Yukio Saeki (hereinafter, Saeki): I am Saeki, Director, Executive Vice President. I would like to report on these interim financial results.

First, a summary. Compared to the same period last year, net sales decreased 6.7 percent, ordinary income decreased 1.7 percent, and net income decreased 5.4 percent.

On the other hand, compared to the forecast announced in April of this year, net sales were 1.6 percent higher, ordinary income was 11.8 percent higher, and net income was 13.3 percent higher.

At the beginning of the period, we had forecasted that profits would decrease by more than 10 percent from the previous period, and we believe that the decrease was minimal.

Here is a summary of our current performance.

Net sales, ordinary income, and net income for the interim period were 111,712 million yen, 6,147 million yen, and 4,305 million yen, respectively, down from the previous period.

However, compared to the forecast released on April 30, shown on the right side of the slide, both of these results exceeded the forecast.

The graph shows the change in sales.

Compared to the previous year's sales of 119,698 million yen, the CN business increased by 3,333 million yen, the distribution business within the EC business decreased by 11,529 million yen, and the PB business, also within the EC business, increased by 209 million yen.

Although both positive and negative, the resulting sales for the period were 111,712 million yen.

Sales and profits by segment.

In the CN business, sales and segment income both increased from the previous year to 17,687 million yen and 2,168 million yen, respectively, due to strong sales of equipment and security products, as well as an increase in maintenance and monitoring services.

On the other hand, although commercial rights expanded for some customers in the EC business, overall performance was weak due to the stagnation of the Chinese market and other factors. Net sales were 94,024 million yen, and segment income was 3,978 million yen, both of which were lower than the previous year.

CN Business Segment Information.

Storage-related products and security-related products, etc. all performed well, especially for system integrators.

As mentioned at the beginning of this report, maintenance and monitoring services also remained strong.

Segment information for the EC business.

Overall sales of industrial equipment remained sluggish due to customers' high inventory levels and a decrease in analog ICs as a result of direct sales.

On the other hand, overall sales of processors, logic ICs, and Boards, Electronic Components, etc. for automotive equipment increased, due in part to the expansion of commercial rights.

This is the status of sales of overseas consolidated subsidiaries.

Sales in dollars, shown in the center of the slide, were $172 million, a decrease of $10 million from the previous year.

On the other hand, the yen basis increased by 530 million yen compared to the previous period.

As noted on the slide, the exchange rate weakened the yen by about 11 yen, resulting in a decrease in dollar terms, but an increase in yen terms.

This is the status of sales in the PB business.

Sales in the PB business totaled 6,986 million yen, an increase of 209 million yen from the previous year.

For TED, design and manufacturing services were at about the same level as in the previous year.

On the other hand, the increase was due to the full-scale delivery of wafer inspection systems.

TED Nagasaki sales decreased due to sluggish sales for semiconductor production equipment.

FAST CORPORATION saw steady growth in its inspection systems. The PB business as a whole was positive.

Balance Sheet.

Total assets for the interim period were 164,278 million yen.

Assets are being collected on trade receivables, as sales have been declining.

As a result, trade receivables decreased.

On the other hand, inventories increased due to the stocking up of inventory in connection with the expansion of commercial rights.

In liabilities and net assets, notes and account-trade payable decreased due to a decrease in purchases, while advances received increased due to growth in maintenance services.

Cash Flows.

Cash flow from operations was positive 6,285 million yen, cash flow from investments was negative 1,582 million yen, and cash flow from financing was negative 1,873 million yen, compared to a cash balance of 6,757 million yen in the previous year, resulting in a cash balance of 9,536 million yen at year-end. The balance of cash and cash equivalents at the end of the period was 9,536 million yen.

Our tendency is for operating cash flow to swing positively during periods of declining sales.

Orders received.

The CN business has maintained a high level of orders due to strong IT investment and orders for large projects.

On the other hand, the EC business saw an overall decline, partly due to a reactionary drop in long-term orders and partly because customers are maintaining high inventory levels.

For the first time in four years, the level of orders received fell below 30 billion yen. That is all for my explanation. Thank you very much.

