Results Briefing and Q&A Summary PDF （3,557KB） PDF （3,557KB）

Financial Results Briefing for the Fiscal Year Ended March 2026 May 14, 2026

(Total: 62 minutes, Presentation: 33 minutes, Q&A: 29 minutes)

Shinji Tanaka Representative Director, President

Joji Kumamoto Director, Senior Managing Executive Officer

Kozo Okada Director, Executive Officer

Keizo Hashimoto Executive Vice President

Kaoru Ueda Executive Officer

Motoyasu Sudo General Manager, Investor Relations & Public Relation Department

Harunobu Goroh UBS Securities

Yuji Matsumoto Nomura Securities

Yu Shirakawa Morgan Stanley MUFG Securities

*Analysts that SCRIPTS Asia was able to identify from the audio who spoke during Q&A or whose questions were read by moderator/company representatives.

This briefing will be conducted using the presentation material available on the UACJ website. If you do not have the material at hand, please visit our website.

Although information including forward-looking statements may be provided in this presentation, such information is only our current forecast. Please note that actual results may differ significantly from these forward-looking statements due to various factors.

Let me introduce the Company's attendees for today's meeting. Shinji Tanaka, Representative Director, President.

Mr. Tanaka, Representative Director, President, will now explain the results for FY2025 that we announced today. Please join us while reviewing the presentation material.

Mr. Tanaka, please proceed.

I will explain in turn the following three topics: our FY2025 results and full-year FY2026 forecast, understanding of business environment, and toward management conscious of cost of capital and stock price.

We have compiled this document in a somewhat different manner than in the past and would appreciate any comments you may have.

First, here is an overview of the FY2025 financial results. The table below right lists the items below the sales volume.

Sales volume increased by 51,000 tons versus FY2024 to 1.317 million tons. Revenue increased by JPY182.9 billion to JPY1,181.7 billion, business profit increased by JPY2.3 billion to JPY48.2 billion, and net profit increased by JPY10.9 billion to JPY38.9 billion. Adjusted EBITDA also increased by JPY4.3 billion to JPY88.3 billion.

On the left side, we have commented on the business environment in FY2025.

Overall, the business environment showed steady growth, particularly in demand for can stock globally. In the US, in particular, the capacity to process recycled materials has expanded and contributed to earnings. In addition, exports from Japan to Europe in particular have increased and the effects of price revisions, which have been underway since last fiscal year, have been realized.

On the other hand, profit at UATH decreased due to exchange rate fluctuations, the appreciation of the baht and the depreciation of the dollar.

In light of these circumstances, the annual dividend for FY2025 is revised upward to JPY55 per share. More details will be provided later.

Next is the full-year forecast for FY2026.

Although the business environment is very uncertain due to geopolitical risks in the Middle East, trends in North America, and other factors, we will aim to further increase revenue, business profit, and Adjusted EBITDA.

See right.

In FY2026, sales volume is projected to increase by 48,000 tons versus FY2025 to 1,365,000 tons. This volume exceeds the previous record of 1.33 million tons.

Revenue is expected to increase by JPY118.3 billion to JPY1,300 billion, business profit by JPY16.8 billion to JPY65 billion, net profit to be JPY28 billion, and Adjusted EBITDA to be JPY109 billion.

Similarly on the left side, there is a small mention of the business environment in FY2026.

Global growth will be seen as in FY2025. The change is that thick plates for semiconductor production equipment in Japan, which had been expected to recover since last year, have finally begun to show signs of recovery since the end of last year.

Meanwhile, the situation in the Middle East is difficult to foresee. The full-year plan announced this time incorporates the forecast that the impact will be 20% of business profit. We will explain this in more detail later.

While business profit is expected to increase due to demand capture and price revisions, net profit is expected to decrease due to a decrease in inventory valuation effects.

On the other hand, as shown on the lower right, we plan to increase the annual dividend by another JPY3 to JPY58 per share.

Further details are provided below.

First, understanding of business environment.

Here, we have summarized demand trends as well as sales and profits in Japan, North America, Southeast Asia, and other regions for the period from FY2025 to FY2026. I will explain a few of them here.

