizational structures, policies, and regulations throughout the group. First, in June this year, we established the JR East Group's Determination and Commitment. This statement expresses the determination of everyone across the group to build a sound corporate organization, as well as our commitment to society. At JR East, we have also established new internal control regulations, group management promotion regulations, and compliance regulations. These clarify how internal controls should be established and operated throughout the group. We are introducing similar regulations at our group companies. In addition, we have strengthened our audit functions by increasing the number of full-time corporate auditors at group companies and dispatching JR East employees to serve as part-time corporate auditors. We are also promoting initiatives to foster a sound corporate culture and encourage more active communication, including the establishment of dedicated points of contact within JR East to facilitate communication with group companies. Going forward, we will continue to implement these improvements steadily across the entire group, building the trust that underpins all our businesses. The third area is information security. Against the backdrop of increasing media attention to information security issues, I would like to explain the measures we are taking. In accordance with the JR East Group's basic policy for information security, we are working to minimize security risks. We are implementing both technical and administrative security measures across the group's information systems and IT devices. We have also established an information security management framework, with the Director of the Innovation Strategy Department serving as our Chief Information Security Officer, or CISO, to ensure a prompt and appropriate response to security incidents. In addition, we regularly conduct security incident response drills involving our group companies. Following the recent discovery of vulnerabilities in PHP, we promptly identified systems using PHP across the group, including those operated by group companies. We then implemented the necessary preventive measures, including temporarily suspending certain services as a precaution and applying software patches. To date, we have found no evidence of unauthorized access to our systems or information leaks, and there has been no significant disruption to our customers' use of our services. We will continue to enhance our security standards so that customers can use our services with confidence. Next, I would like to discuss how we respond to changes in our external business environment, particularly inflation and rising interest rates. As inflation and interest rates increase, our cost of capital is also rising. Our objective is to generate returns that exceed this cost of capital. While reviewing our investment criteria for growth projects, we will pursue further growth in both our mobility and lifestyle solutions businesses. In mobility, we will continue discussions with the national government regarding greater flexibility and revisions to the railway fare and charge system. We will seek to formulate specific requests, taking into account the appropriate time frame for each initiative. In lifestyle solutions, we are also implementing measures to achieve growth that outpaces inflation and rising interest rates. In our office business, for example, we will leverage our properties of contagious locations and the comprehensive capabilities of the JR East Group, including mobility, to enhance the value of our buildings. We will also seek to increase rental income by reviewing lease terms, including the introduction of clauses, allowing rent adjustments during the contract period. Furthermore, all of our outstanding debt carries fixed interest rates and consists predominantly of long-term obligations. This structure has helped us limit the impact of recent interest rate increases while providing a certain degree of resilience against future increases. Going forward, we will seek to contain increases in our cost of capital by making greater use of medium-term financing and indirect financing while also exploring ways to diversify our funding sources. I would now like to explain our medium-to-long-term strategies for each or business. Let me begin with mobility. On March 14th this year, we implemented our first fair revision since the establishment of JR East. To ensure that our railway services remain the preferred choice of customers, we will further enhance safety and service quality through increased capital investment and other measures. In addition to installing automatic platform gates and expanding barrier-free facilities, we are moving quickly to improve infrastructure that directly affects customer safety and service quality. In the short term, these initiatives include further improvements to station facilities and the passenger environment. Over the medium to long term, we will also pursue initiatives that contribute to higher safety and service standards and sustainable railway operations. These include pilot programs for remote inspections using drones and introduction of multifunctional heavy railway equipment. Next, I would like to discuss our disaster recovery efforts and measures to address increasingly severe heavy