Atsushi Tokushige (hereinafter, Tokushige): I am Tokushige, President and CEO. Thank you very much for taking time out of your busy schedule today to attend our earnings presentation. I will now explain our earnings forecast for the fiscal year ending March 31, 2025.

First, an overview.

The full-year forecast for the fiscal year ending March 31, 2025 remains unchanged from April 30, 2024, the beginning of the fiscal year.

While first-half results were generally favorable, we anticipate that a full-fledged turnaround to the market Recovery trend, which we had anticipated starting in the second half of the current fiscal year, will not occur until the fourth quarter or later.

The main reason for this is that inventory levels throughout the supply chain are taking time to normalize.

This is due to the prolonged stagnation of the Chinese market and the fact that the inventory held by our customers is considered to be higher than initially expected.

The fiscal year ending March 31, 2025 is the final year of VISION2025.

Although the results are lower than the previous year's performance, we expect to achieve the original targets of VISION2025 for the third consecutive year.

This slide reflects the current changes to the business plan assumptions communicated at the beginning of the period. We had expected the recovery period to begin in the second half of the fiscal year ending March 31, 2025, but we believe it will be later than initially anticipated, and will begin in earnest in the fourth quarter or later.

In the EC and PB businesses, the recovery of demand for industrial equipment has been delayed due to the recovery of the Chinese market and the time required to optimize inventory levels.

The market for automotive equipment is expected to remain steady overall, as needs for EV vehicles are decreasing while those for hybrid vehicles are increasing.

As for trends in commercial rights, the trend toward direct sales by some semiconductor manufacturers is almost at a converging.

On the other hand, other semiconductor manufacturers are not shifting to direct sales, but rather our customer commercial rights are expanding, and the contribution of new customer commercial rights to our business performance is expected to be full-scale from the second half of this fiscal year.

In the CN business, the IT market has remained strong and new agency contracts are being awarded steadily.

We had assumed that the yen would remain weak throughout the current fiscal year, but in the second half of the fiscal year, we expect the yen to appreciate moderately.

In addition to changes in market conditions, the current business environment has many variable factors, such as trends in the U.S. presidential election, that make accurate forecasts difficult.

We will promptly announce any major changes in our earnings estimates.

The consolidated forecasts for the fiscal year ending March 31, 2025 remain unchanged from the beginning of the fiscal year: net sales of 230 billion yen, down approximately 12.9 billion yen from the previous year; ordinary income of 12.7 billion yen, down approximately 1.2 billion yen from the previous year; and net income of 8.7 billion yen, down approximately 1.3 billion yen from the previous year.

The company also plans segment sales of 36.3 billion yen for the CN business and 193.7 billion yen for the EC business.

Here is a graph showing the increase/decrease in sales for each business in the earnings forecast I explained earlier.

We will continue to strengthen our Manufacturer Functions and Service Business to achieve profitable growth.

In particular, we believe that the stock business of the CN business and the wafer inspection system business of the PB business have high growth potential.

In June of this year, we introduced the Corporate Officer System.

The Corporate Officer is the highest position on the executive side. Today, Mr. Miyamoto, who is in charge of CN business, and Mr. Kamimoto, who is in charge of PB business, will explain our mid- to long-term initiatives.

Takayoshi Miyamoto (hereinafter, Miyamoto: I am Miyamoto, Executive Vice President and Corporate Officer.

I will explain our policy of expanding the solutions area in the CN business and strengthening the services business.

The CN business is a technology trading company business that sells innovative products, mainly overseas products, and provides solutions and attentive services to support customers' use of digital technology.

We believe that responding to rapid changes in technology and expanding our solutions to meet the diverse needs of our customers will maximize opportunities and maximize profits.

To achieve the goals of VISION2030, we will therefore continue to collaborate with our overseas offices to discover solutions while focusing on the five areas of security, networking, storage, cloud computing, and AI.

This slide summarizes the services we provide to customers in the CN business.

Our goal is not to simply provide the latest solutions in a flow-type business, but to provide services tailored to the customer's phase.