First, let's look at demand trends in Japan. As mentioned earlier, demand for semiconductor production equipment has been improving since H2 of FY2025. We expect a steady recovery trend from FY2026.

Under these circumstances, demand for aerospace and defense-related materials is expected to grow over the long term against the backdrop of geopolitical risks.

Additionally, see sales/profit below.

As I mentioned at the beginning, can stock for Europe is on the increase and the effect of the price revision starting in January 2025 is starting to manifest itself. However, we need to keep a close eye on the rising prices of raw materials and secondary materials.

See the column of North America in the middle. Can stock will be explained in detail later.

A major current feature of automotive parts is that the shift to BEVs is slowing. See sales/profit in the bottom row in North America.

As mentioned in the can stock section, especially in North America, the effect of investment in capacity expansion of hot-rolling equipment will be fully realized from FY2026, the current fiscal year. At the same time, the Company is expanding its recycling facilities, which is expected to further increase earnings.

See Southeast Asia and other regions in the rightmost column.

Can stock have been generally firm, and, as noted, demand for replacement of glass bottles has been quite strong, especially in the European region. Expansion is expected to accompany this demand.

See sales/profit in Southeast Asia and other regions, bottom right.

As noted in the third item, Although we have been exporting can stock from Japan to Europe, UATH also plans to begin its own shipments to Europe in 2H of FY2026. Similarly, we need to keep a close eye on the rise in the cost of raw and secondary materials.

We recognize that the business environment is as described above.

The following are our results for FY2025 and our forecast for the full year of FY2026.

We discussed this in the opening topic. See FY2026 forecast. The prerequisites are summarized at the bottom.

In FY2026, the LME is expected to be USD3,200/t, the yen-dollar exchange rate is JPY153/$, the baht-dollar exchange rate is THB32.5/$, and the Dubai crude oil price is USD90/bbl.

Based on these assumptions, we expect revenue of JPY1,300 billion, business profit of JPY65 billion, net profit of JPY28 billion, and Adjusted EBITDA of JPY109 billion.

We had targeted business profit of JPY60 billion in FY2027, the final year of our medium-term management plan, but we expect to achieve our goal one year ahead of schedule, with a forecast of JPY65 billion in business profit for FY2026.

This is sales volume of flat-rolled products by variety.

See can stock. The previous summary has been slightly changed, and can stock is now listed by each location. The internal transactions written at the bottom are the duplicated figures.

Sales volume for FY2025 was 1.317 million tons, up 51,000 tons from FY2024. See the top of the table. The bulk of the 51,000-ton increase is can stock. The volume increase of 50,000 tons of can stock, mainly for TAA and Thailand, raised the overall volume.

Although the sales volume of automotive materials was affected by various factors during the last fiscal year, the final sales volume was almost the same level as the previous year and slightly increased, by 3,000 tons.

See bottom row of FY2026.

The sales volume for FY2026 is planned to be 1,365,000 tons, an increase of 48,000 tons over FY2025. As I mentioned earlier, we plan to exceed the FY2022 actual volume of 1.33 million tons.

Sales volume of can stock, mainly in Japan and Thailand, is expected to continue to grow significantly, with overall sales of can stock expected to increase by 46,000 tons. Sales volume of thick plates is planned to increase by 8,000 tons to 47,000 tons due to an increase in sales for semiconductor manufacturing equipment and other applications.

Here is an analysis of the change in business profit and adjusted EBITDA from FY2024 results to FY2025 results.

Again, we have changed the summary slightly. A figure showing the same summary as before is included in the reference material on the back page, so please refer to it as necessary.

First, business profit for FY2024 was JPY45.9 billion. Sales-related differences had a positive impact of JPY5.1 billion. In particular, domestic flat rolled had a positive impact of JPY5.2 billion and TAA had a positive impact of JPY0.6 billion.

On the other hand, overall manufacturing costs had a negative impact of JPY1.9 billion. Of this amount, domestic flat rolled had a negative impact of JPY2.2 billion and UATH had a negative impact of JPY5.7 billion, which was due to the cost of recycled raw materials, among other factors. On the other hand, TAA had a positive impact of JPY6.2 billion.