rainfall. In August and September this year, heavy rainfall and typhoons caused extensive and serious damage to railway infrastructure in Chiba Prefecture. Working closely with our group companies and partner companies, we have restored operations on most of the affected lines. We have also implemented turn-back operations and secured alternative transportation services. On the Uchibo line between Anegasaki and Nagaura, we have substantially shortened the restoration period, which was initially estimated at three months. We now expect to resume operations on November 9, 2026. On the other hand, we have decided not to restore railway operations on the Kururi line between Kururi and Kazusa Kamiyama. Instead, we will continue to provide substitute bus services and other alternative transportation until March 31, 2027, the day before the scheduled discontinuation of railway operations. During these recent heavy rainfall disasters, we place the highest priority on customer safety by following our established operating restrictions for rainfall. However, given the increasing frequency and severity of heavy rainfall in recent years, we are reviewing these rules, including whether revisions are necessary. We intend to complete this review by the end of the fiscal year and implement revised rules accordingly. We will also further strengthen measures to protect equipment and facilities against flooding. These measures include continuing to replace electric point machines with water-resistant models for early recovery, examining improvements to flood barriers, and relocating electrical equipment to higher elevations. To improve profitability in our mobility business, we are pursuing initiatives to create new passenger flows. In July this year, we concluded a comprehensive partnership agreement with Nasushiobara City in Tochigi Prefecture, aimed at increasing the related population, people who maintain ongoing connections with the region without necessarily residing there permanently. Through this partnership, we will promote dual-location living, relocation, and permanent settlement, while improving convenience in daily life through the use of community suika services. By expanding the related population, we aim to generate new passenger flows and contribute to regional revitalization. In addition, four JR companies and Japan Airlines, or JAL, will jointly develop a wide-area tourism model targeting inbound visitors. We will also introduce a new limited express train called Luna Azul, which is scheduled to begin operations early in the next fiscal year. The train will be capable of overnight operation and is designed to make the journey itself a travel experience and destination. Furthermore, when planning train schedules, we will look beyond the conventional objectives such as alleviating congestion or improving efficiency. We will also introduce train services to respond to customer needs and support initiatives to increase the related population and develop wide-area tourism. Through these measures, we aim to capture additional passenger demand. Next, I would like to discuss our efforts to introduce greater flexibility into the railway fare and charge system. In the short term, we aim to replace the current approval system for Shinkansen non-reserved seat express charges with a notification system. We also seek to introduce a mechanism that allows us to respond flexibly to inflation, wage increases, and other changes in the operating environment. In addition, we will pursue further revisions to the guidelines for calculating revenues and costs, including the methodology used to calculate the operational return rate. Over the medium to long term, our objective is to achieve fundamental review of the total cost method itself, and we continue to discuss that with the government. In particular, introducing a notification system for Shinkansen non-reserved seat express charges would enable us to implement dynamic pricing and adjust charges according to demand. We are therefore strongly urging the relevant authorities to introduce this notification system as soon as possible. We will continue to work closely with other railway operators and engage in discussions with the national government to develop specific requests for these reforms. Next, I would like to address the treatment of lease fees for projected Shinkansen lines from their 31st year of operation onward. I understand this topic has garnered much media attention. We are paying lease fees to JRTT. The initial 30-year lease period for the Hokuriku Shinkansen section between Takasaki and Nagano will expire on September 30, 2027. We are currently discussing the treatment of these lease fees with the national government. Our position regarding lease fees from the 31st year onward is based on three key principles. First, the calculation of lease fees should be separated from the funding requirements for future construction of projected Shinkansen lines. Our position is that, given the status of projected Shinkansen development as a national infrastructure project, lease fees should be determined independently of the funding needs associated with construction. Second, the management efforts of the JR companies as private enterprises must be respected. To ensure that these fees do not adversely affect their business operations, we believe