We do not believe that service provision equals profit growth.

Through various technical services, we see it as a means of gaining the trust of our customers to make the most of the solutions being implemented and to increase satisfaction and utilization.

As a result, we will strive to strengthen our relationships and engagement with our customers by upselling higher value-added products and services, cross-selling a wider range of products and services together, and renewing and building an ongoing relationship.

That is all for my explanation.

Mitsutaka Kamimoto(hereinafter Kamimoto):I am Kamimoto, Corporate Officer, Vice President.

I will explain our strategy for the PB business as a whole and our strategy for the metrology and inspection system business, including wafer inspection systems.

The PB business is our most focused business to strengthen Manufacturer Functions. Focusing on growth markets, we will develop strategies that capture both apparent and latent needs of the market. Specifically, we will implement three initiatives to achieve the goals of VISION2030.

The first is research and development of new measurement and inspection equipment technologies.

In the rapidly growing and changing semiconductor manufacturing market, we will focus on developing measurement and inspection equipment technologies that can meet new customer needs.

Second, we will strengthen our manufacturing infrastructure.

To upgrade Manufacturer Functions, we will strengthen our technical organization structure and IT systems, and expand our manufacturing capacity.

Third, investment in growth through M&A.

In the process of VISION2020 and VISION2025, we have established the foundation of Manufacturer Functions by making Aval Nagasaki Corporation and FAST CORPORATION consolidated subsidiaries, and by taking over the wafer inspection system business of Nippon Electro-Sensory Devices Corporation.

We will continue to actively engage in M&A to accelerate business growth.

In the PB business, we are engaged in the R&D business for measuring and inspection equipment technology and the development and mass production of system infrastructure.

In this context, we will continue to focus on the inspection system business, which is an area where significant growth is expected.

Specifically, we will implement three tactics.

The first is to strengthen our core semiconductor wafer inspection system.

We will enter and strengthen the silicon wafer field based on the business taken over in 2023.

In the compound semiconductor wafer field, we will promote overseas expansion with a focus on SiC (silicon carbide) wafers, which are expected to grow.

To further strengthen our business, we will focus on the development of inspection system for the advanced package market.

Second, we are strengthening our LCD panel inspection systems.

We will firmly maintain the business of existing customers here, while strengthening competitiveness and improving profitability.

Third, we are strengthening new business areas.

We will also take on the challenge of developing new inspection systems for new materials and electronic components, where growth is expected, and aim to commercialize these systems within a few years.

Through these efforts, we will ensure the expansion of our business. That is all I have to say.

Tokushige: Three business topics are presented below.

First, we have signed a distributor agreement with Qualcomm Inc. and today began handling SoC, module and circuit board products equipped with AI-specific processors.

Qualcomm is a company with strengths in telecommunications semiconductors, but recently it has been increasing its presence in the field of edge AI.

In addition to PCs and smartphones, edge AI is expected to be used in industrial and medical devices in the future, and Qualcomm is expanding its product lineup for embedded applications.

Our company will support the introduction of edge AI into the industrial equipment field by leveraging its long-standing track record in embedded Windows OS sales and its customer base in the industrial equipment field.

Second, we utilized the latest model of Cerebras Systems' AI accelerator, the CS-3, to develop our own large-scale Japanese language model using our own data.

In addition to equipment sales, the company will offer engineering services to support the development of models that individually learn from data held by customers.

Third, as announced on July 31, 2024, the Company will absorb FAST CORPORATION, a wholly owned subsidiary of the Company, on January 1, 2025.

FAST CORPORATION, which became a wholly owned subsidiary in 2018, has played a major role in the development of private brand products such as wafer inspection systems and vision automation systems.

Through this absorption merger, we will strengthen our technological development base and accelerate the speed of development by restructuring our development system.

Finally, we discuss dividends.

As planned at the beginning of the fiscal year, the Company declared an interim dividend of 52 yen per share. Combined with the forecasted year-end dividend of 65 yen per share, the annual dividend is expected to be 117 yen per share.

That is all for my presentation. Thank you very much.