Next to that, energy and additive metals had a positive impact of JPY4 billion due to changes in unit prices and other factors. This includes time difference, etc. In addition, after deducting depreciation and amortization, and other factors, business profit amounted to JPY48.2 billion.

As noted on the outside, adjusted EBITDA also increased from JPY84 billion to JPY88.3 billion on the far right.

Here is the waterfall chart of FY2025 result vs. FY2026 forecast.

Starting from JPY48.2 billion, the sales-related difference will have a positive impact of JPY15.3 billion and the manufacturing cost difference will have a positive impact of JPY22.6 billion. In particular, domestic flat rolled, UATH, and TAA will have positive effects of JPY6 billion, JPY2.7 billion, and JPY7.4 billion, respectively, compared to the previous year, all of which contributing to the total sales-related difference of JPY15.3 billion.

In terms of manufacturing cost difference, UATH will have a positive impact of JPY2.9 billion and TAA will have a positive impact of JPY20 billion, with TAA making a large positive contribution here.

In addition to energy, additive metals, depreciation, etc., we expect JPY15 billion of Middle East risk, as noted on the far right. While anticipating this risk, we plan to continue to increase business profit from JPY48.2 billion to JPY65 billion.

As noted on the outside, adjusted EBITDA is expected to increase from JPY88.3 billion to JPY109 billion.

This is the consolidated statement of financial position.

Total assets at the end of FY2025 were JPY1,121.2 billion, up JPY151.2 billion from the previous year. The right column summarizes the main reasons for the JPY151.2 billion increase.

In particular, in current assets, inventories increased by JPY50.9 billion due to soaring ingots market prices.

In non-current assets, property, plant and equipment increased by JPY28.5 billion. This includes impairment losses for UATH. This will be explained later.

Also included in this figure is a JPY5.6 billion impairment loss on goodwill of UWH.

Interest-bearing debt increased by JPY48 billion. This was also due to an increase in working capital resulting from soaring ingots market prices.

Total assets increased by JPY151.2 billion this year.

Here is a summary of the impairment losses I mentioned earlier. Impairment losses were recorded for goodwill at UWH and for idle facilities at UATH.

The reason for the goodwill of UWH is, as stated, a revision of future plans due to a sudden change in the business environment. In particular, deregulation in the US and the revision of EV subsidies have sharply increased uncertainty. Due to a series of customer cancellations of new vehicle development, we have now recorded an impairment loss.

As for the accounting impact, operating profit will decrease by JPY5.6 billion, but there will be no impact on cash flow.

As for the future outlook, as stated, the EV shift is currently stalled slightly in North America, but the automobile market will grow over the medium to long term. In addition, the need to reduce weight, a characteristic of aluminum, will continue to arise. Including these and other measures, we intend to restructure our North American automotive parts business.

For idle facilities at UATH, we consolidated facilities to improve productivity. Some facilities have been shut down. This is the paint line of the end material. The book value was reduced this time because it is not expected to be used in the future.

This is all about impairment losses.

This is the consolidated statement of cash flows.

In FY2025, profit before tax was JPY63.7 billion, depreciation and amortization were JPY40.1 billion, and the change in receivables and payables was negative JPY39.7 billion, resulting in an operating cash flow of JPY64 billion.

Capital investment was JPY59.5 billion, and total free cash flow was positive JPY4.5 billion.

Below that, cash and deposits increased by JPY32.1 billion. This was due to an increase in cash and deposits resulting from the unrest in the Middle East.

Interest-bearing debt increased by JPY48 billion.

To the right of this information is the balance of interest-bearing debt and the debt-to-equity ratio. The D/E ratio remains at the 1.0 level.

Next is capital investment and depreciation and amortization. See the rightmost column.

We plan to invest JPY185 billion in facilities and equipment throughout the period of the medium-term management plan. This investment includes JPY20 billion in subsidies, etc., so total capital investment is expected to be JPY165 billion. Depreciation and amortization are planned to be JPY166.5 billion, which is almost within the range of depreciation.

See slides for FY2024, FY2025, and FY2026.