that fees from the 31st year onward should be fixed at a specified amount for a certain period. Third, as I mentioned back in May at the regular media conference, we concluded a formal written agreement with the DEM Ministry of Transport in 1991. Under the agreements and understandings subsequently reached with the national government, this original agreement should serve as the starting point for determining lease fees from the 31st year onward. Specifically, those fees should be based on the cost required for maintenance and other activities appropriate to the condition of the railway facilities, with the current fixed lease fee serving as the upper limit. Based on these three principles, we will continue discussions with the national government regarding the treatment of lease fees from the 31st year onward. Next, I would like to discuss our initiatives to realize sustainable mobility. We will accelerate the transformation of our operations through technological innovation and structural reform. One major initiative is the expansion of driver-only operations on key lines in the Tokyo metropolitan area. By the end of the last fiscal year, we had introduced driver-only operations on four lines. Beginning in spring 2027, we plan to extend these operations to certain sections of the Keihin-Tohoku and Negishi lines, as well as the Chu-Asobu line local service. We then plan to expand driver-only operations progressively to other major lines in the Tokyo metropolitan area by around 2030. We are also moving forward with the introduction of driverless train operations. For the Shinkansen, we aim to introduce driverless operation of non-revenue trains between Niigata Station and the Niigata Shinkansen Rolling Stock Base by fiscal year ending March 2030. By the mid-2030s, we aim to introduce driverless operation of passenger trains between Tokyo and Niigata. On conventional lines, our goal is to introduce driverless operations on the Yamanote line by around 2035. Through mechanization, digital transformation, and the use of AI, we will improve productivity and create an environment in which our employees can devote more attention to enhancing safety standards and service quality. At the same time, by enabling employees to engage in higher-value, more profitable activities, we aim to achieve an operating income margin of 11.5% in our mobility business by fiscal year ending March 2032. We will also take a proactive approach to addressing social challenges facing a mobility business, including work-style reform and labor shortages. As outlined in To the Next Stage 2034, we will pursue the deepening and evolution of our technological capabilities. By making full use of AI and robotics, we will further improve the safety and stability of railway operations while increasing productivity through work-style reform. We will also use new technological innovations to enhance customer service at stations. One example is our initiative to expand construction and maintenance work during daytime hours. We are working to shift equipment maintenance and renewal activities, which have traditionally been carried out mainly at night, to daytime hours on weekdays. This will improve working conditions for our partner companies and support work-style reform, helping us secure the workforce needed for railway construction and maintenance. It will also enable us to shorten construction periods, carry out work at more appropriate times, and provide more stable railway services. As an immediate target, we are working to shift approximately 10% to 20% of nighttime work to daytime hours. We are also considering expanding these initiatives to additional railway lines, including those in the Tokyo metropolitan area, and increasing the frequency of data maintenance work.

Speaker 0

This is about local lines. Regarding the Kururi line and the Tsugaru line, agreements were reached with relevant local governments on April 1, 2027 to shift from well services to automobile transportation. In addition, following damage caused by Typhoon No. 25, it has been decided not to restore well services on the Kururi line between Kururi and Kazusa-Kameyama stations. We will continue to work closely with local communities, including those along several railway lines currently under discussion, to further explore the best mix of mobility and develop a sustainable transportation system. Next, I'd like to talk about Takanawa Gateway City and Oimachi Trucks, which celebrated their grand openings in March. As for the office, which is our main source of revenue, leasing has been completed for both the Link Pillar 1 and 2, which are both office buildings at Takanawa Gateway City. In other words, we have achieved a 100% leasing rate. Leasing has also been fully leased at Oimachi Trucks. On the retail side, all shops are now open at both Takanawa Gateway City and Oimachi Trucks. We have been gradually opening applications for our rental residencies, and more than 80% of the units at both Takanawa Gateway City and Oimachi Trucks have already received applications. In particular, at Takanawa Gateway City, nearly 100% of the units currently available for these have been contracted, excluding those for which leasing has not yet begun strategically. The positive impact of the opening of these two developments has also extended to transportation