Moving on to understanding of business environment. As I mentioned earlier, we are projecting a risk of JPY15 billion for the Middle East situation. Here is a description of what perception this depends on.

It says, "Closely monitoring the impact on our business and performance." First, we intend to continue to respond firmly to ensure a stable supply to our customers.

The most recent perception of the situation is included. In particular, the procurement of ingots and other metals has been reported frequently in the news, and we have been procuring some of our own metals from the Middle East. This has not had a significant impact, including on TAA, as we diversified or changed our procurement sources as soon as possible.

The Group as a whole has not yet experienced any significant impact on its business or performance. However, for items that may cause delays in procurement, we are working with customers to negotiate alternative procurement. We will continue to closely monitor the situation.

We assume risks in procurement and sales, including the above. There is a possibility of cost increases due to soaring procurement prices, delays in passing these costs onto sales prices, and, in terms of sales, a prolonged decline in overall demand, especially from customers. Therefore, we have factored in JPY15 billion, equivalent to about 20%, in our business profit forecast for the full year of FY2026. Since we are not in a position to judge the situation, we will closely monitor the changes.

Here is the global demand for aluminum rolled products. A steady demand is described from 2018 to 2030.

As written in the top right corner, we expect the demand for aluminum to continue to grow toward 2030, driven by the de-plasticization perspective and the growing demand for glass bottle replacements.

Among them, the demand forecast and main supply bases for aluminum cans, our main application, are listed here.

Topics and prospects at each location are listed on the right.

Demand in North America is expected to grow by 2.4% through 2031. The demand for aluminum cans to replace other containers is occurring due to their high recyclability.

In Europe, we expect growth of 3.3% per year, as shown in the upper left chart, due to the replacement demand for glass bottles I mentioned earlier.

In Southeast Asia, this will also increase with population growth and economic growth. In Japan, however, demand is expected to remain mostly flat.

Overall global demand is projected to increase by 2.5% per year, as shown in the middle figure.

Among them, I will briefly explain aluminum can stock, divided into TAA and UATH.

See graph below left. This is the sales volume trend for TAA. Sales volumes are listed on a quarterly basis from Q1 of FY2024 through FY2025. The total amount of the production increased by 8% to 487,000 tons in FY2025, compared to a cumulative total of 449,000 tons in FY2024.

See the market environment column on the right. Second, the increased use of aluminum in new product launches in the US and growing consumer preferences are driving demand for can stock. Tight coil supply in the US continues. There have been no disruptions to production or supply chains in North America as a result of the situation in the Middle East.

In terms of production, as I mentioned earlier, the sales volume for FY2025 increased 8% over the previous year. Third, the sales volume has already been secured through a substantial long-term contract until FY2029. Furthermore, capacity expansion has been underway since last year, and full-scale operations will contribute to record-high profitability.

The forecast for FY2026 is repetitive and will be omitted. Finally, for the 5th Mid-Term Plan, we are also considering further expansion of production capacity.

The following highlights UATH which handles aluminum can stock.

Here, too, demand is on the rise, backed by population growth in the Southeast Asian region and increased consumption in line with economic growth.

The second factor in the market environment is that Chinese manufacturers are also increasing their costs. In line with this, we will also be revising our prices in Thailand and other countries.

Regarding the situation in FY2025, third, the impact of foreign exchange rates was significant.

For the FY2026 forecast, sales of support coils to TAAs will continue through FY2028. Furthermore, third, demand in India is quite strong, and we have received many inquiries from customers. We will take this without fail. The last line, new exports from Thailand to Europe are also planned.

Next, I would like to discuss sales in Japan.

The sales forecast for manufacturing equipment is quoted from the Semiconductor Equipment Association of Japan.

Since this is from the Manufacturing Equipment Association, it is about the sale of the equipment itself. Sales are projected to grow further through FY2027. Naturally, the impact on us will appear a little later, but we expect sales to increase further.

This page describes demand trends related to aerospace and defense materials.

Both aerospace and defense sectors are expected to experience high growth from FY2025 onward. Measures to be taken in each of these areas are listed in the lower right-hand corner. We have set a goal to increase aerospace and defense-related sales by 2.3 times by 2030 through certification from customers, expansion of market share, and establishment of an increased production system.

For your information, regarding aerospace and defense materials, we announced today in a press release that we have entered into a strategic partnership with Safran, a leading global aerospace and defense company in France.

To the right is a photo of the MOU signed on March 31. We hope to use this opportunity to further expand into the aerospace and defense sector.

On this page, we commented on Extra Super Duralumin, which was recognized by the Japan Society for Aeronautical and Space Sciences as the 4th Aerial Space Technology and Engineering Heritage.

We recently issued a press release on this as well. Extra Super Duralumin is a material that is still very widely used in the aerospace industry. We intend to continue to link these things to the enhancement of corporate value in the future.

As part of our efforts to achieve cost of capital conscious management, we have described our shareholder return policy.

The Company's basic policy on shareholder returns is to provide stable and continuous dividends. The dividend payout ratio during the period of the 4th Mid-Term Management Plan is targeted to be at least 30% of net profits.

In response, we have included the actual results for FY2021 through the most recent forecast for FY2026. We paid a dividend of JPY37.5/share for FY2024 and JPY55/share for FY2025, and plan to pay JPY58/share for the current fiscal year.

The next theme is improvements in return on capital and management that is conscious of the stock price. On the left, ROE was 12.2% in FY2025 compared to 5.3% in FY2023.

The business profit target of JPY60 billion in the 4th medium-term management plan is expected to be exceeded this year. In terms of growth investment, we plan to make solid investments in the recycling and aerospace fields, and to secure a solid ROE of 9% or more.

The cost of capital target is in the 7% range and is currently still in the 8% range. The beta values listed below it have also been steadily decreasing. We hope to reach the 7% level by FY2027.

Please refer to the last page for the stock price and P/B ratios since FY2023. This is the end of my explanation.

Finally, the IR-DAY information is listed.

We hope you will join us on May 29 from 9:30 to 11:30 AM. We will be conducting the program online. That's all from me.

However, please understand that we may refrain from answering questions that may affect our business activities depending on the content.

The first questioner is Mr. Yamaguchi from SMBC Nikko Securities.

We have just received an explanation on the overall waterfall chart regarding the outlook for FY2026. Your company's documents include TAA, UATH, and their respective business profit projections. With regard to profit fluctuations, what are the respective profit and loss fluctuations for TAA, UATH, and UWH? Please give us some background if you can, since the results were a bit off from your expectations. I would also like to know how you plan to achieve this profit in the new fiscal year.

For example, TAA's business profit will grow from JPY31 billion in the period just ended to JPY59.1 billion in the new fiscal year, due to the expansion of metal benefits. I would be happy to receive such an answer, for example.

It is important to note that if we subtract the profits of the main subsidiaries I just mentioned from the overall profit or sales, the profit of the remaining domestic business appear to be significantly lower. The JPY15 billion mentioned earlier is outside of each sub-segment, which would be subtracted from the total. If we put this JPY15 billion back into total, the profit from the Japanese business, or rather the rest of the business excluding the overseas subsidiaries from the total, would drop from JPY17.4 billion last year to JPY3.6 billion. If there is no impact from the Middle East, would the profit of JPY18.6 billion, which is JPY15 billion added back to this amount, be the profit that could be generated? Is that due to thick plates or some other contribution?

The question from Mr. Yamaguchi now is what is the expected profit for TAA, UATH, and UWH in FY2026? Also, the growth in domestic business profit, which is calculated by subtracting TAA, UATH, and UWH from the total, appears to be very small; I assume you are asking if this is due to the expected JPY15 billion impact from the Middle East.

Okada will answer your question.

It is difficult to give a clean explanation. First of all, I think TAA is getting a lot of attention. Business profit for FY2025 was JPY31 billion. I think the first question is why this will increase to JPY59.1 billion in FY2026.

A large part of this is, as you know, due to the impact of recycled raw materials. In addition to the above, the Company's efforts to increase productivity will also benefit from investments made to date in the expansion of hot rolling and shredding lines.