revenue in our mobility business. Increased passenger traffic at Takanawa Gateway Station has generated approximately 200 million yen in additional revenue per month, while increased passenger traffic at Oemachi Station has contributed approximately 100 million yen per month. Centered on these two developments, we'll continue to build out the Greater Shinagawa Area's plan, laying a solid foundation for achieving over 100 billion yen in annual operating revenue. We will continue to pursue high-value development projects, including railway network-based urban development unique to the JR East Group, which we call JTOD, to create synergies between our mobility and lifestyle solutions businesses. In Funabashi, a large-scale redevelopment project involving more than 1,000 residential units on a 45,400-square-meter former company housing site is scheduled for completion in December 2028. Also, we plan to open a new station on the Tokaido mainline between Ofuna and Fujisawa stations around 2032. We will also move forward with urban development in the area surrounding the new station, tentatively named Muraoka New Station, including land owned by JR East, in conjunction with the opening of the station. In addition, we will steadily move forward with urban development projects around stations in collaboration with administrative entities, as well as redevelopment projects at major terminal stations. At Nakano Station, in line with Nakano Ward's urban development plans for the surrounding area, we're upgrading the station building and constructing a free passageway as well as installing a new ticket gate. We also plan to open a new station building in December 2026. By improving station convenience and walkability, we aim to enhance the value and vitality of the station-centered community. Next, the overall structure of our rotation business model for real estate. In October this year, JR East and Itouchu Real Estate Development Company Limited was established as scheduled. Taking into account the expected benefits of the establishment of the new company, we have revised upward our target for cumulative operating income from real estate sales over the seven-year period from the fiscal year 2025 through the fiscal 2031 from 600 billion yen to about 650 billion yen. We will drive forward our residential sales business by accelerating residential property development and sales through the new company. At the same time, we will strengthen our property acquisition and development activities to enhance our future pipeline. We also explore new business opportunities in areas we have not previously pursued, such as logistics warehouses, data centers, and arenas, with the new company taking a lead. We also expect the We will continue to diversify our asset holdings and investment portfolios to make our funds and reach even more attractive to investors. We're also actively leveraging our railway assets to create new businesses that create new value and services. For example, to create new value from station spaces, we launched the same-day luggage delivery service in August this year. The service allows customers to have hand luggage stored in our malfunctional multi-EQ lockers delivered not only to nearby hotels, but also to hotels at their travel destinations by utilizing our Hakobyun well-freight transportation service. We initially launched the service between Tokyo and Sendai and plan to gradually expand it to other areas. We will also gradually expand the pickup and delivery locations for our JRE Tebura Tabi service beyond JRE stations to include airports, customers' homes, and hotels where they are staying. Through these initiatives, we aim to offer new travel experiences that allow customers to explore areas at railway stations, near airports, and areas along travel routes. Jair East Smart Logistics Company Limited, which operates the malfunctional multi-aircube lockers, is also seeing significant growth. Before the company was established, annual revenue from the overall locker business was just under 3 billion yen. Thanks to these new initiatives, operating revenue is now projected to grow to nearly 7 billion yen in this fiscal year. Furthermore, we have set our target of 10 billion yen in operating revenue for fiscal 2031, and we are currently expanding the business to achieve this goal. Next, I would like to discuss the expansion of the CICAR living sphere through CICAR Renaissance. Under our vision of transforming CICAR from a tool for transportation and payments into an essential part of everyday life, we're currently working to integrate our services through JREID. By positioning JREID as the foundation for our mobility and lifestyle solutions businesses, we plan to increase the number of CICAR holders from the current 46 million to more than 70 million by fiscal 2031. Through this initiative, we aim to consolidate data by strengthening connections not only among services within the JR East Group, but also with external partners. We plan to leverage the consolidated data for data-driven marketing to increase the number of customers using our mobility and lifestyle solution services. Through these efforts, we aim to make the Seca Living Fair even more convenient and user-friendly. Through the contribution of these initiatives to our various businesses, we aim to generate