UATH ended FY2025 with a very unfortunate negative JPY1.2 billion. In contrast, the forecast for FY2026 is JPY2.3 billion. Since we expect the same level of foreign exchange rate assumptions, this increase is due to

the expected greater effect of recycled raw materials compared to the previous fiscal year. We also expect that sales volume will increase as a result of sales expansion, which will generate solid profits.

Another key point is that UATH's profit for FY2025, which was originally projected at JPY1.2 billion, resulted in a loss of JPY1.2 billion. I would also like to explain the reasons for the approximately JPY2 billion decrease in actual results in Q4 from the February forecast.

One major factor is the situation in the Middle East. For ingots, the Japan Premium is applied directly to Thailand. Japan premiums soared, and the impact of this surge was felt all at once in Q4. We will pass on this cost to our customers in our prices, but we were unable to make up for it due to the time difference, resulting in a much larger-than-expected loss in Q4.

Another factor is quantity. We had expected a little more sales volume in Q4 of FY2025, but sales fell about 7,000 tons short of our plan, and that was a factor in the lower profit.

Of these two major factors, the decrease in the premium factor will be shifted to the customer price in FY2026 and will recover well. We plan to make up for the decrease in sales factors by selling products through the year, including those that were delivered late and those that were originally contracted to be sold in FY2026.

The domestic volume is the total volume of various domestic group companies, including the extruded products business and the aerospace and defense materials business, not just plates. In FY2026, as explained earlier, the product mix is very much improved, partly due to the fact that semiconductor-related orders for until around December are coming in. Domestic sales have a positive impact of just over JPY5 billion on profits.

In Japan, there is a negative JPY2.2 billion impact from manufacturing costs, etc. In addition to the negative impact of more than JPY1 billion from recycled raw materials, personnel expenses, including indirect personnel, will also increase compared to the previous year. We will firmly compensate for inflation and other price hikes.

Regarding the JPY15 billion Middle East impact you asked earlier, the impact on our business performance will change depending on the circumstances of its expression. Since this is uncertain, we will monitor progress closely and provide further explanation.

Finally, JPY15 billion was mentioned. It is still difficult to say how we should predict the situation in the Middle East going forward. The unknowns there were factored in this time as a JPY15 billion risk in Japan. Without this, I believe that performance would naturally improve.

The first point is the change in business profit for FY2026 on page 10. It says something like plus JPY7.4 billion in TAA for the sales-related difference and plus JPY20 billion for the manufacturing cost difference. What does this figure for TAA include? Please let me know if the metal benefits, etc., mentioned earlier are included. I think the TAA expects a slight decrease in volume as well.

Also, I think the president mentioned a little bit about building capacity at TAA. What are the possibilities? Is it possible to increase it a bit by modification, etc., as you did a while ago?

Also, in general, the price of aluminum ingots has gone up a bit. This raises the question of whether this will also increase the price of UBCs. What should we think about that in a phase like this one?

As you asked, the majority of TAA's plus JPY20 billion in manufacturing cost difference is due to the effect of recycled raw materials.

We hope to be able to present some form of plan for this as soon as possible when the time comes, so please stay tuned.

Hashimoto answers the third question.

On page 10, you just told us about TAA. Likewise, what are the details of the sales-related difference and manufacturing cost difference for UATH?

Second, I would like to follow up on Mr. Matsumoto's current question. You mentioned that you are now benefiting from the expansion of metal benefits. At the same time, is there any risk of UBC prices going up and metal benefits going back to normal? What are the future trends in Japan, Thailand, and the US?

Similar to the previous explanation of TAA, we would like to make some explanations regarding the contents of the domestic flat rolled products, the effect of recycled raw materials, and the price of UBCs, including some supplementary explanations.

First, the JPY6 billion of the estimated JPY15.3 billion sales-related difference in Japan is mainly due to better roll margins and product mix. The price revision in the last fiscal year was approved by our customers in earnest around H2 of the fiscal year. Compared to last year, the main reason for the JPY6 billion is that margins will be more effective throughout the year this year.

The manufacturing cost difference is expected to be negative JPY0.6 billion in Japan. Although the impact of cost and operation difference will be positive due to strong production, there will be an impact of unit price differences and delays. In addition, the effect of recycled raw materials is only slightly improved. As a result, we expect a negative JPY0.6 billion in Japan.