additional 100 billion yen in operating revenue and more than 25 billion yen in operating income in fiscal 2031. Finally, I'd like to discuss how we are enhancing engagement to accelerate the realization of our To The Next Stage 2034 vision. In July this year, we dissolved the two headquarters and 10 branch offices that have previously overseen frontline workplaces across our service areas, and we organized them into 36 regional headquarters. We also completed revisions to our personnel and wage system on April 1st and partially on July 1st to strongly encourage employees to take on bold new challenges. Our regional headquarters are now actively executing initiatives to maximize customer experience through agile business operations that closely address the needs of our customers and local communities. We're also increasing investment in employee health and well-being as a key foundation for the group's growth. This includes strengthening health support across the group, improving facilities such as employee dormitories and restrooms, including those at group companies, and using DX and advanced technologies to enable more flexible ways of working and enhance our ability to respond to changing needs. The percentage of positive response rate in our employee engagement survey for the fiscal year ending March 2027 reached 66.2%, up 3.7 percentage points year-on-year, exceeding our KPI target of 65%. In addition, sales of products and events initiated by frontline workplaces on JRE Mall totaled approximately 700 items, generating around 270 million yen in sales by expanding the fields in which our employees can thrive in executing initiatives. To maximize customer experience, we aim to realize the lifestyle transformation set out into the next stage 2034. At the same time, we aim to enhance the engagement of the group's employees by expanding investments in health. That's it from me. Thank you very much. I'm Takaoka, Senior Executive Officer. Next, I will explain our financial results for the second quarter of the fiscal year ending March 2027. I'd like to focus on the key points and keep my explanation brief. First, the group as a whole recorded increases in both revenues and income. Operating revenues increased for the sixth consecutive period, reaching a record high for the second quarter. Driven by higher revenue, income increased at all levels. By segment, all business segments recorded revenue growth. The real estate and hotels business saw an increase in revenues but a decline in income, while all other segments achieved growth in both revenues and income. Our real estate sales business had a major transaction in the first half of the previous fiscal year, whereas this fiscal year's major transactions are scheduled for the second half. Therefore, performance is progressing as planned. Next, revenues increased by 122.2 billion yen, while expenses rose by 90.8 billion yen. Resulting in an increase in income of 31.4 billion yen. I'll skip the details. Next, the consolidated statement of income. I will explain the results by segment later. The 4.5 billion yen year-on-year increase in non-operating expenses was mainly due to higher interest expenses on corporate bonds and borrowings. The 25 billion yen year-on-year decline in Extraordinary gains and losses was mainly due to a decrease in gains on sales of investment, insecurities, and disaster-related losses caused by typhoons and heavy rainfall. Next, turning to the results by segment, the transportation segment recorded revenue growth across all areas, including Shinkansen, conventional lines and buses, and rail car manufacturing. Next, regarding traffic volume and passenger revenues, the strong trend in rail ridership, including inbound travelers, has continued. We saw a revenue increase of 21 billion yen for non-commuter Shinkansen passes and 17 billion yen for non-commuter passes of conventional lines. Thus, we achieved very strong overall results. Of this total, we estimate that fare revisions contributed approximately 43.5 billion yen. Almost 5 billion yen came from non-commuter Shinkansen fares. Since this fare revision primarily focused on conventional lines in the greater Tokyo area, we estimate an increase of 25 billion yen from non-commuter passes of conventional lines and about 13.5 billion yen from commuter passes. We also estimate that roughly half of the passenger revenues increase comes from fare revisions and the other half from railway transportation. This is about relevant indicators for the transportation business. Regarding the retail and services business, revenues increased across retail, advertising, and publishing, resulting in both higher revenues and higher income. Next, regarding the real estate and hotels business, while revenues increased and income decreased, this is in line with our plan, as I explained. Since we plan to conduct real estate sales in the second half of this fiscal year, income is currently lower by that amount. If you look at the relevant indicators, station buildings have been outperforming the previous year, and while hotel room occupancy rates temporarily fell below the previous year's level in September due to the impact of the typhoon and others, sales and average daily rate remained above the previous year's level throughout the second quarter. Regarding the office vacancy rate, as of the end of September, the vacancy rate for the properties operated by the group in Tokyo, Specifically, those by JRE's billing had fallen to 1.5%. However, as President Kise explained earlier, Link Biller 1 and 2 and Oymachi tracks are all fully occupied at this time, so we expect this figure to improve by about 1%. This figure stood at 1.5% as of the end of September. In any case, it remains below the average for Tokyo's five central wards, indicating a very low vacancy rate. Finally, regarding other segments, revenue increased in the CECA and finance, global, and construction businesses. Revenue in the energy business fluctuates depending on the timing of construction-related sales in wind power generations, so revenue decreased year on year. In addition to other indicators established, we intend to expand our points of contact with customers going forward through Teppei, which launched on October 20th. Next, regarding actual inbound revenue results, the mobility segment fell short of the plan by about 1.7 billion yen, but it increased by about 2.3 billion yen year-on-year. Demand from Europe, the U.S., and Australia, particularly the U.S., remained very strong, and we were able to capitalize on that growth. However, factors such as the Chinese government's request for citizens to refrain from visiting Japan and rising airfares appear to have impacted the number of visitors to our service areas. In the lifestyle solution segment, we captured demand of hotels and shopping centers, primarily in the Tokyo metropolitan area, and thus exceeded our plan. The balance sheets and consolidated summary of cash flows are as shown. Regarding consolidated interest-bearing debt, capital expenditures, and key indicators, net interest-bearing debt was increased by 233.7 billion yen compared to the end of the previous fiscal year. Given that interest rates continue to rise, we intend to closely monitor market conditions and raise funds flexibly as needed. We are managing interest rates by shifting from foreign bonds to domestic bonds and by shortening the average maturity. Capital expenditures have Have decreased significantly as large-scale projects have come to a close. The next page shows the change in consolidated interest-bearing debt balance, so please take a look. The non-consolidated figures follow. Please refer to them for your information. Regarding the forecast on page 42, we have revised our four-year earnings forecast upward. This revision is based on the fact that operating income in the transportation business generally exceeded plans in the first half, while retail and services, real estate and hotel segments were generally in line with plans. Please refer to the table for the specific figures. In line with this, we have also slightly revised the figures for traffic volume and passenger revenues plan on page 43. Next on the page regarding non-consolidated operating expense plans, which we haven't covered much in the past, we have clearly outlined our assumptions for non-consolidated operating expenses toward the bottom of the page. We have clearly stated the company's assumptions regarding how personnel expenses, energy, and other items are expected to trend from the fiscal year ending March 2028 onward. Regarding KPIs and other metrics, since transportation revenue figures are now quite close to those for the final fiscal year, we plan to review future trends in detail when we prepare next year's earnings forecast. Regarding action to implement management that is conscious of cost of capital and stock price after taking into account various factors in the business environment, such as interest rates and inflation, We estimate that our cost of equity has risen to approximately 7.5%. This assessment is part of the second of our biannual updates. Furthermore, as shown on page 51, we estimate that the AfroTax weighted average cost of capital, WAC, has also risen to about 4% as a result of rising costs of equity and debt. Regarding our current recognition of return on equity in mobility and lifestyle solutions, while the forecast for the fiscal year is 3.0 compared to the 2027 KPI of 3.1, it is showing a steady upward trend. However, since the impact of fair revisions is significant this fiscal year, we intend to work toward further improving ROE next fiscal year. As for lifestyle solutions, our target is an ROE of 7% or higher. We intend to take on the challenge of increasing profitability, including through sales and rotation of real estate. Regarding our current recognition of market evaluation, since this involves specific figures, please refer to the materials. Finally, and I apologize for jumping ahead quite a few pages, it's on page 61. This concerns cash allocations, shareholder returns. As President Kiss explained earlier, we've set a medium-term target of a 40% dividend payout ratio for fiscal year 2027. To work toward this goal, we're gradually increasing the payout ratio. Since we have revised our earnings forecast upward this time, we aim to maintain a dividend payout ratio in the 37% range. Accordingly, we have revised our dividend upward from the initial forecast of 84 yen to 88 yen. We intend to continue steadily implementing shareholder returns while taking into account capital expenditures and business performance trends. Thank you very much.