I have two follow-up questions. Regarding the first point, does the JPY6 billion sales-related difference in Japan include the improved mix of thick plates for semiconductor production equipment? Is it just the roll margin?

However, H2 is very uncertain. We intend to make sure that even if it drops, we will still be able to enjoy the benefits. The shredder is now in full operation. So, we will work to increase the "area" and strategically procure more so that additional profits can be earned. Tariffs are a consequence, and we would like to focus on doing what we can do to the best of our ability.

The next question is from Mr. Goroh of UBS Securities.

First, I would like to ask about room for profit improvement. The business profit target for this fiscal year is JPY65 billion, which would be JPY80 billion simply calculated if there were no Middle East risks. You are talking about being able to achieve the JPY60 billion target of the mid-term management plan one year ahead of schedule. Since TAA's higher performance is a major factor of this, I feel that your company should work hard over the next year or two to reap the rewards of what you were originally supposed to be working on.

I feel that last fiscal year was a year for your company in which you were forced to work on revising your roll margins as you had incurred costs first and then had to recover them. In the new fiscal year, how much do you foresee the effect of the investment, for example, in improving the recycled raw material rate? What is the projected effect of recovering volume, including the thick plates mentioned earlier? Or, how much room do you expect there to be for growth in the future? I would like to know more about the effectiveness of such measures.

In particular, I have the impression that the rate of recycled raw material use has already increased to some extent. I would appreciate an explanation of whether there is room for further improvement, including energy savings and other cost-effective aspects.

The second point, on the flip side, is the impressive movement of the stock price after the announcement of the Q3 results. At the time, stock prices fluctuated due to warnings that the tariff policy of the US president might suddenly change.

Conversely, I have the impression that the basis for the incorporation of metal benefits into TAA's profits was not clear to us, so we were a bit confused. For example, I believe that metal benefits themselves are now rapidly expanding. I would appreciate it if you could tell us, to the extent possible, what level of numbers you are factoring in. I am asking this question based on the idea that this can be regarded as your actual power. I think there is room for even higher figures than you forecast, if something extra comes. Please explain how it works.

The first point is about the room for profit improvement, or how to improve it. I think your second question is about the incorporation of the effect of recycled raw materials and the projections further down the road.

I will explain the first point and Okada will explain the second.

Room for profit improvement includes the effect of increased use of recycled raw materials. This has continued throughout last year and the year before. In Japan, we will increase the scrap usage rate by installing pre-processing equipment for recycling at our Fukui Works. In the US, additional shredder lines will be added to increase recycling rates as well. In Thailand, a scrap melting furnace was started up in April 2024.

In all cases, we will increase the use of recycled materials and raise the recycling rate. In each case, we expect certain effects.

At the same time, especially in Japan, the effects of the roll margin review and price revisions that have been implemented since last year will be realized during the year. We will also improve the product mix in Japan. Through these efforts, we will continue to improve profitability.

Okada will answer to what extent the effect of recycled raw materials is factored in.

We believe that in H1, with the current 50% tariff and a very high UPS (LME+MWP), there is a very high probability that we will be able to reap the benefits of recycled raw materials. On the other hand, H2 is really uncertain and will become more precise as time goes on, quarter by quarter.

Therefore, we are committed to making a solid profit in our core business. On top of that, we would like to add the effect of recycled raw materials as a result.

Let me confirm the first point. The main effects of the measures were the use rate of recycled raw materials and improvement of the product mix. What is your own assessment of how much progress has been made in the first two years of the four-year medium-term management plan? I believe this will lead to further growth, not only in the current year, but also in the following years. How would you evaluate this?

This concludes the FY2025 financial results presentation of UACJ corporation. Thank you for joining us today. [END]

Document Notes

1. Portions of the document where the audio is unclear are marked with [inaudible].

2. Portions of the document where the audio is obscured by technical difficulty are marked with [TD].

3. Speaker speech is classified based on whether it [Q] asks a question to the Company, [A] provides an answer from the Company, or [M] neither asks nor answers a question.

4. This document has been translated by SCRIPTS Asia.

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